SAN JOSE, Calif. — A price war has broken out in the FPGA arena, according to an analyst.
"Based on our channel checks, we believe Altera is aggressively cutting prices in the high end FPGA (Stratix family) arena, which we believe is causing a weak December quarter for Xilinx," said analyst Satya Chillara of Pacific Growth Equities LLC (San Francisco).
"We now believe, based on our channel checks, that Xilinx is loosing market share to Altera," he said in a report. "Altera is aggressively discounting the prices on their high end FPGA products and we view this as incrementally negative for Xilinx as they enter the December quarter."
Both companies face a hit on the bottom line, but Xilinx is getting the worst of the deal. "This is concerning to us as this is a high margin product family for both companies," he said. "With Xilinx backing off in order to go head on with Altera, we believe this would cause their top line to be weak."
Xilinx, according to the analyst, could guide its quarterly revenue to be flat to plus or minus 2 percent. "In our opinion the impact of this weaker than anticipated demand will likely decrease top and bottom line performance for the remainder of FY:07 as well as for FY:08," he said.
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