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Technology Stocks : Altera
ALTR 53.61+1.3%Jul 7 5:00 PM EST
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To: Bill Martin who wrote (1359)10/30/1997 7:11:00 PM
From: Ken Muller  Read Replies (1) of 2389
 
Bill:

I used to sell FPGAs for 6 years. One thing has changed which everyone should understand.

The oem buyers are far more sophisticated about FPGA costs.
It used to be that a FPGA supplier could design in a base level device and then when the designer needed more speed, slip in the MUCH higher priced -1,-2, or -3 speed selected device. Buyers paid the higher price without asking many questions. That is no longer true.

A semi buyer today can get a FPGA conversion quote from a half dozen suppliers in 48 hours. A conversion can be done in 21 days (prototypes). I have seen buyers read the quote right off the RFQ sheet to the FPGA salesman(usually $3-$6). Where FPGAs could be priced $40-$200, they have been forced to $8-$50. The competition has come primarily from asic pricing, not competition between Altera and Xilinx. The margins were kept high during this period become of severe price erosion on 0.8, 0.6, and 0.5 ucmos processes in Taiwan. That is no longer true with 0.35 ucmos. IMO, the days of 63% gross margin are over.

BTW, when I saw statements from Altera in the past that they were going to take over the asic market, I had to laugh. Unless you are pad limited an asic wil always be a MINIMUM of 50% cheaper than the equivilent FPGA.

Regards,
Ken
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