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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: etchmeister who wrote (11764)	10/19/2004 3:20:01 PM
From: Proud_Infidel	Read Replies (1) \| Respond to of 25522

Memory Bulletin: Intel, AMD see mixed Q3 results in flash market NOR flash price competition intensifies in the fourth quarter By Nam Hyung Kim Silicon Strategies 10/18/2004, 9:21 PM ET The following column was provided by Nam Hyung Kim, a principal analyst with iSuppli Corp., an El Segundo, California-based market research firm. It was a tale of two flash-memory suppliers in the third quarter for Intel Corp. and Spansion, with Intel enjoying a robust rise in revenue, while Spansion suffered a decline in sales. Spansion, formed from a joint venture between Advanced Micro Devices Inc. (AMD) and Fujitsu Ltd., saw its revenue decline by 20 percent in the third quarter compared to the second. The company lost share in the NOR flash market and was bumped from the number-one supplier position by its main rival, Intel. Spansion's troubles can be traced back to the mobile-phone market, which is the main application for NOR flash. Inventory of finished mobile phones swelled to higher-than-expected levels in the third quarter in China and in the Asia/ Pacific region as a whole. This excess inventory depressed the production of new phones, thus cutting NOR-flash demand from Chinese wireless handset makers. Spansion supplies NOR flash to most of the Chinese mobile-phone makers, so the inventory overhang cut into the company's sales in the third quarter. However, Spansion is taking steps to regain its momentum. During AMD's quarterly financial conference call last week, the company said Spansion would increase production of its MirrorBit Multilevel Cell (MLC) flash products, which reduce cost and board space by packing two or more bits into each memory cell. Another Spansion cost-reduction effort, its migration to the 0.11-micron process technology, also is progressing smoothly. This could help Spansion recover its sales to the cost-conscious Chinese mobile-phone makers. In contrast to Spansion's decline, Intel's flash-memory sales grew by 9 percent in the third quarter compared to the second. Intel's sales surge mainly was due to the company's aggressive sales efforts and price-cutting for its high- density flash. The company also boosted shipments of low-density parts to other applications outside of mobile phones. Based on a preliminary analysis, Intel's strong performance may have allowed it to reclaim the number-one ranking in NOR flash revenue for the third quarter from Spansion. Spansion in 2003 displaced Intel from its longstanding leadership position in NOR flash. However, Intel's aggressive pricing strategy during the third quarter squeezed the company's flash-memory operating margin compared to Spansion. The competition between Intel and Spansion is taking a toll on the NOR-flash-memory market. Even as both companies aggressively expand their flash-memory production capacity, they are accumulating inventories of NOR parts. With production and stockpiles on the rise, spot-market prices for NOR flash memory have been falling for more than two months. Meanwhile, other suppliers are entering the market or expanding their efforts in NOR flash, turning up the competitive heat on Intel and Spansion. Samsung Electronics Ltd., the leader in the overall flash market, now is offering NOR flash for mobile phones, expanding on its existing business in NAND parts. STMicroelectronics is ramping up production of its 256Mbit MLC NOR flash part in order to catch up with Intel and Spansion in the high-density segment of the market. Because of these factors, iSuppli expects that price competition will intensify during the fourth quarter. Interestingly, the relative flash performances in the third quarter by Intel and AMD/Spansion were mirror opposites of their results in the PC microprocessor arena. AMD outgrew Intel in the microprocessor business and took share away from its larger rival.