S3 (A LONGER TERM PERSPECTIVE) Message Board

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Technology Stocks : S3 (A LONGER TERM PERSPECTIVE)

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May 12 5:00 PM EST

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To: stock talk who wrote (12648)	1/26/1999 10:14:00 PM
From: Synapsid	Read Replies (1) of 14577

I believe there is something peculiar about the design and production process of the original 0.25-micron Savage3D which greatly increases the cost of its manufacture; this is apparent from press releases and documents filed to the SEC . From the beginning S3 has been very clear about the fact that they were only targeting the high-end segment with the chip, as lower price points would not be cost-effective. Most design wins that the Savage3D has are probably best described as dumping of excess inventory below cost. As for the reason for the high cost, it's mainly speculation, but it probably has to do with the early stage of the 0.25 micron learning curve at which the Savage3D was released in the spring of 1998. The chip may have been designed with design tools ill-suited for the 0.25 micron process, and for process characteristics that do not match the current, mature high-volume 0.25 micron manufacturing process at USC. Talking in wafer terms, the Savage3D might be a very tough dish to cook (marinate for 24 hours, special frying oil etc). The Savage-4 had better resemble french fries and a coke.

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