What's the latest and greatest news heard around the water cooler?
Nov. 22, 2006
Comings and goings
Jim Handy, flash analyst at Semico, left to form a new research firm, dubbed Objective Analysis.
At the recent Samsung conference in San Jose, Tom Quinn was spotted. In September, Quinn, a longtime executive from Samsung Electronics Co. Ltd.'s U.S. subsidiary, agreed to plead guilty and to serve jail time for participating in a global conspiracy to fix DRAM prices, the Justice Department said. said at that time.
At the event, Quinn declined to comment on the case.
Intel a "Buy" despite Vista
Analyst Doug Freedman of American Technology Research on Intel: "If AMD does lower the GM bar as a result of lower revs from ATI, lower yields, continued price pressure, it could put Intel's shares under pressure."
Freedman currently has a "BUY" on Intel and a price point of $21.71.
"We would be buyers of the pull back as longer term trends in the PC space are favorable," he said. "In the near term we believe Vista release will continue to frustrate investors with no clear attributable impact. Is it Vista or general demand levels? We don't think this question ever gets answered. What is clear to us is that Vista and video applications will lift the hardware demands on the PC installed based, likely kicking off a new upgrade cycle."
Applied Materials recently announced a $3 million investment with Solaicx, a solar wafer maker. Bill Ong of American Technology Research, said that Applied hopes to expand into the solar equipment market with the investment.
"We maintain our 'Neutral' rating on AMAT as new orders remain at risk given our expectations for a below seasonal demand outlook in 2H06," he said.
"We believe Applied's recent series of investments in the alternative energy business is part of its overall strategy to diversify from the core semi cap equipment business that has been slowing as the company looks to enter new growth market segments," Ong said. "By strengthening the solar supply chain, AMAT hopes to further expand the solar equipment market."
Investors had better be patient with AMAT. "The overall solar equipment market remains small at about $1 billion is size in 2006," he said, noting Applied Materials' projected sales for 2006 are about $9.6 billion.
"Applied's current offerings include PVD and CVD deposition tools to support thin film and crystalline-silicon based solar panel applications," he said. "AMAT recently began breaking out its Adjacent Technologies business which includes solar where it represents less than 1 percent of total sales."
Good news. Bad news.
Good and bad news for Trident or TRID on the stock exchange. Chairman and CEO Frank Lin this week resigned amid a stock-option scandal at the chip maker.
"We do not see significant risk to the firm's relationships or its 2007 revenue prospects with Lin's departure," said Craig Berger, an analyst at Wedbush Morgan.
"TRID getting better visibility into HiDTV Pro design win with a top tier TV OEM for 2H:07," he said. "Checks preliminarily show strong TV demand trends with low price points and premium positioning at retailers all driving buzz."
FPGA war update
"Based on our checks, we believe Xilinx is seeing potential upside in the quarter with their Spartan-3 devices. Spartan-3, which is a mid-end FPGA, targets end markets like the consumer segment," said Satya Chillara, an analyst with Pacific Growth Equities.
"We are comfortable at this point regarding their December quarter (FQ3:07) traction with potential upside coming from the military market as well consumer segment," he said.
However, there is some bad news. "We continue to believe, based on our channel checks, that Xilinx is potentially loosing market share to Altera, as Altera is aggressively discounting the prices on their high end FPGA products on a longer term basis," he said. "However, we now think that this may be partially offset by potential upside in the quarter with XLNX's Spartan-3 devices."
Most boring event: Samsung conference Nothing new. No real news.
Runner up: SIA dinner Jay Leno was OK. The problem with the SIA dinner: No press event, which was a tradition until last year. Without a press event, CEOs can refuse to address the new IC forecast, among other issues. What are chip CEOs hiding from? Stock option issues. Missed forecasts. Outsourcing. I wish I knew.
Most interesting event: AVS (Advanced Vacuum Society) conference. A ton of surprisingly interesting papers on semis, solar, biotech, etc. No vacuum cleaners were seen at the event.
Nov. 14, 2006
Everyone knows that Taiwan is the world's leader in PC-related products. Taiwan is also building so-called mega-fabs.
Now, the island wants to dominate the "mega-yacht" business. Taiwan, Asia's biggest producer of large-sized yachts, will invest NT$450 million ($13.7 million) in revamping two yacht piers in the southern port city of Kaohsiung.
The infrastructure overhaul is not only aimed at raising the industry's production value by more than 10 percent, it is also part of a concerted effort to catapult Taiwan to the top-3 spot of the word's biggest makers of large luxury yachts.
The ambitious goal would require Taiwan to overtake the Netherlands and the U.K. in producing yachts measuring 80 feet or longer, trailing only Italy and the U.S.
In 2005, Taiwan was the world's fifth-largest maker of these so-called "mega-yachts," while it came in at seventh place for yachts of all sizes, according to ShowBoats International magazine.
The goal won't be so far-fetched after the completion of a 46 hectare industrial park dedicated to yacht-building in Kaohsiung at the end of the year, according to the island's Industrial Development Bureau.
The industrial park is expected to be up and running by the end of 2007, helping raise the annual production value of Taiwan-made yachts to $300 million from $230 million at the end of 2005, the Industrial Development Bureau said.
The government has secured commitments from around 15 yacht and parts makers to invest a combined $95 million in shipyards and factories housed in Kaohsiung's Shin Da Yacht Industrial Park. It is seeking more yacht makers to take up residence at the inland port.
Last year, the value of Taiwan's yacht exports grew 30 percent to $220 million, data from the Taiwan Yacht Industry Association (TYIA) show.
A 65 percent majority of the 235 exported yachts were shipped to North America, followed by 21 percent to Europe, according to the United Ship Design & Development Center, a government-funded ship designer and technical consultant.
As the number of export orders barely nudged from 234 mega-yachts in 2004, the sharp increase stems from a 24 percent jump in the average price tag to $940,000, reinforcing the government's directive to focus on high-margin, custom-made mega-yachts.
Of the 31 yacht manufacturers in Taiwan, 21 are located in Kaohsiung, including industry behemoth Horizon Yacht, the sixth-largest luxury yacht builder in the world. By the end of 2006, Horizon Yacht will have more than doubled its production facility, enabling it to increase production by 40 percent, said company founder John Lu.
ASML is grabbing business left and right. It recently won large immersion and dry litho orders at IM Flash, Inotera and Nanya. ASML already owns several accounts: IBM, Samsung, TSMC, among others.
Texas Instruments, known as the stock symbol TXN, may be paying a price for LoCosto, its single-chip cellular-phone solution, said analyst Doug Freedman of American Technology Research Inc.
"We believe that it may become a negative for TXN as single chip solutions become more important to the handset market in general. While TXN will likely benefit from a higher percentage of the semiconductor content within the handset, we believe total handset IC content is likely to decline," Freedman said. "In other words, we believe that in order for TXN to remain at current wireless revenue levels, it will be necessary for the company to increase the number of units it sells. The company seems to be setting up a situation in which it is cannibalizing its own handset content with lower ASP solutions."
"We believe that Nvidia is entering the low-end integrated chipset space, putting them in competition with Intel and others like Via, etc.," said analyst Satya Chillara of Pacific Growth Securities LLC.
"In our opinion the gross margins in this space will be challenging and pose a risk to Nvidia," he said. "As a point of reference we know that the low end integrated Intel based chipsets produced by ATI Technologies had gross margins of around 15 percent, and to Nvidia's credit, we expect they will have better margins than ATI, but our attitude towards the stock will remain cautious until we have more visibility into Nvidia's strategy in this space. Also, Intel is a tough competitor in terms of pricing and it could be volatile compared to other businesses."
Buy, sell, hold
Asyst Technologies from analyst Bill Ong of American Technology Research. "We are maintaining our 'Neutral' rating as business visibility remains somewhat limited and gross margin results remain lumpy." Ong has a price target of $7.44 on the stock.
"We reiterate our 'Neutral' rating on Amkor as well as our cautious stance on the semi equipment sector given the lack of visibility into CY07," Ong said, who has a $7.49 price target on the stock.
Freedman on National Semiconductor: "NSM is likely to continue to underperform given what we believe to be a lack of traction on newly introduced products," he said. Freedman has a "Sell" on National with a $23.95 price target.
Nov. 5, 2006
Fusion, an independent distributor, on the SRAM market: "The lead times for almost all Cypress SRAM have been pushed out to 20 + weeks with no solution in site. To make matters worse, much of Cypress & Samsung's time is going to be tied up in questions of Anti-trust violations, dealing with a Department of Justice probe into allegations of price fixing."
"Intel trimmed down their line of StrataFlash and has finally gotten production & deliveries of their Nor Flash products under control with reasonable lead times," according to Fusion. "Spansion on the other hand is recently struggling to meet delivery dates and is starting to push out lead times. Several OEMs and CMs have reported a lack of confidence in Spansion's ability to deliver shipments on time."
"Xilinx & Altera, two manufacturers who strictly control their parts in the market, have both recently pushed out their lead times by several weeks," according to Fusion.
"TI is still struggling to get their production in line with demand," according to Fusion.
"Lead times have been pushed out significantly in the past couple months on DAC, INA, OPA, and TPS series of parts. Lead times are out to 16+ weeks on the OP Amp (OPA) and Differential Amp (INA) parts," according to Fusion. "The Voltage Regulators from TI (TPS series) has now jumped over 6 weeks. As demand increases for DSP technology, we are seeing a lot of activity on TI's TMS series of parts. We predict this to be the next big spot shortage in the market."
Dave Burstein of DSL Prime on Ikanos:
"Rajesh Vashist built Ikanos into a dominating leader in VDSL, but now is leaving as sales fell Q3 and look to plummet in Q4. His achievements should not be underestimated. Ikanos delivered DMT fast VDSL chips at least a year before anyone else," Burstein said.
"Without Ikanos, QAM chips from Metalink and Infineon/Savan would probably be winning the market today because DMT allies Broadcom, ST, and TI were unable to demonstrate production chips. He raised sales to $40M a quarter, successfully IPO'd the firm, and leaves with strong products on the way. Vashist was a demanding CEO, with high turnover in key positions, but until this quarter the results were remarkable," he said.
G. Venkatesh led the board in this surprising move," he adds. "The company has $100M in cash and plenty of time to turn things around. Interim CEO Dan Atler's highest priority is solving the production issues on the new 90 nanometer chips and improving the firmware and system design to get maximum performance."
More from Burstein: "Rajesh was the strongest proponent of quickly moving from ADSL to VDSL, but few carriers have made that choice. VDSL2 includes everything in ADSL2+, so at some point will dominate the market. It offers years of small improvements in technology and 3 to 50 times the performance on short loops."
Shakeup at Applied?
According to a recent report from FBR Research, Applied Materials' board is looking for a "replacement" for Mike Splinter, president and CEO at the chip-equipment giant. FBR says that the rumors are just in the "chatter" stage.
Splinter would make an ideal COO at his former employer, Intel. Maybe Splinter could be a better CEO at Intel.
Last week, Nanometrics disappointed the market, by reporting Q3 operating EPS of minus $0.25 on sales of $29 million. Avinash Kant, an analyst from Canaccord Adams, projected EPS of minus $0.20 on sales of $29 million. Consensus was minus $0.21 on $29 million.
"Post acquisition of Accent, we believe margin improvement remains the key execution item for management going forward," Kant said.
"While purchase accounting rules will continue to impact numbers
through Q4, the company guided for sequentially flat revenues (plus or minus 10 percent) in Q4. Given the full quarter contribution from Accent in Q4, this indicates some further slowdown in Q4, which is not a surprise to us given our thesis
of a near-term industry slowdown," he said. "Based on the company guidance, we are now modeling minus $0.75 on $99 million for 2006 vs. our old minus $0.41 on $106 million."
Buy, sell, hold
Entegris reported Q3 operating EPS of $0.16 on $171 million (down 5 percent q/q), weaker than our $0.18 on $180 million and consensus of $0.17 on $178 million. "Revenues were down primarily due to weakness in the capital spending-driven business," Kant said.
"For the December quarter, management guided for $0.11-0.14 in EPS on revenues of $155-163 million. This was slightly lower than our expectations," he said. "We maintain our 'Buy' rating on the stock."
Meanwhile, Craig Berger, an analyst with Wedbush Morgan Securities, maintains a "Hold" rating and price target at $41 for International Rectifier.
"While we respect International Rectifier's server and gaming console design wins, we remain at a HOLD given 1) IR's gross margins are not improving as quickly or meaningfully as management continues to suggest to investors, 2) the firm may have made material margin concessions on its new gaming and server platform wins, and 3) the stock's valuation multiples are not compelling relative to peers," he said.
Another firm, FBR Research, on Maxim or MXIM: Maintain 'Market Perform' rating and $30 price target. "Weakness in MXIM's quarter and guidance reflected both market related weakness, similar to that which was heard from MXIM's peers, as well as the effects of MXIM's strategic transition to a higher mix of high volume (but lower gross margin) products," the firm said.
FBR on Nvidia: We are raising our F3Q estimates on NVDA for the second time this quarter, as we expect upside in the quarter driven from an improved market environment and significant share gains. Channel expectations remain high for a strong F1Q
and FY08 due to the Vista launch and NVDA's new G80 platform.
Reiterate Outperform, raising price target to $36 from $34."
Analyst Satya Chillara of Pacific Growth Securities on Skyworks: "We are reiterating our 'Buy' rating on Skyworks," he said, adding the market is looking at a price range of $9.
"The company reported a solid quarter which was in line with our top line estimate and beat our bottom line by $0.02. Following the elimination of the baseband business segment, and taking into consideration the forthcoming ramp with Motorola, we believe that there is a potential upside to the current stock levels," he said. "We are optimistic going forward and believe the catalyst for revenue growth in CQ1:07 should come from the DigRF shipments into Motorola, and we also believe that the Helios EDGE shipments to Samsung and LG should drive CQ4:06 revenue."
Oct. 29, 2006
Apple is moving towards entry into the wireless market with the so-called iPhone.
"Apple's entry could be the most disruptive event that wireless has experienced in its short history as a major industry," said Al Boschulte, chairman of Probe Financial Associates Inc. "To extend their Apple culture and business methodology, they are virtually forced to become more than an equipment supplier probably something like a 'Super MVNO.' "
President and COO Lou DiNardo has recently exited Intersil. "While we are surprised by the departure, we do believe Lou DiNardo had a lot to do with the recent success at Intersil," said analyst Doug Freedman of American Technology Research.
"We have the highest regard for Rich Beyer as CEO, but believe it is likely he will return the organization to a gross margin structure to speed decisions on the operations levels," Freedman said. "This departure does leave a hole in the organization that will most likely have to be filled from the outside. We believe that many of the line level managers are unseasoned and will require the addition of some head count between the CEO and daily operating managers."
Optoelectronics and discrete semiconductor sales both strengthened in the first nine months of 2006, while the high-flying sensor/actuator market segment lost a
little momentum because of price erosion, according to IC Insights. IC Insights now expects optoelectronics revenues to grow 13 percent to a record-high $16.8 billion in
2006. This total will edge out discrete semiconductor sales, which are
forecast to rise 8 percent to $16.5 billion this year.
Worldwide mobile phone semiconductor revenues are expected to grow 12.2 percent in 2006 and reach $42.0 billion in 2010, according to IDC. "The two biggest catalysts for this growth are connectivity and multimedia," according to IDC. "These drivers are closely aligned with consumers' growing interest in mobile phones for entertainment and productivity. These trends are having dramatic affects not only on mobile phone features, but also on their semiconductor content."
The wireless LAN (WLAN) semiconductor revenue forecast continues to look strong due to technology advancements in 802.11, such as single chip low power devices, production of pre-N and draft-N chipsets, and burgeoning end-market applications. The worldwide market will reach $3.2 billion by 2010, a 17 percent compound annual growth rate (CAGR), IDC predicts.
Buy, sell, hold
Analyst Freedman on Micrel: "Micrel's relatively small top-line compared to its larger competitors makes it a more attractive investment vehicle for growth as the company has the ability to gain share with recovery in the broad-based power management market," he said. Freedman has a "Buy" rating on Micrel with a $15 price target.
Analyst Jeff Schreiner of American Technology Research on Silicon Image: "Investors will realize the strong improvement in the company's margin structure and see the opportunity for further improvement as we enter CY07," he said. The analyst has a "Buy" on Silicon Image and $17 price target.
Craig Berger, an analyst from Wedbush Morgan, maintains a "Hold" rating on PortalPlayer and price target from $10 to $11. "While PortalPlayer is touting several new growth and diversification initiatives including Preface and a new chip licensing plan, we remain skeptical of the firm's ability to generate meaningful revenues from these initiatives absent greater visibility into customer traction and specific product strategies; we thus advise investors to avoid the stock until better visibility is realized," Berger said.
Berger has a "Buy" for On Semi and price target from $10 to $9. "Despite a lowered bar for Q4 and 2007 EPS estimates, we believe On is one of the more compelling lower tier analog/discrete stocks given continued management execution," Berger said.
Berger on Monolithic Power Systems: "Strong 'buy' rating, and $14 price target," he said. "Q3 revenues and EPS ahead of consensus estimates driven by strong gross margins. Management guided Q4 revenues worse than our and consensus estimates, though we believe some conservatism is embedded in guidance given a difficult operating environment."
FBR Research on MEMC, which is known as WFR on NASDAQ: "As expected, WFR reported upside on all fronts, as reported revenues of $408M, up 10 percent QOQ, came in above our estimate/consensus estimates
Guidance is for 4Q06 revenues to increase by 1-2 percent QOQ. ''We expect semi revenues to remain flat QOQ in 4Q and the incremental revenues to come from continuing to sell poly in the spot market," the firm said.
"As we highlighted several times during the quarter, we believe that the company slowed the ramp of 300mm semi wafer capacity expansion (as illustrated by lower capex spending), which, in effect, has helped WFR
with increased excess poly (to be sold in the spot market)," it added.
Oct. 15, 2006
Research firm Databeans has lowered its IC forecast for 2006. Last January, Databeans' 2006 worldwide semiconductor revenue forecast called for a 15 percent increase over 2005, resulting in a market worth $261 billion.
"With 8 months of the year recorded, it looks like the market will finish 2006 at about $256 billion, or 13 percent higher, a slight reduction from the original forecast," according to the firm. "This comes as a result of the struggling MPU market, which might only be up 5 percent this year if not slightly less. Nonetheless, the chip market has paced well and September's results should follow trend."
Databeans' current growth rates, projected by semiconductor market segment, includes averages of 15 percent for communications, 12 percent for consumer, 11 percent for computer, and industrial and automotive both at 8 percent.
"Our checks indicate 4Q PC production rates that are largely in line with seasonal norms. Our checks suggest seasonal 4Q growth for desktops/motherboards, with notebook production on the low end of seasonal
norms, according to Friedman Billings Ramsey & Co. Inc. (FBR).
"We think several PC semiconductor suppliers, particularly those in the analog and hard drive space, have significant inventory to burn, and demand that is 'just seasonal' may not fully clear inventory
by year end," according to the firm.
Analyst Doug Freedman of American Technology Research breaks down Intel, which is reporting its results on Tuesday.
The stock: A buy rating. "We believe that Intel will exceed the high-end of its guidance range driven by a strong seasonal rebound. We are increasing our price target from $24 to $26," Freedman said.
Q3 sales, profits: Up, up and away. Intel's Q3 sales guidance was $8.3-$8.9 billion. American Technology's estimate was $9.0 billion.
"We are increasing our Q3 estimates to $9.01 billion in revenue and $0.19 EPS (from revenue of $8.69 billion and EPS of $0.17) and our Q4 estimates to revenue of $9.84 billion and $0.26 EPS (from revenue of $9.55 billion and EPS of $0.24)," he said.
Inventories: Cloudy. "Inventory levels and product mix will come under scrutiny after the build-up in Q2," he said. "We believe Intel will report that inventory levels were in fact worked down some, even with a chipset shortage due to the ATYT/AMD deal. The deal caused Intel to support all Core 2 Duos with chipsets from internal supplies."
Intel's new processors: Gaining momentum. "Intel's focus this quarter has been on rolling out its next-generation Core architecture product lines Merom, Conroe and Woodcrest," the analyst said.
"Conroe has regained the performance crown in the enthusiast segment over AMD's FX series. In the server segment Woodcrest has provided a big improvement, specifically in performance/watt over the previous NetBurst generation, although at a system level where AMD still maintains an advantage in some segments," he said. "However, these products are in their early ramp stage with the majority if Intel shipments still coming from the older product lines."
Buy, sell, hold
Cypress: Freedman has a "buy" rating at $19.71.
"While we believe the stock is approaching fair value, the majority of the recent move is based on speculation of a possible LBO or management-led buy-out as opposed to fundamentals," Freedman said.
"We expect Cypress to report slightly better than expected results," Freedman said. "While our published September EPS estimate including stock based compensation of $0.08 is lower than the consensus estimate of $0.15, on an apples-to-apples basis we are expecting a pro-forma EPS result of $0.16. Strong PSoC sales and a healthy SRAM pricing environment should help contribute to the growth we will see out of the SunPower portion of the business."
Lam Research: A hold rating at $48.12, said analyst Avinash Kant of Canaccord Adams.
Last week, Lam Research delivered strong EPS and revenue upside for its September quarter. "For DecQ2, Lam guided for gross margins of 51 percent on revenues of $605-625 million, resulting in EPS of $1.07-1.11," Kant said.
"For DecQ2, Lam guided for orders to be [plus or minus] 5 percent q/q, once again in line with our preview of flat orders q/q," he said. "While orders may be flattening, Lam guided for shipments to continue to grow sequentially over the next two quarters. As a result, our C2006 estimates get revised up to $3.87 on $2.2 billion from $3.70 on $2.16 billion."
MEMC: Silicon wafer maker is a "market perform" at $36.00, said Mehdi Hosseini, an analyst with Friedman Billings Ramsey & Co. Inc. (FBR).
"We expect MEMC to meet/exceed our in line with consensus 3Q estimates, and guide to above our below-consensus estimates for 4Q," according to the FBR analyst. "The upside to 2H06, in our assessment, is mostly driven by selling poly into the spot market, as well as pushing out some of the capacity ramps into 2H07, both actions also providing upside to our GM expectations."
SanDisk: Freedman of American Technology Research has a "buy" rating at $58.26.
SanDisk will report Q3 results on Thursday. "We are modeling revenue of $730 million and EPS of $0.60," Freedman said. "This is driven by bit growth of 28 percent and an ASP decline of 19 percent. We believe that SNDK had solid sell-through this quarter and did not experience any substantial pricing pressure beyond its guidance. Royalty revenue will be down this quarter after the weak NAND results from Samsung in Q2."
