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To: DiViT who wrote (47324)	11/2/1999 5:52:00 PM
From: BillyG	Respond to of 50808

No end in sight for networking financial boom eetimes.com By Loring Wirbel EE Times (11/02/99, 3:35 p.m. EDT) ARLINGTON, Va. — Progressive semiconductor integration and advances in optical networking will continue as twin drivers pushing the financial and bandwidth growth of internetworking in the foreseeable future, analyst John McQuillan said Monday (Nov. 1) on the opening day of the Next Generation Networks conference, which he has chaired throughout its 13-year history. And any dark clouds on the horizon are tempered by the fact that the Internet is in a position to swallow radio and television markets and extend into nascent markets in developing nations, which means bandwidth growth is still in its infancy, McQuillan said. While citing Cisco Systems Inc.'s $6.9 billion acquisition of Cerent Corp., the record initial public offering for optical networking specialist Sycamore Networks Inc., and the acquisition of Premisys Corp. by Zhone Communications Inc. for $248 million in cash, McQuillan refused to concede that any of these displayed signs of market overvaluation. Zhone, a special funding company founded by several executives of Ascend Communications Inc., has an initial warchest of $500 million to spend on existing communications companies such as Premisys. Trends such as the formation of Zhone, McQuillan said, indicate that Wall Street is finally grasping the open-ended growth potential of the Internet infrastructure, and is pricing resources accordingly. One-thousand networking startups have been formed in calendar year 1999, McQuillan said. In the first eight months of this year, the money raised by startups was double that raised during the entire year of 1998. Wall Street is not crazy when it places initial values of Sycamore, Akamai, and Juniper in excess of $10 billion each, McQuillan said. Instead, the market is simply responding to the potential for continued growth in Internet access as voice and video traffic moves to packet networks. "While we can't always identify where every bit in additional bandwidth capacity will go, there is a revolution in rising expectations among users out there," McQuillan said. "Remember, the Internet is still largely a U.S. phenomenon right now, and the potential continues to expand as it goes global." McQuillan's fervent optimism appeared to be borne out by the demographics of this year's Next Generation Networks conference, where venture capitalists and investment bankers were present in abundance. High-stakes deals, such as the announcement by Mayan Networks Inc. (Sunnyvale, Calif.) of a new round of financing to bring its funding up to $90 million, seemed to be everywhere at the show. Daniel Gatti, president of Mayan, a specialist in aggregation of edge access services, said that his company had to limit the amount of venture capital coming in so as not to appear greedy, but that venture funding for networking had approached "astonishing, unprecedented levels." Dark clouds on the horizon were represented by the warning from Craig Partridge, scientist with BBN Networks Inc., who warned that U.S. networking companies are eating their seed corn by neglecting basic research. McQuillan, who was an associate of Partridge's in the past, said that "what we in the financial community are doing now is more exciting and fun than long-range research, but it's certainly true that folks in the packet industry are mining all the science built up 20 years ago. In the optical field, the entrepreneurs are working off much newer technology, exploiting findings that are only two or three years old. In the semiconductor community, it's just a continuous process of engineering and regeneration."

To: DiViT who wrote (47324)	11/2/1999 5:54:00 PM
From: BillyG	Read Replies (1) \| Respond to of 50808

Double-digit chip growth forecast for next three years eetimes.com By Brian Fuller EE Times (11/02/99, 2:12 p.m. EDT) INDIAN WELLS, Calif. — Surging demand for systems and a revitalized DRAM sector will push worldwide semiconductor sales up 50 percent in the next three years with a slowdown not coming until 2003, the market-research firm Dataquest Inc. reported this week. At the company's annual forecast conference here, Ronald Bohn, director of Semiconductor Research, said the industry should grow 14 percent this year, 17 percent next year and another 19 percent in 2001 to a total of $215 billion in worldwide revenue. The figure is still short of the $300 billion level executives predicted in 1995 the industry would reach by 2000 — before the collapse in DRAM prices and overcapacity prompted industry recessions in 1996 (down 6 percent) and 1998 (down 8 percent). Bohn said he expects growth in the U.S. to slow a bit but be offset by resurgent economies in Asia and Latin America. Returning to vigor and leading the charge for the other sectors is DRAM, which fell from a peak of more than $40 billion in annual sales in 1995 to less than $15 billion in three years. While nothing on the order of Windows 95 looms on the horizon to increase DRAM usage, performance demands and the ramp of Rambus Direct DRAMs next year will help boost the sector to a new peak of $63 billion in annual revenue by 2003, Bohn said. If demand is just now coming in line with supply, capacity will remain tight until 2003, when the next "bust" cycle should hit, he added. Flash memory, whose sales have stagnated for four years, will resume growth this year to nearly $4 billion in sales and double to more than $8 billion in sales by 2003, Bohn said. Of the applications driving semiconductors sales, PCs—the driver for the 1990s—is becoming less of a factor, according to Dale Ford, principal analyst in the semiconductors group. Communications (14.1 percent growth between 1998 and 2003) and automotive applications (13.9 percent growth) will outpace the PC's 11.8 percent growth and the consumer electronics sector (8.5 percent), Ford said. Indeed, digital cellular applications are the highest-volume semiconductor-rich platform in the game right now, he added. Microprocessors will continue their strong growth (doubling from roughly $40 billion last year to 2002) but will be affected by PC price wars. "We've got the squeeze on the microprocessor like never before," Ford said. On the macroeconomic level, Greg A. Smith, chief investment strategist for Prudential Securities Inc., said technology's increasing influence in economies plus build-to-order practices that lower inventory should keep the GDP humming for some time. "Everyone has adopted the Dell model" of just-in-time manufacturing, Smith said. "How do you have a classic inventory overhang recession with that model? My argument is you can't." He also dismissed fears about the impact of Y2K on economies, saying that it may actually have benefits come the first week of January. "Everyone will be walking around with one to five weeks' of excess in their pockets" that they've saved to prepare for Y2K calamities, he said. When nothing happens, "Jan. 3, 2000 begins the biggest impulse buying boom we've seen," he quipped.