The good fall weather is also helping us to make better-than-expected progress in our home renovation. In the past week-and-a-half, we have put up a new "el" to the 180-year-old house we acquired this summer. We're finishing the roofing today, so we'll be all buttoned up in case the weather turns. This house had been the home of the caretaker of our property back in the 1930s and 1940s. It was built in 1820 by in-laws of General Brewer, the shipbuilder who built our home, The Mansion House, when he married his wife back in 1785.

IC industry keeps adding capacity,
even when 1/3rd of capacity is idle

You have to wonder who is watching the store these days. With fully one-third of the world's IC processing capacity sitting idle in the third quarter, the chip industry was still adding new capacity to its production lines.

Despite all the plant closings and the huge amounts of cuts being made in capital spending this year, IC fab capacity nudged up by 0.7% in the third quarter to 1.324 million eight-inch wafer starts per week from 1.315 million in the previous quarter, according to the latest Semiconductor International Capacity Statistics (SICAS) report.

Global wafer fabs were operating at a record low 64.2% capacity utilization in the third quarter, down from 73.1% in the second quarter and sharply below the year-ago figure of 96.4%, according to the SICAS report released this week by the Semiconductor Industry Association.

While the growth in wafer starts was much less than the previous quarter, the increase in fab capacity at record-low utilization rates "is amazing and shows just how difficult it is to turn this ship around despite all of the cutbacks," observes analyst Bill McClean, president of IC Insights.

Because of this low capacity utilization, McClean is forecasting another big cut in semiconductor capital spending next year. IC Insights is forecasting a 25% drop to $31 billion in 2002, which follows a 32% fall in shipments this year.

Of course, the action next year will be in leading-edge processing capacity-or gear that can fabricate devices with feature sizes below 0.2-micron. Capacity utilization here ran 79% in the third quarter, down just a bit from the 80.4% figure in the second quarter.

"The 0.18- and 0.13-micron technologies will be the basis of the next recovery and the 0.25-micron capacity will not be used for new IC designs," he says. Already the need for leading-edge technology is beginning to fill up some pure-play foundry lines, says McClean, noting that the world's largest foundry supplier--Taiwan Semiconductor Manufacturing--has reportedly sold out its 0.18-micron process capacity.

(See Nov. 21 story.)

Are equipment makers
pulling out of power dive?

It may not be much of an improvement, but the monthly market picture for North American suppliers of semiconductor equipment went positive again. The book-to-bill ratio hit 0.71 in October, up a tad from 0.65 in the previous month, and meaning that $71 worth of orders were received for every $100 in shipments. So the next question might be: Will the market bottom be V-shaped No, or a broad U-shape More likely.

We may finally be at the market bottom, but we're sure a heckuva long way from the peak of the last chip-equipment cycle. A year ago, in case you may have forgotten, the book-to-bill hit a wildly bullish 1.17, meaning orders were coming in far faster than the industry could ship product.

According to the SEMI trade group, bookings for North American suppliers moved up to $651 million in October, a 5% increase over the $619 million order level in September. But this total was an incredible 78% below the $3 billion in orders posted in the same month a year ago, SEMI says.

Billings amounted to $916 million in October, or 5% below the revised total in September, and 64% below the billings in September 2000, SEMI says. The trade group was still bearish. "While the decline in orders has abated, the average monthly shipment figure continues to weaken and there is no appreciable indication of a near-term trend reversal," declares SEMI CEO Stanley Myers.

(See Nov. 20 story.)

Xilinx wants consumer product designers
to switch from ASICs to its new FPGA line

Xilinx has come up with a lower cost version of its Virtex E line of field-programmable gate arrays to go after consumer electronics applications, especially digital video. The San Mateo company will try to convince designers of digital cameras, DVD players, and PDAs to switch from ASICs to programmable logic.

Prices for the five products in the new family will range from $13 to $35 each, and are expected to cost only half of that by late 2002, Xilinx figures.

Spartan 2e I/O supports speeds of more than 300 megahertz, fast enough to match the performance requirements of 19 I/Os. The new device also is said to have enough muscle to handle a range of digital signal-processing functions such as Viterbi decoding, Reed-Solomon, and color-space conversion.

The Spartan 2e FPGA has from 50,000 to 300,000 system gates and will run at more than 200 megahertz speeds. To keep costs down, Xilinx has given the Spartan 2e only half the block RAM of its Virtex E line. Stripping away this RAM is a safe bet., the company says. "We're finding that even in Spartan 2, designers are not using all the block memory that's there," says Steve Sharp, senior marketing manager.

