South Korea's antitrust regulators announced Wednesday that they would fine Intel 26 billion won ($25.4 million) for allegedly abusing its dominant position in the local chip market.
The Korea Fair Trade Commission said in a statement that the chip giant had offered rebates to two PC makers in South Korea in return for not buying processors from rival Advanced Micro Devices. Regulators also ordered Intel to stop offering the rebates.
Bruce Sewell, general counsel for Santa Clara, Calif.-based Intel, criticized the ruling, and told the Wall Street Journal that the company is likely to appeal the KFTC's decision. "The conduct they're seeking to attack is the conduct at the heart of competition. It is offering lower prices in order to sell your products," he said.
The charges mirror those Intel faces from the European Commission, which also alleges that the chipmaker violated antitrust laws by abusing its dominant market position.
The KFTC charged Intel with violating South Korean antitrust laws last year after completing a two-year probe.
Semiconductor sales grew 5.9 percent worldwide in April, a healthy clip given the current sluggish economy, the Semiconductor Industry Association reported Monday.
Chip sales rose to $21.2 billion in April, up from $20.1 billion a year ago and flat with the previous month. The SIA noted April sales were essentially in line with historical industry patterns.
"Despite steep increases in energy costs that have diminished the disposable income of consumers, worldwide sales of semiconductors grew by a healthy 5.9 percent compared to April 2007," George Scalise, SIA president, said in a statement.
Weakness in memory prices weighed on the industry, which would otherwise have posted year-over-year growth of approximately 12 percent, according to the SIA.
"Unit sales of both DRAMs and NAND flash products were up significantly year-on-year, but price attrition resulted in a 14 percent decline in total sales of memory products," Scalise stated.
Chip sales for PC and handsets, however, appear to remain on track. PC and handset unit sales have kept pace with forecasts, with PCs sales expected to grow 10 percent this year and handset sales 12 percent.
Much of that growth in PC and handset sales, which are two of the largest drivers of semiconductor sales, is being fueled by overseas sales, according to the SIA.
Chip designer Via Technologies unveiled its OpenBook Mini-Note reference design on Monday, in a move that throws some open source into its core business of developing chips for mobile devices.
The OpenBook design aims to aid PC makers in creating ultra-small notebooks based on Via's Ultra Mobility Platform. Last year, the company trotted out its Via NanoBook reference design, a prototype designed to compete against rivals in the small-computer market but at a lower cost.
"By making the CAD files of the external panels for the OpenBook available for download, Via has simplified design customization. You can now download these open-source files from the (Via) Web site and individualize the look and feel of your OpenBook devices," Via states.
Via, in providing the source files for download, aims to deliver local Wi-Fi, long-range WiMax, and speedy data delivery via 3G mobile connectivity.
With its Via OpenBook design, the Taiwanese company is hoping to ride potential growth in the mini-notebook market, which currently ranks in the small niche category. But as 3G becomes more pervasive and users become more adept using smaller devices to carryout computing and communications functions, demand for mini-notebooks may rise.
Intel has started shipping its long awaited low-power chip for wireless devices, but the company is clearly starting at the high end of the market.
The Centrino Atom--which took almost four years to develop--is the world's fastest chip under 3 watts of power, according to Intel. The first Atoms run at speeds up to 1.8GHz and sport a thermal ceiling of 0.65 to 2.4 watts. By contrast, the average laptop chip runs at 3.3GHz and consumes 35 watts at a peak.
The company unveiled the chip at the Intel Developer Forum taking place in Shanghai this week. Intel also said that the first chips based around Nehalem, a new chip architecture for desktops, notebooks and servers, will come out this year. Nehalem is designed to go up to eight cores. (Hubba, hubba.)
Then there is a whole new architecture coming in 2010 code-named Sandy Bridge.
Atom will probably get the most attention at the show. Intel has been trying to play a bigger part in the wireless market for years and create new categories of devices for wireless, cranking out another chapter in the so-called "new users, new uses" strategy. Intel will initially aim Atom at "pocketable devices" which can play movies, hold hours of music, and let users scroll the Internet. A few companies like OQQ and Samsung have come out with ultra-portables like this. They haven't sold in huge numbers. The first devices with Atom will sell for around $400 to $600.
The mobile sector is the fastest-growing category in the semiconductor business and Intel wants to be in there to compete with companies such as Dallas-based Texas Instruments, Samsung Electronics, Qualcomm, and STMicroelectronics.
"The architecture is going to be able to bring all the PC functionalities, what you saw in the market in 2003 and 2004," Gary Willihnganz, director of marketing in Intel's mobile group, said in a conference call from Shanghai on Tuesday.
