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Technology Stocks : IDTI - an IC Play on Growth Markets -- Ignore unavailable to you. Want to Upgrade?

To: Xianming Liu who wrote (7308)	3/10/1998 4:09:00 PM
From: Harold Engstrom	Read Replies (1) \| Respond to of 11555

My projection probably is too optimistic, Xianming. I was looking for roughly $20MM/Q in one year. For 1MM C6 chips/quarter at $80/up. For growth in ATM and switching products. For logic and memory sales growth that will compliment the C6 shipments. For increased MIPS shipments. I had hoped for general growth from this ~$150MM to the $200MM level plus the added $100MM from C6 and CL. But, again, that may be too optimistic. If there really is the capacity crunch that some people are predicting in the next year, then memory could add something more to the bottom line.

To: Xianming Liu who wrote (7308)	3/10/1998 4:23:00 PM
From: Rob S.	Read Replies (1) \| Respond to of 11555

I agree that $300 mil per quarter will be very tough. IDTI could approach that with new fab agreements and new OEM agreements, etc. etc. but not based on the current scenario. They hope to achieve a production rate of around 750,000 to 1 mil parts per quarter (stated as a 3-4 million parts per year run rate) by early next year after spending about $225 million on additional fab lines at the Oregon facility. I think IDTI will not get $80 blended ASP but closer to the current level of $60. You will see increased errosion of C6 pricing as sales build with the C6+ latter this year. Maybe IDTI will drop production of the C6 altogether by the end of the year - that would make sense if they can sell all the C6+ they can produce. But there is no certainty of that; IDTI will have a superior position on the C6 for low-end markets but will be more closely head-to-head against AMD, Cyrix and Intel on the C6+. Unknowns are how well the C6+ is suited for the portable market and the viability of locking up a major OEM for them - that could shift the equation toward higher ASPs. If I were to peg a number at this point, I'd put it at 750k to 1 mil parts at $70 ASP = $50 mil to $70 mil/quarter for the C6 and, say $160 mil for everything else; $210-$230 mil. That's 45% to 60% growth over DEC '97 sales but not close to $300 mil which would need more than a doubling of sales. It could happen with a major foundry agreement but is unlikely given IDTI's manufacturing constraints.