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Technology Stocks : Texas Instruments - Good buy now or should we wait? -- Ignore unavailable to you. Want to Upgrade?

To: tbuff who wrote (2303)	12/3/1997 5:04:00 PM
From: robert w fain	Respond to of 6180

Wonder why they picked ADI?--Also wonder if this is a dual sourced item?

To: tbuff who wrote (2303)	12/4/1997 1:12:00 AM
From: Bilow	Read Replies (4) \| Respond to of 6180

Regarding 3COM switching DSP providers: This was what I was warning this thread about regarding DSPs a few months ago. Volume DSPs are always commodity items, because they can be engineered out. The DSP provider cannot make above average profits on them, because a high volume customer can easily afford the engineering costs of replacing the "intellectual property." This means that a company providing DSPs is forced to defend market share by dropping prices to large customers. This is why there is always such a steep price curve versus volume for these sorts of parts - it's to give an incentive for the volume users to not design them out. For really high volumes, the prices end up being reduced to pretty close to the cash cost of production, if productive capacity is available. Given a slow-down in the world economy, you can bet that productive capacity is available. Another thing I should mention is that those who think Korean troubles are going to reduce Korean DRAM production after only 6-12 months from now are apparently unaware of how long a typical fab is kept in operation. Fact is, the Koreans just reduced their variable costs by about 40%, and are now going to flood the market with all kinds of chips for 2 years. This applies to the rest of SEA makers as well. Remember the volume competitor for TI DSPs is actually full custom ASICs, and Taiwan Semiconductor is going to be providing them pretty cheap. Those of you who doubt this are invited to explore the TI web site for what kind of processes TI currently supports. Some of them are ancient, and the same applies to other foundries. Logic costs are partly about speed, but mostly about dollars per gate. The older processes typically provide cheaper gates, especially with pad-limited designs. Designers only use the new processes if they need the speed, or (rarely) need the density. Consequently, failure to construct new fab lines is not going to cause a dearth of chips any time soon, IMO. -- Carl