To help convince wireless handset makers to select its chip, Intel promises a "seven year extended life support." That is, handset makers will be able to get chips and support for seven years for the same processor. Handset and consumer electronics device makers change internal silicon slower than PC makers.
The company presented a list of around 20 manufacturers, 10 service providers, and a big group of software companies that have signed on to work with Intel. How many come out with devices remains to be seen, but it's a start. In the past, Intel has kicked off mobile phone efforts with less support.
News.com's Michael Kanellos contributed to this story.
As had been expected, AMD on Wednesday announced updates to its Phenom processor line, including four new high-end quad-core chips it claims "can improve performance for gaming and multi-threaded applications," according to a company release. Among those new chips is the Phenom X4 9850, which CNET has already reviewed.
The chipmaker also announced that it is shipping its triple-core Phenom processors, a first for the PC market, as Brooke Crothers of CNET's Blogger Network details in a related blog post.
The Sunnyvale, Calif.-based company further announced what it calls "the world's first energy-efficient desktop quad-core processor, providing customers with a cool and quiet digital media workhorse." The Phenom X4 9100e operates at a maximum of 65 watts.
Intel announced Sunday that is has chosen the name "Atom" for a new family of ultra-small chips.
The other, code-named Diamondville, is a single-core processor for ultra-low-cost laptops. Intel refers to the low-cost notebook design as "netbook" and estimates the pricing for these devices will go as low as $250. Diamondville is a tiny 45-nanometer processor that employs a simpler design than standard Intel processors,
Intel also rebranded its Menlow chip as the Centrino Atom--a low-power companion chip with integrated graphics, a wireless radio, as well as thinner and lighter designs.
Though cable news pundits may predict hard times ahead, reports from IBM and Intel for 2008 show the technology industry isn't ready to mimic the banking industry's financial woes just yet.
Intel announced its second consecutive record-breaking quarter Tuesday, though earnings just barely met the company's own projections.
The chipmaker reported its highest-ever fourth-quarter revenue of $10.7 billion and earnings of 38 cents per share. Intel set expectations for this quarter at between $10.5 billion and $11.1 billion, while analysts were anticipating revenue of $10.8 billion and earnings between 38 cents and 44 cents per share.
While that's an increase in revenue of 10.5 percent over the same quarter a year ago, expectations were heightened following the company's record-setting third quarter, in which it blew away analyst forecasts. Intel shares were pummeled in after-hours trading, dropping more than 14 percent.
But let's not push the panic button quite yet. The company said revenue for its computing products was on target; revenue for NAND memory was below expectations; and while total microprocessor units set a record, average selling prices were flat for the quarter. It's not great news, but unless CEO Paul Otellini is throwing a smoke screen as bad as anything from the denial stage of the dot-com bust, Intel doesn't see the sort of tech sector meltdown that some fret could occur.
"In the fourth quarter we saw that computing-related products actually grew as we expected...on the back of a very strong (third quarter)," said Intel CFO Stacy Smith. "The part that caused us to be a little below (the) midpoint (of expectations) was the demand pricing environment was worse than we expected." He said demand in its CPU business in particular continued to grow in the fourth quarter, and the company said there were no unusual cancellations of orders or build-up of inventory. "All felt pretty healthy," Smith said.
Despite concerns over weakness in the U.S. economy, tech companies probably don't need to worry as much, as the U.S. makes less of a contribution to their success these days. As Otellini noted, "Seventy-five percent of Intel's revenue is not in the United States, and (outside the U.S. is) where most of our growth is coming from."
That way "a little bit of weakness doesn't result in an overall dramatic change to the overall forecast," said Dean McCarron, analyst with Mercury Research. "It puts a much smaller impact on the numbers than it did 10 years ago."
For the first quarter of 2008, Intel is projecting revenue between $9.4 billion and $10 billion, representing more than the usual seasonal decline of about 7 percent. Smith did not attribute the decline to any one significant factor, but a combination of continued weak pricing on NAND memory and an end to some supply agreements with Marvell.
But looking ahead, Otellini attempted to assure analysts that he is optimistic about the coming year.
"Q1 is not clouded by a pessimistic view of computing," he told analysts. He said he agrees with--and Intel is planning around--industry analyst expectations of "low double-digit growth" in PC unit volumes in the coming year. The continued shift toward mobile computing will be a main factor in driving growth in the industry, Otellini said.
He didn't seem too alarmed about the overall economy, despite uncertainty in the U.S.
"I said I have the same caution that everyone in America that watches CNBC has today. You hear all the pundits saying that the world is going to a trash basket, it makes you worry," said Otellini. "It may be a self-fulfilling prophecy. But, he emphasized, "We don't see anything on the horizon, our customers don't see anything on the horizon."
