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Similar properties characterize the HeatPath line of silicon gels from Raychem Corp.

QBK020A0B1-H_Datasheet PDF

Similar properties characterize the HeatPath line of silicon gels from Raychem Corp.

Analyst Bunting said it is no surprise that startups like SiTera and C-Port are announcing development partners prior to silicon availability, not only to jump-start development programs, but to prove viability in the critical phase through the end of this year. But the partnerships that matter, he said, are the design wins from known OEMs.

— Additional reporting by Rick Merritt and Ron Wilson

QBK020A0B1-H_Datasheet PDF

Capacitor makers posted the most significant improvements, toting up quarterly sales and earnings figures that exceeded even the most optimistic analyst's expectations.

For its first fiscal quarter, AVX Corp. blew away Wall Street's earnings forecast. The Myrtle Beach, S.C.-based company's net income of $17.5 million, or 20 cents per share, was flat with the year-ago period, but 66% greater than the 12-cents-per-share average estimate of analysts polled by First Call Corp., Boston.

QBK020A0B1-H_Datasheet PDF

Meanwhile, Kemet Corp.'s net income of $4.7 million, or 12 cents per share, was triple the $1.5 million, or 4 cents per share, the Greenville, S.C.-based company posted in the same period last year. Wall Street had expected Kemet to earn 9 cents per share.

QBK020A0B1-H_Datasheet PDF

AVX and Kemet's financial results were lifted by changing trends in Asia, especially Japan, and both companies have ample room for growth, analysts noted.

Operating margins are currently only about one-third of historical averages for AVX and Kemet,” said Jerry Labowitz, an analyst at Merrill Lynch & Co. Inc., New York, in a recent report. Even more important, demand for electronic equipment is improving in Japan, and this is absorbing some of the excess capacity of the Japanese passive-component companies, which is easing the pressure on capacitor prices for the first time in quite a while.”

Other OEMs are fast divesting plants, and that pace is expected to accelerate in the second half. The goal is to toss non-core operations overboard and farm out such services to contract manufacturers. Leading the charge is Nortel Networks Corp., which last week announced some plant divestitures and plans to outsource several manufacturing operations.

One of the major challenges OEMs face in the second half and into 2000 will be offloading facilities being divested and getting contract manufacturers to buy these plants. As more OEMs outsource, more plants are becoming available, stretching the capabilities of CEMs to absorb them, said analyst Michael Morris of Salomon Smith Barney.

The opportunities for OEM [plant] acquisitions are greater than they've ever been, and the OEMs are competing for bandwidth among the leading contract manufacturers,” Morris said. There may be undertakings by the OEMs to make available groups of facilities, some of which may be high margin and some which may not be quite so high margin, and offer these in a basket to contract manufacturers.”

Federal encryption authorities today acknowledged that virtually unbreakable code systems are available from foreign sources.

In fact, the National Institute of Standards and Technology (NIST) selected two European proposals as finalists for the U.S. government's next-generation encryption standard.


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