Intel Corp (INTC)

[mike306oh]

Re: Why Investors Are Dumping Chips

Nice article! Indeed (and for good reason) educated investors have started, or will sell their chip related stocks in the near future. Since Olga's article didn't answer the main question: "Why Investors Are Dumping Chips," below is my two penny thought on the subject you proposed. And I'm well aware some people will jump at me (again).

A potential good explanation is the fact that chips cost more and more to be made. In a quest for higher speed (more transistors/chip), as you know for instance Intel is going into 65 nm (from 90 nm today), it will test 45 nm next year, and 32 nm two years from now. To do this, more and more very sophisticated tools will be needed, that cost more and more, and have less and less useful life.

The electronic chip is near the end of its useful life. Going further down with the critical dimension below 32 nm will be cost prohibitive. On the other hand, fast speed Internet, telecom and a host of other high speed applications are pushing for speeds that electronic chips won't be able to supply at any production costs.

What then? In my opinion silicon-based all optical integrated chips (that will run up to 1 Million times faster than their electronic counterparts) are the answer. Intel already took a good step last month. And I trust, as a result, silicon photonics in general, and silicon based integrated optics in particular are going to be here much sooner than many people may think, or wish to admit. When that happens, a new generation of chip enthusiast investors will jump in.

Mike