Investec Announces Investment Opinion: Investec Lead Semiconductor Analyst Eric Ross Initiates Coverage of the Semiconductor Industry

Business Wire, June 24, 2002

Business Editors

NOTE TO EDITORS: The following is an investment opinion issued

by Investec Inc.

NEW YORK--(BUSINESS WIRE)--June 24, 2002

Investec Lead Semiconductor Analyst Eric Ross Initiates Coverage of

the Semiconductor Industry

Sees Bottom of Semiconductor Cycle and Beginning of Major Upturn

Initiating Coverage on Intel, Micron Technology, Zoran, ESS

Technology, nVIDIA, Advanced Micro Devices, SanDisk, Analog Devices,

Altera, Atmel, Linear Technology, LSI Logic, Maxim Integrated Products, Microchip Technology STMicroelectronics, Texas Instruments,

and Xilinx

Eric Ross, Director of Electronics Research and Lead Semiconductor Analyst at Investec Inc., has initiated coverage of the Semiconductor Industry.

"We believe this is an opportune time for investors to play the major end-market drivers of semiconductor growth, as we believe we are at the bottom of the cycle and likely at the beginning of a major upcycle," Ross said. "We believe PCs and consumer electronics will be the two major drivers for the semiconductor industry over the next 18 months."

"Our top picks in the semiconductor industry based on our end-market focused themes are Intel Corporation (INTC - STRONG BUY) and Micron Technology, Inc. (MU - STRONG BUY) for PCs, and Zoran Corporation (ZRAN - STRONG BUY) and ESS Technology, Inc. (ESST - STRONG BUY) for DVD players. True value investors may wish to look at nVIDIA Corporation (NVDA - BUY), Advanced Micro Devices, Inc. (AMD - BUY) and SanDisk Corporation (SNDK - BUY)," he said.

Intel Corporation (INTC - STRONG BUY). We initiate Intel with a STRONG BUY rating and a 12-month price target of $35. This is 39x our CY03 EPS estimate of $0.90. We pick Intel as the leading beneficiary of a potential PC resurgence and the resulting strength in microprocessors due to its roughly 80% unit share. We believe PC unit sales are poised to improve in 4Q02 and more strongly in 2003 driven by consumer seasonality and corporate reinvestment.

Micron Technology, Inc. (MU - STRONG BUY). We initiate Micron Technologies with a STRONG BUY rating and a 12-month price target of $35, or 13x our CY03 EPS estimate of $2.60. Micron and DRAM demand will likely be driven primarily by increasing memory per box, driven by upgrades, incentives, and increasing Windows XP computers. Vastly increasing memory per box, combined with improved spot pricing and its low cost base, makes Micron our top pick for the PC channel.

Zoran Corporation (ZRAN - STRONG BUY). We initiate ZRAN Corporation with a STRONG BUY rating and a 12-month price target of $35. This is 32x our CY03 EPS estimate of $1.10. We believe the stock is under valued given its growth rate. Zoran is the technology leader in DVD players with the best OEM relationships.

ESS Technology, Inc. (ESST - STRONG BUY). We initiate ESS Technology with a STRONG BUY rating and a 12-month price target of $30. This is 19x our CY03 EPS estimate of $1.60. We believe the stock is under valued given its growth rate -- ESST is trading at 8x our CY03 net of cash EPS with a revenue growth rate of 15% in 2003 for a P/E to sales of 0.5x. The end-market driver is the DVD player market wherein ESST derives 53% of its sales from DVD players. We believe this market will grow 61% year over year from 31m units in CY01 to 50m in CY02.

nVIDIA Corporation (NVDA - BUY). We initiate nVIDIA with a BUY rating and a 12-month price target of $30. This is 13x our CY03 EPS estimate of $2.30. nVIDIA will continue to be the leading provider of high-performance graphics processors with its cascading tier of GeForce processor lines. We believe nVIDIA's strategy of moving into the high performance consumer chipset market with nForce can potentially open up approximately a $1.0 billion or greater market with similar profitability to the corporate average.

Advanced Micro Devices, Inc. (AMD - BUY). We initiate Advanced Micro Devices with a BUY rating and a 12-month price target of $11. This is 73x our CY03 EPS estimate of $0.15. On a price to sales basis, AMD is undervalued compared to its peers. AMD trades at 0.7x price to sales compared to an average of 1.9x for its peers. AMD should be considered for deep value players, as we believe the leverage on its model may meaningfully increase earnings upon a small increase in its revenue run rate.

SanDisk Corporation (SNDK - BUY). We initiate coverage of SanDisk with a BUY rating and a 12-month price target of $13. This target is 39x our CY03 EPS estimate of $0.33. SanDisk is positioned well competitively, and it is likely to maintain share. By leveraging its rich patent base and multiple flash storage platforms, it has become the premier supplier of the flash storage market and its share leader.

Investec also initiated coverage of Analog Devices, Inc. (ADI) with a BUY recommendation and has initiated coverage of Altera Corporation (ALTR), Atmel Corporation (ATML), Linear Technology Corporation (LLTC), LSI Logic Corporation (LSI), Maxim Integrated Products, Inc. (MXIM), Microchip Technology, Inc. (MCHP), STMicroelectronics N.V. (STM), Texas Instruments Incorporated (TXN), and Xilinx, Inc. (XLNX) with HOLD ratings.