I think this is a good threshold for a startup or lean small business, but perhaps a bit low for Intel? A 50% gross profit is basically like a 100% markup: the cost to make the product is doubled to get the sale price.
But that 50% gross profit remaining has to cover all of operations overhead--which includes G&A and R&D--and still leave a net profit > 5% for shareholders. Note that software products usually deliver in excess of 80% gross profit; and hardware products are 50% or more.
I think this is a good threshold for a startup or lean small business, but perhaps a bit low for Intel? A 50% gross profit is basically like a 100% markup: the cost to make the product is doubled to get the sale price.
But that 50% gross profit remaining has to cover all of operations overhead--which includes G&A and R&D--and still leave a net profit > 5% for shareholders. Note that software products usually deliver in excess of 80% gross profit; and hardware products are 50% or more.
This is not encouraging. Gross profit is the wrong metric to be "laser focused" on for long-term survival.
the logic conclusion is that they are not laser focused on long term survival.
Sounds like a corporate suicide pact to me.
What kind of margins does Nvidia make on silicon? AMD? I don’t think 50% is a lot in the semiconductor industry.
or it turns them into aqui-mode for a while.