Well, Patrick
I know you will not believe this by profession is that of an analyst dealing in financial numbers. I have been busy researching the entire graphics industry over the past 12 months. Here is what I think is going to happen long term.
Diamond and NVDA will merge. Diamond will spin its graphics division into NVDA. Why?
1. Diamond and CREAF are the only two significant players in graphics cards. Although CREAF is larger and financially sounder than Dimd, CREAF is primarily focused on audio. The man who runs CREAF is very strong willed and the man who runs NVDA is a very dynamic personality. Unless one of the two takes a back seat (unlikely), a merger or buyout will not happen. In addtion, Dimond is the card player who now has the OEMS tied up with the TNT2 and this is most important to NVDA. Ideally, a good solution would be for a merger of CREAF, NVDA, and DIMD. CREAF could run audio and DIMD communications and graphics.
2. S3 has announced significant design wins. I suspect this is at the expense of ATI and Matrox. S3 will not be successful at retail but will be tough for TDFX at the OEM level. Another real strength of S3 that no one should discount is that they have their own fabs (or interests in fabs) with migration to .18 fab technolgy. If you have keep up with the most recent news in Taiwan you will recognize the TSMC and UMC fab capacity utilization rates are way up. In addtion, many larger companies, are outsourcing more production to these fabs. There is some concern among fabless companines that they will not be able to obtain production. It is funny how the world can change in 12 months. But when is the last time you can remember announcements about new fab construction plans. Several years ago, we had an announcement every day. As Japan and Asia continues to recover this fab shortage will become a bigger problem. I suspect right now that NVDA and TDFX are fighting with TSMC because the chips are from the same TSMC plant.
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