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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Ibexx who wrote (47671)	2/12/1998 1:10:00 AM
From: Paul Engel	Read Replies (1) \| Respond to of 186894

Ibexx & Intel Investors - Intel's i740 Graphics Chip There is a lot of hoopla concerning this chip - most likely due to tomorrow's introduction. There are some things that we should think about if this chip becomes a "success". With Intel set to ship 80+ million CPUs this year, it is conceivable that the i740 may get a 5% hit rate - or 4,000,000 chips. Bear in mind that this is 25% more chips than ALL the K6's that AMD shipped in all of 1997! If Intel is successful in making this chip a "standard" and it reaches a 15% or 20% "hit rate" (per cent of total CPU sales) by next year, that represents 15,000,000 or 20,000,000 i740's for 1999 - assuming Intel's x86 CPUs increase to 100,000,000 in 1999. That could easily add $500 to $700 Million to Intel's top line. This "rosy scenario" will have a major impact on Intel's wafer fab utilization. These 15 or 20 million graphics chips could easliy consume an existing wafer fab, running an older 0.35 micron process. Obviously, relaying this out on a 0.25 micron process will increase the fab capacity - with a 35% or more die size reduction, and pay for the additional 0.25 micron equipment. Note - Intel will be combining the i740 with the 440BX - most likely on the 0.25 micron process - to add yet another "component" to address the "low end" of the PC spectrum. Another wildcard will be the i740-version for notebook computers, supposedly being designed by Chips & Technology, now part of Intel. If Intel builds this in-house, this may account for several hundreds of thousands additional graphics chips that need to be fabricated in Intel fabs. The net result is to put another burden on Intel's already large wafer fab manufacturing capability. If the i740 is successful, either the DEC fab has to come up in a hurry - and the Feds haven't even approved this yet - or the Texas fab will have to be re-started. The payback for a success in the graphics chip area may be a requirement to expand capacity. The good news is that fab equipment may be more readily available with the Japanese and Koreans putting their fab expansions on the back of the back burner. I think Barry Watzman brought this up earlier today - Intel will expand its dominance and, representing the U.S., increase our competitive position vis-a-vis the Japanese and Koreans. Paul