Nanotech - The Circuits Blog

As chip equipment goes, so goes the electronics industry and the rest of high tech.

It's a pretty simple equation. Electronics gadget makers get silicon from chipmakers, which get production gear from companies like Applied Materials and ASML. So when chip gear suppliers go south, you can bet the entire electronics industry (and the overall tech industry) is in a funk.

And it is. Appearing on CNBC Thursday morning, Peter Wennink, chief financial officer of Netherlands-based chip equipment maker ASML, said the "sudden drop in end demand for electronic products...is forcing our customers to announce severe cuts in their production." Who are ASML's customers? Companies like Toshiba, Taiwan Semiconductor Manufacturing Company, Samsung, and Intel, which supply the electronic guts to customers like Sony, Nokia, Compal Electronics, and Hewlett-Packard. (Samsung and Toshiba are also large consumers of silicon from the chip-making arms of their companies.)

Thursday, ASML announced that it was cutting 10 percent of its workforce amid an "unprecedented" downturn. "Never before have we witnessed such a sharp and sudden fall-off in lithography system demand," said Eric Meurice, chief executive officer of ASML, in a statement. He attributed this to "an unprecedented mix of falling end-demand for semiconductors, weak memory prices and restricted access to capital for our customers."

Meurice went on to cite one of ASML's biggest customers, Toshiba, which announced on Monday night that it was cutting production for flash memory 30 percent, starting in January. Flash memory is one of the staple components of consumer electronics and computers and is used in everything from portable music players to digital cameras to PCs.

ASML plans to shut down production facilities for four weeks, spread over the first and second quarters of 2009. ASML's restructuring follows a similar move by U.S.-based Applied Materials, the largest chip gear supplier. In November, Applied said it was paring its global workforce by 12 percent or 1,800 positions. For the fourth quarter, Applied said fiscal 2008 net sales were $8.13 billion, down from $9.73 billion from 2007.

Semiconductor equipment forecast; a recovery isn't expected until 2010.

(Credit: Semiconductor Equipment and Materials International )

"We're at levels we last reported in 2003," Dan Tracy, senior director industry research and statistics at SEMI, said in a telephone interview. Semiconductor Equipment and Materials International provides market data for the global semiconductor equipment market. "In our most recent data through October, orders for semiconductor manufacturing equipment were down over 50 percent from the peak in 2007."

Tracy said orders for automotive chips--a giant market--have also "slowed down dramatically in the fourth quarter."

Japanese chip equipment makers, some of the largest in the world, saw orders sink 71 percent in November from the same month last year as customers cut spending, according to a Reuters report Wednesday, citing the Semiconductor Equipment Association of Japan.

"This was the 21st straight month of year-on-year declines as the financial crisis hurts consumer appetite for computers, digital cameras, and TVs," Reuters reported.

To top off the bad news, market research firm iSuppli issued a report Wednesday forecasting that worldwide semiconductor industry revenue is set to decrease by 9.4 percent in 2009 to $241.5 billion, down from $266.6 billion in 2008. iSuppli had previously predicted 6.8 percent growth for the same time period.

In the more immediate future, iSuppli said in the fourth quarter "excess semiconductor inventories could balloon up to $10.2 billion in value, up 268 percent, from $3.8 billion at the end of the third quarter."

Steep worldwide recessions "have resulted in a pullback of consumer spending on all types of electronic products," iSuppli said, leading the firm to forecast a decline in OEM (original equipment manufacturer) factory revenue for electronics equipment of 1.3 percent in 2009. The previous forecast had predicted 6.7 percent growth.

Updated on December 18 at 3:25 p.m. with pricing information.

Toshiba said Wednesday that it will showcase a 512GB solid-state drive at the Consumer Electronics Show next month and begin shipments in the second quarter of 2009.

Toshiba 512GB solid-state drive rivals hard disks in capacity

(Credit: Toshiba)

To date, this would be one of the largest-capacity solid-state drives for use in laptops and come close to matching the size of mobile hard-disk drives.

Samsung has begun mass production of a 256GB SSD and Micron Technology is readying a 256GB drive that will ship in March.

