AMD, Freescale, Japan and more

What does this tell me? SMIC can't devise its own 45-nm process. It doesn't want to get sued by TSMC again for alleged IP theft.

The real answer: It also means that SMIC is positioning itself as a takeover target for someone. Loss-ridden SMIC has already been dropping hints about going private.

In 2008, I could see Chartered and SMIC forming a joint foundry company, which could threaten the big boys in Taiwan: TSMC and UMC. Chartered is part of IBM's "fab club." Now, SMIC is tiptoeing into the club.

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7. I can't see how Freescale has benefited from going the private-equity route. Since it went private, Freescale is spilling red ink. And a lot of it.

Freescale is looking to go IPO again. My prediction: I look for a breakup of Freescale to salvage the company. Infineon could buy the wireless and/or wireline and/or auto chip segments of Freescale. Or, for that matter, Infineon may buy the entire company. Maybe NXP or ST may buy some of the pieces.

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8. I also can't see how AMD can continue on its downward spiral. It is losing vast sums of money and market share.

The company recently obtained some cash from the Mubadala Development Co. of Abu Dhabi, but that's a stopgap measure. So who will rescue AMD in 2008? One Web site recently suggested that Apple may be the likely suitor. That's BS! What a lousy fit. Why would Apple need a loss-ridden chip unit?

I see three possibilities for AMD:

A) IBM buys a stake in AMD. IBM is a technology partner with AMD and IBM may want to compete with Intel again. Several years ago, IBM tried to compete in the x86 processor market, but Big Blue ended up getting black and blue in the process.

B) AMD goes the private equity route. Private equity is pass and doesn't guarantee happiness. Ask NXP or Freescale.

C) Samsung may want to re-enter the processor business and buy AMD. Once upon a time, Samsung attempted to compete in the processor business with the Alpha chip. Remember that flop? I doubt even mighty Samsung wants to compete with Intel in the processor market. Samsung is a memory house. Logic seems illogical for Samsung.

My prediction: A or B.

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9. I see something happening with two memory houses: Micron and Qimonda.

First, let's talk about Micron. Amid losses, Micron has already dropped hints about looking for some kind of partnership. Like AMD, Micron may go the private equity route. Perhaps Micron may combine its memory operations with Germany's Qimonda. Strange combination, but the DRAM market is horrible and the two companies cannot afford to spill red ink throughout 2008.

If that is not an option, Qimonda may end up merging with DRAM partner Nanya of Taiwan. It may take these types of ventures to compete against Samsung.

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10. Finally, something has also got to happen in Japan. There are too many slow, lumbering IDMs in a rough business. Toshiba is the exception to the rule. They are doing well.

Sony is more or less a goner in semis. Who's next? Epson, NEC Electronics, Oki, Renesas and Sanyo cannot take another bad year in semis.

I look for Sanyo to jettison its semi unit after a previous effort to sell the unit failed. Oki and Epson will remain in the business, but only as tiny players.

That leaves me to Renesas and NEC Electronics. In the distant future (beyond 2008), I see Toshiba absorbing NEC Electronics. Renesas will survive in the long term -- as a fabless company.

Within the next 2 years, DRAM specialist Elpida and its Taiwan partner, Powerchip, will merge.