Xilinx was able to cut more cost out by switching to a lower-cost version of its 256-pin, fine-pitch ball grid array package that has two less substrate layers.

(See Nov. 19 story.)

If you look out far enough,
WLAN chip market is winner

Here's another short term-no growth, long term-big growth market. Sound familiar? This time it's the wireless local-area networking (WLAN) chip market. This year it will show no growth, but over the next five years it's expected to rebound and grow at a 42% compound annual growth rate, according to a new report from Forward Concepts.

That makes for a heckuva five-year growth. The market researcher predicts the WLAN chip market will grow from $1.6 billion in 2001 to $9.1 billion in 2005. The 802.11b-compliant chip market will remain dominant throughout this period, Forward Concepts says, with a unit compound annual growth rate of 82% from 2001 to 2005.

"The new 802.11g draft standard will enable faster 22- and 54-megabits-per-second transmissions in the 2.4-gigahertz band, engendering new chip set offerings on the heels of a plethora of 5-gigahertz 802.11a offerings," says analyst Carter L. Horney.

"Because of better signal propagation characteristics," he says, "54-megabits-per-second operations in the 2.4-gigahertz band can cover greater distances than is possible in the 5-gigahertz band targeted by early 802.11a products," he maintains. "With better area coverage, coupled with compatibility with the popular 11-megabits-per-second 802.11b installed base," Horney notes, the 802.11b will drive the 5-gigahertz 802.11a market."

Although the enterprise market for WLAN interface cards, access points, and LAN-to-LAN bridges are presently the largest markets for this technology right now, the wireless-based home-networking market is growing faster and will be the bigger of the two by 2005, according to the research firm. The market for embedded WLANs--such as Webpads, PDAs, pocket PCs, and even cellular phones--will begin to blossom in 2002 and should eclipse both home and enterprise markets by 2005, Forward Concepts says.

(See Nov. 20 story.)

Ten Nvidia employees accused
of violating insider trading laws

You'd think that working for one of the fastest growing chip makers in the world now would be enough for some investors. But never estimate greed.

According to graphics chip vendor Nvidia, 10 of its employees have been formally accused of violating insider trading laws by the Securities & Exchange Commission. The chip company says the insider trading charges were related to stock transactions made in March 2000 and reportedly earned the employees more $1.7 million in illegal profits because they traded stock after receiving early information that Microsoft had awarded Nvidia a key contract for chips in its Xbox video game, according to The Wall Street Journal. Investigations have been going on for more than a year.

"Nvidia takes its obligations under the federal securities laws extremely seriously," comments Jen-Hsun Huang, CEO of Nvidia. "We will not tolerate any violation of insider trading laws or of our own policies in this area."

Nvidia is one of the few bright spots in the recession-battered chip industry this year. Earlier this month, the company reported that its sales surged 87% to $370.2 million in its fiscal third quarter ended Oct. 28th, while net income shot up 59% to $44.7 million over the same period last year

(See Nov. 20 story.)

300-mm wafer bumping line
close to volume production

Advanced Semiconductor Engineering has developed the wafer-bumping technology for flip-chip packaging of chips from a 12-inch wafer. A fully automated solder-bumping line for 300-mm wafers will be ready to go at the Taiwan company before the end of the year, ASE reports, and customer qualification tests will begin in the first quarter.

According to the contract chip-assembly and testing house, the 300-mm bumping line will be capable of handling 5,000 wafers a month. It has applied for more than 30 patents related to its solder-bumping processes and claims that its 200-mm wafer bumping technology has 99% yields.

(See Nov. 20 story.)

PRI Automation has lousy quarter,
with recovery signs still not visible

PRI Automation's decision to sell out to Brooks Automation increasingly looks like a darned good idea.

The Billerica, Mass., builder of chip-production systems showed a 21% sequential drop in revenues to $59.2 million in the fiscal fourth quarter ended Sept. 30th, and a 26% decline from the same quarter last year. The company posted a net loss of $41.7 million, including special charges for layoffs, plant closings, and inventory write-downs. Worse yet, PRI's gross bookings in the quarter just-ended were just $25 million.

"We haven't seen any signs of an upturn, and clearly the full-scale transition to 300-mm has been delayed," says CEO Mitch Tyson. "However, based on conversations with customers, we believe that the market may be bottoming out."

Under the pending acquisition, Brooks will purchase PRI for about $380 million in stock and merge the two companies into Brooks-PRI Automation. For fiscal 2001 ended Sept. 30th, PRI had revenues of $268.6 million and a net loss of $99 million.

(See Nov. 20 story.)

