If you use a cell phone, DVD player, or high-speed Internet connection, chances are you rely on a programmable logic device (PLD). A logic device can interpret the signal from your DVD remote or automatically set the clock on your cell phone.

These devices can be reprogrammed at anytime so that product engineers with last-minute design tweaks won't need a whole new set of chips -- they can just reprogram the current ones. After the final chip design is complete, there's little production time involved. Customers simply program the design onto the already mass-produced PLDs.

Efficiencies like these have caused PLD production to become a fast-paced, competitive industry, with two companies duking it out for market share: Altera (NASDAQ:ALTR) and Xilinx (NASDAQ:XLNX).

Altera reported fourth-quarter and year-end earnings Monday. Quarterly revenues were up 20% and net income rose 66%. For the full fiscal year, revenues were up 16% and net income was up 74%. The company also holds more than $1 billion in cash and equivalents and announced plans to buy back even more shares (it repurchased 12.5 million in 2003). All of this bodes well for Altera's present outlook, but don't place your bets yet, because the war with Xilinx is just heating up.

Xilinx competes head-to-head with Altera in several ways. Both boast relationships with customers such as Cisco (NASDAQ:CSCO) and Nortel (NYSE:NT), and both have essentially the same business model. They design and market PLDs and outsource the actual manufacturing to industry giants such as Taiwan Semiconductor (NYSE:TSM) or IBM (NYSE:IBM).

While each sports double-digit profit margins and growth, Xilinx has more market share and fired off quite a strong quarter last week. The competition between the two isn't likely to lessen anytime soon, meaning it's critical for Altera to continue executing well.

Investors are expecting strong performance from both. Altera trades at a price-to-earnings of 56, and Xilinx's P/E is 63. Hopefully these chipmakers will continue to see a cyclical upturn since both are set to roll out growth-boosting products this year and need quite a bit of performance to keep their valuations logical.

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Email Matt at FoolishThurmond@aol.com. He doesn't own shares of any of the mentioned companies.