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Technology Stocks : Intel Corporation (INTC)
INTC 34.26-1.3%11:43 AM EST
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To: Amy J who wrote (98380)2/7/2000 1:44:00 PM
From: Paul Engel  Read Replies (2) of 186894
 
Amy - Re: "Any idea as to the margins on this market segment? Isn't flash a low margin component? "

Flash is a very low margin business and I would expect the deal allows Intel to make a small profit on these - 15% - 20% gross margin.

However, the MORE IMPORTANT aspect is the cooperative development of a new generation of Flash products to better utilize the data storage aspect for general purpose communications (i.e., Internet) as opposed to the current, simplistic "phne address book" usage of flash memory.

And, hopefully, the REAL PAY OFF down the road will be LOGIC CHIPS for Ericsson - Intel's DSP group makes and sells CDMA chip sets. I would assume Intel's long range effort will be to get the design win for these DSP chips, and possibly CUSTOM CDMA chips with on-chip StrongARm controllers and/or Flash memory.

There is a lot more UPSIDE to this deal than just low margin Flash Memory chips.

Paul
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