Analyst Satya Chillara of Pacific Growth Equities on SanDisk: "We are raising our Q3 revenue estimate to $744M from $707M and our proforma EPS to $0.59 from $0.50; the Street consensus estimate is at $733.1 million," he said. "One of the main drivers for raising our revenue number is the continued OEM momentum on the mobile cards in particular from Nokia and Sony Ericsson. Based on our most recent channel checks, we believe that product gross margins are going up for Q3 due to SanDisk procuring little die from Samsung."
Silicon Labs: Buy at $45-50, said Chillara. "After the company pre-announced Q3 results and guided down for the quarter, we believe that business continues to be soft in Q4," he said. "We feel there has not been a lot of up tick in the food chain, and the company has been cutting back on the inventory from the Q3 shortfall."
Oct. 8, 2006
According to the San Jose Mercury News, Cypress could fetch $3 billion if it goes the equity route. That could include its chip and solar-cell (SunPower) units.
In comparison, Freescale went for $17.6 billion.
NXP went for $10.6 billion.
T.J. must have a bruised ego by now.
Dumb idea of the week: Intel is looking to buy Nvidia.
Intel has screwed up every acquisition it has ever made. Look at what Intel did in comms. The chip giant already has a graphics chip offering.
Nvidia makes nice products. Why mess that up? On the other hand, Nvidia is under pressure after the big AMD-ATI merger.
Analysts are mixed about Nvidia's stock. "Our checks at Nvidia and ATI channel partners suggest that near-term conditions for Nvidia remain strong, due to stabilizing PC build rates, as well as Nvidia design wins resulting from ATI roadmap uncertainty," according to Friedman Billings Ramsey & Co. Inc. (FBR).
"We further think chipsets, notebooks, handsets, and PS3 provide enough growth drivers to comfortably meet 2007 estimates, with room for upside. We reiterate our 'Outperform' rating and raise our price target to $34 from $32," according to the firm.
Pacific Growth Equities has another opinion about Nvidia: "We are downgrading Nvidia to a 'Neutral' from a 'Buy' and are adjusting down our January quarter (FQ4:07) revenue estimates to $770 million from $790 million and we are cutting our pro-forma EPS estimates to $0.35 from $0.38."
More bad news for Nvidia: "We are now below the Street estimates of $794 and $0.38 for revenue and EPS. We believe that the January quarter is not looking strong from a demand perspective, mainly due to concerns of the AMD-ATI bundling once the merger is complete in October. We are also concerned over the pricing of graphic and logic chipsets caused by the AMD-ATI bundling."
Buy, sell, hold
Skyworks: "We are upgrading Skyworks to a 'Buy' from a 'Neutral' rating based on corporate restructuring and updated guidance," says analyst Satya Chillara of Pacific Growth Equities LLC. Price target: $9.
Tokyo Electron Ltd.: Sell the stock, says analyst David Motozo Rubenstein of Japan Ltd.
Analysts estimate an 8 percent rise in operating profit for FY3/08.
"If TEL is lucky, DRAM and flash memory capex next year will be flat," he says. "Now memory capex is about 60 percent of capex at TEL."
Xilinx: Buy rating at $25 a share, says analyst Chillara.
Bad news. "We have cut our revenue and EPS estimates for the remaining quarters of FY:07 and for FY:08 as a result of our channel checks indicating to us that there is softer than anticipated demand in the storage, automotive and industrial sectors," he says.
Observations from Susquehanna Financial Group semiconductor analyst Daniel Berenbaum: "Despite recent strength in semi cap stocks, we see more risk than reward in equipment names in the near term. Our view is driven by a combination of peaking cyclical indicators and channel checks that suggest orders are set to decline into 1H07. While large 300-mm memory projects will clearly buffer the downside to equipment bookings, we do not expect these to offset risks to foundry and logic spends -- combined with an anticipated drop in 200-mm activity from outsized 1H06 levels, we see orders declining [around] 35 percent from peak to trough over the next several quarters, and model capex -- 7 percent Y/Y in CY07."
More bad news: "Our channel checks indicate that overall bookings at equipment OEMs will likely decline [about] 5 percent in C3Q06, drop another 15-20 percent in C4Q, and start to level off in C1Q/2Q07."
And still more: "We do not expect the launch of Microsoft's Vista operating system to drive significant IC demand, memory or otherwise. Interestingly, our survey shows that 89 percent of sub-$700 PCs and 93 percent of sub-$1,000 notebooks currently on sale at major U.S. retailers are Vista-ready, implying that we may have already seen the bulk of the Vista-related DRAM demand."
Oct. 1, 2006
Drum roll please
Dataquest/Gartner's updated IC forecast:
2006: 10.9 percent growth
2007: 9.4 percent growth
Observations on last week's Intel Developer Forum (IDF) from analyst Doug Freedman of American Technology Research:
*"While Intel is introducing new technology at an impressive rate, AMD is still viewed by an increasing number of PC OEMs as a viable alternative source. For Intel to be successful it needs the PC space to grow, while AMD needs its products to move into more mainstream markets."
* "In the server space Intel has regained the performance lead with Xeon 5100/Woodcrest [processor], but the share battle still continues as the FB-DIMM power issues remain."
*''While we are not believers in the Viiv marketing plan for increased PC adoption in the living room, it appears products are advancing in the right direction."
More on Intel
At IDF, Intel and Nokia said that they will partner to offer embedded wireless Internet connectivity in laptops. This has changed the market outlook for embedded cellular modems in portable computers.
"The Nokia/Intel partnership to produce an embedded HSDPA Mini-card modem will not only accelerate the market for cellular connectivity in notebooks," says ABI Research senior analyst Philip Solis, in a statement. "Intel is also taking a first step towards the eventual inclusion of WiMAX wireless broadband in portable computers. The eventual goal is to offer multiple connectivity options."
According to ABI, cellular modems for laptops come in two form-factors: PC cards and embedded modems such as the ones Intel and Nokia plan to offer.
While PC cards will continue to be sold on an aftermarket basis for some time, particularly for new air interfaces, the real future of the market lies with embedded modems which will make up nearly 17 percent of the total this year, according to ABI.
"Demand for low-power DRAM will grow through to 2010. But contrary to the opinion of some memory vendors, low-power DRAM will still form only a fraction of overall DRAM megabyte shipments in 2010," says Gartner analyst Lara Walter.
Buy, Sell, Hold
Mattson: Analyst Bill Ong of American Technology Research on Mattson Technology: "Mattson continues to gain share in both dry strip and RTP with goals of capturing further share and doubling revenue by 2008 from 2005 levels," Ong said.
"Mattson believes September quarter orders are likely to be closer to the high end of guidance, where guidance was for orders to be sequentially flat to up 10 percent," Ong said. "The general outlook for the December quarter is not clear given the company's turns-like business, but is expected to be flattish given expectations for follow-on strength on memory orders, which Mattson believes should extend into 2007."
The analyst currently has a "Buy" rating on Mattson's stock.
On Semi: Maintain a "Buy" rating and a $10 price target, says Craig Berger, an analyst with Wedbush Morgan.
"Field checks suggest that On Semi is tracking towards the mid-point of its Q3 revenue guidance range, inline with consensus estimates," he said. "Field checks also suggest that On Semi's Q4 revenues should be sequentially flat, putting consensus revenue growth of 2.5 percent quarter-over-quarter at risk."
According to WitsView's street price survey in September, "the average selling prices of large size TFT-LCD TVs and monitors kept decreasing while that of CRT monitors slightly increased."
Troubled companies of the week: HP, KLA-Tencor, Sony. Terrible week for the trio.
Marketing award: Intel at IDF. The machine at work.
Mystery of week: The buyout rumors at STMicro. Is that for real?
Mystery products: Quad-core processors. What are the benefits for consumers? No one knows or cares.
Sept. 24, 2006
Don't look now, but Gartner has dropped hints that it will reduce its chip forecast. Sequential growth is expected to be a disappointing 5 percent in Q3. Q4 is expected to be weak, according to Gartner.
Translation: 7 percent IC growth in 2006 based on WSTS measurements. Still, Gartner has not changed its current forecast yet, which sits at 10.9 percent.
IC Insights disagrees with this 2H scenario, but still sees 8 percent chip growth in 2006.
Not sure what SEH and Sumco are thinking. Both silicon wafer makers are expanding at a frenetic pace amid a possible slowdown in the market.
Profits are good in silicon wafers now. But for how long?
Billion dollar baby
"More than 967 million phones will be made in 2006, creating a chip market worth $41.1 billion. Production will reach 1 billion units in 2007 as demand for WCDMA handsets increases," says Gartner analyst Alan Brown.
All eyes are on Freescale and NXP (formerly Philips Semi), which have been separately taken over by private equity firms. Are the private equity firms good for the semiconductor industry as a whole?
"The motivation is financial," says Bill McClean, president of IC Insights. "The financial people are not interested in fabrication facilities. Fabs are not a good financial position."
China's chip makers are struggling despite the hype in that nation. Few, if any, of China's chip makers have ever made a buck. "It's been tough to make money," says McClean.
The outlook is mixed for Japanese chemical giant JSR Corp. JSR has boosted its margins, thanks in part to recent price hikes for its semiconductor material lines. But the company could also miss its forecast for the first half of its fiscal year, due to a slump in its flat-panel display materials unit.
"Outlook is reasonable for the mid-term in the core fine chemicals division, with operating profit expected to rise 16 percent year-on-year," said David Motozo Rubenstein, an analyst with Jefferies Japan Ltd.
"LCD materials demand slumped in May-July, but has recovered in August and September, and JSR believes that most of the LCD production adjustments are over for the most part," the analyst said. "This softness in Q2 might cause a miss in 1H operating profit forecast of 26.5 billion yen."
JSR's core LCD products are color pigmented resists and alignment films, each of which are 35 percent of total LCD material sales.
"Outlook [for semiconductor materials] is better than LCD," Rubenstein said. "Semiconductor materials shipments have accelerated as worldwide production of memory chips has spurred demand."
JSR has a commanding 40 percent market share in 193-nm photoresists, which are the highest growth of all resists. "JSR also has the top market share in CMP slurries, which are also outpacing the growth the semiconductor materials industry. Sales of CMP slurries and pads are 30 percent of semiconductor sales," he said.
"The firm has also raised prices twice this year in order to mitigate material price increases, and thus margins in Q2 could recover since the first price rise was implemented in May and second in August," he added.
Epson Toyocom: Toyocom more than doubled its crystal business after merging with Epson in 2005. "Outlook for Q2 should continue the strong trend as demand for crystal devices is buoyant in cell phone and other digital applications," says analyst Rubenstein.
"In addition, Epson Toyocom is ramping up capacity for its high margin tuning forks by 30 percent this year, which could add an extra 10 billion yen to revenues (plus 10 percent of total sales 93 billion yen in FY3/07) in the next 12 months. Since the firm commands a 60 percent market share in tuning forks, the improvement in product mix should raise margins next year as well."
Nihon Dempa Kogyou: Company's two main product lines are crystal units (45 percent of sales) and crystal devices (41 percent of sales) used in cell phones, Bluetooth, auto applications, and communication networks.
"Outlook is bright and operating profit should beat 1H projection by about 25 percent, but stock has priced in much of the improvement in demand for its crystal devices in cell phones, digital appliances, and autos," Rubenstein says.
Buy, sell, hold
Broadcom: Fair valuation for the company is $35 per share, says Satya Chillara, an analyst with Pacific Growth Equities, who issued a "Buy" rating for the stock.
"Our channel checks indicate that Broadcom is providing 15-25 percent of the Bluetooth chips for Nokia, which we believe should act as a growth driver going into 2007," he notes. "Also, our checks indicate that 802.11n continues to pick up and we believe that there is an upside in the PC laptop space in the consumption of 802.11n with PC makers. Specifically, we know there have been design wins and shipments to Dell and Acer."
Silicon Labs: Lowered their Q3 guidance last week, but "we believe a 'Buy' rating is appropriate given our growth expectations from AeroFONE and FM tuners in 2007," says Chillara..
"The downward adjustment to guidance was attributed to weaker than anticipated demand for the Aero transceivers along with the DAA softness in the broad-based mixed-signal business," he says. "We believe that the ramp of the single chip AeroFONE should be a major revenue driver for 2007."
Valuation: $45-50 share price.
Craig Berger, an analyst with Wedbush Morgan Securities, on Silicon Labs: "Lowering 2006 EPS estimate from $1.50 to $1.28, 2007 EPS estimate from $1.90 to $1.65, and target price from $48 to $41; Maintaining 'Buy' rating on prospects for 2007 FM Tuner and AeroFONE product cycle."
The problem with Silicon Labs: "Recent AeroFONE checks are a bit mixed with contacts indicating Q4 volume shipments to Amoi and TCL will proceed, however, the part also appears to be somewhat late, allowing Texas Instruments to gain a stronger toe-hold in that market," Berger says.
Troubled companies of the week: HP and Sony win again. Electroglas joins the group.
Worst paper at Bacus: Micronic Laser: Gave product pitch on old pattern generator.
Best paper at Bacus: Intel
Best keynote at Bacus: ASML
Worst multimedia at Bacus: ASML: Turned lights completely off to pitch black so attendees couldn't take notes on presentation.
Best reception at Bacus: Brion: Venue on Fisherman's Wharf
Worst wine at Bacus: Brion reception. Bad vintages. Awful selections.
Sept. 15, 2006
Word on the street is that Vishay is interested in buying International Rectifier's commodity chip business. IR declined to comment. "As I mentioned we can't comment on any details on our divestitures our than what we have said publicly," an IP spokesman said.
In April, IR said that it is exploring the potential sale of the company's commodity or "non-focus products business." These products are not considered to be aligned with the company's long-term objectives or do not meet its gross margin and revenue growth targets, according to IR.
Texas Instruments is ramping "LoCosto," its single-chip, cell-phone device. "It starts with the low-end of the market with GPRS and will move up to the higher end of the market," says analyst Doug Freedman of American Technology Research.
TI's view on the cellphone-on-a-chip competition: "Marvell is a competitor given Xscale purchase: TI thinks this would have been a bigger threat if Intel had held onto it," Freedman says.
"Silicon Labs has announced a single chip product, but TI hasn't seen it at customers yet," he says. "Infineon has a single chip solution as well. TI has seen Infineon at customers, but has yet to lose competition."
More NAND declines?
"Recently NAND spot pricing has moved up due to the MP3 builds and some inventory building ahead of Q4," says analyst Doug Freedman of American Technology Research. "We expect to see some spot declines into December as the Christmas build slows down, but nothing major."
During the week of Sept. 15, DRAMs were up again, according to Gartner. DRAM spot prices rose by an average of 2.7 percent from the previous week, standing at $6.69 on a 512-Mbit basis, according to the firm.
Prices were all over the map, from no increase for PC133 versions of 256-Mbit devices, to up 2.6 percent for 333-MHz versions of 512-Mbit DDR2 parts.
"Demand has noticeably decreased, especially for DDR1 and DDR2 devices," according to the report.
Buy, sell or hold
Applied Materials: Analyst Bill Ong of American Technology Research believes "that the near-term order outlook is uncertain through the second half of 2006 with the earliest potential rebound by mid-2007." He currently has a "Nuetral" rating on Applied's stock.
Cohu: Dennis Wassung, an analyst with Canaccord Adams, on IC test-handler specialist Cohu: "We reiterate our 'Buy' rating and $21 target price," he said.
Last week, Cohu announced acceptance of its $8.9 million microwave systems contract with the United Arab Emirates (UAE). "While Cohu shares have declined in recent months, we continue to see value even with an industry slowdown in Semi Test spending," he said.
TI: Analyst Freedman states "while TI has been executing well we remain somewhat concerned about the slower than expected ramp of 3G." He currently has a "Nuetral" rating on TI's stock.
Xilinx: Despite lowering its sales forecast last week, "We maintain our 'Buy' rating, yielding a $28 share price," says Satya Chillara, an analyst with Pacific Growth Equities.
"We continue in our thinking that the PLD industry is growing at a rate of 10-15 percent, and that this will serve as a driver for the stock," he says. "We also believe that in the December quarter (FQ3:07) revenue should snap back and demonstrate a sequential increase of [about] 2-4 percent."
Most troubled companies: AMCC, Ford, HP (tie)
After taking a huge charge for its stock-option woes, AMCC is a (or loser) this week.
HP's board members more popular than Dave Packard and Bill Hewlett. The "HP Way" is a joke.
And Ford is toast. Why can't America build a decent car? U.S. auto execs and engineers get paid too much for building junk. Stop crying and build a better car!
Best business minds: Freescale
Feeling undervalued compared to Broadcom, TI and others, Freescale was acquired for a fortune.
Worst business minds: Intel
Company acquired LAN/WAN-chip makers for more than $3 billion, but divested those products for $115 million last week.
Quality control award: Canon, Sony
Canon Inc. joined the ranks of consumer electronics companies issuing warnings on possibly defective products, announcing it would inspect and replace parts in 1.87 million personal copiers due to fire risk concerns, according to online reports.
Sony, of course, makes those outstanding batteries for notebook PCs, which catch on fire.
Sept. 10, 2006
Bad week for Intel, which plans to cut 10,500 jobs and slash its capex by $1 billion.
Now, Intel is apparently "re-thinking" its "copy-exact" fab strategy, according to SG Cowen. For years, Intel has "copied" its various wafer fabs around the world, using similar equipment sets and processes. Intel has also basically worked with one or so equipment vendor on a particular critical process.
According to SG Cowen, Intel may go the route of the Korean chip makers, which procure equipment from many vendors and beat them up on price.
Advice for equipment makers that do business with Intel: Watch out below!
Last week, the Water Cooler slammed Intel's management and put HP's on a pedestal. (See below for entry.) Now, with the corporate spying scandal mess at HP, EET.com Editor George Leopold says HP and is investigators were Inspector Clouseau-like.
Here's some interesting analysis on HP from Dave Burstein of DSL Prime:
"AT&T and Verizon may need the country's best legal talent to deal with their poor security and the Hewlett-Packard scandal. Fortunately, AT&T just hired John Ashcroft, Bush's attorney general. Verizon already has on the payroll Bush's daddy's attorney general, Bob Barr," Burstein says.
"John Ashcroft, formerly George Bush's attorney general and since July 20 an AT&T registered lobbyist, is the perfect man to resolve their latest crisis. AT&T leaked the phone records of Hewlett-Packard board member Tom Perkins, as well as reporters from the WSJ, New York Times, and San Jose Mercury. Perkins and ally George Keyworth are now off the board for talking to reporters," Burstein notes.
Here's more: "Verizon President Larry Babbio is entangled as an HP board member who presumably knew what was going on. Only a fool would believe, as the WSJ reports HP's Dunn saying, 'she and other H-P directors didn't learn that pretexting involved the potentially fraudulent representation of identity until August.' How the heck did they think the investigators got the phone records? Babbio for sure knew these would never have been legitimately released," he says.
There's more dirt: Babbio "has his own powerful legal shield if necessary; Bill Barr, U.S. attorney general in the first Bush presidency, works for Verizon," he added.
NXP and Infineon won the first round for chips in the U.S. government's electronic passport program. The European companies outbid U.S.-based chip makers like troubled Atmel in the program, according to Erwin Wong, an analyst with Gartner.
"Atmel encountered chip-quality issues late last year," Wong said in a report. "The affected smart card vendor had to recall a significant number of smart cards because of defective silicon supplied by Atmel."
Do more troubles at Atmel surprise you?
What's wrong at troubled Sony? After the notebook PC battery snafu, Sony delayed the Playstation 3 again.
The impact on PS3-based chip makers like IBM, Nvidia and others? Analyst Doug Freedman of American Technology Research on the Nvidia situation: "While the PS3 push-outs will delay gaming royalties to a certain extent, we do not believe they would have been the main near-term growth driver."
Freedman currently has a "Buy" rating on Nvidia and "increased our price target on Nvidia to $36. Our bullishness is built on the belief that graphic processing demand will be driven through 2007 by the release of the Vista operating system, new integrated chipset products, share gains in notebook at Advanced Micro Devices with increased opportunity at Dell."
National Semiconductor reported revenue in-line with its August negative pre-announcement, says Freedman. "We are maintaining our 'Sell' rating as we are unsure whether or not NSM will be able to slow the unit share loss it has been experiencing as recent ASP increases moderate," he says. "Our $22 price target implies a 15x multiple applied to our forward 12-month EPS estimate including stock based compensation of $1.45."
Guess what memory type is in a severe shortage mode? Not NAND. Not DRAM. Some says SRAMs are in tight supply. Samsung is reportedly sold out. Others like Cypress bailed out of the SRAM market.
Sub for substrates?
Substrates for chip packages are still on allocation. Once upon a time, ASE's substrate plant in Taiwan caught on fire. Substrates fell in short supply. Apparently, substrates are still hard to get.
"Worldwide memory revenue will grow by 20 percent in 2006, to $59.4 billion. The NAND flash and pseudo static RAM markets will see the strongest growth, contributing to an overall compound annual rise of 6 percent from 2005 to 2010," says Gartner analyst Clare Hirst.
Analyst Avinash Kant, of Canaccord Adams, on Nanometrics:
"We are updating our estimates for Nanometrics post the completion of its acquisition of Accent Optical Technologies," Kant says.
"During its Q2 conference call, Nanometrics guided for Q3 revenues to be up 5-15 percent q/q ($25-27 million excluding Accent). Additionally, given that the Accent merger was completed during Q3, we expect Accent to have a 10-week contribution to Q3 results now. We believe Q1 and Q2 revenues for Accent were roughly $10 million and $14 million, respectively," he says.
"As a result, we are modeling EPS of minus $0.20 on revenues of $29 million in Q3/06," he added.
Alcatel messed up in Taiwan, according to DSL Prime.
"Alcatel suspended deliveries to [Taiwan's] Chunghwa after several hundred thousand lines were shipped [and] after deciding the contract was unprofitable," according to a newsletter.
"Alcatel and subcontractors Foxconn/Hon Hai, ZyXEL, and Broadcom had bid a low $48 to win a contract for nearly a million units. Foxconn failed to win a price reduction from Broadcom, and wanted to substitute a chip from Realtek," the report said.
"Chunghwa was reluctant to allow the change, because the Realtek chip had limited shipment records. Alcatel and Foxconn finally agreed to deliver as ordered, and I'm told a Taiwanese newspaper predicted they would pay a major penalty. Alcatel did not comment," it added. "Broadcom, Conexant, Infineon and Taiwanese chipmaker Trendchip all qualified in the earlier round and are favored in the new 600,000 line tender. ECI had the contract before Alcatel and has an opportunity."
Troubled companies of week: HP, Intel, Sony (tie)
Bad week for trio.
Potentially dumbest acquisition: AMD-ATI
A $140 million sales shortfall is incredible.
Silliest announcement: Applied's solar strategy
Absolutely no news here.
Sept. 3, 2006
AMD goes underground
Can a chip maker boost microprocessor sales by advertising in subway stations? Maybe on San Francisco's BART system. But what about Washington's Metro subway system? AMD apparently thinks so.