Toshiba said it is releasing a broad family of "fast read/write SSDs" based on 43-nanometer Multi-Level Cell (MLC) NAND flash technology that will be showcased at CES. MLC technology allows solid-state drive makers to deliver higher capacity drives at lower prices.

In addition to the 2.5-inch 512GB drive, the new series of Toshiba drives also includes capacities of 64GB, 128GB, and 256GB, offered in 1.8-inch or 2.5-inch drive enclosures or as SSD Flash Modules, the company said in a statement.

Samples of the new drives will be available in the first quarter of 2009, with mass production slated for the second quarter, in the April to June time frame, according to the company.

Pricing in sample quantities ranges from $220 for the 64GB drive to $1,652 for the 512GB drive, Toshiba said.

The drives achieve a maximum sequential read speed of 240MB per second (MBps) and maximum sequential write speed of 200MBps. This is roughly the same read-write speeds offered by Samsung on its 256GB SSD.

Toshiba said it sees SSDs growing to approximately 25 percent of the notebook market by 2012.

With Apple under its belt, Nvidia is taking aim at Netbooks.

On Wednesday, Nvidia is launching its GeForce 9400M "Ion" graphics chipset for Netbooks and small desktop designs. And the Santa Clara, Calif., company is hoping for another coup like the one it staged at Apple, where Nvidia bumped Intel silicon out of the Apple MacBook because of underperforming graphics.

The goal this time is to replace the Intel silicon that supports the Atom processor. Currently, Netbooks from companies such as Acer, Asus, Hewlett-Packard, and Dell use the Atom and accompanying Intel silicon called a chipset.

Nvidia has always stayed well ahead of Intel on the graphics performance curve. "Nvidia does have superior graphics, and it's a double annoyance for Intel," said Jon Peddie of Jon Peddie Research, a firm that tracks the graphics chip market.

"First, because Nvidia is in competition with (Intel), and second, because it will allow Netbook makers to build larger-screen Netbooks, which will encroach into the thin-and-light segment, and potentially cannibalize Intel's bigger mobile CPUs," he said.

In short, Nvidia wants to bring full-fledged PC features to the Netbook. "What we want to bring to the Atom-based platform is true visual computing," David Ragones, product line manager at Nvidia, said in an interview last week. "For example, high-definition video where Blu-ray (Disc video) processing now happens on the GPU (graphics processing unit), not the CPU (central processing unit), where you get a much more smooth experience."

(Nvidia had originally intended to enter the Netbook market with Via Technologies--an announcement made in April--but it later dropped the idea.)

Nvidia's GeForce 9400M-based Ion platform proposes to bring higher-end features such as DVI video, HDMI, and SATA to the Netbook.

(Credit: Nvidia)

"Some of the restrictions Intel has put in place around Atom platforms really zero (in) on deficiencies that the underlying chipset has--the (Intel) 945 chipset," Ragones said. "For example, you cannot pair a GPU with these platforms because of the limitations of PCI Express bandwidth," he said.

PCI, or Peripheral Component Interconnect, is a data path used in all PCs today. Netbooks today have a relatively low-performance version of this technology.

Nvidia's Ragones also said Netbooks are limited artificially to displays of 10 or fewer diagonal inches. This sentiment echoes recent statements from Advanced Micro Devices, which is expected to announce its Yukon platform at the Consumer Electronics Show in January. Yukon will likely target a new class of low-cost ultraportable laptops that have screen sizes larger than Intel-based Netbooks.

Nvidia doesn't stop there. Ragones claims that its one-chip design is more space-efficient than Intel's two-piece chipset.

He also said the GeForce 9400M silicon would offer more robust support for Windows Vista and the upcoming Windows 7 operating system.

The price premium over a standard Netbook will not be large, Nvidia claims. Probably no more than $50.

Intel would not comment on the Nvidia 9400M. However, the company's success with the Atom processor--which powers virtually all Netbooks today--has put a bull's-eye on it and the platform. In addition to Nvidia and AMD, companies such as Qualcomm and Freescale Semiconductor are now targeting the Netbook space. And, of course, all are claiming that they can outdo Intel.

