repost of IBD article on ACTL:
> ACTEL CORP. Sunnyvale, California Chips, Served Up Fast, To Fit The > Customer
>
> Date: 6/5/96
> Author: Reinhardt Krause
>
> Customers come to Actel Corp., a maker of specialty chips, looking for > quick time- to-market and flexibility. When the programmable chips
> also offer the right operating speed and density, it's a deal. >
> Actel makes devices called field programmable gate arrays. Even when > the semiconductor market slows down, FPGA demand is usually strong, > because the chips can be programmed with software tools.
>
> The FPGA market will grow to $858 million in 1996, from $662 million
> last year, according to In-Stat Inc. The market research firm projects > a 29.6% annual compound growth rate for FPGAs between 1995 and 2000.
>
> Actel is the second-leading supplier, with a 15.6% market share in
> 1995. Xilinx Inc., which makes reprogrammable FPGAs, leads with 68.4%. >
> There are many flavors of computer chips, but basically they boil down > to two types: logic and memory. In the logic world, chips can be
> standard devices, like the microprocessors from Intel Corp. Or they > can be custom devices designed from scratch for a particular
> application.
>
> Actel's devices are semi-custom. FPGAs are made up of many small logic > blocks which are arranged in an array. How the blocks are
> interconnected determines what the chip does. >
> With Actel's ''anti- fuse'' technology, tiny switches are normally > open. When programmed, they are permanently closed. This provides > one-time programming.
>
> Often, the FPGA replaces several chips on a computer board. Customers > take advantage of the programmable wiring to make devices destined for > communications gear, medical instruments, office automation products
> and military equipment.
>
> Actel has been growing fast. The company reported revenues of $108.5 > million in 1995, up 43% from $76 million in 1994. Even in a torrid
> market, Actel's growth has outpaced the industry average. >
> ''When we go out to our customer base, the first thing we hear coming > through the door is 'will it meet our application?' with the right
> speed and density, price and quality,'' said David Sugishita, Actel's > chief financial officer.
>
> FPGAs are more pricey than some other custom devices, called
> application- specific integrated circuits. The premium comes from a > quicker turnaround - from the day a deal is set to when the first
> chips are delivered.
>
> Actel's devices enable customers to make prototypes quickly, Sugishita > noted. When placed in a system, FPGAs are a way to see if a chip
> design will pan out. And even late in the design stage, FPGA designs > can be tweaked.
>
> When Actel's customers are ready to order large volumes, they
> typically will move to another supplier that makes lower-margin ASICs > called gate arrays.
>
> Winning an order is called a design-win. Companies like Actel and
> Xilinx typically have won business from customers requiring FPGAs with > densities - gate counts that reflect how many transistors are used -
> of below 20,000 gates.
>
> But analysts expect FPGA makers to encroach on the low end of the gate > array business served by Japanese chip companies over the next few
> years. FPGAs offer densities up to 100,000 gates. In general, the > high-density parts get better margins.
>
> The growth in FPGA demand has attracted more competitors. In the past > three to four years, several big-name chip companies as well as
> start-ups targeted the FPGA market. Xilinx and Actel, though, still > lead the pack, thanks to their software advantages.
>
> Founded in 1985, Actel has a customer list that includes a number of > start-ups looking to get to market quickly. Other clients are AT&T, > Siemens AG, AST Research Inc., Westinghouse Electric Corp.,
> International Business Machines Corp., Hughes Aircraft and Eastman > Kodak Co.
>
> Almost half of the FPGAs designed by Actel go into communications > gear. Industrial control/medical instruments and data
> processing/office automation each garner about 20% of sales. >
> ''Communications applications often have two things in common that > play into the strengths of FPGAs - changing industry standards and > fast product cycles,'' said Rhondalee Rohleder, president of market > research firm Pace Technologies.
>
> Actel has several deals in place with electronics distributors, who > help find customers. Distributors such as Wyle Electronics,
> Pioneer-Standard Electronics Inc.#m#Pioneer Standard >
> #m# and Arrow Electronics Inc. accounted for 37% of sales last year. >
> In early 1995, Actel bought the FPGA business of Texas Instruments > Inc. Actel is a ''fab-less'' chip company and contracts out its
> manufacturing to other companies. TI had been a supplier of devices to > Actel - as well as a competitor - under the two companies' earlier
> pact.
>
> Buying the TI unit has helped Actel improve average selling prices. > That and a cost-reduction program have helped improve Actel's gross
> margin to to 55%, Sugishita said, up from 50.2% in the second quarter > of 1995. Operating margin has climbed to a company record of 14.1%
> from 5.9% in the same period.
>
> For the first quarter ended March 31, per- share earnings grew to 16 > cents from two cents a year earlier. Net income increased to $3.3
> million from $332,000. Revenue jumped 80% to $35 million from $19.5 > million. The stock, priced near 21, trades by ACTL.
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