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Technology Stocks : S3 (A LONGER TERM PERSPECTIVE) -- Ignore unavailable to you. Want to Upgrade?

To: Ken Muller who wrote (7050)	10/30/1997 2:45:00 PM
From: SidStock	Read Replies (1) \| Respond to of 14577

Ken, RE: The fab earnings are the key component here, IMO. Here I will help you unlock the fab earnings.... Sid TSMC profits slip a bit with foundry price erosion By Mark LaPedus HSINCHU, Taiwan -- Citing the ongoing price erosion in the IC wafer foundry business, Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) reported a net profit of $148.5 million for the third quarter, ended Sept. 30, a 2.5% drop compared to the same period last year. But, sales at Hsinchu-based TSMC jumped 18% to a record $378.6 million in the quarter, compared to last year. For the first nine months of this year, TSMC's net profit fell 30% from the prior year to $362.5 million. Sales for the period were $925.6 million, an 8.3% drop compared to the third quarter last year. A TSMC spokesman said demand remains strong for its foundry services despite falling margins. TSMC's archrival in the foundry business, Hsinchu-based United Microelectronics Corp. (UMC), reported a net profit of $200.6 million in the the first nine months of this year, a 2.8% drop compared to the same period in 1996. Sales were $595.6 million for the first nine months, an 11.6% increase over last year. A service of Semiconductor Business News, CMP Media Inc. Story posted at 11 a.m. EST/8 a.m. PST, 10/30/97

To: Ken Muller who wrote (7050)	10/30/1997 2:53:00 PM
From: Bill Lin	Read Replies (2) \| Respond to of 14577

Ken, i think that 0.35 um process will be the bread and butter for the next 12 months. however, as the main stream process it will be under extreme price pressure in the latter 6 months of '98, as production efficiencies of 0.30um (micron), and 0.28um (NEC) SDRAM processes yield healthy profit margins (on 16Mb chips no less), on reduced ASPs. this will force a transition to the 0.25um process and more capital investment. MPU producers (INTC, LSI, IDTI, AMD, TXN) are going towards 0.25um and smaller very aggressively because their gate counts are about 1 - 1.5 magnitude larger than most others. but all that is kinda irrelevant. We are concerned with the Merchant Fab mfg market with USC. With CHPS production moving into INTC fab plants, capacity should open up in the fabless market. LSI and IDTI are running WAY under capacity in their brand spanking new plants in Oregan. USC is looking to expand 3 fold in Taiwan? Capacity sure is growing, huh? yes, i'm looking out 6-12 months, and making tons of assumptions, but i do see some cause for pricing concerns for USC in late '98. My personal upgrade cycle is 3 years. I will be buying 1 P2 system and 2 motherboard upgrade in the next 12 months. i have to upgrade 2 graphics boards also. Maybe $500 worth of memory, and another Jaz drive. Then its another 3 years. So from my own perspective, there is about 18-24 months of corporate upgrade cycle left, then the next PC drought. there is a lack in the demand side of the equation. Some say the PC market is missing "the killer app". S3's 3D software investment is a start. Dragon Systems (Mass - private company) speech recognition system should be a main component of the next operating system. NT is already obsolete. Its a reprise of everything we have now, except slightly better. Nothing exceptional. oops - digressing. anyway if PC demands fall off, then the whole tech sector is dead. Ken, by now you know i am a worry wart. for the most part my worries are groundless. but maybe once in 20 my worries bear fruit. to answer your question about value in chip stocks: i can't. Their Price to Book are pretty huge, way above 1. maybe alsc, idti, lsi, siii. all the crappy stocks. also look into the ddx sector (wdc, apm, rdrt, seg, kmag) they got whacked hard this month. and they are still making money. and don't knock the auto industry. Chrysler is making $4 this year, paying $1.60 dividend, trading at $35/36 today, projected at $4.50/$5 next year. AND they are buying back their stock. when will S3 make $4/year? (yeah, i wouldn't buy a chrysler car, but minivans and grand cherokees are ok) BL