Gathered below are the top five stories for the week beginning Sunday October 24, 2004, as ranked by Silicon Strategies' readers, up to and including Thursday, October 28. The ranking is based on the number of reader "views" or "hits" on each article.
Mark LaPedus, the editor of Silicon Strategies, and Peter Clarke, news director, provide commentary and analysis on the week's top stories.
1) Intel tips efforts for scaling in 2013 and beyond .... Looking to scale devices in the 2013 time frame and beyond, Intel Corp. on Friday (Oct. 22) disclosed that it is investigating a breathtaking range of exotic technologies. The chip giant is researching tri-grate transistors, carbon nanotubes, silicon nanowires, III-V-based chips, spintronics, phase change logic devices, interference devices, and optical switches.
Talk about futures. Intel is investigating a raft of technologies for the post-silicon era, which is expected to take place in 2013. Basically, the chip giant was saying, 'We're looking at everything.'
However, analyst Bob Merritt of Semico Research believes that nanotechnology in the post-silicon era will come sooner than later. "We see it differently than Intel," he said.
Merritt pointed out, for example, that startup Nanotero is projected to go into production with its first product in early 2005. Early in 2003 Nantero announced it had developed the basis of a 10-Gbit memory, an array of more than 10 billion carbon nanotube "junctions" on a silicon wafer. The company claims that its non-volatile memory is a candidate to replace all existing types of memory component including DRAM, SRAM and flash. ML
2) No IC downturn seen in '05 by some analysts and execs .... While many IC forecasters predict a mild IC downturn in 2005, VLSI Research (Santa Clara, Calif.) is sticking to its earlier forecast of positive 8 percent growth for the semiconductor industry in 2005 over 2004.
Dan Hutcheson, president of VLSI Research, is quite the contrarian, as he sees 8 percent growth for ICs in '05. My own projection, which is based on looking at Chinese tea leaves, is 22.7 percent growth for ICs in 2004, with zero growth in 2005. I may lower my '05 projection -- soon.
But next week, some speculate that the SIA will lower its overall forecast for semiconductor growth in 2005 and beyond. In June, the SIA issued its 2004-2007 midyear forecast, projecting stronger-than-expected growth of 28.6 percent for 2004. However, SIA has predicted growth in 2005 of just 4.2 percent -- much lower than other forecasters -- followed by a 2006 market that will decline by 0.8 percent, before rebounding to 11.7 percent growth in 2007 (see June 9 story).
Indeed, there are some good and bad signs in the market. In the NAND-based flash-memory sector, September industry flash card sales were up 12 percent month-over-month to $136.2 million, according to RBC Capital Markets. Digital camera card sales were soft, up 1 percent month-over-month, while USB flash drives displayed another month of strength, up 37 percent in September, according to RBC.
Here are some more data points in the form of financial results in various sectors last week:
*MEMC's Q3 revenue of $275.3 million was less than our estimate of $286.0 million for the silicon wafer maker, said Ted Parmigiani, an analyst with Lehman Brothers. Reported EPS of $0.27 was better than our and street estimate by $0.02 and $0.04, respectively, he said. "While we are lowering Q4 revenue estimate by $27 million to $269 million, guidance for gross margin of 38.2 percent vs. our prior 36.5 percent estimate leaves our $0.25 EPS estimate unchanged," he said.
*Amkor's Q3 revenve of $491 million beat our and consensus estimates by $10 million, but minus $0.13 EPS is in-line, he said. "Q4 revenue guidance of $442-to-$466 million and EPS of minus $0.16 to $0.23 [is] worse than expected," he added.
*PC maker Gateway last week reported strong 3Q results and it posted its first non-GAAP profit in 11 quarters. The company's 4Q revenue guidance of $975 million to $1.025 billion was slightly lower than consensus expectations of $1.08 billion, but EPS guidance of $0.01-$0.02 was higher than the consensus EPS expectation of breakeven results, according to Piper Jaffray senior technology analyst Les Santiago. ML
3) TSMC's Chang sees plummeting utilization, 2005 capex down .... In what may turn out to be an ominous sign of a short-lived recovery, foundry Taiwan Semiconductor Manufacturing Co. Ltd. caught market watchers by surprise Tuesday (Oct. 26) with a grim outlook for the fourth quarter that anticipates its manufacturing capacity utilization rate plummeting by about 15 percent to roughly 85 percent.
When TSMC's Chang speaks, people listen. Chang believes that fabs in China are not as cost competitive as those in Taiwan. It will take five years before China catches up to Taiwan, Chang assertss.
