Jock, LSI did do foundry work before and I believe in a time of need, they will do that again. Again, in foundry work, you only make money for the wafers but not the IP part, so it's better to do their own product if possible.
I think they are ramping Gresham as fast as they can and there really is no capacity for any foundry work. As they can see filling up the fab in the next year or two, they should not do foundry work. Foundry customers expect and gets wafer start allocations that one cannot just cut off just like that when the good time comes. As such, no reasonable customers will engage with LSI now for any serious work as they also can see that LSI cannot provide a long term relationship at this point.
I think LSI is not going or isn't really compared now to Intel, Altera, Xilinc, Novellus and AMAT. I think it is now being grouped with ADI, STM, TXN, VLSI. That's the reason for the stock being touted now and being revised upwards now. I don't look for LSI to be priced in the mid 60s because it does not have the history of sales growth, earnings growth as the other companies. Hopefully, if LSI does it good job and create that history over the next two years, it will be revised up to that. Hence my decision to go with LSI instead of the usual XILN, TXN or ADI in the beginning. The other ones will do 2x to 3x over the next two years, not counting the bash last Nov. But LSI may have a potential to do better because it is a 'turn -around' situation. Blue bird - take a little bit more chance, maybe get rewarded later.
patrick |
