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Technology Stocks : Altera -- Ignore unavailable to you. Want to Upgrade?

To: Daniel Kahn who wrote (1622)	3/21/1998 12:48:00 PM
From: Skybolt	Respond to of 2389

I won't pretend to have an expert opinion, but I am an electronics designer and FPGA user, so here's my 2 cents (maybe) worth. The recent price cuts in Altera and Xilinx FPGAs are at least partially the result of die shrinks that reduce the manufacturing costs, so the margins may be somewhat intact. The reduced prices should in fact increase the market for FPGAs as they get closer in cost to ASICs or discrete logic. FPGAs offer great advantage to the designer over discrete logic, since the logic connections move from PC board artwork into the FPGA where they can be changed without reworking the printed circuit. If FPGAs are a cost-effective alternative, they do reduce risk and shorten design cycles. Altera and XIlinx may see more competition, but they are still the leaders in the technology and the overall market should continue to grow. JMHO

To: Daniel Kahn who wrote (1622)	3/21/1998 3:02:00 PM
From: shane forbes	Respond to of 2389

Daniel: Here's my rough naive take on this. That LU invention and also one from MOT I believe may be long term threats to the business of the PLD guys like ALTR and XLNX. But not yet. I do not think that ALTR will vanish overnight or vanish at all because of these developments. Here are the different facets: (1) Can ALTR make the per gate cost of their PLDs equivalent and eventually lower than gate arrays? The low end gate array business is theirs to take since the big boys like LSI are willing to give this business up since they are moving to system-on-a-chip designs. I agree with Skybolt that as long as ALTR and XLNX can bring down the cost of the chips they have a long term chance. (2) Another concern perhaps a bit closer is the paradigm shift taking place in the networking sector. I think that ALTR's advantage in reprogramming the chips when things change are somewhat moot when standards are set. This means that if standards continue to be established the networking companies may not need the reprogramming features and higher cost of PLDs. Thus they go the system on a chip fancy and cheaper ASIC route. I do not know when this will happen. I know for instance that LSI's networking business has exploded. It is their fastest growing segment I think. And one of the reasons is the networking paradigm shift that their CEO mentioned in the c.call. If true, then since ALTR and XLNX get such a relatively large position of their business from the networking guys then they may be in trouble longer term. (3) Yet another issue is the high-end gate business. The increased gate count requirements means that over the next few years one has to develop with cores to guarantee that complex chips can be develoed faster. The guys like LSI have set up the cores so that their customers can put about 80% or so of standard cores and then build around that 80% their 20% of customized solutions. Again this means that they can do the designs quickly (if the EDA tools are developed) and there still remains an elemnt of customer differentiation. Plus these are much cheaper than higher end PLDs. How will ALTR get into these higher end gate count markets. LSI's average designs are now 400k gates having doubled from 200k designs 12 months ago. Maybe LSI gets to 600-800k average gate count designs by the end of the year. How will ALTR match this? --- Anyway even though the picture may be iffy, I'm not so sure these things will affect these companies near term or even intermediate term. Besides they have the entire low end gate array market to take over near term. The CAGR for PLD is about 30% over the next 5 years. ALTR and XLNX will get a large piece of this. Besides being fabless helps ALTR a lot since there appears that there will be a large amount of capacity coming on line and cheap capacity means cheaper chips. So at least for the next little while they will be alright - as long as they can bring the costs per gate down. I am pretty certain they will. Shane.