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Strategies & Market Trends : The New Economy and its Winners

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To: Tradegod who wrote (574)	5/25/2000 12:45:00 AM
From: Glenn D. Rudolph	Read Replies (1) of 57684

Investment Highlights: ? In today?s evening edition of the Nihon Keizai, it was reported that Sharp Corp., the world?s 4th largest flash memory supplier in 1999, is increasing pricing on its flash memory products by up to 30% on rising demand from mobile phone manufacturers. ? In our opinion, this is a substantial pricing increase and is a further indication of the accelerating scarcity in the supply of flash memory products driven by a multitude of end market applications, including cell phones, set-top boxes, personal computers, and personal digital assistants. ? We believe that Atmel ($45 3/8; C-2-1-9) ? with its nearly 30% exposure of revenues coming from flash memory ? is particularly well positioned to capitalize on the explosive demand for flash. At the Merrill Lynch Hardware Heaven conference earlier this week, Atmel stated that bookings for the company are accelerating ? particularly for memory and application-specific integrated circuit (ASIC) products sold into cell phones ? and the company now appears to be capacity constrained for the remainder of C00 and well into C01. Atmel also stated that it believes the supply situation is going to get worse before it gets better. ? Given that Intel is Sharp?s manufacturing partner for flash, we believe this news makes it a likely scenario that Intel also should continue to raise prices on its flash memory products. ? We reiterate our Accumulate/Buy ratings on ATML and our 12-18 month price objective of $75. Bulletin United States Semiconductors 5 May 2000 Eric Rothdeutsch Vice President Christopher Danely Industry Analyst Flash Memory Scarcity Accelerating Sharp to Raise Flash Pricing by 30%; Good News For ATML and others Reason for Report: Company Update Merrill Lynch & Co. Global Securities Research & Economics Group Global Fundamental Equity Research Department RC#10212607 Industry

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