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Technology Stocks : Neomagic Corp. (NMGC)

NMGC 0.00730

+1.4%

Nov 7 9:54 AM EST

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To: tejek who wrote (3017)	5/20/1999 10:57:00 PM
From: Mani1	Read Replies (1) of 3645

tejek, Re <<Not withstanding their market cap, nmgc will have to do something unusual like this or slowly go out of business. This may be the first time there has ever been a shortage of fab space and i think its going to take some creative thinking for the fabless companies to stay afloat. What do you think?>> I disagree. Most small companies out source their manufacturing. It has been like this for years. Pretty much every industry outsource manufacturing and semiconductor is no exception. Re << This may be the first time there has ever been a shortage of fab space>> Not true, semi is very cyclical in nature and this happens every 3 years or so. Also I am not sure that there is fab shortage. NMGC can not get access to a fully developed 0.25 process. Even if IBM or Motorola (two most advances foundries) agreed to manufacture it for them, it would take months to get out the first silicone. Don't get me wrong, I am very disappointed with Neo's management with regard to this issue. But I guess we can chuck it up to their lack of experience and a "growing pain". Re << Not withstanding their market cap, nmgc will have to do something unusual like this or slowly go out of business.>> There is not doubt that Neo will stay fabless which is the only reasonable thing to do. As you already know Apple and Nintendo, just to name a couple companies who are significantly larger than Neo Magic, are also fabless. Next time Neo will be more aware about the foundry business and will not plan on a process which does not exist. Fabless business is clearly the future of this industry since 0.25 and 0.18 are extremely expensive and they will only get more expensive, and the economy of scale are very significant. Mani

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