Ads for Opteron microprocessors have begun appearing in Metro stations in downtown DC. The company is touting its CPU as the microprocessor equivalent of a hybrid car while its rival's chips are portrayed as gas-guzzling SUVs. Perhaps both companies should ride public transportation if they really want to reduce power consumption.
AMD is riding high. Intel is down in the dumps. Intel is shedding unprofitable units and is set for a big layoff. Maybe what Intel really needs is new blood much like what HP did. Not Carly Fiorina, but Intel needs someone like HP CEO Mark Hurd to shake things up. It's time to bring in an outsider to run Intel instead of promoting the good 'ole boys, who are not getting the job done.
Who was first?
The College of Nanoscale Science and Engineering at the University of Albany has issued a statement that it stands by its announcement that it received the world's first full-field R&D EUV tool from ASML Holding NV. In the statement, the College of Nanoscale Science and Engineering (CSNE) also offered help to European research institute IMEC as it assembles another ASML EUV lithography machine and gets it up and running.
Despite the PR posturing, EUV has a lot to prove. There are no power sources or suitable defect-free masks for EUV right now.
It "remains to be been seen" if EUV lithography can move into volume production, said Dean Freeman, an analyst with Gartner. "Because the tools are in the public eye, so to speak, the industry should learn quickly if these systems are ready for the 32-nm technology node, or if it is back to the drawing board," Freeman said.
IBM, Chartered, Infineon and Samsung have produced chips on a common 45-nm process technology, the companies said last week.
TSMC has also rolled out its 45-nm process, but are the IDMs and fabless chip makers ready for 45-nm?
"The key question is whether the fabless companies are ready," said Freeman and Jim Hines of Gartner. "Most of them should be starting to produce their 65-nm devices, but the question is whether jumping ahead will provide any advantages from a cost or performance standpoint."
ASICs still alive
"Revenue from application-specific integrated circuits and application-specific standard products will rise by 10.8 percent in 2006, to $84.5 billion. This figure will reach $126.1billion in 2010," says Gartner analyst Bryan Lewis.
Buy, sell, hold
LSI Logic: Craig Berger, an analyst with Wedbush Morgan, has a "Hold" rating on LSI Logic.
"After spending a day marketing with LSI Logic CEO Abhi Talwalkar, we came away impressed with the firm's very sharp strategic focus on its core enterprise storage market and believe the firm's execution could drive more significant top line growth in 2007 than we previously expected," Berger said.
"While management would not comment on demand trends, we do believe that customers' inventory levels are at normal levels, consistent with Q2 results commentary, and that seasonal demand should resume in Q4," he said.
OmniVision: Analyst Doug Freedman of American Technology Research (AmTech) believes "OVTI may see unit growth challenges in the January quarter." Freedman has a "Hold" on OVTI, the stock symbol for CMOS image sensor maker OmniVision.
Last week, OmniVision reported revenue of $136.9 million, up 4 percent sequentially versus AmTech and consensus expectations of up 6 percent sequentially. EPS excluding the effects of stock based compensation came in at $0.39 versus consensus expectations of $0.40 and AmTech expectations of $0.36.
Analyst Satya Chillara of Pacific Growth Equities on OmniVision: "We are maintaining our 'Neutral' rating as the company's guidance is below expectations for the October quarter," Chillara said.
"We are concerned with the gross margin shortfall and intense price pressure even without Magnachip and Samsung's presence," he said. "Also, the company's volume ramp during C2H:06 might take more time than expected and we feel they could be losing business from their most important customers.
"On a positive note, the shipments of 2-mexapixel image sensor to Sony-Ericsson is continuing; however, based on our industry checks we feel there is no major compelling factor to switch to 2-megapixel across the board," he said.
Semtech: Freedman believes "investors will be more focused on the revenue growth and expenses related to the investigation than the results of the investigation." Freedman currently has a "Hold" on Semtech.
"We believe that similar to most analog companies, Semtech saw slower than expected bookings from distribution and some slowness from the handset market. We note that the ATE market is very soft despite word that Semtech is gaining some share with new design wins."
Analyst David Motozo Rubenstein of Jefferies Japan Ltd. on Japan's Epson Toyocom:
"Epson Toyocom is one to keep on the radar screen," he said.
"The firm has a dominant market share in crystal devices used in cell phones and digital appliances, competing with Nihon Dempa."
Epson Toyocom has a 70 percent market share for sound device crystals in cell phones. July order figures from Japan Crystal Device Association show strong year-over-year growth of 22 percent.
Rubenstein on Nippon Electric Glass: "Firm is one of three dominant glass suppliers for LCD/plasma substrates with about 20 percent market share, while its gearing to LCD growth is higher than peers Asahi Glass or Corning," he said.
Nippon Electric Glass is 25 percent owned by NEC. Top 5 clients are: LG Phillips, AU Optronics, Chungwa Picture Tubes, SVA (China) and NEC.
Samsung uses Corning's glass through a joint venture and Asahi and Corning dominate Sharp's business.
"Worldwide glass volume shipments should grow by 30 percent next year, while price erosion is moderate in single digits due to generally tight supply conditions," he said. "However, in the near-term, there is a risk that Q2 earnings disappoint [for Nippon Electric], as two main clients have recently cut production, which would impact July-Sept. sales."
"NEG is worried about production adjustments of LCD manufacturing and was surprised by the weak Q2 at Corning, where sales fell 16 percent QoQ for its LCD display division," he said.
August 26, 2006
When it rains, it pours. Research firm Gartner thinks that Intel will sell its NOR flash-memory unit by year's end, because it has lost money for three straight years.
Wedbush Morgan Securities predicts that Intel will sell the NOR unit to Micron. (See below entry.) In May, American Technology Research first speculated that Intel would spin-off or sell the unit. At that time, Intel denied that assertion, however.
SanDisk has expanded its MP3 line, but Dell exited the MP3 player business last week.
Here was the big news: SanDisk cut the prices of its older, flash-based MP3 player models. In other words, the price war in NAND flash will intensify. Watch out for a bloodbath in NAND flash, where vendors make parts at below cost.
Here comes the sun
After buying Applied Films, Applied Materials is set to discuss its solar strategy on Sept. 5. However, there are already details about Applied Materials' solar strategy in a recent article here in the San Francisco Chronicle.
Too hot to handle
In the aftermath of the recent massive recall of lithium-ion batteries, designers are wondering whether the Dell Inc. laptop fires suggest that mobile systems are just too hot and whether those systems need a fundamental rethinking.
The answer? Yes. Take a look at the recall from Apple. However, Sony is the one under fire for making the batteries for Apple and Dell.
What this also means is a boom for power-management ICs in the notebook space. For mobile handsets and PDAs alone, the power-management IC market will grow from $815 million in 2005 to $3.4 billion in 2010, according to Gartner.
Buy, sell, hold
Credence: Analyst Dennis Wassung of Canaccord Adams after Credence's poor results: "While we are optimistic for Credence's SoC and analog/mixed signal businesses, and for the long-term stock opportunity, we expect CMOS shares to remain impacted in the near term while the changes are worked through. Accordingly, we maintain our 'HOLD' recommendation, although look forward to seeing the current issues overcome, potentially unlocking revenue growth and increased profitability leverage."
Lintec: David Motozo Rubenstein, an analyst with Jefferies Japan Ltd., on Lintec, a Japanese supplier of semiconductor dicing tape and coating films. "Outlook is reasonably solid," he said. "Q1 operating profit was about 8 percent over plan as it rose 59 percent YoY, powered by semiconductor dicing tapes, LCD coating films, and ceramic coating films."
There is other positive news for Lintec. "Semiconductor dicing tape grew 31 percent YoY in Q1 and should continue high growth as shift to 300-mm wafers favors Lintec's UV-type dicing tapes, which will be fully adopted for 300-mm wafer size," he said.
Bottom line: "Valuation looks attractive with a PE of 19x FY3/07 and high growth for next year," he added.
National: Analyst Doug Freedman of American Technology Research. Doug believes "the company may be cautious with forward guidance given the sharp decline in orders seen during the summer months." The analyst currently has a "SELL" on National after lowering its forecast.
"We believe there may still be some risk to revenue estimates as the handset power management market begins to consolidate under the new dynamics of single chip solutions," Freedman said. "We believe some of the softness in wireless revenue is related to share loss in new handset models as both Freescale and Texas Instruments look to gain share at their tier one OEM accounts."
More results (yawn)
Analyst Rubenstein on recent results at Japanese equipment makers Dainippon Screen (DNS) and Ulvac:
DNS: "Results very good as we expected. SPE orders of 52 billion yen were an all-time high," he said. "If we use TEL as a proxy, orders up 96 percent YoY for Electronics division, almost exactly the same as Q1 for TEL," he said.
"DNS' P&L showing better improvement," he said. "DNS revised up its 1H [revenue projection] by 44 percent, but left FY unchanged."
Ulvac: "Most analysts were surprised by the strong results and outlook, given that Taiwan and Korea had been rumored to push out orders," he said.
"Ulvac forecasts a 14 percent increase in orders for FY6/07 and 18 percent increase in sales," he said. "Ulvac claims these forecasts are on the conservative side. Operating profit forecast is for a 35 percent increase, owing to improved yields as LCD 7G substrate becomes the main size (over 50 percent of total LCD shipments in FY6/07E). Firm is more bullish on semiconductor capex this year than LCD capex (20 percent semi equip order growth vs. 5 percent LCD order growth projected)."
According to Nikkei, TDK Corp. will increase production of load ports. Load ports are used in the automated transport of silicon wafers between semiconductor manufacturing equipment.
"As early as next month, the company will add production personnel and increase monthly output to 800 units, a 60 percent increase from present volume," according to the report.
DSL chips are a growing market in terms of units, but a tough one to make a profit in," says Dave Burstein of DSL Prime. "Half a dozen companies produce to a standard and often wind up competing on price. Quarters move up and down as orders fluctuate, and after three strong quarters may be somewhat weak. Underlying demand is continuing. Inventory may be high (unconfirmed) and challenges continue, but things haven't soured overnight the way the stock prices did."
August 21, 2006
More flash dancing
Craig Berger, an analyst with Wedbush Morgan Securities, has a hot one: "Intel is likely to sell its NOR flash business soon, with Micron the most likely buyer of this business, which includes Fab 23 Colorado Springs and possibly Fab 10/14 in Ireland."
Troubled Credence Systems Corp. recently bailed out of the flash-memory test business after Intel Corp. scrapped an order from the ATE firm. Now, sources say Credence is trying to sell its flash-memory test technology, but there are no takers yet.
Japan's Rohm Co. is jumping into the silicon wafer business, according to The Nihon Keizai Shimbun. Rohm Apollo Device Co. will make 300-mm wafers, which will then be used to make chips at Rohm Hamamatsu Co., the report said.
U.S. gross domestic product (GDP) has been thought by many to be a leading indicator for the performance of the semiconductor industry. Analysis conducted by Advanced Forecasting has disproved this supposed phenomenon, finding that the GDP's value as a leading indicator was only relevant during five out of the 16 years investigated.
"The GDP's historical year-over-year quarterly growth rate correlated well with IC revenues from the end of 2000 to the end of 2004 with a three-month lead, but no correlation exists during the periods 1990 through 2000 and 2005 through the present," said Rosa Luis, director of marketing and sales for Advanced Forecasting. "Continuing to use the GDP as a predictive tool for the semiconductor industry today may greatly mislead decision-makers."
August 10, 2006
Quasi-modo or I mean Qimonda had a less than memorable IPO. Why? Qimonda is only a DRAM play.
The German company wants to be in NAND flash and licensed that technology from Saifun. The problem: Qimonda can't manufacturer the Saifun part, leaving it all dressed up with no place to go.
Don't be surprised to see private equity firms buy Atmel. Here's something from Barron's after the mess at Atmel:
"When does the departure of senior management amid scandal mean a buying opportunity for investors? Perhaps when the scandal in question is not one relating to stock options. That seems to be the message today from Needham & Co. chip analyst Charles Glavin after semiconductor firm Atmel (ATML) fired its Chief Executive George Perlegos, who founded the company 22 years ago, over alleged misuse of travel funds. The company is also asking Perlegos to step down as chairman of the board.
Needham's Glavin says in a report this afternoon that private equity firms RDG Capital and Golden Gate Capital could buy out the company for at least $5.50, which is what RDG apparently offered Perlegos when he talked with the buyout firm back in May. That's because the guy put in place of Perlegos, Steven Laub, was previously a partner with Golden Gate, raising the likelihood of a PE deal getting done."
Strong demand for semiconductors is keeping the chemical and material market in high gear, according to The Information Network, a New Tripoli, Penn.-based market research company.
The worldwide market for chemicals and materials for semiconductor manufacturing grew 6.1 percent in 2005 and is projected to grow another 20.0 percent in 2006.
"We continue to see strong demand across all businesses, especially in North America and Asia-Pacific," says. Robert N. Castellano, president of The Information Network. "The market is being driven by strength in demand for CMP pads and slurries, along with increased sales of deep ultraviolet photoresists and related products in all regions."
The clear winner in the market is the silicon wafer sector, growing 21.9 percent in revenues in 2006. Higher pricing, increased volume demand across all diameters, and 300-mm capacity ramp-up are responsible. For 2006, SEH will lead wafer the market with a 33 percent share.
Avinash Kant, an analyst with Canaccord Adams Inc., has a "Buy" rating for Entegris after posting its results. Entegris reported Q2 operating EPS of $0.17 on sales $180.7 million (15 percent up q/q), which was better than consensus estimates of $0.15 on $170 million.
"During the June quarter, Entegris generated 58 percent of revenues from unit-driven businesses and the rest from capex-driven businesses," Kant said.
For the September quarter, management guided for $0.14-to-$0.17 in operating EPS on revenues between $170-to-$180 million.
"We reiterate our thesis that due to the changing of its reporting to
December fiscal year from its old August fiscal year and its recent merger with Mykrolis, investors have not paid much attention to the Entegris story," he added.
A proposal to build a new semiconductor research and development laboratory in Vancouver, Wash. recently got a jumpstart, thanks to Congressman Brian Baird. In June, Representative Baird secured $100,000 in federal funding to be used towards Phase I development of the facility.
The laboratory is part of a broader regional economic development plan being led by the Washington Technology Center, the Columbia River Economic Development Council, nLight Photonics and Sharp Laboratories.
The plan is known as the Semiconductor Industry Reinvestment Initiative. "This funding will create jobs and spur economic development by helping existing high-tech businesses grow and attracting new businesses and researchers to our region," said Congressman Baird, in a statement.
The new Clark County facility will be sited on the Washington State University-Vancouver campus. The lab will provide high-tech businesses and academic researchers in Southwest Washington with a local resource for conducting leading-edge semiconductor research.
Phase I development of the research center includes planning and constructing a small clean room in an existing space near the WSU-Vancouver campus and purchasing equipment to develop a foundation of standard semiconductor and micro device fabrication processes at the lab.
The Vancouver facility will be modeled after the Washington Technology Center's Microfabrication Laboratory located on the University of Washington campus in Seattle. The facility filled a critical need for the state's growing base of research engineers working in the MEMS field.
August 6, 2006
It's official. Philips got rid of its semi unit and the honeymoon is already over for Philips Semiconductors.
Now that it's nearly independent, Philips Semiconductors must decide to go the IDM, fab-lite or fabless routes, according to market researcher Gartner.
The new semi spin-off faces challenges in the mobile phone market and also "faces sharply declining prices for consumer semiconductor devices," according to Gartner.
The spin-off may need to do some "cost-cutting and a reassessment of the product portfolio," according to Gartner.
Here's the winners and losers in SanDisk-Msystems merger:
Winners: SanDisk, Msystems
Losers: Hynix, consumers
Hynix is said to be the foundry for Msystems' x4 4-bit/cell technology. That will go away over time. Also consumers will lose out. A merger like this reduces one competitor and an innovator in the market.
Analyst Jim Handy of Semico says: "By Semico's estimates Msystems owns 16 percent of the USB flash drive market, and SanDisk another 14 percent, so their combined share should be 30 percent of this important market. SanDisk will be able to bring their lower cost structure to the Msystems business helping improve this line's margins. Furthermore, both companies are IP heavyweights, although Msystems has played a more subdued game of licensing their patents than has SanDisk. We will see over the course of time whether SanDisk is able to reap higher royalties than has Msystems from the Msystems patent portfolio."
Worldwide June chip sales, which were released by the WSTS, were $22.7 billion. This was lower than Gartner's expectation of $23.4 billion.
"While revenue growth could reach double digits in 2006, a weakening in demand in the second half of the year would likely mean a mid-signal-digit growth year and a downward rolling annual growth trend heading into the first half of 2007," warns analyst Richard Gordon of Gartner. In 2006, Gartner says the IC market will grow 10.6 percent.
DSPs up, down
DSP hopeful StarCore is shutting its doors. No surprise.
But the DSP market is alive and well. DSP Q2 shipments were up 14.7 percent over last year's Q2, according to Forward Concepts. "On a sequential basis, Q2/2006 DSP chip shipments were up 3.3 percent over Q1 to the $2.1 billion level," says Will Strauss, president of Forward Concepts.
"Although the wireless segment still dominates, Q2 only saw a 2.8 percent shipment increase in that segment. Automotive and consumer segments had dramatic gains over Q1. Computer DSP shipments also had a positive gain," he says.
"DSP shipments to the Americas (mostly the U.S.) dropped 14.5 percent in revenue terms, leading to a global market share drop to 9.4 percent, the lowest share since WSTS has been tracking DSP shipments," he said.
Buy, sell, hold?
What's the deal with the market? "We believe the recent pullback in semiconductor stocks presents investors an opportunity to upgrade to higher quality names at very attractive valuations," says Craig Berger, an analyst with Wedbush Morgan Securities.,
"While the summer should remain choppy for chip stocks given macro and cycle concerns, we believe chip investors who take advantage of near-term weakness will be rewarded by year-end given our views that 1) underlying demand trends are robust, 2) supply chain chip inventory levels are still rational, 3) customer order patterns have rationalized, and 4) valuations are near all-time lows," he said.
And the hot stocks?
Monolithic Power Systems:
"While MPWR guided to Q3 revenues worse than our own and consensus expectations, we believe investors should 'Buy' the stock here given that 1) the firm's LCD and PC end-markets are likely set to seasonally bounce, 2) Q3 visibility is limited given the firm's 4-6 week leadtimes thus driving what we view as conservative DC/DC guidance, 3) our beliefs that the firm could possibly settle outstanding litigation with MCRL in 2006, and 4) valuation remains reasonable at 21x and 12x our 2006 and 2007 EPS estimates," says Berger, who lowered his price target from $16 to $14.
International Rectifier: "While we respect International Rectifier's server and gaming console design wins, we remain at a 'Hold,' " says Berger, who is targeting the $40 range. "Management has delayed its planned divestiture of its non-focus businesses (commodity products and non-aligned products); however now expects to complete the sale by December."
O2Micro: "We recommend investors continue to avoid shares of O2Micro at current valuations," Berger says, who lowered his price target from $8.50 to $5.50. O2Micro's "crosscurrents include management's poor execution (negative) and our expectations that its end markets could seasonally bounce higher (positive)."
"Mobile TV is not just going to be 'Mini-Me' TV," says Al Boschulte, chairman of Probe Financial Associates Inc. "Its implications go well beyond reducing traditional TV to a relatively tiny screen."
"Broadcast mobile networks are going to proliferate," Boschulte added, "and this could work far-reaching changes not only on the cellular business, but on other aspects of the video entertainment business, audio, advertising, interactive services and other areas."
I received some letters about this article:
GM, Ford embrace iPod; satellite radio dead?
Thanks for your feedback.
In the article, I never said the iPod would replace satellite radio. Neither did Ford or GM.
I just pose a thought, something most journalism lacks these days. Another thought to ponder: In two years, I doubt Sirius and XM will survive. They will end up merging. Both are losing a ton of money and the business model is a loser.
How can you run a business with $800 million-plus run-rate losses? Only the government can do that...
Satellite radio is a great idea with good technology. But like online groceries and satellite phones, satellite radio won't gain enough subs to cover its overhead. And paying Howard Stern $250 million is lunacy.
Here's some feedback:
That is a ridiculous notion! I for one don't want the hassle of having to do all of the work downloading songs and lugging around an iPod so that I can listen to music in my car!
They are mutually exclusive technologies and have different uses. I applaud the auto makers for the addition of the iPod tie-in making it easy for owners to use their iPods but I would be seriously upset if they did that as a replacement to offering XM (or Sirius). I love my XM radio.
Dear Mr. Lapedus,
Your conclusion that satellite radio sales will be harmed by Apple's new agreements with GM and Ford does not seem valid to me.
Satellite radio provides a very different service from the iPod. A consumer can have both products in their vehicle and use both regularly (although not at the same time). I currently have that capability in my own vehicle where I can use an FM transmitter unit to play both my MP3 player and my satellite radio. When
I want to listen to a specific piece of music, I use the MP3 player. When I want to listen to random music or news I use my satellite radio. There is room for both products in a consumer's vehicle. It's not necessarily a choice between one product and another.
Are you serious? iPods don't begin to compare with XM. It isn't even close. I have a 60-GB iPod, packed (as in full) with music. Most of the time, I leave it at home in favor of the XM in my car. Why?
Because XM can deliver variety and depth that an iPod cannot possibly match. My iPod gives me one channel -- the "David" channel -- while XM gives me a hundred or so.
They really are two totally different things. The iPod, while taking some of XM's sales, just can't deliver the breadth of entertainment drivers expect to receive. Sure, I can bring my own music, but I have to pay 99c/track for it (1 CD = 1 month's XM subscription) and I also have to (somehow) figure out which music I want, which XM makes easy.
A fine article, but it couldn't be more wrong.
Hot Springs, AR
This is the stupidest article I've read in the past week #1: There's no Howard Stern on people's Ipods. #2: You have to purchase songs to be played on your Ipod, and not every song you like is worth .99, plus radio is a way to hear new songs that you would never think of buying. #3: Sirius is not struggling, matter of fact even your own article shows they are adding subscribers at a rapid pace #4: Your article suggests that the Ipod market is the same as the satellite radio market, as if their competitors. Satellite radio isn't even in competition with regular radio, much less the digital music market #5 Its called journalism, what you do is research and then present the facts to your readers. Please go back to school or take a couple refresher courses, Im not a journalist but this article was a press release for Apple, not a real article.
July 29, 2006
Another problem at Intel: On top of the mess at the chip giant, the company misjudged the transition to RoHS compliance, according to Fusion (Andover, Mass.), an independent distributor.
"One of the biggest issues the electronic component marketplace is facing is the adaptation to the new RoHS directive and the restrictions this places on manufacturing," according to Fusion in a newsletter.
