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

To: Barry who wrote (11980)	4/29/1998 12:33:00 AM
From: shane forbes	Read Replies (2) \| Respond to of 25814

Barry: Re: However, won't the drive toward 250nm and below linewidth more than make up for the slowdown in the move from 200mm to 300mm wafers? I think Motorola and Siemens said their shrinking of linewidth from 350nm to 250nm on 200mm wafers will as a result yield twice as many chips per wafer. This means an extension of too much capacity for the chip world. Though I don't know the specifics this is precisely why the semi-equips will be down in the dumps for awhile. The design shrinks and the doubled capacity and the lowered demand in the world meant oops for the commodity semis and bigger oops for the semi-equips. AMAT's hope for the 300 mm push did not materialize and last time I checked pilot lines have continued to be pushed out. We have discussed the effect of the design shrinks on LSI before on here. That doubling of capacity seems to fly in the face of all things evil that are being said about the demand side for chips. However my feeling is that this primarily is a problem only in markets with diminished demand or in markets where demand that has slowed. DRAM for instance is getting pulverized partly because of MU shrinks. LSI is lucky in that once they win the contract you either buy from them or no one else. Therefore the essential thing with LSI is to understand how good their win-rate is and how the end markets will be growing. LSI's consumer chip market is growing somewhere in the 35-40% area. DVD and others are well into the 50+% area. Std. cell revenues are forecast to grow at 30%+ and LSI is doing better than that. So they ought to be able to absorb the design shrink problem and we hope they do because it likely will be big trouble if they do not do a good job forecasting demand and bringing supply on line to meet it. The other benefit with LSI's chips and the markets they are going into is that these design shrinks turn into cost advantages for their consumer customers (& I guess the GSM and CDMA chips now) and performance and power advantages to most everyone else. Not ALL bad therefore - I actually would argue that LSI's process technology is partly responsible for their good GM and may even be responsible for what appears to be very good order win momentum for them. INTC made a history of crushing competition by doing a good job here - I think LSI understands this. Get smaller now or die. Shane.