I believe that's true -- at least for now. Taiwan's IC infrastructure is far ahead of China's. For example, all of the chip-equipment vendors have set up shop in Taiwan to handle the support calls and spare part deliveries for the island's chip makers. In contrast, shipments of spare parts and equipment uptime can be problematic in China.
But that's not the real point. "The reason we are going is because not all Chinese business can be served from outside China," Chang said. ML
4) No cost benefit in China wafer fab, says TSMC's Chang .... Morris Chang, chairman of foundry chipmaker Taiwan Semiconductor Manufacturing Co. Ltd., said Tuesday (Oct. 26) that the company's China-based wafer fab will not be more cost competitive than its Taiwan-based fabs for at least five years.
Besides running a foundry, Chang should get into the market research business. Back in 2003, the TSMC chairman projected 17 percent growth for the IC industry in 2004, with a mild downturn in 2005. "I expect near the end of 2005 or early 2006 that we will see a slowdown," he said, adding that the downturn of 2005 will look much like the mild overcapacity situation in 2000.
Speaking at a conference, Chang also ignited some sparks, by saying that China will cause the downturn. At the time, China was building fab capacity at an alarming rate, causing Chang and others to believe that the IC market faces another cyclical round of semiconductor overcapacity by the 2005 time frame (see Sept. 15, 2003 story).
Chang was partly correct. We are seeing a slowdown right now, with a possible downturn in '05. China's IC makers aren't the only cause, however. Ironically, China's end-user markets are not cooperating. Recently, the Chinese government moved to cool China's economy, which is causing a slowdown in the end markets in that nation.
This, in turn, is contributing to those nasty "IC" words: inventory correction. The IC market is bloated with too much inventory, causing a lull -- if not a mini-downturn worldwide. ML
5) Aftershocks from Japan earthquake keep fabs shut down .... The strong earthquake that hit central Japan over the weekend has been followed by several strong aftershocks that have prevented several Japanese electronics manufacturers from resuming operations at plants located there.
Monday, October 25
TI to start building Richardson 300-mm wafer fab November .... Texas Instruments Inc. plans to break ground mid-November on a $3 billion wafer fab complex for processing 300-mm diameter wafers in Richardson, Texas, the company said Monday (Oct. 25).
Tuesday, October 26
Broadcom's CEO stands down in favor of Philips executive .... Lanny Ross, president and chief executive officer of fabless chip company Broadcom Corp. is to step down with effect from January 3, 2005 when Scott McGregor, outgoing president and chief executive officer of Philips Semiconductors will take control, Broadcom said.
Lanny Ross, president and chief executive of Broadcom, is stepping down at the right time. However, Scott McGregor, outgoing president and chief executive of Philips Semiconductors, will take control of Broadcom at a challenging period -- if not a bad time.
The market has been reeling from the inventory correction problem, which will impact Broadcom's Q4. In 2005, the overall market is headed south and communications will certainly get hit.
Maybe McGregor should have stuck with his Dutch Treat. ML
Wednesday, October 27
ARM, Philips spin-off to pioneer clockless processor .... In a break with the digital mainstream, processor design and licensing company ARM Holdings plc is working with Handshake Solutions NV and an un-named lead customer to produce an ARM 32-bit RISC processor that does not require a clock signal to operate.
Thursday, October 28
TI, SMIC sign deal to develop 90-nm technology by Q1 2005 .... Chinese silicon foundry provider Semiconductor Manufacturing International Corp. (SMIC) disclosed that it has signed a deal to develop 90-nm process technologies with Texas Instruments Inc.
TI is already working with SMIC on 130-nm process technology. Most of that work involves the back-end metallization portion of the chip, we've been told. In other words, TI does the fine geometry front-end work and ships the wafer to SMIC for metallization.
Still, I am amazed by SMIC's progress. Back in 2001, I visited SMIC in Shanghai. At the time, the startup only had constructed the shell of its first fab, a 200-mm plant geared for 0.25-micron processes.
Now, SMIC is talking about 300-mm diameter wafers and 90-nm manufacturing processes. Here's a frightening thought for SMIC's competitors: It plans to have 90-nm pilot production in Q1 2005. SMIC is also quietly researching 65-nm and 45-nm technologies. ML
Friday, October 29
The CEO interview: with Micron's Steve Appleton .... Silicon Strategies caught up with Steve Appleton, chairman, president and chief executive officer of Micron Technology Inc., at London's Savoy Hotel where Micron was hosting a conference for financial analysts. Silicon Strategies' Peter Clarke asked Appleton about the challenges that lie ahead in the highly competitive memory chip markets.