"One strong example of how this has affected production can be seen by examining Intel's NOR flash division. As more and more applications call for NOR flash products, or specifically Intel's StrataFlash, demand for these products has risen fast," according to the firm.
"On top of that, Intel planners misjudged the demand for the transition to RoHS compliance. The majority of applications that call for these parts have now switched to the RoHS compliant product line," the distributor said. "Intel was not prepared for this huge jump in demand that started in the first quarter of 2006. They are still struggling to catch up with the demand and are now starting to find the right balance to meet their customer's needs."
Has Intel fixed the problem? "We expect the NOR flash issues to level out by the end of Q3 or the start of Q4 at the latest," it said, adding that Spansion is in the same boat. "Spansion has been experiencing the same struggle to adapt to the new environmentally friendly market that leans heavily in the direction of RoHS compliance."
What else has Fusion uncovered? "Ceramic capacitors continue to be in short demand for the third quarter in a row this year. The main issues lie in 0402, 0805, 1206 and 1210 case sizes with high core values of 106, 226 and 476," according to the firm.
"Murata, TDK and Taiyo Yuden are the manufacturers having the hardest time coming through on deliveries. Murata lead times for values of 104, 105 and 224, have increased to 16 weeks and TDK is up to 28 weeks on many products," according to Fusion.
"There are several causes for this but it is mainly due to an industry wide rapid increase in demand. The technology has recently changed and many applications demand significantly more capacitors than they have in the past. For example, the recent innovation of the Dual Core Processor affects the capacitor market because these CPU's require twice as many high value caps as their predecessors," it said.
What's the cost for next-generation lithography (NGL)? According to Burn Lin, TSMC's litho guru, here's the price tag for a single NGL system:
Multi-beam direct write: $20 million
Single-pass 193-nm immersion: $30 million
Double-pass 193-nm immersion: $40 million
EUV: $40-to-$50 million
Buy, Sell or Hold
Advanced Energy: "We maintain our Buy rating and $17 price target on the stock," says analyst Avinash Kant of Canaccord Adams.
"AEIS has been diligently working toward diversifying into the data storage, flat panel and solar markets," Kant said. "While revenues from the solar market could likely double on a y/y basis, we realize that the semiconductor business still continues to be the key driver (70 percent of revenue in Q2). Given the capital spending pattern of leading semiconductor manufacturers, we do expect to see some moderation in business during the later part of this year."
CyberOptics: "We maintain our BUY rating
on the stock but we are reducing our price target to $17 vs. our old $19," says Kant.
"During the quarter, management indicated that going forward, CyberOptics plans to focus more on the systems side of the business, as that market is growing faster than the industry average," Kant said.
"With inspection systems such as the SE 300 Ultra and Flex Ultra AOI, CyberOptics is already seeing significant traction in this area," he said. "The inspection systems business has typically been around 35 percent of revenues recently. We believed that traction on the systems side, along with new products -- such as EPV sensors, 300mm wafer leveling sensors etc -- will continue to generate significant traction for CyberOptics in 2006 and
Microsemi: Maintain BUY with $32 price target, says analyst Craig Berger of Wedbush Morgan. "Satellite and commercial air businesses were strong while the medical business was expectedly slower [in Q2]; Microsemi saw additional strength in notebooks, LCD TVs, wireless LAN business with positive book-to-bill across all businesses," the analyst said.
"We maintain our BUY rating and $28 price target on the stock," says analyst Kant of Canaccord Adams.
"Sales to Applied Materials, the largest customer of MKS, contributed 22 percent of Q2 revenues (up 10 percent q/q)," Kant said. "MKS has been diligently working toward diversifying into the non-semiconductor businesses, and the company is seeing a lot of traction in areas such as medical equipment and automobile combustion, etc."
PixelWorks: "Throwing in the towel and downgrading from BUY to HOLD as 2007 TV ramp seems limited, says Berger.
"We were wrong to have been constructive on PixelWorks over the past year and are downgrading shares to HOLD given our view that the firm will not recover as much lost TV business in 2007 as we were previously hoping for," he said. "Design win traction with meaningful customers appears limited in its TV business, and we do not believe holding out hope that PixelWorks is acquired is reason enough to recommend the stock. We do still believe the firm has a compelling technology position and product roadmap, though we favor Trident in this space given their strong execution and earnings power."
PortalPlayer: Increasing 2006 EPS estimate from $0.12 to $0.65, maintaining 2007 EPS estimate at minus $0.70, HOLD rating, and $10 price target, says analyst Berger.
"PortalPlayer is working to reinvent itself after announcing it lost the iPod Nano socket," Berger said. "That said, several interesting comments were made yesterday that could drive a positive trading bias to the stock in the short-term including: 1) implying that it would likely remain in the iPod Video through year-end 2006, 2) saying it had won a wireless socket (but with no other details provided), and 3) noting that it has increasing traction with traditional and detachable Preface systems at Quanta and Compal. We still think the stock is worth $10 absent greater visibility into revenue streams associated with these efforts."
On Semiconductor: "Big Q2 and Q3 guidance upside demonstrates continued execution," says Berger. "Maintain BUY rating with new $10 target."
RF Micro: "Maintain BUY on RFMD as ramp at Nokia could yield a larger revenue opportunity in the next few quarters," says analyst Satya Chillara of
American Technology Research. "We believe RFMD will lose share at Motorola to Freescale and Skyworks on EDGE radios over next few quarters, but can offset the loss with a huge EDGE ramp at Nokia," he said.
Texas Instruments: "Maintain Buy rating and price target of $40," Chillara adds.
"In spite of all the negative component data still coming out, we believe TI is relatively immune because of the Nokia factor," he says. "With Nokia and Motorola Q2 results and outlook for 2H:06 looking good, we remain optimistic about TI's prospects. Also, so far we have seen the push outs with Motorola suppliers, i.e. Broadcom, Skyworks and potentially RFMD."
July 22, 2006
Buy, Sell, Hold
Chip stocks suck. On Tuesday of last week, the Philadelphia Semiconductor Index (SOX) fell to its lowest level in 14 months, dropping under the 400-point level for the first time since early May 2005.
So what's the strategy here? Semi analysts rate these chip stocks: AMD, Broadcom, Cohu, Cypress, Fairchild, Freescale, Intersil, MPS, PDF and Skyworks.
Monolithic Power Systems: "Upgrading shares from 'Buy' to 'Strong Buy,' cutting 2006 and 2007 EPS estimates from $0.59 and 1.15, to $0.50 and $0.90, and cutting price target from $21 to $16," said Craig Berger, an analyst with Wedbush Morgan. "Channel checks indicate the firm is tracking to the midpoint of its revenue guidance range for June with softer CCFL chip shipments (consistent with a weak PC supply chain) and reasonably robust DC-DC converter chip shipments."
Intersil: American Technology Research analyst Doug Freedman upgraded Intersil to a "Buy" from a "Hold." Freedman believes "the increase in inventory in Asian distribution is supported by design wins in the new platforms that are ramping in 2H '06."
Freedman's $28 price target "implies a 20x multiple on our forward twelve month EPS estimate, including share based compensation of $1.43."
Cypress: Freedman also maintains a "Buy" rating for Cypress despite exiting two chip markets. "We maintain our 'Buy' rating and are increasing our price target to $19 from $18.50 as we believe ongoing restructuring increases the value of underlying assets, while SunPower and PSoC/PRoC offer stability and growth to top-line numbers," he said.
"Divestitures of PC clocks and pSRAM businesses should be public by the end of the 3Q," he said. SunPower, which is also a "Buy" rating, "continues to be a revenue growth engine and EPS contributor as margins ramp due to the accelerating production ramp and use of thinner wafers and higher ASPs."
Advanced Micro Devices:Freedman maintains a "Buy" rating, but reduces the price target from $39 to $30. "AMD reported weaker than expected results for the June quarter," Freedman said. "We do believe AMD will begin to grow faster sequentially over 2H '06 and beyond. The company continues to take share in the server space and has had solid initial success with its new Turion product for the mobile market."
Skyworks: Analyst Satya Chillara of American Technology Research has a "Buy" for Skyworks. "Going forward, we believe the focus on RF and mixed signal linear products will bear fruit over the next few quarters as the linear products carry higher gross margins," he said. "Also, Skyworks is ahead of the game in the WCDMA arena compared to RF Micro and Silicon Labs. Lastly, heading into Q3, we expect a significant ramp of Samsung EDGE radios."
PDF Solutions: "We reiterate our 'Buy' rating and would aggressively buy PDF on recent share price weakness," said Dennis Wassung, an analyst with Canaccord Adams.
Cohu: "We lower our target price to $21 from $26, and we maintain our 'BUY' rating," Wassung said. "Cohu's capacity-driven 'high speed' handler products continued their volatile, upward trend in Q2."
Fairchild: "No change to our 2006 EPS estimates of $0.95 (which does imply a 2H '06 cut), lowering our 2007 estimates slightly from $1.20 to $1.18, lowering our price target from $22 to $19, and maintain our 'Hold' rating," said Berger. "Fairchild indicated that its business environment is stable and seasonally normal, as evidenced by flat distributor inventories, leadtimes, and utilization rates; PC remains sluggish while industrial shipments are strong."
Broadcom: "Maintain our 'Hold' rating on reduced Q3 and Q4 expectations and reducing price target to $27 from $30," says Chillara. Broadcom "did announce it is shipping in one Samsung 3G model," he said. "Based on our analysis however, we believe Samsung mobile may not be working as closely with Broadcom as a second source, despite claims by the company. We believe Qualcomm is inking the deal with Samsung and that foundry was the factor impeding the progress of Broadcom gaining traction with Samsung mobile in the 3G arena."
Freescale: "We maintain our 'Hold' rating as we increase our price target to $32 from $30," Freedman said. "However, we believe investors are going to want to see a broadening customer base in the wireless segment and signs of firm end market demand before growing comfortable with CY07 EPS estimates."
The College of Nanoscale Science and Engineering (CNSE) of the University at Albany has formed two new partnerships one with the University of Waterloo (UW) and the other with Vanderbilt University.
The collaborative agreement between CNSE and UW will allow for an exchange of technical, economic, educational and business information related to innovative nanoscale science and engineering.
Meanwhile, CNSE scientists and engineers will work with their colleagues from Vanderbilt University's Institute for Space and Defense Electronics (ISDE) to develop a computer chip to improve radiation hardness through process innovations, as part of a project sponsored by the U.S. Office of Naval Research.
A team of researchers from CNSE, Vanderbilt and several industry and government partners will begin collaboration on 90-nm and 65-nm computer chip device technologies and work to develop future nanotechnologies at sub-45-nm node.
July 15, 2006
It's that time of the year again. Analyst Doug Freedman of American Technology Research previews the financial results coming from AMD, Cypress, Freescale and Intel.
Intel: "We expect Intel to report June quarter revenue of $8.3 billion (versus consensus $8.3 billion) and GAAP EPS, including the effects of stock option expensing, of $0.13 (versus consensus $0.14).
We believe present market conditions combined with stock market dynamics will lead PC names to report weak results, with inventory overhang concerns lingering. We believe Intel will report slightly below consensus, but will say that inventory concerns have abated."
AMD: "We expect AMD to report June quarter revenue of $1.22 billion (versus consensus $1.25 billion) and GAAP EPS, including the effects of stock option expensing, of $0.22 (versus consensus $0.22).
We believe AMD may point to Intel's inventory as a lingering concern on 3Q demand."
Cypress: "We expect Cypress to report June quarter revenue of $259 million (versus consensus $260M) and pro-forma EPS, excluding the effects of stock option expensing, of $0.09 (versus consensus $0.09)."
Cypress is suffering from "market share loss in the MP3 market for the PSoC. High exposure to PC related end markets with poor '06 outlook."
Freescale: "We expect Freescale to report June quarter revenue of $1.55 billion (versus consensus $1.55 billion) and GAAP EPS, including the effects of stock option expensing, of $0.46 (versus consensus $0.49)."
Freescale is seeing "strength in the handset business in the second half of 2006, including new models out of Motorola and growth in emerging markets."
July 7, 2006
Magma's been hitting the discount rack
Back in May, EE Times was the first to break the story that Magma Design Automation Inc. had acquired the assets of ReShape Inc.
Though rumors at the time had it that Magma had paid less than $1 million for the former design services firm turned EDA provider, they were unsubstantiated.
But Magma's fiscal 2006 annual report, filed with the U.S. Securities and Exchange Commission last month, tells a more complete story. Magma paid a mere $750,000 to acquire the patents and intellectual property of ReShape, according to the report.
That's a jaw-dropping figure, considering that ReShape
raised at least $31 million in three rounds of venture funding from companies such as American River Ventures, the Bay Area Equity Fund managed by JP Morgan Chase & Co. and others.
Magma's annual report also revealed that last November the company acquired ACAC Corp., an EDA startup that offered transistor-level simulation analysis capabilities for mixed digital and analog designs, for an initial payment of about $453,00. Under the agreement, Magma also assumed ACAD's debt of about $3.9 million and agreed to pay up to $5.65 million to the ACAD shareholders pending certain unstated financial and technical milestones, according to the report.
Buy, sell or hold
SG Cowen Securities has a "buy" on ATMI, KLA-Tencor and Nextest. The firm also likes Teradyne and Applied Materials for long-term buyers and is "neutral" on Brooks, FEI, Novellus, Lam, Nanometrics and Electroglas.
ATE analyst Dennis Wassung of Canaccord Adams likes the following stocks: "We recommend Eagle Test Systems, a recently public ATE supplier to the [analog/mixed-signal] segment, as it expands its customer base and delivers industry-leading profitability. We also recommend Cascade Microtech, with its fast-growing advanced production probe card business."
Craig Berger, an analyst with Wedbush Morgan Securities, has issued a "hold" on O2Micro. "O2Micro pre-announced a June quarter miss with shipments likely to decline by minus 3-4 percent quarter-over-quarter instead of growing by 2-6 percent, as was previously guided," he said. "OIIM crosscurrents include management's poor execution (negative) and our expectations that its end markets could seasonally bounce higher (positive)."
July 1, 2006
Drum roll please
"Semiconductor revenue grew by 5.7 percent in 2005, to $234.6 billion. Conditions are gradually improving, so our most-likely forecast now shows market growth of 10.6 percent in 2006 and 8.9 percent in 2007," says analyst Richard Gordon of Gartner/Dataquest.
Buy, sell or hold
Analyst Craig Berger of Wedbush Morgan Securities on Silicon Laboratories: "Initiating coverage with a 'Hold' rating and $38 target. We have some near-term concerns regarding softness in the handset market and await better visibility with Q2 results; however, we maintain a positive bias given our expectations for a strong uptake of AeroFONE and FM Tuner chips over the next year."
Berger on Fairchild Semiconductor: "Reiterate 'Hold.' It appears that Fairchild's business trends, while not as hot as Q1, remain stable in Q2 and likely into Q3."
Analyst Doug Freedman of American Technology Research on Micron: "Maintain 'Buy' rating and $20 price target based on further successful product diversification. Despite the revenue shortfall, given strength in DRAM pricing, strong demand for CMOS image sensors and further diversification of product lines, we would be buyers on any short-term pull-backs."
Analyst Satya Chillara of American Technology Research on ATI Technologies and Xilinx. "We reiterate our 'Hold' rating [on ATI] as we believe the August quarter could be less robust," he said. "Based on our analysis [of Xilinx], we estimate the revenue impact from the Spartan-3 recall could be in the range of $20-30 million for the combined 9 months. This could take time to fix, thereby causing volatility in next quarter's numbers. Maintain 'Buy' rating and reducing price target to $25."
June 27, 2006
What's the outlook for semis?
We have potential chip inventory issues, which could stunt the growth rates. There is a possible glut of fab capacity. High oil prices. Freezed-dried chips from IBM.
And now, Technology Forecasters Inc. predicts a "severe inventory misalignment" in the electronics industry as a result of the European Union's Restrictions on Hazardous Substances (RoHS) Directive.
Producers that have not managed their component supply chain with accuracy may find themselves left with inventory that is no longer usable, according to the research firm. Conversely, companies with products that are exempt from the legislation may find shortages of non-RoHS compliant components.
"If millions of unusable components end up in landfills as a result of poor planning on the part of electronic product manufacturers, that result will violate the spirit and intent of the legislation, and negatively impact many companies' balance sheets," warned Pamela Gordon, president of Technology Forecasters.
New York nonsense
If or when AMD ever makes a new fab announcement, I am not going to listen to the conference call. Instead, I will go out play golf.
During its conference call last week to announce its new fab site in upstate New York, AMD did little talking about its new plant. And there were few details about the fab.
Instead, most of the call was dominated by New York's politicians, who bragged about bringing the fab to their humble state. Boring.
I'd rather not hear from the politicians. Next thing you'll know is that they will take credit for inventing the semiconductor.
June 23, 2006
There's a "sell" order out for Israel's msystems.
"Based on our channel checks, we believe Hynix is the foundry partner for [msystems'] x4 technology, which gives us little confidence that [msystems] will be able to start production in 2007," said analyst Satya Chillara of American Technology Research Inc., who issued the "sell" order.
Introduced in May, x4 is a technology designed to enable the utilization of 4-bit/cell NAND flash, which was "previously considered to be a practical and physical impossibility," according to msystems.
msystems has been secretive about the foundry partner for x4. But the company did say x4-enabled NAND components are likely to be mass produced during 2007.
Not so, says Chillara. "This fundamentally raises the stake and is very questionable in terms of manufacturing yields," he said in a report. "For comparison, SunDisk/Toshiba, the leaders in MLC technology, are still working on 3 bits/cell on an R & D basis."
June 22, 2006
A cash crunch?
Despite its large and prized MP3 chip business at Apple, Creative Labs and Samsung, SigmaTel is running out of money.
"SigmaTel faces a likely cash crunch by Q4' 06," according to Wedbush Morgan Securities Inc. (Los Angeles). "Channel checks indicate business trends remain difficult at SigmaTel, and maybe worsened in recent weeks, possibly leading to a Q2 or Q3 miss vs. Street estimates."
SigmaTel is getting squeezed in the MP3 processor business by PortalPlayer at the high end and Actions Semiconductor on the low end. China's Actions "new 0.18-micron chip will keep up the pressure on SigmaTel in coming quarters," according to the firm.
Wedbush is lowering its 2006 and 2007 EPS estimates from minus $1.55 and $1.05 to minus $1.70 and $1.25, respectively.
After reporting its results last week, CMOS image sensor specialist OmniVision's stock took a beating.
"Discussions with various clients have led us to believe that investors perceive that OmniVision has too much China exposure," according to American Technology Research Inc. in a report.
"We do not believe this to be the case," according to the firm. "OmniVison ships its die into module makers, who in turn ship to their end customer, a cell phone OEM/ODM. OmniVision counts the module maker as its customer. If the module makers happen to be in China, it counts the revenue from China. However, this module maker could be shipping the finished module to some other country for final cell phone assembly."
Here's the real story: "We do not view the low-cost handset issues in emerging countries as having any bearing on OmniVision since most of the low-cost GSM handsets do not have cameras in them," according to the report.
June 19, 2006
Don't look now, but Gartner Dataquest may be in the process of reducing its IC forecast for 2006 after recently reiterating its estimate for 10.6 percent growth this year.
Worldwide chip sales were terrible in April. The figure was $17.1 billion for the month, compared to Dataquest's estimate of $18.5 billion.
As a result, worldwide chip sales in Q2 could be "about $4 billion lower than our previous estimate of $61 billion" unless there is an uptick in May and June to make up for April, according to the firm in an e-mail newsletter.
So, based on normal patterns for the second half, the IC market could grow by only 6 percent in 2006, compared to the industry consensus of 10 percent, the firm said.
Stay tuned. Gartner Dataquest will release its new forecast on August 15.
June 14, 2006
Intel is still going with the thought that its computer telephony unit, Dialogic, is for sale. No word on if there is an actual buyer for the unit, leaving some to wonder if Intel can close the deal on July 12, as previously expected.
Here's what Intel is offering Dialogic employees to leave the company and join a prospective buyer:
"Intel has come up with a transition bonus instead of a sabbatical. A transition bonus would be one week pay plus one week for each year of service to a maximum of 10 weeks," according to sources.
"This is for the employees designated as 'aligned' with the new company. This is on top of a severance package from Intel if the new company will not require your services," according to sources. "Then, a given employee would also receive two months pay plus a scaled number of supplemental weeks pay based on service."
The reaction? "Most people seem to be happy with this; however, it will depend on if you are asked to stay on for the transition, if you are offered a job or if you are offered but refuse a job," the source said. "Theoretically, under the worst scenario, which would include a bad decision by an employee, someone could receive nothing and not have a job."
Analyst Satya Chillara of American Technology Research Inc. says msystems is in trouble:
msystems "has recently launched its X4 technology. After reviewing the details, we believe [msystems] will have to address the legal issues surrounding Sandisk's IP," the analyst said in a report.
"If the technology has the merits to go to the production phase, we believe Sandisk could be knocking on [msystems'] door for royalties," he said. "The X4 technology is based on NAND implementation, as opposed to Saifun's Nitride-based NROM technology, which also has a similar 4 bits/cell technology. Sandisk has a strong hold on NAND MLC technology and it does not stop at 2 bits/cell."
Analyst Doug Freedman of American Technology Research says that "Micron has the necessary votes lined up to close its proposed acquisition of Lexar."
So what's up with the Lexar-Samsung connection? Samsung supplies NAND parts to Lexar, but Micron dislikes Samsung....
"Lexar's current supply agreement with Samsung has a large impact on the dilutive nature of the deal," Freedman said in a report.
"We do believe Samsung will ship to Micron as required in the Lexar supply agreement, which was extended in October 2005 to March 2011. Our model assumes the amount of Samsung bits shipped into Micron/Lexar will decline over time as IMFlash supply increases," he said.
"However, we should state that this could be a conservative view if Samsung continues to support the supply given Samsung's wider product portfolio. It is possible that 2-3 years into the deal Samsung may be a significant source of NAND production for Micron's NAND business unit," he said.
"We believe that much of IM FLash development will be on PC and MP3 storage type NAND devices, while Samsung may supply through Micron high density solutions targeted at the mobile handset market," he added.
June 8, 2006
Innovasic Semiconductor (Albuquerque, N.M.), a provider in replacement integrated circuit (IC) and microcontroller solutions, announced that it is developing a roadmap to address Intel Corp.'s recent end of life notice (EOL) in the embedded MCU space.
Intel was supposedly exiting the embedded controller market, but the chip maker denied that, saying it is competing in the sector.
Intel is phasing out older embedded lines. Discontinued products identified in Intel's notice include the 8051, 251, 8096/196, 188/186, i960, all versions of the 386 and 486. Innovasic plans to develop replacements for several of these components and is currently working with customers to identify and prioritize their needs.