From the beginning, Intel has maintained the view that Netbooks are not notebooks and don't require the high-octane graphics found in higher-end laptops. Netbooks are relatively low-performance designs and consequently inexpensive (typically under $500) precisely because they are targeted at less-demanding users looking simply for e-mail, Web-browsing, and word-processing capabilities.

Step up from this, and a Netbook isn't a Netbook anymore, but rather an inexpensive notebook, according to Intel statements in the past. And inexpensive notebooks are plentiful--such as this Dell Inspiron listed at Best Buy for $499.

According to Peddie, in competing against rivals in the Netbook space, "Intel's weapon will be price; their IGP (integrated graphics processor) will be about half the price of Nvidia's."

Can the chip industry doldrums get any worse? Yes, Gartner says. In fact, semiconductor sales may set a record for consecutive yearly declines.

The market research firm on Tuesday predicted that in 2009, the chip industry will see back-to-back yearly declines for the first time in its history, with global chip revenue expected to decline 16.3 percent, to $219.2 billion.

Sales in the fourth quarter of 2008 will post a historic decline too, sinking to a record quarter-over-quarter decline of 24.4 percent, surpassing the 20 percent decline record set in the second quarter of 2001, the firm forecasts.

Gartner's preliminary 2008 market share results, released last week, showed 2008 revenue reaching $261.9 billion, a 4.4 percent decline from 2007.

The market researcher had to quickly revise a mid-November forecast. That report had said 2008 worldwide semiconductor revenue would grow 0.2 percent, and the market would decline 2.2 percent in 2009. "However, the financial crisis is having an unprecedented negative impact on fourth-quarter 2008 sales and profits," Gartner said.

In 2001, the semiconductor industry saw its worst revenue shortfall in history, with sales declining 32.5 percent from the previous year, according to Gartner. "However, this followed two strong revenue growth years, in 1999 and 2000, when revenue grew 22 percent and 34 percent, respectively."

One bright spot is that chip inventory is being managed better than the previous market decline in 2001.

"While many executives may try to compare this downturn to the 2001 tech bubble, this downturn is different in many ways," Bryan Lewis, research vice president at Gartner, said in a statement. "This downturn is broad-based, not limited to only technology, has a much different growth profile before the downturn, and has far less inventory buildup. Inventory levels this time have been monitored and more tightly controlled throughout the entire food chain, and this will help the market come back more quickly than in 2001."

The "wild card" for the chip industry in 2009 is DRAM, the main memory used in PCs. "The DRAM industry has been in a downturn for 18 months, and losses are now approaching $12 billion," according to Gartner.

Toshiba plans to cut flash memory chip production starting in January, citing the global economic slowdown. SanDisk, which operates manufacturing lines jointly with Toshiba, said it will follow suit.

Toshiba announced on Monday that its Yokkaichi Operations plant in Japan's Mie prefecture will cut NAND flash memory production by approximately 30 percent, effective from January 2009.

"Recession in the global economy and the slowdown in consumer spending are having a significant impact on demand for semiconductors," Toshiba said in a statement. "This is particularly notable in NAND flash memories, where decreased demand for applications such as memory cards and MP3 players has generated excess supply."

The Yokkaichi facility has four fabs. Fab 3 and Fab 4 produce NAND flash memories on 300-millimeter wafers, Fab 1 and Fab 2 on 200mm wafers, Toshiba said. "Prior to the January production adjustment, the 300mm wafer lines will suspend operation for 13 days, and the 200mm wafer lines for four days, during the year-end and new-year period," the company said.

Milpitas, Calif.-based SanDisk, meanwhile, said it will halt production at the same joint-venture manufacturing facilities in Yokkaichi. "Production in Fab 3 and Fab 4 will be temporarily halted from December 31 to January 12. Following this shutdown, joint-venture production will resume at approximately 70 percent of current capacity," the company said in a statement.

"The duration and extent of this reduction in fab output will depend upon market conditions," SanDisk said.

SanDisk also said it is continuing to work with Toshiba on definitive agreements to restructure the manufacturing joint ventures and expects to sign these agreements in the first quarter of 2009. An agreement that covers selling a portion of the capacity from the joint ventures to Toshiba was originally announced on October 20.

