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  1. Technology
September 25, 1995

MONTGOMERY EXTRA

By CBR Staff Writer

Rallying to the cause of static RAM makers everywhere whose stocks have fallen recently as the shortage of devices has begun to ease up, Integrated Device Technology Inc’s chief executive and president, Leonard Perham, told the Montgomery Securities investment conference, static RAM demand is very strong, adding that his company’s production is sold out until March: but he added that the company was protected from price pressure because its products were high performance and price degradation was occurring at low or entry-level devices; he added that he disagreed with references about supplies becoming available and said a major challenge for the company was capacity; it is building a chip fabrication plant in Oregon and expects revenues to grow 55% year over year and 11% to 14% consecutively between the first and second quarters.

And another company experiencing increasing sales on the back of Windows95 is consumer appliance retailer Circuit City Stores Inc, which experienced a sharp drop of in-store inventory last month due to the launch of the new operating system: chief executive Richard Sharp said stores would be fully stocked by the end of this month; and he was he comfortable with analysts’ fiscal year estimates of $2.02 a share: the company reported earnings of $1.72 a share for the year ended February 28 1995; Circuit City expects to achieve sales of $15,000m by the end of the decade; in fiscal 1995, revenues were $5,600m; it will open 65 stores in the present fiscal year and will replace or upgrade 15 stores, but there is uncertainy about the future of Carmax, the firm’s used-car division and decision on it will be made in 12 to 18 months.

Texas Instruments Inc chief executive Jerry Junkins said the company’s growth will continue at or faster than the market’s growth, of 35 to 40% annually; 73% of its revenues come from semiconductor sales and Junkins said the company is better positioned to take advantage of semiconductor growth than we’ve ever been before, refering to the expansion and diversification of its product line which now includes memory chips, signal processors and Sparc RISC chips, plus chips for large Unix-based workstations and supercomputers, as well as application specific integrated circuits; Digital signal processing is growing faster than any other segment of the semiconductor business, at about 77% a year, he said, adding that the firm’s strategy of adding capacity through joint ventures had lowered the risk in building expensive chip plants, saving billions of dollars.

Despite a variety of pretenders over the years, hard disk drives are still hard to beat in terms of cost and performance and as if to prove the point Komag Inc’s president and chief executive Steve Johnson told the Montgomergy Securities conference that the company maintains its target of a compounded annual growth rate of 42% for unit shipments, but he declined to offer any target for revenue growth; the company produces thin-film platters for hard disk drives and last year reported revenues of $392.4m, predicted to grow to $477.9m in the fiscal year ending in December; Johnson added that the company maintains its target of 35% growth in gross margins for the full year, a figure raised from 30% earlier this year; this year, gross margins stood at 38% in the second quarter.

Seagate Technology Inc, looking to regain the title of the world’s largest disk drive maker with its planned bid for Conner Peripherals Inc, said it will build a third manufacturing centre in Malaysia, bringing the amount of factory space it has under construction to produce heads to 1m square feet world-wide: Pat Bonnie, senior vice-president for recording-head operations, told Dow Jones & Co that the new plant, again in the Malaysian city of Ipoh, will eventually employ several thousand people and is being built sooner than the firm had expected it would need extra capacity; he said business was soaring; the first Ipoh plant began shipping two months ago.

Part of the soaring demand Seagate Te

chnology Inc has seen relates to Microsoft Corp’s Windows95 which is, according to Al Shugart, chairman and chief executive of Seagate, igniting demand for larger drives and fuelling growth of the company’s sales; he said capacity at the low end is now about 400Mb to 500Mb and demand for higher-capacity devices from OEM customers is rising faster than he anticipated; in the quarter ended June 30, 66% of sales were for drives of at least 1Gb and 51% of sales came from drives of at least 2Gb; and he said to expect even higher capacities; We won’t be running out of gas for quite a while; meanwhile, prices continue to decline, in the fourth quarter by an average of 8%, by 11.7% in the preceding quarter.

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Not that we weren’t already aware of the demand for silicon, Norwood, Massachusetts-based Analog Devices Inc came to Montgomery Securities’ conference to say that it is seeing demand accelerate for its products, namely analogue chips and signal processing devices, reports Reuters: president and chief operating officer Jerald Fishman told attendees In 1996 we’ll have the capacity in place to answer the demand, adding that the firm is positioned to boost its growth to 25% a year.

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