"We are currently working to determine which of these ICs we will develop and offer as off-the-shelf products," said Keith Prettyjohns, CEO of Innovasic Semiconductor, in a statement. "Our initial assessment is that the 186/188 family and the 386 family appear to be in the highest demand with our customers."
June 3, 2006
A PC enthusiast has filed a complaint with the Finnish EU electricity product safety authority, TUKES (www.tukes.fi), claiming Intel's processors are unsafe and "dangerous."
Intel "has deliberately published a false (too low) value as the Iccmax of the Socket 478 Intel Pentium 4 Prescott (90-nm) 3.2/3.4 E GHz processors," Peter Aberg claims.
"This value, Iccmax 91A, indicates the processor dependent current (Ampere), a motherboard's voltage regulator circuitry has to sustain briefly," he said. "If the main conclusion of [this] is correct, the
product combination (motherboard + Prescott) is defect and susceptible to failure, but not necessarily a 'dangerous product' in the legal sense."
"Prices for foundry wafers fell or remained stable in the second quarter of 2006 across most technologies. During the next six months, buyers and sellers expect further price declines," says Dataquest analyst James F. Hines.
Analyst Rob Lineback of IC Insights says: "For the second year in a row, sharp price erosion will curb revenue growth in image sensors during 2006, but once again, strong unit volumes will drive sales to a fifth-straight record level this year. Total shipments of charge-coupled devices (CCDs) and CMOS image sensors are expected to grow 31 percent this year, reaching 1.9 billion units worldwide, and that will be enough to push sales up 12 percent
and across the $7 billion mark."
Solar-cell maker SunPower last week raised a cool $200-to-$227 million as result of its recent follow-on offering; as of Q1 '06 it had $117 million of cash on the balance sheet, according to Piper Jaffray.
SunPower's "$117 million cash balance plus expected cash flow generation is sufficient for its capital expansion plans for line 4, 5, 6, and the construction of new building in Philippines," according to the firm.
"Approximately 33-50 percent of cash proceeds from the offering will be used for pre-payment of polysilicon, the rest will fund the following: 1) supply chain initiatives such as warehousing distribution centers; 2) working capital financing initiatives for installers to finance solar installations until receipt of subsidy rebates (it takes substantial time for rebate checks); and 3) working with banks to come up with financing alternatives for home owners wishing to install SunPower solar modules," according to the firm.
May 31, 2006
Curse of the Bambino?
A microprocessor glitch knocked out the microphone of Giants broadcaster Dave Flemming as he called Barry Bonds' 715th career home run on the radio on Sunday, according to the San Francisco Chronicle.
KNBR, the Giants' flagship radio station in San Francisco, determined that the microprocessor went on the blink in the mic. This caused Flemming's microphone to go dead, just as Bonds hit his historic fourth-inning home run, according to the report.
At that time, radio listeners had no clue what had happened. Then, the other KNBR play-by-play personality, Greg Papa, was summoned to go on the air after Flemming's mic went dead, according to the report.
What happened? "It is the exquisitely bad timing of the glitch that has spawned conspiracy theories, everything from speculation that Flemming's microphone became unplugged during the excitement to the possibility that KNBR was the victim of sabotage," according to the report.
Or was it the Babe?
Sources believe that Cisco has reportedly closed its internal customer-owned tooling (COT) unit. Cisco has handed off that function to Texas Instruments, sources said.
Employing the COT model -- in which customers are responsible for front- and back-end design, coordinating silicon fabrication with a foundry, packaging and shipment -- requires much infrastructure and greater knowledge of the entire design flow,
May 25, 2006
Is the sky falling on semis?
Technology stocks are falling fast. Why? SG Cowen lists some reasons:
1. "Delay and disappointment for nearly every key technology product cycle driver in the first months of 2006."
2. "Persistent weakness in the PC sector that is likely to persist through calendar 2006 -- with fundamentals consequences that are likely to reverberate through the entire component food chain."
3. "Minimal evidence that swollen corporate cash balances are now being plowed into technology capital spending."
4. "Mixed messages on the communications spending front."
5. "Increasingly untenable margin expectations."
6. "The options back-dating scandal."
Good news, bad news
On the negative side, Analyst Doug Freedman of American Technology Research says:
1. "The worst case scenario is that inventory built in 2H06 slows the introduction of new products in 2007."
2. "A prolonged price war in the PC sector, or product introduction missteps could cause an oversupply in the memory sector."
3. A global slow-down in end market demand as energy prices and inflation finally hit consumer spending."
4. "Demand growth simply slows, which in turn forces pricing pressure and market share battles that ultimately slow revenue growth."
On the positive side, he says:
1. "Capital spending has been very constrained throughout the industry, traditional foundry suppliers have under-invested and have yet to accelerate spending as the new China based capacity forces a cautious outlook."
2. "We are now seeing outsourced demand balanced across a wide list of foundries throughout Taiwan and China."
3. "Explosive growth in NAND demand has stolen traditional capital from the DRAM market with limited fab expansion. This new memory technology is driving increased bit consumption and is consumed in a larger base of end products and markets."
4. "We are clearly in a growth phase of the semiconductor industry, with one notable under performer in the PC sector. We believe the PC sector will recover in 2007 to lead the semiconductor market to new highs."
Days of our lives
Michael McConnell, an analyst for Pacific Crest Securities, also sees some mixed signs:
1. Days of semi inventory were 77 days in Q1, up from 69 days in Q4.
2. Semi inventory is caused by a "component overbuild" in Asia.
3. Inventories are the highest level at communications companies and EMS providers since Q3 '05 and Q1 '03, respectively.
4. Worldwide fab utilization fell below 90 percent in Q1. It was 89.5 percent in Q1 vs. 91.8 percent in Q4.
May 19, 2006
Micron to buy Qimonda? "Given Micron's focus on NAND production expansion, the company's DRAM share is expected to decline in 2006," said analyst Doug Freedman of AmericanTechnology Research.
"We would not be surprised by a more aggressive move [by Micron] to acquire the assets of Infineon's memory business in coming months to regain share in the core DRAM market," he said.
Infineon recently spun-off its memory business, renaming it Qimonda. Or is it Quasimodo?
Reza Faramarzi, memory marketing manager at Hynix, has reportedly left the company to join Qimonda.
Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) is scrambling to keep up with huge customer demand, especially for trailing-edge 0.18-micron processes. To keep up with demand, TSMC recently bought the entire 0.18-micron fab capacity from its troubled foundry spin-off, Vanguard International Semiconductor Corp.
TSMC owns a 29 percent stake in Taiwan's Vanguard, which is a specialty foundry. TSMC and Vanguard also compete against each other for business, especially for power management and high-voltage accounts.
Unable to meet customer demand, Texas Instruments is quietly pulling in a large percentage of its chip-packaging and test work in-house, according to Robert Lineback, an analyst with IC Insights Inc.
In the past, TI (Dallas) outsourced about 50 percent of its chip-packaging and test work to third-party subcontractors, while the remaining share was done in-house, Lineback said.
Now, TI is bringing in 80 percent of its backend work in-house, he said. The company has backend plants in Malaysia and the Philippines.
In fact, TI is spending 35-to-45 percent of its total capital budget on backend capacity, he said. In total, TI plans to spend $1.3 billion in 2006.
The move will enable TI to meet demand. "They couldn't ship products late last year [due to a shortage of backend capacity]," the analyst said. Calls to TI were not returned.
Analysts believe that high-end packages like flip-chip, chip-scale packages and others are in short supply. Altera, On Semiconductor, Xilinx and others are unable to obtain enough backend capacity as well, according to analysts.
Thoughts from Susquehanna Financial Group semiconductor analyst Kevin Vassily: "After the market close yesterday, Dell announced that it will begin offering AMD Opteron dual core processors in some server products by the end of the year. Dell had been the only major computer manufacturer not using AMD chips (excluding the recent Alienware acquisition)."
Big deal, right? "While this is good news for AMD, the upside in terms of share gains from Intel is likely limited, as we believe Dell's gains are primarily going to come from taking share from IBM, HP, and other competitors already using AMD processors, and not from a major shift away from Intel processors," he said.
"That said, the announcement validates the obvious -- AMD's superior position in the server market. However, we believe that life is going to be increasingly difficult for AMD as Fab 36 comes online and the industry comes off the peak in the current MPU cycle. This is likely one of the last pieces of good news in the near term. We maintain our estimates and our 'Neutral' rating," he added.
Avinash Kant, an analyst with Canaccord Adams, is in the bull camp for semi equipment: "Contrary to the broad expectation of a second-half slowdown, orders could stay strong through the rest of C2006. We expect a short-term move up in capital equipment stocks as this better-than-expected news is reflected in the stocks. Longer term, the stocks may be capped by
concerns that current high order growth rates could be unsustainable."
Federal and state governments should build fabs and research facilities near the boarder of Mexico, thereby "minimizing the flow of illegal immigration," according to The Information Network.
The cost of illegal immigration to the federal government alone is estimated at over $10 billion a year, according to the research firm. In addition, California citizens pay $10.5 billion a year in the form of higher education costs, higher law enforcement costs, and higher health care costs. Texas citizens pay $4.7 billion, and Arizona citizens pay $1.3 billion, the research firm said.
"Channeling $25 billion per year can establish a microelectronics infrastructure that can include 300-mm fabs at $3 billion each and five Centers of Excellence in nanoelectronics, photonics, bioinformatics, information technology and environmental systems at $1.4 billion similar to New York States' program," noted Robert N. Castellano, president of The Information Network, in a statement.
A key strategic element is where to build the microelectronic centers -- in Mexico or over the boarder in the U.S. Building in Mexico will eliminate the complexity of monitoring border crossing and work visas, while building in the U.S. while employing a predominant Mexican workforce will keep strategic technology within our borders
"In addition, this microelectronics infrastructure will get China out of our pockets by deferring the more than $4 billion the U.S invests in the country per year," added Castellano. "In its Quadrennial Defense Review (QDR) in February 2006, the Pentagon cited China as having the 'greatest potential to compete militarily with the United States.' "
Regarding China's military technologies, the QDR said that unless the United States implemented necessary measures, China "could, over time, offset traditional US military advantages," illustrating the depth of Washington's concern about China's future military development, according to the firm.
May 17, 2006
Hide and seek
Call it a game of hide and seek. At Taiwan Semiconductor Manufacturing Co. Ltd.'s technology forum on Wednesday (May 17), the silicon foundry giant did not schedule a press event.
Until this year, TSMC held a press event at the forum in which executives from the firm would give an overview of its business and answer questions.
One TSMC exec explained why the event was canned: "Last year, we said some things that got us in trouble," he said.
Blame the media. But what ever happened to transparency?
May 13, 2006
The U.S. photomask industry remains in a huge crisis despite some positive news in the arena. As reported Photronics the last U.S. merchant photomask maker and Micron Technology have joined forces to establish a mask technology center that will develop and produce photomasks for next generation semiconductors.
Photronics gained a big victory, but it's not all good news for the company. Except for Micron, Japanese photomask makers DNP and Toppan have won virtually all of the leading-edge mask business.
DNP won the Intel business. Toppan has won AMD, IBM Infineon, among others. DNP and Toppan split the Japanese accounts. TSMC, SMIC and Samsung have their own mask shops.
Photronics simply can't compete against DNP and Toppan, which are backed by giant conglomerates in Japan. Photronics is too small and is looking to grab the scraps from DNP and Toppan.
The U.S. company is getting some flat-panel display mask business, but also faces competition in the arena from Japan's Hoya. Hoya supplies mask and glass blanks for FPDs. Photronics must buy the blanks from Hoya. What's wrong with this picture?
It's time for a U.S. photomask consortium. Who will step up to the plate and lead the charge besides Micron?
The Semiconductor Industry Association (SIA) expressed strong support for a package of three bills aimed at improving teaching of math and science and encouraging young Americans to pursue careers in technology, research, and math and science education. The bills, which originated in the House Science Committee, were introduced by Representative John H. "Joe" Schwartz (R, MI) and Representative Michael T. McCaul (R, TX).
"America's future competitiveness depends upon maintaining our historic leadership in advancing the frontiers of science and technology," said SIA President George Scalise, in a statement. "Today we are simply not graduating enough scientists and engineers to ensure continued leadership in innovation and technology."
Word on the street is that the Taiwan Semiconductor Industry Association (TSIA) is looking to block the China Semiconductor Industry Association (CSIA) from joining the World Semiconductor Council (WSC).
The TSIA is a member of the WSC and apparently refuses to be marginalized by the CSIA.
The U.S. Semiconductor Industry Association (SIA) dismissed and denied the rumor, however. "The answer to your question is no," according to a spokesman for the SIA.
"All of the members of the WSC are eager to have CSIA join and participate. The statement released on Thursday was adopted unanimously," the spokesman said. "As you'd expect, anything involving multiple governments and industry associations takes time, but the WSC is united on the importance of CSIA becoming a member."
"As we have been saying since January, we believe the current MPU cycle has passed a near-term peak, making for a challenging 2H06 ahead for both Intel and AMD," according to Susquehanna Financial Group semiconductor analyst Kevin Vassily.
Intel's challenges have been well documented recently, including share losses to AMD and an inventory build underway at customers, resulting in an aggressive spending reduction plan," he said. "AMD has shown strong execution through 1Q '06, with continued share gains from Intel in the March Q, an improved operating profile, and looks set for some modest share gains through 2Q."
Both Intel and AMD face challenges. "That said, as the demand environment becomes more challenging, we believe Intel is perhaps better positioned to take advantage of weakness, as its product roadmap is likely to provide some boost in 2H06 through early 2007, while AMD likely faces significant hurdles ramping (and filling capacity at) Fab36. We are reiterating our Neutral ratings on AMD and Intel, and are introducing 2007 estimates," he added.
TI is getting rave reviews after an analyst day.
According to Susquehanna Financial Group semiconductor analyst Vassily: "We continue to be impressed with Texas Instruments' execution, and believe the company's long-term outlook in wireless and HPA (high-performance analog), in particular, are encouraging. That said, we believe the semiconductor industry growth outlook is moderating, nearing its long-term peak growth rates. This is likely to make for a less robust demand environment as we head out of 2006, which could temper the growth prospects at Texas Instruments. We are introducing 2007 estimates, with the backdrop of a likely slowdown in analog, offset somewhat by wireless growth. We reiterate our Neutral rating."
Meanwhile, analyst Satya Chillara of American Technology Research, said: "We believe Texas Instruments' wireless, DLP and high performance analog sectors are growing. Within wireless, sampling of WCDMA merchant solutions in 4Q05 should become a revenue driver for 2006, with the single chip wireless phone providing an additional growth area. With the DaVinci product, Texas Instruments'views digital video as the next driver for new applications in multimedia. DLP still remains a growth story with their 50% market share in front projectors and 20% share in TVs. Texas Instruments has gained share in analog for the past two years and highlighted strength in its new customer revenue. Maintain BUY rating and price target of $40 based on sustained strength in the semiconductor business."
Finally, there is good news at LSI Logic, which has reportedly won some storage business. "There has been significant speculation that LSI Logic has won some low-end server business (Engenio) with Dell and possibly with Sun Microsystems as well, a potential positive for the stock," said Craig Berger, an analyst at Wedbush Morgan.
LSI Logic faces some challenges. "Although we see management's cost cutting and business realignment actions as positive moves that sharpen the firm's focus on its core enterprise storage and consumer markets, we believe management will need to show evidence of material topline growth to push its earnings power
higher, and to push its target multiple towards the 18-20x range," he said.
May 8, 2006
In the 1980s, two Silicon Valley workstation vendors Silicon Graphics and Sun Microsystems were big stuff and could do no wrong.
How the mighty have fallen, leaving many to ponder about the future of Sun and SGI.
Following a string of losses and dwindling market share, Jonathan Schwartz last month replaced Scott McNealy as Sun Microsystems' CEO.
Analysts want Sun to make deep cuts in the company to reduce its costs and breakeven number. Many doubt that Schwartz is the right man for the job, leaving Sun's future in doubt.
Many believe the sun has already set on Sun. For years, the prevailing rumor has been that Japan's Fujitsu will eventually buy Sun. Hewlett-Packard and IBM could also expand its market share in the workstation market by acquiring Sun.
Hard to believe, but SGI is in far worse shape than Sun. As reported, , high-performance computing solutions supplier SGI reached an agreement with its lenders to reduce its debt by $250 million, as part of its reorganization plan to emerge from Chapter 11 bankruptcy.
SGI is likely looking for a suitor. One clue is when the company brought in Dennis McKenna as CEO in January. McKenna is actually a chip-packaging specialist who ran ChipPAC. With McKenna leading the charge, Singapore's STATS bought ChipPAC.
Many wonder if McKenna is working on the "right package" for SGI. Here's a wild guess: IBM will eventually buy SGI.ML
Who are the biggest suppliers in the sensor/actuator arena?
"TI and HP are big in this segment because of actuators," says Rob Lineback, an analyst with IC Insights. TI uses micro-mirror devices in DLP and HP has inkjet print heads based on MEMS.
"Seiko Epson also uses MEMS technology in its inkjet heads," he said. "Robert Bosch is the largest sensor supplier with its heavy presence in automotive, but the company like others is pursuing consumer products and portable apps for accelerometers and gyroscope chips."
According to IC Insights, here are the top-10 solid-state sensor/actuator suppliers in 2005:
1. TI - $640 million
2. HP - $615 million
3. Bosch - $295 million
4. Honeywell - $215 million
5. Infineon - $209 million
6. Seiko Epson - $190 million
7. Freescale - $182 million
8. GE-NovaSensor - $140 million
9. Omron - $125 million
10. Analog Devices - $115 million
May 5, 2006
Sunny days and wasted nights
Here's more thoughts on Applied Materials buying Applied Films: "With Applied Material's belief that now is the inflection point for the solar cell market, Applied Films should help boost its profile," said analyst Darice Liu of Maxim Group LLC.
"Applied Films has been in the market for a few years now, with its latest PVD solar cell product called the ATON (ASPs: $2-$5 million). Applied Films has four commercial customers and 1 pre-production customer. We estimate roughly a dozen tools in the field. In its recent quarter, the company announced two additional Asian orders," Liu said.
Applied Films' TFT PVD tool has been delayed. "Applied Films has run into problems with its TRITON tool and its first beta tool acceptance has been pushed back to September 2006," Liu said. "Its ITO (indium tin oxide) product is still scheduled to launch at the end of this year. Its current TRITON product is only applicable to the metal alloy layers."ML
Do or die shrink
Here's the new and possible roadmap for lithography. Immersion lithography appears to be ready for production at the 45-nm "half-pitch" node.
A new litho candidate for the 32-nm node? For the 32-nm node, some believe that many chip makers will use 193-nm immersion lithography, along with double-pattering techniques.ML
C- to C+
Sorry Intel, but NAND flash and the foundries are now the leading drivers in lithography. Intel is involved in a joint NAND venture with Micron, but IBM, Samsung, TSMC and Toshiba are driving lithography. Processors are no longer the drivers.
And according to one flash guy, what's the report card for lithography vendors? Jon Kang, senior vice president for the technical marketing group at Samsung Semiconductor, assessed the lithography vendors in this manner: "They are not able to keep up with our needs," he said.ML
South Korea is looking to make inroads into the robotics market at a time when interest may be waning elsewhere. A state-funded South Korean company, Korean Institute of Industrial Technology, has unveiled an android featuring a woman's body and capable of expressing human emotions, following movements and communicating in Korean.
Called EveR-1, the robot has facial and physical features of a Korean woman in her early 20s, according to Kitech. Laden with sensors and motors, the EveR-1 can recognize 400 Korean words, and is able to mimic human expressions such as pleasure, anger, sorrow, and joy.
But the robotic business may be in trouble elsewhere. Japan's Sony Corp. announced in January it would close its entertainment robot business including terminating development of humanoid robots.
In the U.S., the Robotics Industries Association announced orders for North American robotics companies plunged 30 percent the first quarter, due to slowing orders from U.S. automotive OEMs and component suppliers. The automotive industry accounts for 60 percent of North American robotic orders.SC
May 2, 2006
Here's more input in the great 450-mm fab debate. "I just don't see the financial benefit to anyone to build a 450-mm fab," said Jerry Cutini, president and chief executive of Aviza Technology, a chip-equipment maker.
"What would the revenue need to be to justify the cost of a fab that size? At best, only Samsung, Intel and TSMC MIGHT be able to afford this. Also, think of the total number of systems that need to be installed to run a new wafer size. It's pretty substantial. With only three potential customers, who would invest all the money required to develop the new systems? I just don't think 450-mm is close to a reality yet and it won't be for a few years at best," he said.
"We're not at the productivity levels required in existing 300-mm fabs," said Peter Rickert, platform manager for application specific products at Texas Instruments. "From our perspective, [450-mm fabs] is beyond 2010."
April 28, 2006
Intel wants to "overhaul" the company and for good reason. The company is under pressure from AMD in its core processor business, while its non-processor units are struggling. Frankly speaking, Intel is an underachiever.
A pair of EET.com editors offer some advice for Intel CEO Paul Otellini to repair the company:
Intel can no longer be all things to all people. It should exit the ultra-competitive memory market, where it is unprofitable, and focus on the processor market where its strength still lies. After all, AMD spun off its memory business into Spansion while Infineon also got out of memory.
Intel should also re-examine its processor lineup. It should use its hefty R&D budget to continue developing advanced processors for desktop, server, and mobile apps, and move away from some products where there's too much price competition and poor margins. The company should try avoiding getting into price wars as much as possible.
1. Get rid of the NOR flash business. It's a loser. Intel should try and sell the business to STMicro or set up a JV with ST. Focus on NAND.
2. Scrap the Itanium processor line. The 64-bit processor is going no where and taking up too many resources. Focus on the new architecture, dubbed Core.
3. Ease off from pushing the industry towards 450-mm fabs. Why push another wafer size when the industry is still learning about 300-mm technologies?
4. Help set up a U.S. equipment consortium. Intel talks a lot about U.S. competitiveness. Yet the U.S. equipment industry continues to lose ground and needs help. Lithography, photomasks and ATE is a good place to start.
Samsung is building so many fabs that it's hard to keep them straight. At the SEMI event in Napa, Calif., Jon Kang, senior vice president for the technical marketing group at Samsung Semiconductor, dropped hints about another fab or fabs being built.
Samsung is prepping the so-called Line 17 and 18 lines in Hwaseong, South Korea. Last year, Samsung broke ground on a second round of construction at its Hwaseong semiconductor facility. The building is part of a $33 billion seven-year plan that calls for an R&D facility and eight fabrication lines to be built there by 2012, Samsung said.
Samsung's capex is staggering. "We will be spending $6 billion a year over the next few years," Kang said at the SEMI event.