"It would be imprudent not to be cautious about it though," he added.
Big Blue on track
Another important indicator for the health of the tech industry, IBM announced earlier Tuesday that it anticipates better-than-expected revenue from the fourth quarter. The world's biggest technology services company is set to report a 10 percent rise in revenue. IBM's success can also be attributed to strong performance in markets outside the U.S.--Asia, Europe, and emerging countries--according to a statement by IBM CEO Sam Palmisano.
A combination of new products categories like smaller and more inexpensive mobile computing devices and the growth of emerging markets outside the United States are all good signs for the worldwide technology industry, said Mercury Research's McCarron.
One very tiny new product indicates that the demand for lower-cost computers is high, which should be beneficial to both Intel and the tech industry in general. The Eee PC from Asus, a sub-notebook selling at $399, is doing surprisingly well (between 350,000 and 400,000 units) since its recent launch, which is encouraging for a non-tier 1 computer maker. It's a product category that is doing well in emerging markets, and Intel's ability to address that demand has "significant potential of growing the market," said McCarron.
"It demonstrates there is significant price elasticity in the market," he added. "As we expand the lower-cost options that are available...we see expansion of the overall market, (so there) is a number of fairly positive indicators, whether it's the technology or the markets themselves."
Advanced Micro Devices said Wednesday it expects in the fourth quarter to take a sizable write-down for the declining value of intangible assets related to its $5.4 billion acquisition of graphics chipmaker ATI Technologies.
AMD, in a Securities and Exchange Commission filing, said it doesn't yet know the exact size of the write-down but expects it to be "material"--or in other words, substantial--when it concludes its review.
The chipmaker said it's planning to write off the value it assigned to the ATI acquisition that was above the actual value of ATI's assets, otherwise known as "goodwill" in accounting jargon. That's because AMD has since found the value of these intangible assets has declined since it recorded the ATI acquisition on its books last year.
"This conclusion was reached based on the results of an updated long-term financial outlook for the businesses of the former ATI Technologies Inc., as part of the company's strategic planning cycle conducted annually during the fourth quarter," AMD said in its SEC filing.
The chipmaker further noted that while it expects the noncash impairment charge will be material, it has not yet determined the amount, or range of amounts, for the impairment charge. Once it does, it expects to issue an update to its SEC filing within four business days.
Two other questions remain, however. What did AMD find in its review of ATI's businesses that has impaired the intangible value of the company it acquired? And how will Wall Street react when the company holds its analyst day Thursday?
Qualcomm has likely dodged a bullet that could have halted the import of some of its chips into the United States.
On Friday, the company said a judge recommended putting an end to an investigation conducted by the U.S. International Trade Commission that is looking into complaints filed by handset maker Nokia against Qualcomm.
Nokia, which sells more mobile phones than any other manufacturer in the world, asked the ITC in August to ban imports of phones that included Qualcomm chips that Nokia says infringe on its patents. The patents are related to technology that enhances device performance, lowers manufacturing costs and improves battery life.
Nokia and Qualcomm have been duking it out in the courtroom for several months after the companies failed to renew a licensing agreement that expired in April.
ITC Administrative Law Judge Paul Luckern recommended that the investigation end because the companies are already in arbitration to settle the dispute, Qualcomm said in a statement. The ITC has 30 days to review the decision. If the decision stands, the investigation will be terminated and Qualcomm will continue to be allowed to import its chips into the United States.
The judge's recommendation comes a few months after the ITC ruled that imports of Qualcomm chips that infringe on a patent from Broadcom would be banned from entering the U.S. The ban has been partially stayed while Qualcomm appeals the case. But service providers such as Verizon Wireless, which use Qualcomm chips in many of the cell phones they sell, has made a separate deal with Broadcom to ensure that phones on the Verizon network still make it into the country.
The federal government is suing seminconductor company Novellus for discrimination and racial bias on behalf of an African-American employee who says he was forced to leave his job after complaining about a fellow worker's racially insensitive behavior.
Assembly technician Michael Cooke complained to his bosses about a fellow employee who listened to and sang along to rap lyrics aloud, which included slurs against African-Americans.
"That kind of language pains me. The N-word is not something I take lightly," Cooke told the San Francisco Chronicle.
When his co-worker's behavior did not stop and Cooke complained again, Cooke says he was laid off.
The attorney for the Equal Employment Opportunity Commission, the government agency that filed the suit, said that while they are not out to judge taste in music, they are "concerned when we find that an employer failed to respond promptly after being put on notice of racially offensive language or conduct in the workplace."
The attorney for San Jose, Calif.-based Novellus said Cooke's version of the story is incorrect and the company looks forward to re-explaining the events to the EEOC.
