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

To: shane forbes who wrote (12297)	5/12/1998 9:39:00 AM
From: Grand Poobah	Read Replies (1) \| Respond to of 25814

Here I'm gone for a couple days and not only does LSI drop but Shane's off to NY to tell the big bad Wilf what big teeth he has. The things you miss when you're not paying attention. Shane, re: Check these questions out: (1) Aren't you concerned that LSI's success will draw large Japanese, Korean and US companies with greater resources to apply? Toshiba? Hitachi? Samsung? others? Yes, I'm concerned. Especially with DRAM turning less profitable and easy credit for profitless product lines becoming harder to obtain in Asia, I can see these giants turning to another arena. But it's not all that easy to pick up and move into new markets. I don't consider any of my investments in the semiconductor industry to be more than 3-5 year commitments, and I think it would take that long for someone to become a legitimate threat to LSI if they were starting from scratch. (2) Would you call LSI an ASIC company? Yes. (3) Is the talk about single-chip systems real? Yes, but not for a few years. LSI's got as good a chance as anyone, I think. Do you (or others) know the common link in these questions? No. Is this a trick question? And do you (or others) know the answer to these questions? No, but that doesn't stop me from shooting off at the mouth (or the keyboard). :) And are you (or others) comfortable with the answers to these questions? It doesn't worry me that much about LSI at this point, if that's what you mean. G.P.

To: shane forbes who wrote (12297)	5/13/1998 12:24:00 PM
From: Grand Poobah	Read Replies (1) \| Respond to of 25814

Shane, More thoughts about system-on-a-chip and other larger companies which may want to get involved. I thought this mention from Michael's notes of the shareholder meeting was interesting: He made mention of LSI's reliability for timely implementation. Citing many former DRAM semi's in Asia that tried to reorient to SOC product strategies, some LSI customers were attracted to the cheap prices they were being quoted for asian implementation. He said, "Give them a try". They did, and did not get their products out the door thus missing their "window of opportunity". They have come back to LSI. I am sure that the DRAM makers and others would love to start competing in LSI's ASIC and eventual SOC market. But it's not something you can just pick up and do. You have to hire designers with the right expertise, you have to have the right EDA tools, and you have to optimize your fab processes. If you are going to change from DRAM to ASICs, you also have to change your organizational mindset from a commodity product to application-specific and customer-specific designs. Sure it can be done, and they may have high motivation to do so, but it will take at least a couple years and not all who try it will be successful. Other companies like Intel may have a better chance, but it would not be a simple change for them either. INTC has done pretty well in markets other than microprocessors, but they are markets that require intimate knowledge of the microprocessor (motherboards, core logic) and therefore INTC started out with a big edge. Their move into graphics chips has not been as dominant, and even there they had to make an acquisition. They may eventually become dominant in graphics, too, but it isn't guaranteed, and the competition looks a lot stronger than INTC at this point. So I'm not too worried that they can invade LSI's ASIC markets at will. G.P.