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

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Mar 29 5:00 PM EST

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To: Rob S. who wrote (8813)	6/9/1998 2:14:00 PM
From: Xianming Liu	Read Replies (2) of 11555

Rob: Did you ask IDTI investor relation if there was any recent insider buying at IDTI ? How much breath room IDTI (and to less extent for NSM and AMD) has will depend largely on how aggressive is INTC's response to the low-end X86 CPU market. INTC does have strong manufacturing and market muscle. It also has several billions of cash on its balance sheet. Sure, Feds is going to after INTC. But as long as INTC does not sell CPU below the cost, there is not much feds can do. Of course, INTC's stock will suffer if it tries to so ( and hurts AMD, NSM and IDTI too). However, the over-supply of X86 is real. I read from one of the recent article that AMD's 2 fabs (in Texas and Germany) alone would provide 2/3 of supply for the overall current X86 CPU market needs if both of them are in full capacities (and good yield of course). Given that AMD need to raise >$1 billion to build the 2nd fab, it is not likely that AMD can really bring it to the full capacity at the current market conditions. But it does illustrate the potential problems of over-supply. If there is indeed a significant over-supply, I tend to believe that the low-end X86 CPU maker will suffer most because people naturally want to have a faster machine and they will select the faster CPUs when the absolute price difference between the low-end and mid-end is not significant (eg. $10-$25). What happened in last 15-20 years have shown that it is difficult to beat INTEL in CPU business. Look at where are the CPU business sector of TI and NEC; where is the Power PC of IBM/MOT/APPL; and where are AMD and CYRX/NSM will illustrate the point. The biggest worries of IDTI's Winchip business are (missing) the window of opportunity and execution on ramp up on one hand, and over-supply of X86 CPU plus aggressiveness of Intel on low-end on the other. Now return to my original question: if there were any recent insider buyings, it would suggest that insiders do not worry too much about the missing windows of opportunities and execution of ramp-up of Winchip II.

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