At a presentation during the SEMI event, Taiwan's United Microelectronics Corp. (UMC) said that it has devised a new technology, dubbed "stained MOSFETs."
However, Fu Tai Liou, president of UMC's U.S. subsidiary, admitted there was a typo in the presentation. What the company meant in the presentation was "strained MOSFETs" -- not "stained MOSFETs."
April 25, 2006
DRAM supply remains tight, causing some vendors to raise their contract prices for the second half of April, according to the DRAMeXchange, a memory clearing house.
Taiwan's ProMOS will keep its contract prices flat. But Taiwan's Nanya Technologies raised its contract prices, according to the DRAMeXchange. Nanya quotes DDR2 512-Mbit DIMMs at $46-48. Infineon also bump up its contract prices.
Pro and con
This week, Intel revealed a new branding program for the business desktop segment, dubbed the vPro.
"The vPro is intended to pull in the refresh rate on desktop upgrades," said analyst Tony Massimini of Semico. "By establishing vPro on the desktop Intel can get the IT community to start implementing AMT and security features."
The analyst also asks an important question. "Is Intel in danger of having too many brand labels splattered all over the market? These brand names are focused on specific market segments. Consumers will not see vPro in the retail channel," he said.
And there are some challenges. "It takes a long time to develop a branding program," he said. "This new branding program is part of an overall strategy by Intel. The vPro will roll out in conjunction with Intel's new MPU launches it revealed at the most recent IDF."
RF Magic, a fabless semiconductor company in the RF space, announced the appointment of Gordon Schenk as vice president of worldwide sales. With more than 18 years of experience in RF and wireless communications, Schenk is responsible for driving global sales of RF Magic's line of silicon switches, tuners and broadband wireless access transceivers. Prior to joining RF Magic, Schenk has held senior sales management roles at a number of companies including Infineon, Mobilian, Quorum Systems and Provigent.
April 24, 2006
Low-tech or hi-tech? In an effort to combat falling prices for desktop CPUs and recover its slowly eroding market share, Intel unveiled its vPro hardware and software platform to manage desktop hardware and reduce energy and support costs for business enterprises.
Intel used the press conference not only to show off the new products but also give testimonials by several industry partners, perhaps to serve as a confidence booster for the troubled semiconductor giant. Unfortunately-- perhaps indicative of the company's troubles--not everything went smoothly.
Reporters listening to the conference remotely had to endure several minutes of dead silence at one point. In addition, an online presentation accompanying Intel's remarks did not appear until 30 minutes after the conference began.
April 21, 2006
Rumors are running rampant that OmniVision lost some CMOS image sensor business at Motorola, notably a socket within the popular Razr line of cellular phones. American Technology Research CEO, Richard Prati, has "two industry sources that are confident that OminVision will receive no volume for the Razr," according to a report from the research firm.
OmniVision's response? "We don't comment on specific models, but our ultra thin VGA will be ramping during our July quarter. Additionally, we continue to have strong relationships with all of the top 6 handset makers," according to a spokesman for OmniVision.
At Moto, Micron has apparently taken the business away from OmniVision. But OmniVision still thinks that they some won VGA business, according to the research firm.
Micron dominates the Moto account for CMOS image sensors. "Micron has massive 75-80 percent market share at Motorola and OmniVision has 15-20 percent market share," according to American Technology Research.
"It is our view that regardless if OmniVision will have volume in Razr, image sensor demand is sufficient that OmniVison capacity will be absorbed, and will not experience substantial inventory build," according to the firm. "Even if it is true that OmniVison is not selling into Razr, OmniVision could shave off 2-3 million units and it could be offset with the Nokia ramp."
One of OmniVision's biggest customers for CMOS image sensors is Nokia, it was noted.
Amplifiers and comparators are exciting markets. So says Databeans, a market research firm. Major volume applications markets that require amplifiers and comparators include computer disk drives, flat panel displays, and a range of consumer electronics.
Amplifiers growth is expected to improve by 15 percent in 2006, with estimated global revenue of $2.4 billion. Databeans estimates that the global amplifiers market will expand at a compound annual growth rate of about 8 percent through 2011, reaching close to $3.5 billion by the end of the forecast period, with a total of almost 16 billion units shipped.
Comparators growth is expected to improve by about 3 percent in 2006, with estimated global revenue of $199 million. Databeans estimates that the global comparators market will expand at a compound annual growth rate of about 5 percent through 2011, exceeding $250 million by the end of the forecast period, with a total of almost 3 billion units shipped. Combined, worldwide revenue for these signal conditioning circuits is expected to reach nearly $4 billion by 2011.
IC-test handler vendor Cohu reported solid Q1 results, according to analyst Dennis Wassung of Canaccord Adams. "Revenue of $58.3 million beat our $53 million estimate while pro forma EPS of $0.18 matched our expectations," he said.
"Cohu's capacity-driven 'high speed' handler products saw a significant jump in Q1, representing 56 percent of total handler units ordered (roughly double Q4), while high-end Summit handlers dropped to 29 percent," he said.
"Cohu expects a similar mix in Q2, namely a slightly lower margin, but higher volume mix than in 2005 -- indicating strong overall industry conditions, likely with some slowdown in Intel revenue after what was an historically very strong 2005," he said. Q2 estimates jump to $58 million on $0.21 from $58 million on $0.23.
On the move
Best Electronics & Components Co. Inc., a contract test services provider for analog and mixed-signal semiconductors, announced that Peter Hancock has joined the company as COO.
Xceive Corp, developer of multi-standard RF-to-baseband transceiver ICs for TVs, PC TVs, and set-top boxes, named Jean-Louis Bories as CEO. Bories brings more than 25 years of experience in the semiconductor industry, gained from high profile positions with companies, such as National Semiconductor and LSI-Logic.
BridgeCo Inc., a provider of digital home entertainment networking solutions, has appointed Gene Sheridan as CEO. Sheridan takes over from Mark McEachen, the company's CFO, who was appointed interim CEO last July. McEachen will assume additional responsibilities for operations as COO and will continue to serve as the company's CFO.
April 20, 2006
In a conference call on Wednesday, Novellus CEO Rick Hill said Q1 was strong. But he admitted that the company's efforts in CMP and PVD "have not met our expectations."
Novellus is getting creamed in those areas by Applied, the dominate supplier of CMP tools. Applied has been in a price war with Novellus in PVD, thereby hurting Novellus PVD efforts. And Novellus does not seem to be doing well in low-k films.
What's more, there are reports of a growing internal battle between Hill and Sasson (Sass) Somekh, president of the company. Hill is an old-line Novellus exec, while Somekh is an ex-Applied guy who does it the Applied way.
In spite of the problems, Novellus' outlook is not bad after decent Q1 results. On a sequential basis, here's Novellus' outlook for Q2: orders flat to up 7 percent ($417-446 million), shipments at $420-440 million, revenues of $370-380 million and EPS $0.26-0.28.
This is "in line with consensus of $0.29 on $380 million," said Avinash Kant, an analyst with Canaccord Adams. "Novellus pointed out that Japan may be somewhat weak in the second quarter but management expects business in Japan to pick up in the third quarter."
Sky the limits
One analyst issued a "buy" rating at Skyworks Solutions, a supplier of power amps and RF chips. "Based on our channel checks, we believe Skyworks could have greater than 50 percent market share in the EDGE radios at Samsung with a decent ramp in the June quarter followed by a strong CQ3 ramp," said Satya Chillara, an analyst with American Technology Research.
"We are fine-tuning our admittedly aggressive 2Q estimates from $187 million to $182 million and $0.03 to $0.02 vs. consensus at $181 million and $0.02, while our June estimates remain at $195 million and $0.05 vs. consensus at $188 and $0.04," he said.
Some are worried about Microsemi due to the company's exposure in the medical chip market, where it supplies devices for defibrillators.
But investor concerns regarding medical device market weakness "are overdone," said Craig Berger, an analyst with Webbush Morgan Securities.
"First, the FDA's recent decision to lower reimbursement rates for implantable defibrillators is unlikely to lessen demand from sick people that need the device. Second, recent weakness at medical chip customer St. Jude is more likely due to market share losses rather than just a weak market. Third, not yet reported Medtronic results and diminished transparency at Guidant (recently bought by Boston Scientific) are causing some investors to sell in the absence of greater visibility into that business," Berger said.
How does this impact Microsemi? "Our EPS sensitivity analysis leads us to conclude that the worst of the medical device-related Microsemi sell-off is behind us with only a $0.03 potential negative EPS impact in downside scenario," he said.
"Microsemi's June'06 revenue guidance is likely to be in line with consensus, though we expect there could be some positive cost reduction news announced with the closing of the APT acquisition the next day," he said. "Channel checks indicate that Microsemi is winning some market share in notebook CCFL inverter chips."
April 15, 2006
Here's some observations and commentary from Mark LaPedus and others on Broadcom, FSI, Lam, Micron, RF Micro, TI and Samsung:
For years, FSI International has been developing and selling batch-wafer cleaning systems. Now, the company is quietly developing a single-wafer cleaning tool for BEOL strip and clean applications. No pun intended, but look for a big product splash this year.
Like NAND flash, prices for pseudo-SRAM (PSRAM) devices have also fallen off a cliff in recent times, according to sources.
NAND vendors are waiting for prices to rebound in 2H. I'm not so sure the prices will come back. There's too many players chasing after the NAND market. The party is over.
Based on its financial results, Micron appears to be in the wrong markets at the wrong time. The company would have lost money if it had not garnered a one-time payment from Intel for NAND designs. And in recent times, Micron has shifted its fab capacity towards NAND and PSRAM both of which have fallen off a cliff. The company has also moved away from DRAM, which is seeing a revival.
Texas spin control
Rival Samsung deserves an award for spin control. Samsung reported what I would consider horrible results for Q1. But in a planned and well orchestrated PR stunt on the same day, the company announced a 300-mm fab in Austin, Texas.
What got more attention? But here's what fearless Dylan McGrath of EET.com reported: "Austin officials have said in published reports that the facility could eventually cost Samsung $3.5 billion to $4 billion, which would be consistent with the cost of equipping a 300-mm facility. However, the Samsung spokesperson said that as of now, the company has only committed to spending the $220 million. The spokesperson said plans call for the facility to be fully equipped with 300-mm equipment, but that Samsung is not providing details about the size or eventual manufacturing output capability of the fab."
So in other words, don't look for Samsung to equip the 300-mm fab in Texas anytime soon. The company still has a ton of memory and logic fab capacity in Korea.
World's cheapest fab?
In many ways, the Samsung fab announcement was a bit hollow. (No pun intended.) What can you buy with $220 million these days? Maybe a bunny suit or two.
Lam the ram
Despite being a one product company, Lam is a winner. "Based on its guidance, Lam would likely be the only larger-cap semiconductor equipment company to reach quarterly order levels in June that are better than the historical peak order levels achieved during the year 2000 industry peak," said analyst Avinash Kant of Canaccord Adams.
"We see this as another clear demonstration of the company's share gains over the past few years. While we expect industry orders in general to decline in the SepQ, we believe Lam could still see some order growth, primarily due to share gains," he said.
"Chip revenue for 2005 rose by 5.7 percent, to $235 billion. Intel remained the top vendor, with a 14.7 percent share. But Hynix Semiconductor registered the highest growth in the top 25, at 23 percent," said Gartner analyst Andrew Norwood.
Satya Chillara, an analyst at American Technology Research, polished his crystal ball and has some interesting insights on Texas Instruments. "We expect TI's Q2:06 guidance to be slightly better than expectations due to strength in wireless," Chillara said in a report.
Broadcom looks like a winner too. "We believe the company is likely to meet or beat our and consensus estimates for the March quarter when they reports after the market close on April 20," Chillara said in a separate report.
"We are looking for $870 million in revenue and EPS of $0.33 vs. the Street at $871 million in revenue and EPS of $0.34," he said. "Strength in the quarter came predominantly from set-top boxes, ADSL2, and Bluetooth/VPOD product lines. Going into Q2:06 we see the same trend continuing driven by set-top boxes with PVR and HD functionality, with digital TV shipments beginning to ramp."
RF Micro Devices has started to ship its Polaris III modules to Nokia, which is much earlier than Chillara had expected. "We believe this is a huge positive for the company as it opens up a significant dollar content opportunity at Nokia," he said in a report. "Traditionally RF Micro shipped about $1.50-$2.50 worth of content (power amp plus front-end modules)." Shipping radio into Nokia now opens up another $3 per phone for the chip maker.
Here are some predictions from analyst Craig Berger of Wedbush Morgan Securities: "While consumer electronics firms are experiencing some springtime doldrums, we generally believe that orders are going to ramp strongly in Q2, with firms beginning to ship for back-to-school and holidays by the end of the quarter," Berger said.
A plethora of companies are expected to announce their results soon. What's in store for them? "Both Genesis and Trident June guidance will be important barometers for gauging LCD TV market strength for the year, and we expect both firms to guide June revenues nicely higher," Berger said. "Zoran is likely to post strong margin and EPS results driven by conservative guidance, incremental royalties from MediaTek litigation victories, and by healthy end-market dynamics for digital TV chips and digital camera chips. For SigmaTel, we will look at Q2 revenue guidance as a proxy for gauging the company's market share losses to archrival Actions Semi."
How about analog? "Microsemi's revenue guidance is likely to be in line with Consensus, though we expect there could be some positive cost reduction news announced with the closing of the APT acquisition on that same day," he said.
Atmel is in the turnaround mode. "We will watch Atmel's Q2 guidance closely for indications of market dynamics in the company's microcontroller and RF businesses, for signs that a beneficial pricing environment can be sustained through Q2, and for possible cost-cutting commentary from management. We think investors will continue to warm to Atmel's turnaround story over the coming months as they see continued evidence of a more conservative management style," he said.
April 11, 2006
Toshiba Corp. and SanDisk Corp. recently announced an agreement to build a new 300-mm wafer fab at Toshiba's Yokkaichi Operations to meet fast-growing NAND demand.
This announcement underscores a change in thinking at the two companies, according to Jim Handy, an analyst at Semico.
"As NAND prices are collapsing all around them the two companies announce a very significant capacity expansion plan," Handy said in an e-mail newsletter. "Although this plant has been anticipated for a while now, the timing seems very daring."
On one hand, the 300-mm fab makes sense. "After experiencing success in their conversion to 300-mm in Fab 3, the two companies are now finding that their production costs for 300-mm are better than those using 200-mm technology, giving them a competitive advantage," he said.
Here's the most important point: "Another thing to consider is that these companies saw a significant loss in percent market share by investing in capacity at a moderate pace over the last two years while Samsung was converting DRAM fabs to NAND at a clip," Handy pointed out.
"The result of this was that Samsung grew faster than the NAND market as a whole, while Toshiba and SanDisk grew more slowly, allowing Samsung to increase their percent share," he said. "With such an aggressive expansion plan the companies position themselves to stop that trend, and perhaps even to take some of those percentage points back."
The CMOS image sensor business is strong despite predictions of a slowdown. Micron reported $159 million in image sensor revenue in the second fiscal quarter, up 3 percent sequentially.
"We believe OmniVision is also facing a similar pattern in the April quarter," said Satya Chillara, an analyst at American Technology Research. "OmniVision's units were also up, although product mix was tilted towards VGA, thus dragging revenue growth. OmniVision should continue to benefit from Micron's capacity allocation and Magnachip's ramp-up issues for the next several quarters."
OmniVision is ramping up at Nokia, propelling the CMOS image sensor firm, he said.
April 7, 2006
Here's some commentary and observations from EET.com editor Mark LaPedus and others:
Foundry capacity, especially leading-edge processes, is tight. For example, fabs at silicon foundry giant Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) are at capacity and "full."
"Sales for the semiconductor manufacturing equipment market declined mildly in 2005, following explosive growth in 2004. The primary drivers behind market performance were slower growth in manufacturing capacity and 65-nanometer initial production," said Bob Johnson, an analyst at Gartner Dataquest.
On Semiconductor really turned me off after it bought LSI Logic's fab in Oregon. On Semi is looking for trouble and could be saddled with too much fab capacity if or when the market tanks. Business is strong at On Semi right now, but just how is the company going to fill up that fab unless, of course, it decides to shut down an older fab in the near future. That's a strong possibility.
On the other hand, business is strong for On Semi. The trouble is the company is suffering from a shortage of backend capacity.....
One thing is clear: Applied Materials is losing ground in the semi equipment business. Applied had hoped that the service business would become the engine of growth. Instead, service is a low-margin, thankless business. Applied needs to find new markets. I've said it once and I'll say it again. Applied and Canon should form a lithography venture. Lithography is where the action is.
On the other hand, rumors are flying that Applied beat Novellus for a big PVD order at IBM.....
Losing more ground
For that matter, the U.S. still needs a new equipment consortium. The U.S. continues to lose ground to Europe and Japan in equipment and materials. The U.S. has lost the lithography market. ATE, photomasks and materials are on the danger list. The trouble is that there is no leadership in the U.S. semi equipment industry.
According to WitsView's recent survey, TFT-LCD panel prices across the three key applications have slumped in April. It's worse than the research house's expectations. TV panel prices keep falling as demand from second-tier brands are weak. Among the three applications, notebook panel prices performed the worst.
Here's what some are saying about solar cell maker SunPower: "Based on our series of meetings with SunPower suppliers and customers in Germany this week, we believe there is considerable upside to Q1 and Q2 estimates," according to Piper Jaffray senior analyst Jesse Pichel, in a report.
"We believe SunPower has sufficient solar wafers to keep their existing three lines full, and the lines are ramping ahead of schedule," Pichel said. "While 2007 is very much a question mark with respect to poly supply, we believe expectations for 1H are set low and anticipate estimates for 2006 will increase markedly."
SunPower's first two lines have been running at full capacity since February, and its third line is ramping ahead of schedule at 60 percent yield, he said.
April 6, 2006
The Embedded Systems Conference (ESC) was the place to be this week. A lot of hot products, but here was the top T-shirt at the event, based on a panel of distinguished judges:
April 4, 2006
Photronics is slated to open its China photomask manufacturing facility this summer, which is several years behind its original schedule.
In 2002, Photronics outlined its strategy in China, announcing plans to build a photomask plant in that nation. In total, Photronics was supposed to invest $300 million in China. Construction of the facility was supposed to be completed in the first quarter of 2003.
However, the mask maker delayed that plant due to the SARs epidemic and other factors, according to the company. Now, the company said that it plans to have the grand opening this summer.
Meanwhile, semiconductor packaging, assembly and test companies increasingly prefer China, according to Gartner Dataquest. Of the 18 facilities planned to begin production through the end of 2007, 17 will be in Asia/Pacific, including 11 in China, according to the firm.
April 3, 2006
When I first saw the name of Infineon's new memory spin-off Qimonda I first thought it was Quasimodo, the misshapen but gentle bell ringer in the famous novel, The Hunchback of Notre Dame. In the Victor Hugo novel, Quasimodo is hidden from the world in the bell tower of the cathedral.
Quasimodo might have been a better name for Infineon's memory unit, which should go into hiding after an endless and redundant spree of media leaks and newspaper reports about its intentions.
I'm not saying that the memory unit is an ugly mess, but the organization needs a face lift if not an overhaul to keep up with Samsung, Hynix, and to a smaller degree, Micron. Quasimodo . I mean Qimoda has the pieces in place, but it faces an uphill battle.
According to Deutsche Bank, rumor has it that Novellus may have lost IBM's 45-nm copper barrier/seed PVD business to Applied Materials.
March 28, 2006
At least in my humble opinion, the most overrated sector in the semiconductor industry is the silicon foundry business.
Sure. Silicon foundries enable fabless chip makers and IDMs leading-edge manufacturing capacity. And there are a plethora of interesting stories out there.
Foundry giant TSMC is one of the miracles in the IC business. SMIC is fascinating to watch. All eyes are on Samsung's new foundry efforts. IBM is a bust in the foundry business for now. And so on.
But there's more hype than profits in the sector. The foundry model is turning out to be a boom for the fabless chip houses, but it's become a bust and money-losing proposition for the foundries themselves.
Except for TSMC, UMC and a few others, nearly all foundries are losing money and will never see a profit. There is simply too much foundry capacity in the market today and the foreseeable future.
In 2005, it was a bad year for the foundry industry, as worldwide sales hit 18.4 billion last year, down 2.5 percent over 2004, according to Gartner. For the first time, the foundry market fell while overall semiconductor sales grew in 2005, according to the firm, which also listed its rankings for last year.
March 24, 2006
Here's some thoughts and commentary from curmudgeon EET.com editor Mark LaPedus on various subjects: Intel's equipment awards, X-Fab/1st Silicon merger, Samsung's foundry efforts, LSI Logic and ASML.
It's always interesting when Intel hands out its annual equipment and material awards. It's more interesting to see who's not on the list this year: ASML, Applied, KLA-Tencor, Nikon, Varian, etc.
Malaysia or bust
I don't understand why Germany's X-Fab bought Malaysia's 1st Silicon. Several years ago, silicon foundry specialist X-Fab acquired Mitel's fab in the U.K., which turned out to be a disaster. X-Fab ended up being saddled with too much trailing-edge, CMOS fab capacity.
With 1st Silicon, X-Fab will inherit a ton of fab capacity and losses. 1st Silicon spent too much time developing a foundry business around NOR-based flash memories, a losing strategy at best. X-Fab should convert 1st's fab from plain-vanilla CMOS into more of a specialty process plant.
IDM foundry talk
The jury is still out on Samsung's big entry into the foundry business. For years, Samsung and other IDMs have tried but failed in that business. IBM has become a second-tier foundry player at best. And so has Toshiba and Fujitsu.
Samsung is a very scary competitor, but don't look for the company to overtake TSMC and UMC. On the other hand, Samsung's foundry business is gravy for the company; it is still a memory supplier at best. Chartered is still the one to wonder and worry about. It's never made money, even in the upturns.
Wandering chip maker
When I think of LSI Logic, the first thing that comes to mind is ASICs. So, I'm still in the state of shock over LSI Logic's recent move. to exit the ASIC business. LSI also plans to sell its insignificant DSP unit. On one hand, LSI Logic is smart to focus on its profitable businesses: consumer and communications. On the other hand, the company doesn't seem to know what it wants to when it grows up.
One of the first things I though of during the Dubai port fiasco in the U.S. was the ASML-SVG lithography acquisition. Years ago, ASML of the Netherlands acquired SVG Lithography, the sole, leading-edge lithography vendor in the U.S. The merger plan went up to the CIFUS board and was ultimately approved. With all of the big talk about competitiveness now, I wonder if that deal would fly today.
Most of the competitiveness talk today is hot air anyway, but it's a moot point. The U.S. lost the lithography market years ago.
March 22, 2006
Here's some tidbits from Applied Materials' shareholders meeting on Wednesday (March 22):
Dan Maydan, president emeritus of Applied Materials and a board member, has retired from Applied's board, the company announced at the shareholders meeting.
