Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Microcap & Penny Stocks : INCE - Intercell info??? -- Ignore unavailable to you. Want to Upgrade?

To: Jamey who wrote (2500)	1/12/1998 3:15:00 AM
From: Bill Pearson	Read Replies (1) \| Respond to of 3358

Juli, and Jim, have posed questions (and shared their concerns) on this board regarding the potential negative effect the recently depressed prices (in the last 18-24 months) of memory chips might have on Sigma 7's ability to prosper in the business they have chosen to compete in. One of Juli's posts asked me what I thought about this issue and I suggested she go directly to Gil for a far better answer than I could ever give. She did, and below is the discourse between Juli and Gil. With Juli's prior approval, and at Gil's request, I am posting a letter from Juli to Gil Olachea (see far bottom of this post), and Gil Olachea's response to Juli (with a copy to me). I am pleased that 1) Gil knows his stuff, and 2) is willing to respond to questions concerning Sigma's business, and the memory market in general. Bill Pearson (Gil's response to Juli's letter) Hello, JSPENCE. Well, since I was given a password to utilize for Silicon Investor it was at the indulgence of another INCE investor (who is signed-up with SI). Therefore, you have the honor and responsibility of posting it on the Website. Following is a capsulized response...this is an ongoing dialogue with present INCE investors and future investors in Sigma-7 or INCE. The memory market has MANY aspects to it akin the facets of a diamond. Yes, 30 & 72 pin SIMM memory modules were selling at the low end...up 'till a week ago. Module prices are increasing daily 5-8%. A 32 Meg DRAM memory module sells today (1/9/98) for about $21.50 in the distributor spot market. Just prior to Christmas the same item sold for about $16.50! Raw memory DRAM chips are increasing in price, too. Prior to Christmas a 4X4M was $1.90 in the spot market (8 chips are required for a 32 Meg module). Today,(1/9/98) the same part claims $2.40! SDRAM is at $3.05 and was sold at $2.10 prior to Christmas. As I had projected in October '97 (and my industry research colleagues aligned, too) memory demand would increase at the onset of the new year. Supply will be short due to many 'players' exiting the fab side of the business and focusing on either more profitable ASICs, chip sets, telecomm or higher density memory configurations. Yes, it has been a challenge to raise the seed capital for a proper launching. We have the vehicle, roadmap and destination...just require the 'fuel'. Todate we have been sustaining our operation by buying DRAM at favorable levels and selling modules at competitive rates. We are modifying our processes and equipment for DIMMs using TSOP SDRAM. The market is ripe for this configuration and profitability is much more favorable. As you have surmised by now, Sigma-7 manufactures the modules (a fab is a billion dollar burden and INCE wouldn't be listed in NASDAQ's BB). That is our core business. My vision is to create a foundation for many other "dovetailing" businesses which will complement or be a derivative to the existing core. Since you were in the PC market sales end, you are aware that otherboards came outfitted with only SIMM sockets. Presently, motherboards are being manufactured with both SIMM & DIMM sockets. The 'daughter' cards with Klamath, Merced, et al class processors will have core memory only. System memory support will still be required irrespective of the operating system (OS) platform. Hence, a continued bright future for the memory module market. I'll add this, the PC market is rapidly moving to portability (ie laptops), accesibility (ie internet) and connectivity (ie telecomm). This means memory module demand/market will shift, too. It will require flexible substrates, lighter weight, lower voltage, denser structures and faster operational frequency response. This is another Sigma focus, amoung others, to harvest profitable business(s). Present customer base are distributors...they are typically unloyal and shop price ONLY. We are posturing to serve a mix of VAR/VAD (value-added retail/distributor) and OEM (retail) in the future when the timing is right and it is appropriate. A side comment on Micron...there are better memory suppliers in the world with a better product! 1998 will be a year of restructure and building the business. I clearly see a very good year for us. Thank you for the questions and opportunity to respond. I'll also thank you in advance for posting the above in SI. I remain... Sincerely, Gil Olachea Sigma-7 President (Juli's original email to Gil Olachea that prompted the above response) [Mr. Olachea, I have a large investment in INCE which I have accumulated over the past 30 months. I have been impressed by what I have heard through Silicon Investor regarding the new management. I do have serious concerns about Sigma's ability to raise money from investors and to be profitable given the terrible condition of the memory world right now. Does Sigma manufacture the memory or simply package it as does Kingston and others? If in fact Sigma manufactures, how can you compete with the Micron's of the world? How would you fund the move to 300mm and .25 and later .18 micron chips. If you only package, it may be easier, but still extremely competitive. Could you give an example of your customers? You seem to be playing in the high end with dimm and sdram and yes that market with grow tremendously with more Windows NT servers which require much more memory and later with Merced. I just wonder how you will survive until then. I just retired from 15 years in computer sales to give you a little insight into my background. Please respond on the SI thread so all can read. Thank you]

To: Jamey who wrote (2500)	1/12/1998 3:20:00 AM
From: Bill Pearson	Respond to of 3358

Another view, for what it is worth......I'm not taking sides on where the market for memory chips is going to go....that is neither here nor there when it comes to Sigma making money, as long as they turn their finished goods inventory properly (manage their customer relationships), and they buy right (i.e. not too much at one time, if the market is declining, and as much as they can at one time if the market is rising). Bill NEW YORK, Jan 8 (Reuters) - Shares of memory chip maker Micron Technology Inc jumped on Thursday on higher spot prices of computer memory chips and on rumors of chip production constraints in South Korea that could curb supply. "Prices for 16 megabit chips in certain configurations have gone up 25 to 30 percent in the past two days," said Michael Gumport, an analyst at Lehman Brothers. "There are rumors Korean companies are having trouble paying for packaging and that is causing delays in shipments. Whether or not this is true, the fact is DRAM prices have gone up." Shares of Micron rose two to 28-3/8. "We have seen a little bit of an uptick in the spot market in the last day or so and I believe that is the reason Micron has moved up," said Mark Edelstone, a Morgan Stanley analyst. There are also rumors that South Korean companies, which produce about 35 percent of the world's dynamic random access memory (DRAM) chips are unable to get the credit necessary to buy epoxy resin used to make the chips, traders said. This would reduce the supply of chips on the market and drive prices higher, they said. Analysts said spot prices were rising, although they were unsure if the increases could be sustained. "If it is just a packaging issue. It will resolve itself...," Gumport said.