Business Tech

Global semiconductor sales are now expected to fall this year by 11 percent--an improvement over the previous estimate of a 17 percent drop, according to research released Monday by Gartner. And the outlook for 2010 is sunny.

Revenue is projected to drop this year to $226 billion, an 11.4 percent decline from last year's $255 billion. Next year however, it's expected to bounce back by 13 percent from this year's level, hitting the same $255 billion figure it did in 2008.

Personal computers are the largest factor driving semiconductor sales. In another recent report, Gartner said it expects demand for consumer PCs to continue, which will fuel gains in microprocessors and DRAM (dynamic random access memory) chips. But sales may not jump out of the starting gate.

"Both device types experienced lower revenue declines than the industry average, and DRAM began to be profitable for some vendors in the third quarter of 2009 after almost three years of losses," said Bryan Lewis, research vice president at Gartner, in a statement. "While most of the news has been positive to date, recent channel checks in Taiwan indicate there is concern that PC orders are slowing earlier than the seasonal norm and that 2010 may get off to a slow start."

Besides PCs, cell phones have also been a boon for semiconductor sales, noted Gartner, with their need for NAND flash memory.

"The revenue forecast for the commodity memory market -- DRAM and NAND flash -- has improved because of the stronger demand outlook, which means that pricing has strengthened more than previously forecast," said Lewis. "ASSPs [integrated circuits that perform a specific task] and memory, primarily NAND flash, also benefited from an improved outlook for cell phones."

The proposed merger of Chartered Semiconductor Manufacturing and Globalfoundries will help the AMD manufacturing spinoff propel forward in its bid to become a foundry leader, according to analysts.

Earlier this week, Advanced Technology Investment Company (ATIC) and Chartered Semiconductor announced that they entered into a definitive agreement, in which ATIC would acquire Chartered for $1.75 billion. ATIC owns about two-thirds of Globalfoundries--the joint venture that the investment firm created with Advanced Micro Devices.

The deal is subject to Singapore's High Court and Chartered's shareholders, but according to market analyst iSuppli, chances are good the deal will go through.

In a statement, iSuppli said Chartered and Globalfoundries earned a combined revenue of $1.2 billion for the first half of 2009, which would propel it to No. 2 among pure-play foundry players. TSMC was the clear leader at $3.3 billion.

Globalfoundries revenue includes combined Chartered Semiconductor and Globalfoundries revenues for the first and second quarters of 2009.

(Credit: iSuppli)

The deal addresses a number of "glaring weaknesses" Globalfoundries has in service and its ability to produce in bulk, which the company had not been able to correct up till now. In particular, with the addition of Chartered, Globalfoundries would have two operational 300mm facilities and five 200mm ones.

"This acquisition provides Globalfoundries the ability to produce both bulk and silicon on insulator (SOI) technology," Len Jelinek, iSuppli's director and chief analyst for semiconductor manufacturing, said in the statement. "Prior to this, Globalfoundries could only manufacture SOI. But even of larger significance is that prior to the acquisition, the company was stuck doing things the way their largest customer --AMD--wanted.

"Now, they pick up the infrastructure that Chartered had in place and that's a major boon for them," he added.

Jim McGregor, chief technology strategist at In-Stat, said in a research note the potential merger was a "huge step" for Globalfoundries. He pointed out that the deal would deliver the third of three critical factors defined by In-Stat as vital to the foundry's long-term success.

The first two--gaining a significant customer and breaking ground on new capacity--had already been achieved. The third, becoming a part of the Common Platform manufacturing alliance.

"Gaining Chartered gives the company formal entree to the Common Platform alliance, which it was already loosely linked to through its relationships with IBM," McGregor explained. "This does assume that the transaction doesn't nullify the alliance or any contractual obligations, but we do not believe that it will because it actually adds more value to the Common Platform as an alternative to TSMC, the world's foundry powerhouse."

McGregor added that the fact that Globalfoundries had accomplished all three of these tasks in less than a year--"far quicker than In-Stat had predicted"--was "impressive" and drives the company "into a critical position in the market".

iSuppli added that the old foundry landscape was under duress, and that changes are fast-happening. UMC (United Microelectronics Corp.) could regain its second spot, with the expected completion of its acquisition of Hejin later in the year.

UMC did not respond to ZDNet Asia's request for comments by press time.

Chartered: Date for shareholder meeting not fixed
The date for a meeting by Chartered Semiconductor shareholders to vote on the sale of the company to Abu Dhabi's ATIC has not yet been set, according to a Chartered spokesperson.

The company, however, is targeting for the shareholders to congregate in November, she said in an e-mail.

