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Technology Stocks : Rambus (RMBS) - Eagle or Penguin -- Ignore unavailable to you. Want to Upgrade?

To: puborectalis who wrote (17316)	3/12/1999 8:21:00 PM
From: puborectalis	Respond to of 93625

Intel has already invested $500 million in Micron Technology Inc. (Boise, Idaho) and $100 million in South Korea's Samsung Electronics Co. to support the development of Rambus chip designs and back-end testing, two areas that have proved particularly troublesome for DRAM vendors. Those were just a few of the issues that prompted Intel to delay the introduction of its first Rambus-enabled chip set by three months to the third quarter of 1999. Intel has made investment proposals to several DRAM suppliers in Japan, including Toshiba, NEC and Mitsubishi. Industry sources here refer to the investment pool as the Intel Monetary Fund. And just as the International Monetary Fund lends money to recession-plagued countries that follow a strict set of guidelines, Intel is promising a windfall to those companies in Japan that are willing to play by its rules. Indeed, concern about how far Intel may seek to stretch its reach across the Pacific could be behind the lack of agreements with Japanese companies thus far, observers said. "Although Mitsubishi Electric was approached by Intel with regard to possible financing measures for production-related investments, we declined [because we] are able to achieve our current production plan with our present capital-investment levels. No decisions have been made regarding the possibility of entering such arrangements in the future," Koichi Nagasawa, general manager of Mitsubishi Electric's Semiconductor Group, said in a prepared statement. "It can be quite dangerous for a company like Toshiba or NEC to allow Intel to be a shareholder," said Rick Oyama, an analyst with ABN Ambro Securities. "They need the money, but they don't want to give political power to a big U.S. company like Intel." At a recent press conference announcing NEC's plan to restructure in the face of sluggish sales, newly appointed chairman Hajime Sasaki expressed similar concern about the potential strings attached to Intel's overtures. "Accepting an investment offer is not easy going. If they offer us an investment as a matter of course, they expect something in return," he said, without elaborating. Intel is also taking a hard look at LCD supplies. Prices for LCDs plunged last year, with a 15-inch monitor coming down to about $1,000. The drop in price has renewed U.S.-market interest in replacing CRTs at the desktop, a trend that has already caught fire in Japan. If tags continue to shrink, the reasoning goes, LCD monitors will soon be bundled in desktop PCs for U.S. sale, stoking the PC market. The rub is that LCD prices have been on a roller-coaster ride for several years. In the wake of spending cutbacks by LCD suppliers, prices have crept up 10 percent in the past few months. That could damper the effort to jump-start the bundling of LCDs with desktop systems. Antone said Intel has explored making investments in LCD technology and that it has an interest in seeing LCD prices narrow the gap with CRT tags. "If LCDs were to take off in the U.S. on desktops, there's not enough capacity in place to support it. It's something a few of us at Intel are worrying about," he said. Antone expects desktop LCD demand to coalesce once the monitors' prices come down to within 200 percent of prices for comparable CRTs. But some sources said that LCD manufacturers would rather focus on profitability than wage another price war. Asked whether his company would accept an investment offer, a spokesman for leading LCD supplier Sharp Electronics called the prospect unlikely because Sharp already has a five-year production plan in place. "It's not a matter of getting money and expanding capacity. We have to make a long-term profitability plan," he said. Even as Intel dangles investment funds before Japan's financially strapped electronics companies, it is moving to organize a Japanese base for venture capital. "We've centralized [investments] in the U.S., and now we're looking to extend it," Antone said. "The object is the same, but our objective is a little narrower than a straight venture fund." Specifically, Intel is interested in providing seed money to companies that have a hand in Internet software applications, a key driver that Antone called "the common theme worldwide." Japan has embraced the Net but is about two years behind the United States, Antone said. He admitted that Japan's current business climate is not ideal for startups. Few banks are willing to provide loans to small, unknown companies that lack the cachet of a larger corporation to back them up. Yet some observers said Intel's involvement could break new ground. "Japan has never loaned money based on intellectual property or entrepreneurship," noted Scott Foster, an analyst with ING Barings Securities in Tokyo. "They've traditionally done it only based on collateral, like land." Antone said it's important for Intel to establish beachheads in Japan because consumers here often adopt new technology more quickly than in other parts of the world, recession or no recession. The trick, he added, is to determine what will push consumers' buttons. courtesy of cmp media