Maydan had been a member of the board since 1992. From 1994 to April 2003, he served as president, and previously was executive vice president of the company with responsibility for all product lines and new product development.
Maydan joined Applied Materials in 1980 as director of technology to spearhead the development of the company's series of plasma etching systems.
Meanwhile, at the event, Jim Morgan, chairman of Applied, said that China is a key market for consumer items. Motorola, according to Morgan, is selling a cell phone for $50 in China. Philips is working on a $15 cell phone for China, he said.
March 21, 2006
Wacker's silicon wafer unit, Siltronic, is not for sale after all. According to the company, Germany's Wacker has stated publicly several times that all discussions about selling Siltronic are terminated.
The trouble is that the company has not gotten that message out.
At one time, Wacker had been talking to Francisco Partners about unloading its once-underperforming silicon wafer unit. But things are looking up for the unit. Amid strong demand for its polysilicon products in the solar market, Wacker's silicon wafer unit said that it returned to profitability on growing sales for 2005.
March 20, 2006
A jury in Cumberland County Superior Court, located in South Portland Maine, on Monday (March 20) found Bank of America guilty of professional negligence and mismanaging Darrell Mayeux's $27 million dollar nest egg.
Mayeux, a retired Fairchild Semiconductor executive and resident of Falmouth, Maine, hired Fleet Bank's Private Client Group (since acquired by Bank of America) in 2000 after Fairchild's IPO made him wealthy.
The jury found that the bank's failure to provide the financial advice and investment protection it promised at the time of Mayeux's retirement caused the loss of his fortune. A unanimous verdict of nine jurors awarded the couple $7,448,026.00.
Fleet's investment advisors allegedly courted Mayeux and promised him a banking relationship where his investments would be protected. Fleet convinced him to take out a $4 million line of credit, using Mayeux's Fairchild stock as collateral against the loan, in order to make other investments to diversify his holdings.
The loan required that Mayeux's Fairchild stock remain valued at $8 million. Because Mayeux was still employed by Fairchild, he was restricted from collaring the stock. This banking relationship cost Mayeux $45,000 a year for the Private Client Group services plus $144,000 a year in interest on the line of credit.
When Mayeux retired from Fairchild in November 2001, he received no contact from Fleet's Private Client Group regarding new investment strategies for his retirement. Because Mayeux was no longer employed by Fairchild, he was free to collar his stocks and could have paid off the $4 million dollar line of credit.
Mayeux was given no financial planning advice and months later, when Fairchild's stock fell, his line of credit went out of balance. Fleet ultimately sold all of the shares at historic lows to pay off the loan, leaving Mayeux with a negative net worth.
March 15, 2006
FSI International, a supplier of surface conditioning equipment, will not have a booth at the Semicon West trade show this year. This represents the first time that FSI will not have a booth at the big event.
FSI will have a booth at Semicon China and other shows, but not at Semicon West. FSI joins a growing number of disgruntled companies that believe it is no longer worth having a booth at Semicon West. Very few fab managers go to that show and the real action is in Asia.
Meanwhile, Cypress Semi is gaining ground at Apple, which is using that company's click wheel IC controller in its products, according to American Technology Research Inc.
"We believe that Cypress is gaining market share at Apple in the form of design wins throughout the Apple line-up," according to a report.
"We think that Synaptics was able to regain some lost share at Apple, but had to give up significant pricing to do so. Synaptics sells a complete click wheel assembly, while Cypress sells a click wheel IC controller," according to the report.
And finally, Howard High, head of public relations for Intel, is retiring on April 3. High, 52, had been with Intel for 27 years.
March 11, 2006
In 2005, Texas Instruments was the leader in the analog chip industry with 18 percent share of the market, according to Databeans. While the company did not grow revenue much past the overall market, retaining 18 percent share year-over-year helped widen the gap between TI and the other players, according to the research firm.
The second largest supplier in this space last year was Analog Devices, followed closely by National Semiconductor with 13.4 percent and 12.8 percent share respectively, according to Databeans. Maxim Integrated Products and Linear Technology are both estimated to have slightly grown share from 8 percent in 2004 to 9 percent in 2005.
High performance analog includes amplifiers, interface, data converters, comparators, and power management ICs. The market for high performance multi-market analog products was down in 2005 by 1 percent from 2004, resulting in worldwide revenue of $11.7 billion, according to the firm.
Databeans estimates that 2006 will be a double digit growth year, well above 20 percent. "Longer term, this market is expected to outperform the entire IC industry average growth rate, 12 percent annually over the next five years for standard linear, compared to 10 percent for total ICs," according to the firm.
March 5, 2006
Mark LaPedus of EET.com hates to throw cold water on the IC industry. But LaPedus is lowering his forecast for the semiconductor industry in 2006. Now, he sees a 2-to-7 percent decline for the semi industry in 2006.
Originally, he projected minus 5-to-0 percent growth in 2006.
Why the pessimism? Here's what LaPedus sees:
1. Some market research houses and industry associations continue to pump up the IC market. That in itself raises red flags.
2. Industry bellwethers are doing so-so. Dell has a lackluster outlook for the first quarter. Intel will have a lousy Q1. Nokia and Cisco are plodding along.
3. In other words, the PC market is so-so. Wireless is OK. Wireline is mixed. MP3s are slowing, including the iPod. Consumer products like game machines suck.
4. Muti-core processors for PCs are boring and a non-event. The memory market is getting off to a non-memorable start. The NAND and NOR markets are slow, while DRAMs are down.
5. Embedded is always strong, but not exciting. CMOS image sensors are slowing due to seasonal factors.
Feb. 27, 2004
China has pledged to invest over $23 billion towards the preparation for the 2008 Olympic Games. At least 15 percent of the budget will be spent on information technologies, according to Databeans Inc., a research firm.
China's plans for new technological infrastructure include fiber optic networks, an HDTV digital network and a mobile communications system.
China's Ministry of Information Industry announced earlier this year that TD-SCDMA would be the country's "official" 3G standard for wireless communications. With TD-SCDMA (Time Division-Synchronous Code Division Multiple Access), China is attempting to free itself from dependency upon the other 3G standards in the West.
"However, TD-SCDMA on its own will likely not be enough to support the needs of the international community present at the Olympic games," according to Databeans. "Other networks based upon the more popular 3G standards like WCDMA and CDMA2000 need to be built as well," according to the firm.
Still, Siemens has already invested over $200 million in TD-SCDMA, with Nokia also contributing, and investing over $100 million. Several other major vendors are involved as well, such as Motorola and Nortel.
Feb. 24, 2006
During a party at SPIE, I overheard an interesting conversation: Lithography vendors are delaying the shipments of their tools to customers. Lithography vendors are using the same frame component supplier, who apparently cannot keep up with customer demand. This is, in turn, delaying final tool shipments.
Feb. 22, 2006
Albany Nanotech is looking at expanding its thrust in lithography. The R&D organization is currently making heavy investments in EUV and immersion.
The R&D organization is now planning to form a consortium in the direct-write maskless lithography arena. It is also looking at a similar program in nano-imprint.
Feb. 17, 2006
Electronic products improve the quality of human life in so many ways. But they sometimes fall into the wrong hands.
Take the case of former Major League outfielder Albert Belle. It was widely reported Friday that Belle was arrested and charged with stalking in Scottsdale, Ariz. According to reports, Belle allegedly harnessed global satellite positioning (GPS) technology, using it to track his ex-girlfriend.
Hopefully keeping his name in the paper can help Belle's quest to make the baseball Hall of Fame he came up way short last month in his first year of eligibility. One thing is for sure as another publication already pointed out if there were a stalking Hall of Fame, Belle would be a shoo-in.
Feb. 15, 2006
DRAMeXchange believes that DDR2 SDRAM shortages will persist through the first quarter of 2006.
"Some DRAM makers stated that they could only meet 50-60 percent of OEMs' DDR2 demand in February," according to the DRAM clearing house.
DRAMeXchange predicts the DDR2 shortage will continue in March. DDR2 will dominate as the mainstream memory in the spot market in 2Q06.
Feb. 9, 2006
Great Bush administration joke by Synopsys Chairman and CEO Aart de Geus during last week's EDA Consortium CEO panel. Alluding to recent developments such as the competitiveness initiative outlined by Bush in his State of the Union address, de Geus said that it's only been in the past few days that the administration has signaled its intent to provide support for education and high-tech industries.
"Of course," de Geus quipped, "people in other countries might say that this administration has never been that concerned about education and technology because they are not particularly educated themselves."
Feb. 7, 2006
DDR2 module prices are up, but worldwide DRAM output has been dropping since mid-December, says DRAMeXchange, a DRAM clearing house.
Commodity DRAM output has dropped amid Samsung's strategic move to shift its production from DRAMs to NAND flash and niche ICs, according to the report.
On the other hand, DDR2 module contract prices have jumped by an average of 15-to-18 percent in the first half of February, according to the report.
The contract price for a DDR2 DIMM, equipped with a 256-Mbit 400-MHz part, reached $20-$21.50, up from $17-18.75. A 512-Mbit DIMM reached $40-43, up from $34-37.50.
Feb. 3, 2006
Watch out for joint announcements from Freescale and IBM late on Monday (Feb. 6).
What are they up to?
We don't know but we have heard it could be a joint venture or the two operations joining an already existing group and that information is being tightly controlled in the U.S.
So what could Freescale and IBM be cooking up? People have said to me; "Oh it will be a PowerPC thing," Well it could be. Both companies have driven the architecture at various times and it is at risk of losing traction right now. But my gut feel is this is a bigger and more forward-looking announcement than something around a 20 year old RISC architecture.
We've been invited to listen to John Kelly, senior vice president of technology and intellectual property for IBM Corp. and Michel Mayer, chairman and chief executive officer of Freescale Semiconductor Inc. and they have more than one announcement to make, apparently. In other words, we are going to the top and what is being indicated is corporate, strategic stuff. And where did Mayer come from prior to joining Freescale?
You guessed it; IBM.
After recent discussion of an imminent consolidation in the industry are we about to hear about a merger of IBM's chip operations with Freescale?
It seems unlikely, not least because we are heaing tell that press conference will usher in a "new era of collaboration" and the "co" in collaboration implies two or more parties. Although, in theory, a merged IBM-Freescale could be collaborating with other parties. Indeed, given the history of the two organizations, they would be.
Freescale and IBM are natural allies and have been so since the Somerset joint design venture in Austin, Texas, 15 years ago, which sought to drive the PowerPC forward for Apple and into other applications. Somerset was disbanded in 1998 as I remember and nearly a decade later Apple has said they are transitioning to using Intel processors inside Mac computers. That means that, as a computer processor architecture, the PowerPC is in its twilight, although it does figure prominently as the embedded processor in games consoles.
But, with or without a merger, extending collaboration would also raise issues for IBM and Freescale. IBM is in a multifaceted manufacturing process club with Chartered, Samsung, AMD, Infineon, and Samsung, while Freescale participates at Crolles2 in France with STMicroelectronics and Philips Semiconductors and by extension with foundry chip maker Taiwan Semiconductor Manufacturing Co. Ltd.
The control of intellectual property is a key part of these collaborations and it is not a simple matter to extend them. The more technology involved and the more participants there are, the more difficult it becomes to admit a company or group of companies at a later date.
For the reasons above I am shying away from tipping a full blown merger at this time but think that one of the most successful things that IBM and Freescale have in common could be at the heart of the forthcoming press conference: silicon-on-insulator technology.
It could be that IBM or Freescale are simply going further in aligning their SOI technologies, or one or other could be swapping foundry horses, or even that an enlarged SOI club is being formed that extends to include both Chartered, TSMC and potentially others.
Time (and Kelly and Mayer) will tell.
Feb. 1, 2006
The Chinese New Year is the time to sell your semi stocks despite the recent and bullish news in the marketplace, according to SG Cowen, an investment banking firm.
"Chip equipment companies have recently delivered more upbeat messages, more impressive 4Q05 financial surprises and more favorable revisions to 2006 guidance than their chipmaker customers -- who have in turn had more favorable messages, surprises and revisions than their customers that produce end market technology goods," according to the firm.
"The risk/reward profile for most semiconductor and semiconductor equipment stocks has turned negative in what remains of 1H06," according to the firm.
"However, this news flow likely peaked with the arrival of Chinese New Year on January 29, the Year of the Dog," according to the firm. "In fact, history indicates that buying chip stocks entering the Chinese New Year is a prescription for underperformance."
Jan. 31, 2006
"January 2006 is shaping up to be a highly active management turnover month and continues the increasing trend of C-level management turnover in North America's public companies," said Richard Jacovitz, senior vice president and director of research at Liberum Research, part of the Wall Street Transcript.
C-level managers include directors, CEOs, CFOs, and vice presidents. C-level changes might merit a second look from an investment perspective.
With just two days left, January already scored a monthly high of 2,342 for the number of C-level or top-level management changes registered since management change specialist Liberum first began maintaining management turnover statistics in December 2004.
Liberum Research said the drug/biotech industry had the most C-level changes with 262, followed by banking with 200, and business Services with 131.
Companies that had CEO changes in January were the following: Dow Jones, Valero, SFBC, Aetna, AET, Cambrex, First Fund, Columbia Labs, Fedex, Paradigm, Fuelcell Energy, Symbol Technology, Microvision, Allos, Gensym, Autodesk, Innovo, Gymboree, Tumbleweed, Advanced Viral, B&D Food, Borders Group, Dura Vest, Nike, Imclone, Immtech, Pervasive Software, Geneara, Erhc Energy, Dawson Geophysica, Electronic Sensors, Vignette, and 3Com.
Jan. 27, 2006
Is the hot NAND-based, flash-memory market running out of steam? Some say the market is heading south.
"We believe that the market will continue to shift from constrained to over-supplied through the middle of 2006," said Robert Witkow, president of Westwood Marketing LLC (Englewood, Colo.), a research firm. "New applications including hybrid flash hard disks, hard disk replacements, personal media players and mobile phone sockets will take up the capacity at beginning at the end of Q3."
For high-density parts, NAND flash demand was strong last week, according to the DRAMeXchange, a DRAM clearing house. Spot prices for 4- to 16-Gbit parts jumped as high as 5 percent over the week Jan. 17-23. Low-density, however, headed south compared with previous weeks.
DRAMeXchange observes that NAND flash spot prices still enjoy a price premium over contract prices at a range from 5-to-23 percent. Among all parts, DRAMeXchange reveals that 2-Gbit is the item that enjoys the highest price premium.
Next week, many factories in Taiwan and China will shut down for Chinese New Year. DRAMeXchange believes limited transaction amount should drag overall NAND flash prices down from Jan 23.
Jan. 23, 2006
Kyosha America Corp. is selling its former printed circuit board manufacturing facility in Tijuana, Mexico. This offering is a former Maquiladora manufacturing facility on an approximately 5.07-acre site.
Constructed in 1998, the facility is suitable for printed circuit board and other electronics manufacturing, such as optics, solar cell, biotechnology / biomedical, and microelectronics. The sale does not include any manufacturing equipment; Kyosha has vacated and moved out all equipment so the facility is immediately available to a buyer.
The property is being listed by Colliers International's Advanced Technology Real Estate Group.
Jan. 19, 2006
At last week's Industry Strategy Symposium (ISS) event in scenic Half Moon Bay, Calif., there was much talk in the corridors about the problems with extreme ultraviolet (EUV) lithography.
In a nutshell, many believe that EUV will NOT be ready for the 32-nm node in 2009. Some say the technology will get pushed out at the 22-nm node in 2011. Some even speculate that EUV will never work.
As reported, Intel is pushing for EUV for 32-nm designs. ASML, Canon and Nikon are separately developing EUV systems. ASML will ship a demo unit this year and Nikon will do the same in 2007.
However, for some time, there have been no adequate power sources for EUV. The shelve life of a condenser for EUV is about a month now; many had hoped to see shelf lives of four years.
There are still photoresist problems with EUV and no way to inspect the masks, which are supposed to be defect free.
Other than that, EUV is going well
Jan. 17, 2006
Here comes the earnings for the semiconductor-equipment sector!
"We expect most companies in the space to slightly exceed their bookings guidance but more significantly exceed their shipment guidance of 5 percent," said C. William Lu, research analyst at Piper Jaffray & Co.
"The average bookings guidance for 4Q '05 was around 7-8 percent; we believe most companies will report bookings at around 10 percent and guide for another 5-10 percent increase in 1Q06 bookings," he said. "We also expect the 1Q06 bookings guidance to get revised higher intra-quarter as visibility from the foundries clears up post Chinese New Year."
Foundries and Japan are the key drivers for 1Q '06 orders. "We expect strong Japan demand in C1Q06, with sizable orders from Toshiba, Elpida, and Sony," he said. "The upside to 1Q orders are likely to come from foundries. The equipment companies have yet to see significant orders from the foundries, but with revenue forecasts for 1Q06 going up in the foundries and robust holiday sell-through, we believe foundry orders are imminent in late 1Q06 or 2Q06."
Companies with strong exposure to foundry include Applied Materials, KLA-Tencor, Mattson, Lam Research, Rudolph Technologies, and UltraClean Holdings.
Jan. 10, 2006
Big win for AMD! Piper Jaffray senior analyst Les Santiago upgraded Advanced Micro Devices (AMD) from "market perform" to "outperform" after saying that AMD will gain a big design win from Dell. In the second half, Dell will reportedly roll out an x86-based server, build around AMD's Opteron microprocessor, he said. This is a big blow for Intel, which had been the sole processor supplier for Dell.
And big loss for Agilent. Tom Newsom, vice president of Agilent Technologies and general manager of Agilent's SOC Business Unit, is leaving the company to pursue other interests. Newsom had been with Agilent and HP for 22 years. The move follows Agilent's move to spin-off its ATE unit, which will attempt to float an IPO.
Meanwhile, speaking at a conference, ATMI Inc. said it expects worldwide wafer starts to be up 6-to-8 percent in 2006 over 2005, according to a report from investment banking firm Canaccord Adams Inc. For 2005, material provider ATMI said worldwide wafer starts were up 7 percent, according to the report. ATMI said copper-enabled wafer starts grew 30 percent in 2005 and are expected to be up another 25 percent in 2006.
Jan. 6, 2006
Micron Technology Inc., Idaho's largest private employer, is hiring! The memory maker said it will hire people to fill about 900 jobs in Boise, according to The Idaho Statesman.
Micron's openings are in manufacturing, engineering, accounting, finance and information technology, according to the report. Some 14,000 people work in the high-tech industry in Southwest Idaho, according to the report. Some 10,000 of those work at Micron.
Jan. 5, 2006
A former sales representative for chip distributor Memec pled guilty to a federal charge of money laundering in an alleged scheme to bilk more than $2.2 million from his employer, according to the Dallas Business Journal.
Roy Driscoll, formerly of Memec, faces a maximum of 20 years in prison, a fine of up to twice any illicit gains he may have received, and restitution, according to the report.
"In a court filing, Driscoll admitted that he submitted to California-based Memec inflated invoices for products that were sold to Alcatel. He then had refunds wired to a bank account for an entity he set up called 'Alcatel Asset Recovery,' " according to the report.
Jan. 2, 2006
What a way to start the New Year! Silicon foundry giant Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) experienced a production delay in the fourth quarter of 2005 due to a manufacturing glitch, according to Forbes.com.
TSMC's Fab 3 plant, an 8-inch facility, suffered about 10,000 damaged wafers in the period, according to DigiTimes.com. The problem was due to a production glitch, according to the report. TSMC's Fab 3 produces chips for ESS, Freescale, SigmaTel and Zoran.
Meanwhile, a former stockbroker made nearly $23,000 on a pending acquisition by Applied Materials Inc. after using insider knowledge he learned from his girlfriend, according to the AP.
Lee Edelman, 34, was indicted on securities fraud charges after his girlfriend, an associate at a large Manhattan law firm, told him in March 2004 that Applied was in talks to acquire Metron Technology NV, according to the report.
"The Securities and Exchange Commission, which also filed civil insider trading charges against Edelman, said in a release that Edelman broke up with his girlfriend several weeks after he began buying Metron stock," according to the report.
Dec. 28, 2005
Doug Freedman, an analyst with American Technology Research Inc., said the holiday season was a mixed bag for chip makers.
"December bookings rates are hard to read as the December order pattern has traditionally been a poor indicator," Feedman said in a report. "We believe December order rates were strong at the start, but ended on a very weak note. We expect to hear that new products targeted at flat panel TVs, new game systems, AMD processor-based products, and MP3 players sold well."
On a company-by-company basis, the news is also mixed. For example, Cypress Semiconductor's solar unit, SunPower, "has been on fire as we expected," he said. "Now as we begin to focus on the core business at Cypress, we see good things happening. The PSoC product line has been very successful; we also like the clock and USB exposure. We are looking forward to the SunPower divestiture and improvements in the SRAM and TCAM product lines in 2006. We are skeptical on the image sensor business."
On the other hand, Micron Technology's image sensor business is strong and "should continue its rapid growth, with handsets, DSCs, and PC cameras driving the unit growth," he said.
It's also a mixed bag at Freescale Semiconductor, whose chip supply agreement ends with its former parent company, Motorola.
"Wireless products could be the growth engine in 2007 and beyond with strong sales and profits," he said. "We believe 2006 will be another year of transformation for Freescale as the new products that were introduced post-separation should begin to ramp."
There are some positive signs in analog despite an inventory glut in the arena. "We believe that 2006 will be an above average year as inventory management improvements have pushed inventory levels below reasonable levels," he said.
Dec. 26, 2005
More trouble for Singapore's Citiraya Industries, the electronics recycling company that is under "judicial management" amid a scandal involving 3M, AMD, Seagate and STMicroelectronics. "Judicial management" is Singapore's lingo for bankruptcy.
Citiraya recently said that its subsidiary, Citiraya (Singapore) Pte. Ltd. (CSPL), had joined it in seeking protection from creditors. Citiraya in total owes about SGD$56.6 million ($34 million) in its books, and faces claims of more than half a billion Singaporean dollars or roughly US$300 million, according to the Business Times.
As reported, former employees from 3M, Advanced Micro Devices, Seagate and STMicroelectronics were recently jailed over an alleged chip resale scandal involving Citiraya Industries, an electronics waste recycling specialist.
The former chip and disk-drive employees pleaded guilty in taking bribes from executives of Citiraya. In return for the bribes, the individuals allegedly resold chips in the open market that were meant for destruction at Citiraya.
Ng Teck Boon, the former assistant general manager of Citiraya and younger brother of its missing ex-chief executive Ng Teck Lee, was sentenced to eight years' jail for his part in the corruption scandal, according to reports. Nine people have thus far been jailed for their parts in the Citiraya scandal.
Dec. 16, 2005
There are major and troublesome quality problems with Japanese-made CCD parts, which are used in digital cameras and camcorders.