According to a joint statement issued Sep. 7, ATIC and Chartered said that pending board approvals, Globalfoundries CEO Doug Grose would serve as chief executive of the combined operations. Chia Song Hwee, CEO of Chartered, would assume the role of chief operating officer and spearhead the integration effort.

The companies have just initiated the "integration planning process", the U.S.-based spokesperson added. Chartered has around 6,000 employees worldwide, with the "vast majority" based in Singapore. It has one 300mm facility and five 200mm fabs in the island-state.

Vivian Yeo of ZDNet Asia reported from Singapore.

This was originally posted at Between the Lines.

Global chip sales rose to $15.6 billion in April, up 6.4 percent from March. That's the good news. The bad: chip sales are still down 25 percent from April sales of $20.9 billion a year ago, according to the Semiconductor Industry Association.

The SIA provides the following color (statement):

• PC demand is better than expected as inventory is replenished;

• PC sales in 2009 are expected to fall 6 percent better than estimates that expected a decline of 12 percent;

• Cell phone sales also aren't as bad as expected;

• Cell phones and PCs account for 60 percent of chip sales.

Add it up and the chip market remains weak with corporate IT spending down, consumer electronics mixed, and the auto industry awash in red ink. But there does appear to be at least a new normal in the chip industry with the usual seasonal patterns showing up.

CARLSBAD, Calif.--Qualcomm and Freescale Semiconductor are ready to begin pushing a category of devices that they say are cheaper, lighter, and more connected than Intel-based Netbooks.

And just to make sure that the difference is crystal clear, both companies are calling the category "smartbooks."

"We are relabling with the term 'smartbook.' We are joining others in using this term," said Glen Burchers, director of global consumer segment marketing at Freescale, in a phone interview Thursday. "The manufacturers that are using ARM-based devices are cooperating in using this terminology," according to Burchers.

"The smartbook is the smartphone experience on a larger form factor," according to Luis Pineda, vice president of marketing at Qualcomm's CDMA technologies division, speaking during a teleconference on Thursday.

So, what makes a smartbook different from the Netbooks being sold by companies like Dell and Hewlett-Packard? Netbooks use an Intel Atom processor and, typically, Microsoft's Windows XP operating system. Smartbooks will use processors based on an ARM design and the Linux operating system. And 3G connectivity will be standard--like a typical smartphone.

ARM chips offer better power efficiency than Atom processors and ARM-based devices come with virtually no cost overhead for the operating system. "The primary distinction between them (smartbooks) and the existing crop of Netbooks will be longer battery life--eight-hour battery life--slimmer form factor, and lower price point," said Burchers.

One Snapdragon-based prototype uses a tablet motif. Both Qualcomm and Freescale say that the term smartbook will encompass multiple designs. 3G connectivity--the standard for smartphones--is key.

(Credit: Qualcomm)

Other distinguishing features are "instant-on" and "persistent connectivity," according to Burchers. "The idea is that the device is intelligent enough to go fetch your emails and your messages automatically. And this is what you'd expect from a smartphone," he said, trying to emphasize that the device would operate in some ways more like a smartphone than a Netbook.

Qualcomm, for its part, has a Web site dedicated to smartbook prototypes and concept devices and lists standard features such as 3G mobile broadband, Bluetooth, Wi-Fi, GPS, and HD video. Qualcomm hosted a dinner at the The Wall Street Journal's "D7: All Things Digital" conference, where company executives discussed the smartbook strategy.

Qualcomm's smartbooks will be powered by its Snapdragon processor, while Freescale's chips use an uncatchy "i.MX515" moniker. Both companies license the basic chip design from U.K.-based ARM. In Qualcomm's case, it has an ARM architecture license which allows the San Diego, Calif.-based company to do major modifications to the basic chip design.

Another Qualcomm prototype is a classic clamshell design. Some Freescale-based devices will also be clamshell designs.

(Credit: Qualcomm)

The first smartbook devices are appearing from so-called original design manufacturers or ODMs, which typically don't market under their brand name but supply devices to large PC makers which then slap on their brand. Wistron and Pegatron, both ODMs, will be showing Freescale-based 10-inch clamshell devices at the Computex conference, Burchers said. Computex starts next week in Taipei.

"These are the first near production-ready devices that we expect to find a home at OEMs (brand-name device makers) before Christmas time this year. We should definitely be able to hit the $199 retail price," according to Burchers.

Nvidia--while not tying itself to the smartbook nomenclature--is also expected to show devices based on its ARM-based Tegra processor at Computex. Nvidia has been touting a $99 "HD mobile Internet device" that telecommunications companies would offer with subscription plans--the route that devices based on Qualcomm and Freescale chips are also expected to take.

