Xilinx vs. Altera: Which Is the Real Growth Stock?

In the semiconductor business, there are two niches that have had gross margins in excess of 60%. One of them is programmable logic. I worked for ten years in companies that wanted to emulate the success of Xilinx (XLNX) and Altera (ALTR). It took me ten years [and a $35 million dollar judgment against my last Programmable Logic employer] to figure out that this duopoly will own the programmable logic [FPGA and PLD] till the end of time [with a small market-share conceded to Lattice (LSCC), Actel (ACTL), QuickLogic (QUIK), Atmel (ATML) and Cypress Semi (CY)].

ALTR and XLNX make chips that can be programmed to perform any function you would want a chip to perform. Meaning, they make "blank slate" chips that can be configured to implement any logic function that you can dream of. In fact, Intel (INTC) uses huge boards made of tens of these chips to make sure that their logic works - before they get their CPUs fabricated into silicon. Smaller ASIC companies have become smarter over the last decade and make prototypes of their chips [using programmable logic] before they start mass-production.