Sale of Juarez, Mexico manufacturing facility one step in move to reduce expenses and expand into new markets
SAN JOSE, Calif.- November 15, 2000 -3dfx Interactive® Inc. (NASDAQ:TDFX) reiterated today information that was disclosed in a recent Form 8-K filing regarding its current business strategy. The company, which has held the number one retail graphics position since December 1998, plans to maintain its dominant retail position, expand into the OEM PC business, and to license its core graphics technology, code-named Mosaic, into non-PC markets.
A key element in the company's strategy to expand its business is to reduce expenses where possible in order to become more competitive in all of its key markets. The company has therefore decided to outsource its board manufacturing to third party manufacturers and to sell its Juarez, Mexico facility. This decision will allow the company to focus on developing high performance graphics technology; enjoy greater flexibility in running its business; and reduce costs. This decision will also afford the company greater opportunities within the OEM business, by providing OEMs with qualified board manufacturing sources for 3dfx technology at a competitive price.
"As we expand into new markets, 3dfx Interactive must focus on its core competency - developing leading-edge graphics technology," said Alex Leupp, president and chief executive officer. "The sale of our Juarez facility will allow us to continue selling add-in-board products to the retail channel, with significantly reduced fixed costs. We also plan to pursue additional retail partnerships to ensure we get our high-performance graphics technology in the hands of our loyal customers in a way that makes the most sense for our shareholders as well."
Another critical element in the company's plans to expand its business is to use its high-performance graphics chips in addition to its Mosaic 3D graphics cores to gain inroads into the OEM PC market. The company plans to sell its graphics chips to third party board manufacturers as well as directly to OEM PC manufacturers for incorporation into mainstream and high-end PCs.
3dfx Interactive also plans to enter into strategic relationships with integrated chip set manufacturers, through license agreements and other arrangements, to bring its highly efficient, high-performance Mosaic graphics technology to desktop and mobile PCs. The Mosaic technology features 50% better performance than today's graphics products, at one-fifth the die size and with one-third the required memory bandwidth.
"It's well known in the industry that discrete graphics chips sales are transitioning to integrated chip set sales in the mainstream OEM PC business." said Scott Sellers, chief technology officer, 3dfx Interactive. "We believe that to license our graphics core to the primary players in the integrated chip set market is the right strategy to take advantage of the trend toward integrated graphics. This strategy could gain 3dfx access to over 90% of the graphics market without the overhead associated with chip production and inventory, and without competing head-to-head with companies who hold a majority market share position."
Finally, the company also disclosed plans to license that Mosaic technology to emerging consumer applications, such as set-top boxes, game consoles, hand-held personal computers and cell phones. Over the long-term, new applications and better screen size, color and resolution will drive 3D to these platforms as well.
"Just as in 1995, 3dfx Interactive pioneered the move to bring 3D graphics to the PC," said Scott Sellers, 3dfx Interactive, Inc. " We plan to leverage our Mosaic 3D technology to drive 3D on to these high-volume consumer platforms as well."
About 3dfx Interactive
3dfx Interactive is a global leader in enabling the emerging age of visual communications, and the 3D multimedia revolution in personal computers and consumer products. With its patented and award-winning graphics accelerator chips, boards and software, 3dfx provides the technology to create high-impact visual experiences. The company is recognized worldwide for its ability to bring the world's finest games, educational content, interactive entertainment and media-rich business applications to life. 3dfx products are available in retail stores worldwide, and through leading PC makers including Compaq, Dell, Falcon Northwest and Micron. 3dfx has headquarters in San Jose, Calif., with engineering and manufacturing facilities in Richardson, Texas, Austin, Texas, and Juarez, Mexico. The company also operates www.3dfxgamers.com, the premier online community for Voodoo owners and gaming enthusiasts. 3dfx Interactive is available on the Web at http://www.3dfx.com.
This press release contains forward-looking statements based on current expectations that are inherently subject to risks and uncertainties. The words "estimate," "project," "intend," "expect," "believe," "plan," and similar expressions are intended to identify forward-looking statements. The Company's actual results could differ materially from those currently anticipated due to a number of factors, including, but not limited to, risks associated with the Company's recently completed merger with GigaPixel, unexpected or excessive revenue shortfalls or quarterly variations in operating results, rapid changes in the Company's business and industry segment, the inability to attract and retain key personnel, diminished strength in the PC, graphics board and chip industries, the Company's ability to support the retail/distributor distribution channel and manage and integrate acquired businesses, the Company's limited operating history, the Company's ability to develop new products and manage product transitions, significant customer concentration and the potential loss of significant customers, the absence of any long-term contracts with the Company's customers, limited product diversity, dependence on single-source manufacturers and the Company's own manufacturing facility, the need for developers to write software compatible with the Company's products, exposure to foreign business practices, tax law and currency fluctuations, the inability to protect the Company's proprietary rights, reliance on third-party licenses, potential loss of market share, the need for additional financing, exposure to potential Year 2000 issues, litigation expenses, volatility in stock price, the existence of a shareholder rights plan that could discourage a third party from acquiring control of the Company as well as other factors set forth in the Company's current report on Form 10-Q for the most recently ended fiscal quarter and other reports and documents filed by Company with the Securities and Exchange Commission from time to time.
3dfx Interactive is a registered trademark, and SLI and Voodoo5 are trademarks of 3dfx Interactive. All other names may be trademarks of their respective holders.