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

To: kane who wrote (10100)	2/15/1999 11:51:00 PM
From: Xianming Liu	Read Replies (1) \| Respond to of 11555

Kane: I am really impressed by your trust that IDTI will make significant amount of money from Winchip line. However, the chance that IDTI will make any significant amount of money in Winchip in next 1-2 years is very small. First, according IDTI's currently plan, the 400-600 Mhz Winchip will not be out until the second half of 2000. By the time IDT comes out with chip (assuming IDTI does it successfully), the 400 Mhz chip will be really low-end CPU. Currently, the retail price for 400 Mhz, 333 Mhz, and 300A Mhz Celeron are about $142, $70, and $57 each (You can check the CPU price at pricewatch.com). In next 5-6 quarters, the 400 Mhz Celeron will probably drop below $50. I know AMD has to sell its own CPUs at 25% discount to the comparable Intel CPUs. IDTI will be very lucky if it can sell the 400 Mhz at $40 each in the second half of 2000. Unless IDT gets serval large OEM's (which is difficult with the low-end CPUs), I do not see any significant profit on Winchip after the equipment and labor costs. IDT's last 10-Q indicates that it still has more capacities than it can currently use even after the big write-off in the last 3 Q's. If IDT executes successfully and sells sufficient numbers of 400-600 Mhz, it may help to utilize the capacities. Otherwise, the Winchip maybe another project that turns into a money sucker.

To: kane who wrote (10100)	2/16/1999 1:17:00 PM
From: Rob S.	Read Replies (3) \| Respond to of 11555

The WINChip or "Fusion" memory or other potential high-volume products have been touted as the next thing that will redeem IDT's strategy. IDT has some incredible strengths and worthwhile products and "core competencies". The problem is that they have dissapated their efforts in so many directions - technology for technology's sake. They have failed to put together a world beater effort in any single major product categaory aside from the highly competitive microcontroller marketplace. IDT has some great specialty memories and parts targeted towards communication/networking industries but they have failed to live up to the commitment of a "build your own" expenditure on facilities. No saving product strategy has come about because, IMO, they have taken a half-assed approach and grossly underestimated what it would take to become competitive. Having a good design is a very fleeting advantage in the uP wars. Profitable one quarter and land fill the next. Several quarters back we naively questioned whether Intel would file suit against IDT because of their x86 efforts. IDT felt confident that they wouldn't - both because of history and patent position but also because they thought they were still too small for Intel to be threatened by them. IDT certainly lived up to that - maybe they want to remain small while the directors and management continue to draw their six figure salaries and stock options - who needs success?