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To: John Koligman who wrote (6409)	2/15/2003 9:23:28 PM
From: Cary Salsberg	Read Replies (2) \| Respond to of 6531

RE: "Such firms don't have much in the way of their own chip factories..." The subject is $2B or $3B, 0.13u or 0.09u fabs. The firms either have them or don't. Most listed are fabless. They don't. "Much in the way" is just a garbage phrase here. I believe that "garbage" is the operative word for this article. RE: "Taiwan's merchant mills, such as Taiwan Semiconductor Manufacturing and United Microelectronics, can't yet offer those little chipmakers a comparable technology." This is the crux of the problem. The "technology" is created by the semi-equip companies, not INTC, IBM, and TXN. Process technology, the effective use of the tools provided by the semi-equips resides at INTC, IBM, TXN and the foundries. INTC and IBM have leads in some areas of process technology, but ALTR and XLNX, stocks not mentioned and a big part of my portfolio (I don't own any listed in the article), are moving ahead very rapidly with production at 0.13u, 300mm, at TSMC and UMC. RE: "If small firms go to IBM for production, says Guana, they'll still lack the economies enjoyed by Intel with its huge PC chip volumes, or Texas Instruments with its cellular handset volumes." I have read that IBM is sharing process technology with UMC. It is not evident to me why "huge PC chip volumes" provide "economies" for comm ICs that are not available at the foundries. The PC and comm ICs are on different wafers, use different mask sets, and are fabricated differently. I think it is not good for any company to have INTC enter its markets. I just believe that the jury is out on the relative merits of fabs vs fabless and I think the quality of the engineering team is more important than the size of the company's capital expenditure.