Cell phone sales still running
behind year-ago shipments

Cell phone sales still aren't going anywhere. Worldwide shipments of mobile telephone handsets declined 9% to 94.4 million units in the third quarter from 103.2 million in the same period last year, according to Dataquest.

Last year, about 412 million cell phones were sold and most forecasts for this year called for handset volumes to run flat to down slightly. "The mobile phone industry has been impacted by repeated delays in the availability of general packet radio service (GPRS) terminals and the effect of the widespread economic downturn on regions where mobile connection growth has traditionally been high, such as Latin America," sums up Bryan Prohm, senior Dataquest analyst.

The region hit hardest in the third quarter was Western Europe, which accounted for about one-third of global handset sales in 1999 and 2000, says Ben Wood, senior Dataquest analyst. "In an unprecedented development," he says, "shipments actually fell in Western Europe from the second quarter to the third quarter of 2001."

The industry leader, Finland's Nokia, lost market share in the third quarter, according to Dataquest. It accounted for a 33.4% market share, or 31.55 million units, down 2.7% from the second quarter when it shipped 32.42 million units.

Motorola's third-quarter shipments grew 1.6% to 14.77 million from 14.54 million in the same period last year, and LM Ericsson's shipments fell 27.7% in the third quarter to 7.11 million from 10.41 million in the same quarter last year, Dataquest said.

(See Nov. 19 story.)

NEC's disappearing act
at Roseville, Calif., site

I can still remember the first time I ever heard of Roseville, Calif. It was way back when Japan's NEC decided to build a wafer fab in the Sacramento suburb. The site quickly became one of the largest chip factories in the U.S. No more. The operation has now been scaled back by two-thirds as it phased out DRAM production.

At its peak, the Roseville fab had a capacity of 39,000 wafers a month. That production has now been cut to only 14,000 8-inch wafers a month. This output will consist only of systems-on-chips. NEC had planned to build a new 300-mm wafer fab there, but that has been dropped.

What's left of the fab's back-end equipment for packaging and test will be auctioned off early in December, and chips fabbed at Roseville will now be sent to other NEC facilities for final assembly and test.

(See Nov. 20 story.)

Now Hynix may hike
its capital spending

It looks like the DRAM industry is going to have an overcapacity situation for some time to come. Hynix Semiconductor is thinking about raising its capital spending six-fold next year 2002 to $935 million.

The DRAM giant's creditors committee "has formulated the $935 million capital investment budget as part of the new financial package," according to a company spokeswoman. That would be up from the $143 million that the South Korean company has spent in the first 10 months of this year.

Hynix has not yet committed to the higher capital spending plan, but the preliminary creditor committee approval for the increase would allow the troubled Korean chip maker to embark on long-sought major upgrading of its fabs. This kind of program would undoubtedly upset its DRAM competitors, who charge that Hynix is in such bad financial shape that it shouldn't be allowed to invest any more in the face of the distressed global memory market.

(See Nov. 20 story.)

Processor is first VLIW core,
runs 4 instructions per cycle

So how do you get 1-gigahertz performance out of a processor that's running at the lower power level of a 250-megahertz clock? By executing four instructions per cycle, according to STMicroelectronics, which has just developed with Hewlett-Packard the chip that can do just that.

The scaleable, customizable core is the first very-long instruction word (VLIW) microprocessor core, the two companies claim, and was designed for embedded use in multimedia system-on-chip (SoC) designs. The VLIW processor core is primarily aimed at video/audio streaming applications, such as MPEG-2, MPEG-4, and MP3 in digital consumer systems.

The ST210 core will outperform all existing dedicated multimedia processors and VLIW cores in terms of architectural simplicity and silicon area, effective processor speed, and scalability, claims STMicro. According to the developers, many functions are implemented as software algorithms instead of hardware circuitry, making it a lot easier to customize the VLIW-based device. Samples of a test chip are due out by the end of November.

"The ST210 demonstrates not only the fundamental correctness of our approach but also its commercial viability," maintains Andrea Cuomo, STMicro vice president. "We are already exploiting these advances in new SoC designs for audio decoding and MPEG video encoding in applications such as DVD players and recordable DVD," comments Philippe Geyres, vice president who runs STMicro's consumer and microcontroller groups.

(See Nov. 19 story.)

Acquisition should heat up
mass-flow controller market

Look for competition to build between Advanced Energy and such established mass-flow controller suppliers as Mykrolis in Bedford, Mass., and MKS Instruments in Andover, Mass. The Fort Collins, Colo., company is expanding its presence in mass-flow controller applications by acquiring privately-held Aera Japan for $48 million in cash and assumption of bank debt.