Netbooks, by contrast, are typically priced between $300 and $500.

One the challenges facing all ARM-based device makers is the lack of a Windows operating system--a problem that XP- and future Windows 7-based Netbooks don't have. Freescale and others are looking to Google's Android OS, due commercially in devices next year, to counter the marquee draw that Windows has.

"The potential that Google has--this has got everybody's attention," Burchers said. "One thing that's driving that is the Google brand. The second thing is that finally there's one-stop shopping for an operating system that is an alternative to Windows. Linux (generically) is an alternative to Windows but it is fragmented. There are too many derivatives," according to Burchers.

Until the potential of Android in smartbooks is realized, the lack of a Windows operating system will always pose a problem for some consumers, especially in laptop-like clamshell designs.

"The biggest inhibiting factor is that it doesn't have any legacy (established PC) operating system compatibility because Microsoft is unlikely to provide native support for it near-term," said Ashok Kumar, an analyst at investment bank Collins Stewart. "For the mainstream market, unless they get Microsoft compatibility it's going to be a long road," Kumar added.

IBM, Samsung Electronics, STMicroelectronics, and others are teaming up on the development of next-generation chip technology for small, low-power devices with one wary eye on Intel, which is expediting its move to chips with smaller geometries.

(Credit: IBM)

IBM and its semiconductor technology alliance partners are announcing the availability of 28-nanometer (nm) chip technology, a little more than a generation beyond the 45nm technologies currently used by Intel and Advanced Micro Devices in their latest chips.

The first products using chips based on this technology are expected in the second half of 2010, an IBM spokesman said. Devices will include smartphones and consumer electronics products.

The largest, single countervailing force to the IBM-led group is Intel. The Santa Clara, Calif.-based chip giant's chief executive, Paul Otellini, said Tuesday in a first-quarter earnings conference call that Intel is "pulling in" the release of "Westmere" chips based on 32nm technology and will ship silicon later this year.

Generally, the smaller the geometry, the faster and more power efficient the chip is.

The IBM alliance--which also includes the AMD manufacturing spin-off Globalfoundries, Chartered Semiconductor, and Infineon Technologies--are jointly developing the 28nm chipmaking process based on the partners' "high-k metal gate" (which minimizes current leakage), low-power complementary metal oxide semiconductor (CMOS) process technology.

The technology "can provide a 40 percent performance improvement and a more than 20 percent reduction in power, in a chip that is half the size, compared with 45nm technology," IBM said in a statement. "These improvements enable microchip designs with outstanding performance, smaller feature sizes and low standby power, contributing to faster processing speed and longer battery life in next-generation mobile Internet devices and other systems."

IBM said customers can begin their designs now using 32nm technology and then transition to 28nm for density and power advantages without the need for a major redesign.

One prominent customer is U.K.-based ARM, whose basic chip design has been used in billions of devices all over the world. ARM is collaborating with the IBM alliance to develop a design platform for 32nm and 28nm technology and is tuning its Cortex processor family and future processors to exploit the technology's capabilities, IBM said.

National Semiconductor on Thursday announced that it has delved deeper into its energy efficiency efforts with the acquisition of Act Solar.

National Semi, which expanded into the solar business last year, plans to use the privately held company's technology for monitoring solar arrays with its SolarMagic product line.

Under the deal, whose financial terms were not disclosed, Act Solar's business for monitoring technology, which is designed to improve the efficiency of solar panels by balancing, or recirculating energy, will be folded into National Semi's SolarMagic business.

Power efficiency is an issue with electronic devices, given that it effects the life of powering a device and the amount of heat a device can generate. And the output of solar panels can be affected by shade, debris, different panel styles, and aging panels.

"Now with Act Solar, we can further improve the performance and efficiency of solar systems, at the same time providing monitoring capabilities not available before," said Mike Polacek, senior vice president of National's Key Market Segments. "This will make solar installations more efficient and ultimately reduce the cost of solar energy for everyone."

Advanced Micro Devices announced Monday that Intel plans to pull its 2001 cross-licensing patent agreement in the next 60 days, unless concerns surrounding AMD's joint venture chip foundry are addressed.

Intel's warning is an escalation of concerns it expressed more than five months ago, following AMD's announcement it planned to spin off its manufacturing assets to a joint venture with the Abu Dhabi government.

The joint-chip foundry, Globalfoundries, calls for the government's Advanced Technology Investment Co. (ATIC) to own a majority 55.6 percent stake, but AMD and ATIC will hold equal voting rights. The deal officially closed earlier this month.

