[GM Growth]
Pierre,
You wrote : " With 3DFX GM already rivaling that of Intel I would hardly expect much improvement in this arena."
Quite recently, Intel's gross margins were in 55% range, higher for the top of the line models. TDFX reported 51% GM on a product that is (at least for now) widely perceived as top of the line. So there is still is some room for improvement, provided that TDFX is good at planning.
Recent GM declines for Intel are caused primarily by pricing pressures - competition offers roughly equivalent products at lower prices while demand isn't growing fast enough. At least for this quarter I view TDFX as a company offering a superior product in a growing market - have you seen any indication that they had to lower their ASPs for Voodoo 2 lately?
On the production side of the equation, it is not unreasonable to assume that problems associated with the production rampup should be behind TDFX suppliers by now. I have no facts to support this, but neither have I seen any factual data supporting your (plausible) "worst case" scenario (production capacity of current suppliers is limited, TDFX looking to find new suppliers in the last moment due to poor planning/unpredicted surge in demand, yields suffer and production costs rise). While this is yet another generalization, in the current climate I don't expect chip manufacturers exerting serious pricing pressures on fabless companies.
All this leads me to believe that GM could improve during this quarter. Of course, introduction of Banshee could change the picture considerably.
Regards,
Y. |
