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Technology Stocks : LSI Corporation
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To: patrick tang who wrote (14748)9/3/1998 4:58:00 PM
From: shane forbes  Read Replies (1) of 25814
 
Patrick:

You are right about the capacity at 0.25 issue.

However a lot of the Far East companies are looking at the
foundry/IP model as a very viable alternative. Cadence and
their ilk provide the missing link and it is I believe a
good model going forward. Those foundries are also large
enough to build up sub micron capacity. Remember a few years
ago they used to be several generations behind the traditional
ASIC vendors, now they have caught up and perhaps surpassed. I
think one of them is readying plans to play at 0.18.

What is appealing in these relationships is that a lot of
smaller companies (companies or OEMs that LSI won't do
business with - remember LSI has those relationships with
Wyle etc to address the smaller OEMs) can now enter businesses
that were not available to them in the past. LSI would not
look at Jo Blow if Jo Blow were a tiny company. LSI picks
the big OEMs as 'partners of choice'.

[LSI should really be a CSIC company now not an ASIC
company. That is passe...]

I don't really believe the larger companies will go
the foundry/IP vendor model (at least for now) mainly because of this issue. Also the bigger OEMs want to have capacity available when there
are shortages because that is precisely when they make
their big bucks. Therefore this is an advantage to the
vertically integrated companies (such as LSI).

But I also have to agree that bigger is better and only
with Symbios do I have a sense that LSI has hit critical
mass.

Therefore even though I am hesitant to have LSI beyond 3-4
years I do believe that the Foundry model is still a tad
early to get too worried about at this stage.

Nevertheless it is interesting for Erica to finally put
it down in writing - almost like a death knell.

As mentioned earlier - design wins are the vindication of the
prowess of a company's technology. I think LSI continues to
do very well here and so for the immediate future (3-4 years)
I am not too concerned.

shane.
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