from forbes...
an old article we may not have seen here.
(apologies if we have)
note in particular the bear stearns "analyst" remarks in the
closing paragraph....
Bottom feeder enters Intel territory
A week after the chip giant Intel was sued by Digital Equipment Corp. and Cyrix, another company entered the microprocessor business to feed off the scraps.
Intel owns the microprocessor business with nearly 85% market share of the $20 billion-plus-a-year market. Other companies, like Advanced Micro Devices (AMD) and Cyrix exist on the remainder of the market. Now add San Jose, Calif.-based Integrated Device Technology (IDT) to the ranks of the minnows.
Who? IDT is better known in the memory chip and RISC-processor market. The company returned to profitability in the first quarter of 1997, after being ravaged by falling memory prices in the previous two quarters. In that quarter IDT earned $2.1 million on revenues of $143.2 million. Intel boasted first-quarter profits of $1.9 billion on sales of $6.4 billion.
IDT introduced a new X86 Pentium class microprocessor on Tuesday, May 20 designed by its subsidiary, Centaur, an Austin, Tex.-based startup. The chip, code-named "IDT-C6" is likely to go into full production some time in June and will be available in varying clock speeds, from 150-to-200 MHz. IDT stock has been trading near its 52-week high of 14 7/8.
IDT's costs are competitive with Intel's. IDT's C6 chip costs only $40 (the same as it costs Intel to make a non-MMX Pentium) compared with $70 a chip for AMD's K6 and $80 for a Cyrix M2-chip.
Using just ten engineers IDT spent a laughably low $15 million to develop the C6. Pretty incredible--after all it cost NexGen almost $10 million a year for nine years before coming up with its first worthwhile products, the K5 and then the K6. NexGen was bought by AMD in 1995 for just over $300 million. Intel spends around $2 billion a year on R&D.
Linley Gwennap, editor of The Microprocessor Report, an industry newsletter, thinks that instead of going head-to-head with Intel, IDT will focus on the very low end of the market, so far the exclusive stalking ground for AMD and Cyrix. Or look to no-name brands in the Far Eastern markets and emerging nations like China and India. "Any PC vendor who is not getting enough chips from Intel is a potential customer for IDT," says Gwennap.
Maybe--but it is unlikely that Dell or Compaq will risk buying from an unknown.
"I would view this [IDT's chip] with a great deal of skepticism," says Nimal Vallipuram, semiconductor analyst at Bear Stearns. "I have heard this kind of news many times in my life."
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By O.P. Malik
Copyright 1997 Forbes Inc. c, Terms and Conditions and Notices
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