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Technology Stocks : SILICON STORAGE SSTI Flash Mem -- Ignore unavailable to you. Want to Upgrade?

To: Ram Seetharaman who wrote (575)	6/22/2000 3:40:00 AM
From: Allegoria	Respond to of 1881

Flash sales should increase 116% to $9.9 billion this year and 34% to $13 billion in 2001! Bright future for SSTI! Good luck, Eric June 20, 2000 Flash: AMD Has a New Friend in Nokia By Monica Rivituso smartmoney.com ADVANCED MICRO DEVICES (AMD) is flexing its flash muscle again. Tuesday, the company unveiled two new flash memory chips for next generation cell phones that rank as some of the fastest on the market. The 32-megabit and 64-megabit chips will begin showing up in 2001 and 2002 as cell phones increase their functionality. But what's interesting is that AMD new products drew praise from Nokia (NOK), the world's leading cell-phone maker, which has until now reportedly bought the majority of its flash products from industry leader Intel (INTC). "AMD is the first supplier to meet Nokia's flash-memory requirements to address the high data rates of next generation cellular phones," said Rune Lindholm, Nokia's principal scientist of baseband architectures. Nokia hasn't given much business to AMD since about 1992. Its willingness to do business with the chip-maker now could signal that AMD is benefiting at Intel's expense. "This is so significant [because] it's the first time AMD has been permitted to move into Nokia," says Chase H&Q analyst Sudeep Balain. "This is a huge plus for AMD." The intense rivalry between AMD and Intel is nothing new. The two chip makers are in a never-ending battle to make faster microprocessors for personal computers. They also go head-to-head in the flash-memory market, considered the hottest area in the semiconductor sector. According to the Semiconductor Industry Association, flash sales should increase 116% to $9.9 billion this year and 34% to $13 billion in 2001 before they start to slow. Today, most cell phones use 16-bit flash memory. But next generation phones will require more power as Internet connectivity, personal digital-assistant functionality and streaming video becomes more important. For these capabilities, beefier flash chips are going to be in order. "On paper, this is a fairly impressive announcement," says Needham & Co.'s Dan Scovel of AMD's new products. But, he adds that the question for AMD now becomes availability and execution. While the announcement seems solid, Scovel notes that AMD shares still trade on its microprocessor business, not on its flash business. Indeed, the stock was up only fractionally today, on a day when the chip sector rallied yet again 2.4%. (The Philadelphia Semiconductor Index is up 75% for the year.) Investors know AMD best as a chip maker for low-end processors of PCs, but flash memory comprises roughly 30% of AMD's revenues, making it number two behind Intel. Still, Scovel has a point, as microprocessors are far and away AMD's bread and butter. But the chip maker seems to be making more inroads into the flash market, according to Chase's Balain, who upped his rating on the company to Strong Buy from Buy earlier this month. Citing the strength of three new flash contracts with Siemens, Nortel (NT) and Philips, Balain wrote "there is not another company in our mind who is executing better in flash than AMD." By Balain's estimation, these new flash-memory chips could mean an additional $1.5 billion in sales in the next couple of years. This year, AMD's total flash sales should top $1.5 billion (with roughly 75% of those sales from high-density flash memory, which carry better margins). Next year, those sales should come in at $2.5 billion, he said. While the full ramifications of AMD's announcement are yet to be seen, one thing's clear: the company is pumping up its product line. And that could get Intel's, and investors', attention.