Advanced Energy currently supplies power systems and integrated technologies for wafer fab tools. Aera's products will expand its offering for plasma-based manufacturing processes in wafer fabs. The company first moved into emerging technology for mass flow controllers by acquiring Engineering Measurement at the beginning of 2001.

"Power delivery and mass flow control are two of the largest segments of the components and subsystems market for semiconductor equipment," comments Doug Schatz, CEO of Advanced Energy.

Aera, founded in 1976 as Nippon Tylan, is based in Hachioji, Japan and supplies digital mass-flow controllers, pressure-based mass flow controllers, liquid mass flow controllers, ultrasonic liquid flow meters, and liquid vapor delivery systems to the semiconductor industry. For the fiscal year ended last June, Aera had $114 million in revenue and $17 million in operating income. It employs 205 people.

(See Nov. 19 story.)

Motorola buys Synchronous
to beef up optical technology

Motorola is making a major acquisition to expand its technology to cover the growing needs of its broadband communications customers. It has agreed to buy Synchronous to expand its infrastructure product lines to the optical networking and telecommunications markets.

The deal is worth about $260 million and will be based on a stock exchange ratio to be determined just before the acquisition closes in late 2001 or early 2002.

Acquisition of the 20-year-old San Jose company is part of the Motorola broadband communications systems group's strategy to help operators support a growing number of data-intensive services--such as Intranets, e-commerce, and the so-called "triple-play" broadband services of video, voice and data.

The acquisition will provide Moto's transmission network systems division with optical networking technology, including dense wave division multiplexing (DWDM) 1550-nm transmitter platforms and erbium-doped fiber amplifiers (EDFAs).

"The traditional cable television network is shifting toward an optical-rich network as broadband service providers seek to efficiently increase their carrying capacities to support additional programming, Internet access, VoIP, and other advanced services," points out Dan Moloney, senior vice president who heads Motorola Broadband's IP systems group. "Synchronous' world-class optical technology significantly extends and complements our existing broadband TNS product line," he says.

(See Nov. 19 story.)

Kobe Steel, Dainippon to develop
supercritical fluid-based systems

Supercritical fluid-based, cleaning and drying systems will be needed within three years for the mass production of ICs, as device feature sizes shrink to less than 100 nm (0.10 micron).

At least that's what Kobe Steel and Dainippon Screen Mfg. believe, so they are partnering to develop next-generation semiconductor fabrication systems using supercritical fluid technology. While supercritical fluids have densities approaching liquids, they also have the viscosities and diffusivity properties of gases. This makes them ideally suited for wafer cleaning and drying applications.

Kyoto-based Dainippon Screen is one of the world's top10 suppliers of chip-manufacturing gear and a leading producer of photolithography resist coat-and-develop equipment and wafer-cleaning tools. Kobe Steel in Tokyo supplies supercritical fluid process technology and high-pressure, contamination-free equipment.

The two Japanese companies plan to develop and market new wafer fab systems using supercritical fluid technology in three areas: Super Critical C02 (known as SCCO²) as a post-develop drying agent for sub-100-nm lithography; wafer cleaning using SCCO² enhanced with co-solvents; and SCCO² in post-clean drying applications.

(See Nov. 19 story.)

Nikon getting double hit:
economy and competition

It probably won't come as much of a surprise to learn that scanner makers are facing tough times in the current downturn. All the big guys--Nikon, ASM Lithography, Canon, and Ultratech Stepper--have reportedly lowered their sales and shipment forecasts this year.

But for Nikon, the world's largest supplier of lithography tools, it is facing a doubled-barreled problem, since analysts figure the Japanese company also is losing market share--ASML is giving Nikon fits in the U.S., and Canon is taking share from Nikon in Japan.

Just this week, Reuters reported that Nikon had cut its forecast for lithography-tool shipments in its current fiscal year ending next March. It now expects to ship 226 units, a 10% decline from the previous fiscal year. Its latest forecast had called for it to ship about 250 tools this fiscal year.

Nikon will miss its original forecast by a wider margin. Earlier this year, Nikon had figured it would ship about 400 lithography tools in fiscal 2002.

As a result of this slowdown, Nikon plans to cut 50% of its 3,100 seasonal workers between now and next March. The Tokyo company now figures to lose nearly $90 million this year.

(See Nov. 20 story.)

We welcome your feedback, comments, criticisms, or questions. E-mail us at bhenkel@aol.com. And remember: God bless America! And please have a delightful and restful family Thanksgiving day

(Click here for last week's Semiconductor Alert!.)