Under the , restrictions exist regarding the transfer of licenses and patents. That agreement is in place until 2010, when it expires.

Intel said its opposition stems from a belief that Globalfoundries is not a subsidiary of AMD, under the terms of the chip companies' 2001 agreement. As a result, Intel does not view Globalfoundries as having licensing rights to its patents.

Bruce Sewell, Intel general counsel, said in a statement:

Intellectual property is a cornerstone of Intel's technology leadership and for more than 30 years, the company has believed in the strategic importance of licensing intellectual property in exchange for fair value. However AMD cannot unilaterally extend Intel's licensing rights to a third party without Intel's consent.

AMD, however, views Globalfoundries as a subsidiary of AMD and sees Intel's latest warning is an attempt to box in its rival, said Harry Wolin, AMD general counsel.

He added that ATIC, through the joint venture, will provide AMD with the capital needed to have state-of-the-art manufacturing technology, posing a greater competitive threat to Intel and its foundries.

AMD also views Intel's actions as a means to distract the public's attention from its recent antitrust battles with the European Commission, as well as in Japan, Korea, and the U.S.

For AMD, the 2001 Intel agreement allows it to manufacture chips using Intel's x86 design, while providing Intel access to its chip patents.

The companies have had a long-standing patent and licensing relationship, going back to 1976.

But this latest turn of events could result in a change in that relationship. AMD, in its filing with the Securities and Exchange Commission on Monday, said Intel sent it a letter that alleges AMD "committed a material breach of the Cross License through the creation of the company's Globalfoundries joint venture and purports to terminate the company's rights and licenses under the cross license in 60 days if the alleged breach has not been corrected."

AMD notes that the parties seek to resolve the issue through mediation and that both are currently taking the stance that the other has materially breached the 2001 agreement.

Under the 2001 deal, a party that has been found to be in material breach of agreement will no longer have access to the patents and licenses.

AMD, in its filing, stated that it "strongly believes that the company has not breached the terms of the cross-license and Intel has no right to terminate the company's rights and licenses under the cross license."

AMD shares rose 5.56 percent to $2.66 a share in morning trading, on a day when the Dow Jones Industrial Average was up.

Taiwan's economic affairs minister has retreated from previous statements that suggested a merger of the country's ailing memory chipmakers was likely, saying it's "too complicated," according to reports.

Instead, Taiwan Memory Co., the new government-backed entity, will focus on acquiring technologies and tapping existing manufacturing plants in Taiwan, according to a Bloomberg report.

Economic affairs minister Yiin Chii-ming and John Hsuan, a former United Microelectronics Corp. executive who was appointed by the state to oversee the formation of Taiwan Memory, are also saying that the scale of the aid plans will be pared back, Bloomberg said. This is a departure from previous statements that suggested a massive consolidation of the six loss-ridden memory chipmakers was likely.

"It is wrong to assume we would take in these companies with all their debts and problems," Bloomberg reported, citing an interview with Chen Chao-yih, head of the economic ministry's industrial development bureau. The six companies have combined debt of about $11 billion.

Taiwan's memory chipmakers lost a combined $12.5 billion in 2007 and 2008, highlighting the dire straits--including bankruptcies, widespread plant closings, and layoffs--that the memory chip industry is in worldwide.

The six companies are: Nanya Technology, Inotera Memories, Powerchip Semiconductor, Rexchip Electronics, ProMOS Technologies, and Winbond Electronics.

National Semiconductor said Wednesday it would slash 1,725 jobs, or about one-fourth if its workforce, as earnings dropped sharply in its most recent quarter.

Manufacturing facilities in Arlington, Texas, will be shuttered

(Credit: National Semiconductor)

The Santa Clara, Calif.,-based company reported on Wednesday that its fiscal third-quarter profit plummeted 71 percent, to $21.1 million from $72.9 million a year ago. Revenue dropped 36 percent to $292.4 million.

Job cuts will take place across the company, which currently has a workforce of about 6,500, and will involve, in coming months, the shuttering of facilities in Arlington, Texas, and Suzhou, China.

The chipmaker will incur charges of $160 million to $180 million in severance and other costs.

National Semiconductor describes itself as a supplier of "energy-efficient analog and mixed-signal semiconductors." Its products include "power management circuits, display drivers, audio and operational amplifiers, communication interface products, and data conversion solutions," according to its Web site.

There's more bad news to come. The company said on Wednesday that it expects between a 5 percent and 10 percent sequential decline in sales, well below analyst expectations.