SanDisk will provide additional details when it holds its fourth-quarter 2008 earnings conference call.

Correction, 1:30 p.m. PST: This story misspelled the last name of a Qualcomm director of product management. His name is Manjit Gill.

Qualcomm's four-year, $350 million effort to design a chip that goes into small notebooks and handhelds will come to fruition next year when device makers deliver products based on the Snapdragon processor.

I spent Friday morning at Qualcomm discussing the San Diego company's quest to build a processor for very small, very lightweight notebooks--what the Intel camp calls a Netbook.

Though Qualcomm's prototype looks like a Netbook on the outside, the Snapdragon technology inside is quite different from Intel's Atom silicon, which powers dozens of Netbooks on the market today.

And what's inside goes to the heart of how Qualcomm separates itself from Intel.

"Intel is a great company. I think they have great talent. But we believe there are limitations in the (Intel) architecture," said Manjit Gill, director of product management, Connected and Consumer Products Group, at Qualcomm. In short, he thinks Intel technology is wrong for this market, which values connectivity above processing power.

"Our vision is that (the device is) always connected. Even when you shut it down, it's still 'on.' (The laptop) goes to your Exchange server, gets your e-mail, puts it on the drive--solid-state or hard drive--and then when you're ready to do e-mail, you flip it open and it's right there. Instant on, always connected," Gill said.

Manjit Gill of Qualcomm demonstrates a small laptop prototype running Red Flag Linux. Next to it is a MacBook Air.

(Credit: Brooke Crothers)

"The question is, can you enable the same value proposition on an Intel platform?" Gill's answer, not surprisingly, is no. "Two or three hours later the battery's just completely drained out. You cannot rely on it to be there all day long in your bag and still getting all your e-mail."

And Snapdragon contains the technology that will enable Qualcomm to build an un-Intel, un-Netbook type of device, Gill claims.

Though becoming too un-Intel presents a challenge. Intel has consistently countered arguments like Qualcomm's by saying that consumers want to stay plugged into its x86 architecture that runs Windows and all the software and applications that go along with Windows. And this has been one of the reasons that Atom-based Netbooks have become so popular, so fast.

"Of course, Atom and Snapdragon are completely different beasts," said Tom R. Halfhill, a senior analyst at the Microprocessor Report. "Atom is an x86 processor with little integration. Snapdragon (has) more integrated features. In terms of real-world performance, Atom is much faster than Snapdragon."

But one of the big goals, according to Gill, was to build something that exceeds the current ARM processors found in hundreds of consumer devices today. (ARM is a design house that licenses its chip designs to companies such as Samsung, Nvidia, and Qualcomm.)

"About four years ago we had a bunch of guys join (who) used to work for IBM in the PowerPC group," Gill said. He said the engineers came from IBM's chip group that designs chips for low-power "embedded" devices.

The new team was tasked to turbocharge typical ARM designs that were "maxing out" at about 500MHz, which isn't enough speed to deliver the experience that Qualcomm is aiming for. (Intel's Atom for Netbooks, by comparison, now maxes out at 1.6GHz.)

"There was a need to go do something beyond this. So, we went and got the architecture license (from ARM) and we have this team of about 50 CPU designers and we put them to task. So, four years and $350 (million) to $400 million later, we have a CPU that actually works better than the (typical) ARM CPU."

The piece de resistance of this strategy is the Qualcomm QSD8672 dual-core Snapdragon that features two CPU computing cores capable of 1.5GHz performance, and a host of other features includes HSPA+, up to 28Mbps download speeds, 1080p high-definition video, Wi-Fi, mobile TV, and GPS. The graphics core is based on Advanced Micro Devices' ATI unit's technology.

Qualcomm is able to achieve this relatively high speed (1.5GHz) for a low-power processor because it did more than simply get a license from ARM. "We went and got an architecture license from ARM. The architecture license was for their new instruction set, the V7 instruction set. There's a difference between getting an architecture license and just getting a core license. A core license means ARM does the (chip) core and they give it to you. The architecture license is different: the actual implementation is your own," he said.

