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January 21, 1997updated 05 Sep 2016 1:07pm

APPLE, OTHER CUSTOMERS LET VLSI DOWN

By CBR Staff Writer

Underlining the extent to which Intel Corp has to be valued these days as a monopoly rather than as a semiconductor manufacturer, there is no joy from the company’s recently divorced partner VLSI Technology Inc (the two broke up a joint venture on low power consumption chips and chip sets for portable computers last year). The San Jose company’s shares tanked mightily late Friday, losing over 25% of their value, after the company projected that revenues in the 1997 first quarter would be equal to or below the fourth quarter of 1996. The news followed announcement of a loss for the fourth quarter of $63.6m on flat sales of $183.6m. In the 1996 first quarter, VLSI did $3.2m or 7 cents a share, on sales of $167.7m. Analysts reckon that the chipmaker is suffering in three of its four business areas, with computing suffering from the manifest and manifold woes at major customer Apple Computer Inc. Its digital entertainment sector is seen as facing stiff competition from SGS-Thomson Microelectronics NV, while its Compass software unit is also in pain. The one bright spot is the wireless communications chip business, which continues to benefit from the insatiable demand around the world for cellular telephones and service. But the company is at an awkward and vulnerable size.

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