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To: Pam who wrote (27456)	2/15/2005 1:59:15 PM
From: Sam	Read Replies (1) \| Respond to of 60323

Intel, AMD To Face NOR Flash Revenue Risks 02.15.05, 1:21 PM ET Credit Suisse First Boston said Intel (nasdaq: INTC - news - people ) and rival Advanced Micro Devices (nyse: AMD - news - people ) may face revenue risks as NOR flash memory is rapidly phased out of the design of mobile phone handsets. NOR memory chips store the software that runs the phone. "We believe NOR Flash memory is rapidly being designed out of handsets and will be in less than 15% of new handset architectures by 2007, from nearly 100% today," CSFB said. "While we have been suggesting this trend was a possibility for over a year now, our checks this week at 3GSM in Cannes, France, widely confirm our suspicions." NOR memory is being replaced by NAND flash memory, CSFB said, "which now has good enough performance to handle code storage and is also capable of handling all the data storage associated with multi-function mobile phones." The research firm maintained an "underperform" rating and $22 price target for Intel. "The two largest players in the $8.8 billion NOR Flash memory market are Intel (26%) and AMD (27%)," CSFB said. "Wireless handsets represent the largest market for NOR memory (60%) and an even larger portion of Intel's and AMD's business. AMD is slightly better positioned as it has developed a form of NOR memory that functions like NAND memory and is slated to ramp in 2006. That said, it represents a larger percentage of AMD's business (47% of 2004 revenue vs. Intel at 7%)." Besides the obvious impact of losing NOR flash business, the research house said both Intel and AMD produce NOR memory at facilities no longer used to manufacture processors, which could lead to further negative implications. "Using this type of "left over" capacity gives Intel and AMD a profit-tail to their manufacturing investment. If AMD and Intel lose that capability, their return on the manufacturing investment will inevitably decline if they can't find another product to leverage their processor manufacturing investment." In addition, CSFB noted that despite the trend to NAND for handsets, "pure-play" suppliers will not have sustainable benefits due to growing competition from DRAM suppliers such as Samsung and Micron Technology (nyse: MU - news - people ). forbes.com