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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Tony Viola who wrote (108574)	8/27/2000 2:34:45 PM
From: Barry Grossman	Read Replies (3) \| Respond to of 186894

Niles - "Maybe the next big thing is going to be Intel" Edelstone - "The Pentium IV is going to be huge"....."The cost levers on 0.18 and the flip chip packaging are extraordinary. The cost structure gets so much better, driving gross margins," thestreet.com Intel Flashes Its Memory By Tish Williams Senior Writer Originally posted at 8:46 PM ET 8/25/00 on RealMoney.com SAN JOSE, Calif. -- Can you zip up my bunny suit for me? My virgin white Intel (INTC:Nasdsaq - news) bunny suit, that is. We're venturing into chip land this week at the Intel Developer Forum. We wouldn't want to track in all that dirt from Wall Street to taint the pristine grip the giant has on the semiconductor faithful. We believe! We believe! -------------------------------------------------------------------------------- Lehman Brothers analyst Dan Niles, fresh off raising his estimates for Intel's revenue and profit margins, didn't want to take any guff over his optimism about the company. Niles snorted and bared his bull's horns at the insinuation that Intel faces competitive threats. "You guys love the David vs. Goliath story. It's always got to be somebody. First AMD (AMD:NYSE - news) was going to kill Intel. Then NexGen, then National (NSM:NYSE - news). Maybe the next big thing is going to be Intel," says Niles, who recently arrived at Lehman. (The firm hasn't performed recent underwriting for Intel.) -------------------------------------------------------------------------------- Ron Smith, Intel's wireless communications computing group chief, showed the same testiness for one of Niles' analyst compatriots. During a news conference on a new extension of Intel's StrongARM technology for wireless, an analyst kicked off the questioning by asking about Intel's plans for 0.18 micron production of flash memory. (For those of you who have slacked off on your recreational flash memory reading, flash is a type of memory chip that goes into portable devices such as digital cameras. Intel could be a threat to established flash players. The move to 0.18 micron from the larger 0.25 micron technology allows Intel to fit more memory on less silicon, which cuts costs.) "Hmm ... flash capacity! This is my favorite question -- I only answer it about 40 times a day. Let me flip my parrot switch," said Smith. Intel will have one of its fabrication plants manufacturing 0.18 micron this year. Next year it'll ramp up Oregon and Colorado fabs, as Intel adds one fab to the 0.18 micron effort each quarter. Don't get too dizzy, those fabs aren't necessarily going to be exclusively devoted to 0.18 micron, and "only a small portion will be 0.18 micron this year. Our workhorse will continue to be one-quarter micron," Smith says. -------------------------------------------------------------------------------- Ah, the old incremental rollout. Mark Edelstone, an analyst at Morgan Stanley Dean Witter, explained that the highly anticipated Pentium IV chip probably won't outship the Pentium III until 2003. Why? Because that's the way masterful Intel rolls out its chips. Intel will use the old 0.25 micron process to manufacture the first Pentium IVs. After Intel feels nothing but confidence in its 0.18 micron fabs, it will shift the Pentium IVs into high gear on 0.18 micron. "Intel's new CPUs are never on the right process. Intel doesn't like to take a technical risk and a product risk at the same time," Edelstone explained. Call it a cover-your-butt mentality that has served Intel well. "The Pentium IV is going to be huge, but it will take time," Edelstone said. "A lot of naysayers will say, 'Why do we need it?' But Intel is the master of driving transitions." Once Intel gets the P4s cranking on the newer, enhanced 0.18 micron process, hold on to your hats. "The cost levers on 0.18 and the flip chip packaging are extraordinary. The cost structure gets so much better, driving gross margins," Edelstone explained of two new Intel breakthroughs in manufacturing techniques, backing up Niles' predictions of rosy returns for the chip giant. (Morgan Stanley hasn't done any recent underwriting for Intel.)