Sony has big problems in the arena. In fact, the company's problems are mounting, which is also a troublesome sign for the holiday season uptick. It has suspended sales of its digital still cameras in China in response to Zhejiang province's injunction to stop sales of its digital still cameras judged by authorities there to have fallen short of quality criteria
Since October, a series of announcements have been made by Sony and other major Japanese manufacturers of digital still cameras and camcorders regarding problems with the CCDs.
Sony issued a statement acknowledging the problem and said it would fix all cameras made between October 2002 and March 2004 with the problem.
"Seems like this could turn into a big black eye for CCDs in Japan and elsewhere, while the CMOS image sensor movement gains momentum," according to one source. "Sony's problems were apparently related to packaging issues. Several reports I've seen on the Web said moisture was getting into the CCD package and causing them to fail."
Here's some links to digital photography sites that have been posting stories about the problem:
One report can be found on this site.
Another can be found here and here.
Dec. 15, 2005
Shortages of select components and product price hikes are hitting the market, especially capacitors, flash memories and Intel's Prescott processors. And there are also major quality problems with Sony's CCDs, which are used in its digital cameras and camcorders.
The push towards DDR2-based SDRAMs is getting a bit stronger. But due to a lack of product available through Intel and the gray market, pricing has jumped above direct on the company's Prescott 521 processors, which are moving around $165-to-$169, according to Fusion Inc., an independent distributor, in an e-mail newsletter.
"There have been several mergers and acquisitions as companies struggle to stay profitable in this very competitive environment," according to Fusion. "Manufacturers have cut down and sometimes even closed out production on their unprofitable lines, leaving large gaps in the supply of board level components."
In the passive market, for example, ceramic capacitors have continued to be an issue in many areas. "This quarter alone, we have seen lead times increase from 6 weeks to 10 weeks to 16 weeks and more," according to the newsletter.
"There have been shortages across all the major capacitor manufacturers, especially in X5R dielectrics and parts with values over 100,000pF," according to Fusion. "Another area to keep a close eye on is the tantalum capacitor market. There are hints of an impending shortage in the slightly increasing lead times. Prices on tantalum caps are also going up as we enter the New Year."
The NOR-based flash marketplace is seeing a lot of activity this quarter. Spansion LLC has yet to "reach a flow in their process of replacing AMD parts with the new Spansion numbers," according to Fusion. "Many issues have led to this current state, including a lack of testing capacity and flaws in their ability to market the change in part numbers."
Intel and STMicroelectronics are working together to create a new line of multi-level-cell (MLC) products. "This will increase production on the higher density flash (512-Mbit and 1-Gbit), but it will leave the lower density flash very short throughout the market. We are already seeing signs of this in increasing prices from other manufacturers of low-density flash."
Going into the New Year, flash shortages will continue to cause production problems. "Deliveries have been delayed or cancelled in the 128- and 256-Mbit product lines. The manufacturers who can stay on top of this demand will win out in the end," according to the firm.
DDR discrete product should start to see some constraint and pricing is already starting to reflect this possibility. The push to DDR2 is getting a bit stronger. Expect DDR400 modules to be at a premium within 3-to-6 months, according to Fusion.
Dec. 14, 2005
What happened to the long-awaited upturn in DRAMs? A clearing house says the upturn will happen in mid-2006. But now, the DRAM market is weak.
DRAM bit growth slipped 2.65 percent in November, down from October's 10 percent sequential growth, says DRAMeXchange. The DRAM clearing house also believes DDR2 will make gains with the desktop PC segment, with the crossover projected in 1Q06.
DRAM spot prices remains flat with slight drops over the week of Dec. 6-13. NAND flash, on the contrary, reported accelerated drops, especially high-density parts.
On the bright side, DRAMeXchange also observed stronger demand from the China and U.S. markets. Hynix and Micron both received increasing inquires for DDR2 512-Mbit 533-MHz chips.
DRAMeXchange expects DRAM supply bit growth will show mild growth in 1H06, limited by the already full 300-mm capacity.
Dec. 13, 2005
Infineon Technologies AG and Zoran Corp. separately rolled out new chips for emerging applications.
Infineon Technologies AG said that its 512-Mbit GDDR3 (Graphic Double-Data-Rate 3) graphics DRAM were selected by ATI Technologies for use with its Mobility Radeon X1600 graphics processor targeting notebook PCs.
The Mobility Radeon X1600 is ATIs new
mobile graphics processor. Infineon's 512-Mbit GDDR3 graphics DRAM for high-performance mobile and desktop 3D graphics applications supports clock frequencies of up to 800-MHz and uses a 32-bit interface.
Meanwhile, Zoran announced availability of two new reference designs for DVD recorders with integrated support for digital broadcast standards, one with ATSC for the U.S. and another with DVB for Europe.
Both new platforms are based on the Activa 100/150 DVD recorder solution, currently shipping to leading manufacturers worldwide, and support stand-alone DVD or hybrid DVD+HDD (hard-disk drive) recorders.
For the U.S. market, Zoran's DVDR+ATSC reference design uses the SupraHD 640 high-definition digital TV processor and Zoran's Cascade 2 front-end demodulator with the Activa 100/150 to enable recording of high-definition broadcast signals to DVD or hard disk. This solution includes a transport processor, high-definition MPEG video decoder, and Zoran's proven HDXtreme video processing and picture-enhancement technology.
For DVB systems in Europe, the Zoran reference design uses the SupraTV 150 integrated standard definition digital TV processor to support free-to-air satellite or terrestrial broadcasts throughout Europe and Asia, including support for third-party middleware such as MHEG-5 for the U.K. market and selected conditional access systems for other markets.
Dec. 9, 2005
Two companies rolled out a pair of novelty items: solar-powered cars and electric hybrid buses.
Solatec LLC introduced flexible, rooftop-mounted solar panels for hybrid vehicles, starting with a kit for the 2004-2006 Toyota Prius.
With Solatec panels installed on the roof, the prototype SolaPrius averages 55 miles per gallon (MPG) in the city and 62 miles per gallon (MPG) on the highway an overall 10 percent improvement over the pre-installation numbers.
Solatec's photovoltaic kit (patents applied for) adds two flexible, conformal panels that charge the hybrid automobile's auxiliary battery through a proprietary charger/current-limiter system concealed behind interior trim panels. The self-adhesive, rooftop-mounted panels are only 0.6mm thick and cause no change in aerodynamic drag.
The $2,195 kits will be available nationwide through dealer franchises.
Meanwhile, Azure Dynamics Corp., a developer of hybrid electric and electric powertrains for commercial and military vehicles, this week announced the unveiling of its first hybrid electric CitiBus.
Azure announced the launch of its shuttle bus program with the sale of five hybrid electric, 20-passenger shuttle buses to The Bronx Overall Economic Development Corporation ("BOEDC"). Azure's hybrid electric CitiBus will employ the same chassis and hybrid electric drive system currently used in delivery vans supplied to other Azure customers such as Purolator Courier Ltd. The hybrid chassis is fitted with a conventional shuttle bus body.
Dec. 3, 2005
Intel Corp. is debating whether or not to build a 450-mm fab in Hillsboro, Oregon. The proposed fab is called D1E.
Intel claims that the semiconductor equipment makers are in development with 450-mm tools.
I'm sure Intel's key tool and material suppliers are exploring next-generation, 450-mm equipment, but how many can really afford to develop it?
Until other chip makers jump on the 450-mm fab bandwagon, there is no business model or profits for 450-mm tools.
Meanwhile, Intel is exploring future interconnects based on carbon nanotubes. The technology could have a potential current-carrying capacity of 1,000 times greater than copper.
For wire lengths greater than 100-nm, carbon nanotubes shows lower resistance than copper, according to Intel. New progress is being made on PECVD techniques to enable the technology.
Don't look for nanotube interconnects in the near term.
Dec. 1, 2005
Spurring the move to build a new wafer fab, Intel Corp. recently obtained a $25 billion property tax break from the Oregon government.
The so-called Strategic Incentive Program (SIP) is the fourth tax break for Intel in Oregon. Under the new 15-year program, Intel will not pay property tax on semiconductor equipment in a fab.
Which fab? Intel said that it is considering a plan to build a new development fab in Oregon, which could possibly become the world's first 450-mm facility.
During a press and analyst conference here on Wednesday (Nov. 30), officials from Intel acknowledged that the chip giant has the so-called D1E wafer fab on its manufacturing roadmap in Hillsboro (see Nov. 30 story).
Meanwhile, Korea's Samsung last year outspent Intel in capital expenditures.
Intel's reaction? "A lot of people believe who spends the most money wins," said Andy Bryant, Intel's CFO, at a conference. "I don't believe that. It's how you spend the money."
Nov. 29, 2005
United Kingdom's BP plans to double its investment in alternative and renewable energies to create a new low-carbon power business with the growth potential to deliver revenues of around $6 billion a year within the next decade.
Building on BP Solar -- which expects to hit revenues of
$1 billion in 2008 -- BP Alternative Energy will manage an investment program in solar, wind, hydrogen and combined-cycle-gas-turbine (CCGT) power generation, which could amount to $8 billion over the next ten years.
The first phase of investment would total some $1.8 billion over the next three years, spread in broadly equal proportions between solar, wind, hydrogen and CCGT power generation. Investment will be made step by step, and will depend on the nature of opportunities and their profitability.
BP Alternative Energy will be based in Sunbury, Middlesex and initially employ some 2,500 people around the world. It will be headed by Steve Westwell, reporting to Vivienne Cox, chief executive of BP's Gas, Power & Renewables division.
Nov. 28, 2005
Amid a shortage of materials in the market, Evergreen Solar Inc., Q-Cells AG and Renewable Energy Corp. ASA (REC) announced a partnership in the solar cell and materials business.
The world's largest manufacturer of solar-grade silicon and multicrystalline wafers, REC, is joining EverQ, a venture between Evergreen Solar and Q-Cells that is currently building a 30-megawatt solar wafer, cell and module manufacturing plant in Thalheim, Germany.
In conjunction with becoming a stakeholder in EverQ, REC has agreed to the long-term supply of solar-grade silicon to Evergreen Solar and EverQ.
Under terms of the seven-year agreement, REC will initially supply Evergreen Solar with 60 metric tons and EverQ with 190 metric tons of solar-grade silicon annually. Additionally, REC will license to EverQ certain of its proprietary manufacturing technology.
In exchange, REC will acquire a 15 percent ownership position in EverQ on a cost-of-capital basis. Following REC's initial investment, Evergreen Solar will own 64 percent of EverQ, Q-Cells will own 21 percent and REC will have 15 percent.
The agreements contemplate that when REC establishes planned additional facilities for the production of silicon, it will offer to EverQ a second long-term supply agreement that would substantially increase REC's supply of silicon to EverQ. Should REC offer this second supply agreement, REC will be entitled to increase its ownership stake in EverQ to as much as one-third.
The amended master agreement contemplates that Q-Cells will also be able to increase its ownership stake to one-third of EverQ.
"The addition of REC to the EverQ partnership is a landmark event for our joint venture and the entire solar industry," said Richard M. Feldt, president and CEO of Evergreen Solar, in a statement.
"At a time of potential silicon shortages and extremely high prices, EverQ now has an increased supply of silicon to facilitate rapid growth," he said. "Uniting REC's newly developed granular silicon with distinctive technologies from our three companies has the potential to dramatically reduce the overall cost of producing solar products and set a new worldwide standard for solar power."
Nov. 27, 2005
Wake up world! Wind energy is blowing away the market, while fuel cell buses are making their debut in China.
The American Wind Energy Association (AWEA) recently said the U.S. wind energy industry will install about 2,500 megawatts (MW) of new wind power this year. This is a record amount that will help lower skyrocketing home heating and electric bills by reducing the demand for natural gas.
According to AWEA's assessment of the wind energy market, the building boom that is underway could bring the cumulative total of U.S. installed wind capacity to over 9,200 MW, serving the equivalent of 2.4 million average U.S homes. One megawatt of new wind energy is enough electricity to power 270-300 homes.
"Wind power's rapid growth provides what is potentially the quickest and best supply-side option to ease the natural gas shortage," said AWEA Executive Director Randall Swisher. "We are hopeful that the momentum started in this record-breaking year will continue because of the Congress's foresight in extending the wind energy production tax credit through December 31, 2007. The wind power industry is stepping up to provide the U.S. with a significant amount of its power needs in this time of uncertainty."
Meanwhile, Ballard Power Systems and DaimlerChrysler were recently in China to attend the launch of three Mercedes-Benz Citaro fuel cell buses.
The buses, powered with Ballard's fuel cell engines, will enter revenue service in the city as part of a two-year demonstration project being led by the Chinese Ministry of Science & Technology, with support from both the Global Environment Facility and the United Nations Development Program.
Ballard Power Systems designs and manufactures zero-emission proton exchange membrane fuel cells. Ballard's mission is to develop fuel cell power as a practical alternative to internal combustion engines.
"Governments and regions around the world are assembling the building blocks of the hydrogen economy in fuel cell vehicle demonstrations," said Ballard Chairman and Interim President and Chief Executive Officer, John Sheridan.
"Fuel cells and hydrogen can play a critical role in the development of a sustainable transportation strategy in China. Fleet demonstrations, like the one here in Beijing, will seed the market and will provide many people with the opportunity to experience first-hand the clean, quiet and comfortable ride of zero-emission transportation alternatives," he said.
Nov. 22, 2005
Having lived in Asia for five years that is, in Taiwan from 1993-to-1998 I find it interesting to track the progress of the region.
This is especially true for Asian's Tigers: Hong Kong, Singapore, South Korea and Taiwan.
Back in the 1960s, these countries were at similar levels of wealth as many nations in Africa. But between the 1970s and 1990s, the Asian Tigers suddenly emerged with high growth rates and rapid industrialization.
Today, Korea is a powerhouse, but the nation faces several internal problems. Hong Kong is barely a blimp on the radar screen as it has been absorbed into China. Taiwan and Singapore face an uncertain future if not oblivion.
And the Sleeping Giant China continues to arise and gather momentum, leaving some to wonder if that nation will eclipse and drive the Asian Tigers into extinction.
Meanwhile, Korea stands out among Asian's Tigers. Propelled by the likes of Hyundai, Samsung and others, Korea has established global brand names in automobiles, consumer products and semiconductors.
On the other hand, many of Korea's top brands are plagued by an assortment of scandals. Hyundai and Samsung fall into that crowd. It's as though Korea is in the self-destruct mode.
In contrast, Hong Kong failed to establish global brand names or a major manufacturing base in electronics. But Hong Kong did emerge as the Asia-Pacific business center and conduit into China back in the 1970s and 1980s.
However, Hong Kong lost its crown as the Asia-Pacific business center in the 1990s. Many multinationals moved the bulk of their important staff functions from Hong Kong to other Asian nations, especially China, leaving the former British colony less important, if not irrelevant today.
Taiwan and Singapore possibly face a similar fate. Over the years, Singapore has developed relatively few domestic electronic companies and global brand names.
Singapore, however, has embarked upon an impressive strategy to lure multinationals to invest in the city-state, by providing a strong infrastructure and attractive incentives.
Like Singapore, Taiwan is a dynamo in electronics. Unlike Singapore, Taiwan has developed a plethora of domestic electronics companies, which have turned into global powerhouses: Acer, TSMC, UMC, among others.
But Taiwan must find ways to establish more global brand names and move up the value-added chain in terms of developing new industries, said Stan Shih, founder of Taiwan's Acer Group and former chairman and CEO. Now, Shih is group chairman of iD SoftCapital Inc., a venture capital firm.
Like Taiwan, Singapore must also move up the value chain. In fact, both Singapore and Taiwan face another problem: they rely on manufacturing to fuel their respective economies.
The trouble is that the Sleeping Giant China is slowly but surely taking more and more of the manufacturing pie at the expense of Singapore, Taiwan, and, to a lesser degree, Korea.
And many of the industries, key jobs and intellectual property (IP) are also moving to China and elsewhere. Over time, Taiwan has seen its key industries move to China. First, it was the textile industry, followed by low-end components, then PCs, and now, semiconductor manufacturing.
Singapore has also seen more and more of its electronics industry move offshore to Indonesia, China and elsewhere. This includes the disk-drive and IC assembly and test sectors.
One doubts that Singapore and Taiwan will get hollowed out to the degree of Hong Kong. But one wonders if Singapore and Taiwan could become less important over time if they can't move fast enough and re-invent themselves.ML
Nov. 18, 2005
Chip-equipment vendor Axcelis Technologies Inc. disputes a report from an analyst (See entry below), who said that the company is late to market with its single-wafer ion implanter.
Here's what Axcelis wrote in an e-mail to me:
"A quick scan of our press releases or earnings releases reveals we started shipping our Optima MD system early this year. AMD, IMEC, and several fabs in Europe and Asia are customers. We also just announced that we have just received our first multiple system order for our new Optima HD high dose tool. We hope to leverage this success in the single wafer space into increased market share in the future. As the market share leader for 9 out of the past 11 years, I'm confident this will happen."
Vice President, Corporate Communications
Axcelis Technologies Inc
Nov. 17, 2005
At a recent trade show in Korea, I was impressed by the amount of domestic semiconductor-equipment and materials vendors in that nation. Dongjin Semichem, Doosan, IPS, Jusung, Kookje, Leaders Mask Technology are among the leading chip-equipment/materials makers in Korea.
If one talks to these companies, most if not all Korean chip-equipment makers focus more on the domestic market. They do not pay too much attention to the international markets.
Some even believe that Korean chip-equipment makers only sell to one account: Samsung. In fact, Samsung funds much of the R&D for Korea's chip-equipment industry and procures most of the tools.
So is Samsung building up a collection of captive semiconductor-equipment companies? Samsung still buys a ton of equipment from the foreign vendors.
But maybe Samsung is going back to the good 'ole days when IDMs built their own equipment to gain a competitive advantage. Still others believe Samsung is propping up the Korean equipment industry to get better pricing terms from the foreign companies.
In other words, play one against your own captive firm. Fair or unfair? It could be a moot point, especially when you're one of the world's largest fab-equipment buyers.
Nov. 14, 2005
The rumors are flying on two fronts in South Korea.
Reports have surfaced that Samsung Electronics Co. Ltd. will make cell-phone chip sets on a foundry basis for Qualcomm Inc., according to the Chosun Ilbo Web site. Qualcomm uses several foundries right now, including IBM, TSMC and UMC.
And according to DigiTimes, Apple Computer Inc. is reportedly looking for additional sources of supply for NAND-based flash memory parts. Apple is reportedly talking to Korea's Hynix Semiconductor Inc. about obtaining such parts, the report said.
Apple's current suppliers, Samsung and Toshiba Corp., are having trouble meeting demand.
Nov. 13, 2005
During Cypress Semiconductor Inc.'s analyst meeting last week, T.J. Rodgers, president and CEO, failed to show up for the event, said analyst Doug Freedman of American Technology Research.
Moore's Law also failed to show up at the event, Freedman said in a report, adding that Cypress' CMOS image sensor business is losing money, while the company is exploring options for its search-engine CAM business.
It was unclear why T.J. was absent at the event, but "Cypress is in the midst of major product transitions in almost every business unit," Freedman said.
The company is moving towards a "fab lite" strategy, but moving away from Moore's Law, Freedman said. "The company was very clear that R&D spending on leading edge technology would slow after the 65-nm node is reached as most of the spending on 65-nm is now complete," he said. "The slow-down in chasing Moore's Law was attributed to a reduction in the Cypress product mix that requires leading edge technology. It appears that technology for technology's sake days are gone at Cypress."
In terms of its product segments, Cypress' CCD business unit is OK and "leading Cypress back to profitability," he said. "The PSoC, USB, and clock businesses make up the CCD business unit. We believe this is the second most valuable business unit within Cypress as the company's products in this segment are the most unique and have been growing the fastest."
The CMOS image sensor business is in the tank. "The image sensor products were shown and time lines for revenue extended as handset wins were not achieved in 2005 as originally planned," he said. "We believe that Cypress' present 3MP sensor will have to undergo a redesign to smaller pixel sizes before becoming competitive in the market place."
The network search engine "business was mentioned as a business that is not profitable, and for which the company is exploring other options," he said.ML
Nov. 9, 2005
Glad to hear about the IC recovery. Too bad Freescale Semiconductor Inc. is cutting back and handing out pink slips.
By Dec. 24, Freescale is planning to shut down its IC design center in North Andover, Mass., according to a report from the Eagle Tribune.. The move will affect 70 jobs, the report said. The facility produces chips used in networking equipment.ML
Nov. 8, 2005
The ion-implantation market is a competitive field, although Varian Semiconductor Equipment Associates Inc. is dominating the single-wafer, high-current sector of the business, said Mark Bachman, an analyst with Pacific Crest Securities Inc. (Portland, Ore.).
Varian's competitors Applied Materials and Axcelis are behind in single-wafer, high-current implanters, which are critical for 65-nm semiconductor production, Bachman said.
"Axcelis is late to market and has yet to introduce its single-wafer, high-current tool," he said in a recent report. "Applied introduced the Quantum X, which has seen limited success at Intel and AMD, in our view."
Earlier this year, Axcelis Technologies Inc. said it had developed a single-wafer ion implantation tool. The company added that the first example of a family of machines had been well accepted by customers and would start shipping in March (see Feb. 16 story).
But where is the machine?ML
Nov. 7, 2005
Heard from some knowledgeable analysts and sources, who expressed doubts about a new, $2.5 billion fab project in China, dubbed CMD International (Tianjin) Electronic Co. Ltd.
And reports have also surfaced that a firm called the Schaumbond Group is behind this fab project, which will be lucky to get off the ground, according to some.
As reported, a little-known group called CMD International has broken ground on a large-scale semiconductor and R&D project in Tianjin, China, with claims that it will build both 200- and 300-mm fabs in that nation.
Over the next five years, CMD claims that it will build a plant to produce 200- and 300-mm CMOS chips, a gallium-arsenide (GaAs) integrated circuit fab, and an R&D center for related products. The total investment will exceed $2.5 billion (see Oct. 3 story).
Officials declined to comment on the project. Sources believe the "leading actor" in the project is the Schaumbond Group, based in Pasadena, Calif. Calls to this company were returned by a spokesman, who also declined to comment on the project.
Who are these guys? "While consolidating and developing its business in America, Schaumbond Group, Inc. has focused on highly profitable trades and project investments with China," according to its Web site.
"Over the years, Schaumbond Group, Inc. has shifted its direct and indirect investments towards the semi-conductor industry to several companies including Universal Semiconductor Technology (UST) and Universal Semiconductor, Inc. (USI) in Silicon Valley," according to the firm. "Schaumbond also owns individual IC technologies and competencies for use in the marketing development of its core products, and is prepared to invest in a brand new 8-inch fab in the near future."
Sounds like a pie in the sky project to me.ML