IDTI - an IC Play on Growth Markets Message Board

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Technology Stocks : IDTI - an IC Play on Growth Markets

IDTI 48.99

0.0%

Mar 29 5:00 PM EST

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To: Munificent Gnome who wrote (6306)	2/5/1998 8:13:00 PM
From: Rob S.	Read Replies (3) of 11555

National Semi (NSM) has obtained an extension to their cross-license agreement with Intel in which they have gained the rights to produce PII slot 1 chips. Cyrix's lawsuit against Intel for patent infringement was also dropped. Intel may have been in a position that required them to offer the PII slot 1 license or they could have figured that it would be better to have NSM as a low cost producer to help spur the PII market. Maybe some of both. This might put some pressure on AMD and IDTI in the PC marketplace if Cyrix/NSM ops out of the socket 7 market; customers may be quicker to migrate over to slot 1 from socket 7 systems. Socket 7 designs currently hold a clear price advantage but that picture could change by the end of this year. NSM also announced that they are developing a "PC system-on-a-chip" design in their Israeli design center. This center reportedly has about 200 personel, many of them engineers. National is targeting product availability for the first half of 1999. they claim that the parts will include Pentium class uP (Cyrix core), 3-D graphics, DVD, and other on-chip systems support. The targeted price for the part, intended for the sub $600 PC appliance market, is to be bellow $100. NSM's Haller claims to have 4 OEMs they are working with on the project and that one of them is a top tier 1 account. NSM plans to spend about $125 million to develop the product. Haller thinks that markets for around 600 million units per year will eventually be created. IDTI has similar product market opportunities but needs to build volume for the C6 quickly and plow into OEM deals. Either that or they must carve out some unique market nitches. Otherwise, the difficulty and expense of constantly developing parts that are quickly obsoleted by successive generations will be burdensome. In IDTIs' favor is the brilliant design of the C6 core and the highly talented design team headed by Glen Henry. On the negative side is that IDTI is late to the game and attempts to build manufacturing capacity and momentum may prove costly. Just a few mistakes can seperate between great profits or losses. The next few months are critical to IDTs success. I sure hope that we hear some good news about the production ramp, yields and market penetration. I would love to see an announcement of an agreement with a partner, such as IBM, with manufacturing might. It would be terrible if this story evolved into that of a party in which the doors were locked. The posibilities for upside surprise are very encouraging but the risk of lackluster performance that fails to meet key thresholds for production ramp and market momentum are still a big factor.

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