The 45-nanometer processor will be built by Taiwan Semiconductor Manufacturing Company.

Though Qualcomm won't necessarily build the laptops itself, the company's vision for how they will be used is clear. "We don't view these as laptop replacements. We don't think these are the devices people will use to do Photoshop editing or anything like that," he said. "Browse the Web, check your e-mail. At $399, or a carrier subsidizes it further to $199. (At this price), it becomes very, very compelling."

Companies including Acer, Asus, and Toshiba are planning devices based on Snapdragon, according to Qualcomm. Acer, for example, will initially introduce Qualcomm's Gobi 3G modem into its devices, then gravitate to products based on Snapdragon.

Apple's MacBook Air doesn't live up to its wireless promise.

To quote an Apple tagline, "without wires, you're free to go anywhere." But the wireless part of the "air" play on words fails to deliver. (The other half its light-as-air weight: here it does deliver.)

As I've written in the past, I like the Air. I got one in February as soon as it was available at retail and have been pleased with the performance, screen, keyboard, build, and, until recently, the battery life (which has dwindled to under an hour). Of course, the head-turning aluminum aesthetics is also a major appeal to many people.

That said, after a spurt of trips including a 10-day stay on the East Coast and a few treks to Los Angeles, the Air's wireless shortcomings have become painfully clear. In a word (or two), no 3G.

Now, before I get slammed, let me say that I fully realize that I'm not the first person to reach this conclusion so I'm not claiming any unique epiphany. There were a number of observers citing this paradox way back in January. Some frustrated users even attempted hacks to shoehorn a 3G modem into the Air. The point is: because of the price and the way it's marketed, 3G should be built in.

But the full brunt of not having 3G hit me on Friday when I made a trip to Qualcomm to get briefed on a new version of the Snapdragon applications processor (more on this in another post). Sitting there in the nerve center of one of greatest wireless companies in the world, I couldn't get a wireless connection. Everyone else in the room had 3G connections of one kind or another. The Air instantly became the proverbial doorstop (or paper weight--choose your simile, or maybe it's more apropos to say it was a dinosaur.)

It didn't take much prodding from me to get the Qualcomm product manager to point out this fatal flaw.

This came after weeks of not being able to use the Air in many situations when I desperately needed a wireless connection. For instance, not all LA airports have reliable Wi-Fi connections. The John Wayne Airport in Orange County being one example. And when I was on the East Coast, one sprawling place I stayed at for several nights had Wi-Fi only in one inconveniently situated area that was inaccessible at night.

In these situations, the Air is nothing more than a slab of beautifully sculpted aluminum.

Hewlett-Packard Compaq 2510p (L) and MacBook Air. The HP comes with a built-in WWAN option, the Air does not.

(Credit: Brooke Crothers)

Which brings me to the cult of Steve Jobs. Apple was brilliant enough to deliver a groundbreaking design like the Air but why wasn't it savvy enough to build in 3G?

Before I get slammed again, let me throw out some reasons (excuses) why Apple didn't build in 3G, based on reports I've read and my own observations. Apple didn't like the fact that 3G modems often made the user commit to one service provider, i.e., Verizon or Sprint or Vodafone. Or, it believed that if users wanted 3G, they could simply plug in a USB 3G modem.

I have serious problems with both of those reasons. Particularly when you're paying typically more than $1,800 (or $2,500, depending on the model) for a notebook billed as a wireless wonder (for Apple ad copy on why the Air is such a wonderful wireless laptop, just cruise over to Apple's MBA page.) And I have even more of a problem when ultrathin Netbooks are coming with 3G at one-third (and potentially a tiny fraction of) the cost of the Air.

For comparison, let's look at another Valley company, Hewlett-Packard. HP has been selling WWAN (Wireless Wide Area Network) modems in its business laptops for at least two years (and probably longer). The HP-Compaq NC6400 laptop introduced about two years ago was offered from day one with WWAN built in.

Granted, the choice of carriers at first was limited but look at HP's offerings today. Models (including those in the EliteBook line) are offered with Qualcomm's Gobi modem. Gobi obviates the need to have unique radios for each carrier. Gobi supports Verizon, Sprint, and others in one device.

Where was Gobi when Apple refreshed the MacBooks in October? I'm sure Apple has plenty of excuses (for example, not enough space in the Air's ultrathin design).

But Apple should have had 3G from the beginning and certainly in the October refresh. In today's 3G world, continuing to call it the MacBook Air brings another meaning to the play on words: lightness of weight with a touch of advertising hot air.

Additional comments::
The point is not that a user can potentially add an external WWAN modem (though even that's not necessarily easy to do), the point is that the Air should come with 3G capability built in considering how the computer is marketed.

The newest solid-state drives are just starting to hit retail. But would you buy one?

Intel X25-M solid-state drive has received glowing reviews for its performance

(Credit: Intel)

Solid-state drives are attractive because they're generally faster than hard-disk drives, particularly at reading data--generally something PC users spend most of their time doing.

But price is still an obstacle, especially to the frugal consumer.

Sunnyvale, Calif.-based OCZ Technology is now offering some of the most competitively priced solid-state drives based the high-speed Serial ATA (SATA) II interface.

OCZ Vertex SSD drives start at $129 for a 30GB SSD. Other capacities include a 120GB drive for $469 and a 250GB SSD for $869. Though $869 may seem pricey compared to a 7200RPM 250GB hard-disk drive that can retail for well under $100, it's relatively cheap for a large-capacity SSD. In the past, SanDisk had sold a 256GB drive through resellers that was priced, almost incredibly, at more than $15,000. Axiom had been selling 256GB solid-state drives priced above $6,000.

OCZ says the Vertex Series of SSDs have a 1.5 million-hour mean time before failure (MTBF), "ensuring peace of mind over the long term." Solid-state drives, since their inception, have been plagued by doubts about write durability. SSD manufacturers such as Intel, Micron Technology, and Samsung say long-term durability is no longer an issue.

The OCZ drives are backed by a two-year warranty.

Intel's X25-M SATA solid-state drive is now widely available at retail. An 80GB X25-M is priced at just more than $500 at most retailers. Reviews of the X25-M's performance have been very positive.

Unfortunately, the only way to get the newest SSDs in some cases is by ordering a laptop. Samsung is now offering its latest-and-greatest 128GB SATA drives in ultraportable laptops such as the MacBook Air and the Dell Latitude E4200 and E4300.

The Latitude E4300 can be configured with a 128GB SSD for $460 more than the standard 160GB 5400RPM hard disk drive.

Taiwan will likely rescue, in some form, failing memory chipmakers, as that country's industry falls behind the rest of the world.

Newest DDR3 DRAM memory module

(Credit: Micron Technology)

Recent reports depict an industry desperately seeking financial help. The Taiwanese government has responded by offering loans, according to a variety of reports.

(See also: Chip sales dip in October, flash sales dive.)

One report on Thursday said that Taiwan's economic affairs ministry has approved a rescue package. No specifics have been revealed, however.

At stake is Taiwan's dynamic random access memory (DRAM) industry. DRAM is the main memory used in personal computers.

Avi Cohen, managing partner at Avian Securities, which covers memory chip market movements, says "it's something (the government) will have to do if they want to keep all those people employed" at DRAM manufacturers in Taiwan.

And why is this happening? "The Taiwan DRAM industry is falling further and further behind in terms of cost and in terms of production volumes. They have the worst cost basis," Cohen said. "The guys that can produce DRAM on the newest equipment are the most competitive. And therefore can eke out a little profit. Everybody else loses money."

And the companies that lose money? Taiwan-based DRAM makers like Powerchip Semiconductor and ProMOS Technologies--which have been appealing to the government for immediate aid.

The winners (in relative terms since all companies are facing challenges) are companies such as South Korea-based Samsung and U.S.-based Micron Technology. Both Samsung and Micron are comparatively aggressive about moving to next-generation manufacturing process technologies to keep the cost per megabit of memory produced down.

But rescuing the companies will not necessarily be a good thing for the market. "The overproduction that exists in DRAM and all of memory for that matter will likely continue. If you want this market to get some semblance of sanity and reasonableness, you may want to see players go out of business."