Intel and the Mobile Phone Market

In Intel and TSMC Strategic Partnership we observed the signing of a cooperative agreement between Intel and TSMC to enable Intel ans system on chip (SoC) designers to integrated Atom processor technology into their SoC. In an analysis of the agreement between TSMC and Intel Electronics Weekly argue this is to enable Intel to more effectively penetrate the mobile/smartphone processor market and to start challenging ARM in a serious way. The article is a good read. Follow the link below for more.

Electronics Weekly: Analysis: Atom Exposes Intel's Mobile Dilemma

The Survival of Wintel

An interesting piece appeared on the PC Mag website the other day debating the future of the Intel-Microsoft PC duopoly. Intel and Microsoft have both dominated their sectors of the PC industry for almost as long as the PC industry has been around. Both have been ruthless in taking out competition and both have been capable of putting acceptable-to-great products in the consumer market. They are bothed backed by massive marketing machines and gain significant brand recognition benefits, but the landscape is changing with a shift into mobile internet devices and the question is, how significant is the Wintel duopoly in the MID realm?

The rise of ARM based processors in MID and other chip designers like Nvidia getting into the game poses definite challenges to Intel. For Microsoft, emerging mobile phone operating systems like Android are posing another challenge. I suspect both Intel and Microsoft won't give up without a fight and they are tough competitors who have been there and done it before.

The article is interesting. Follow the article link: Can WinTel Survive?

Intel and TSMC Strategic Partnership

Intel and TSMC have struck a deal to co-manufacture Atom system-on-chips. According to PC Mag:

Intel and foundry Taiwan Semiconductor Manufacturing Co. have struck a deal to allow customers to design their own Atom system-on-a-chip processors and manufacture them at TSMC.

Intel is not outsourcing the Atom processor, as this reporter speculated on Friday. Customers who wish to buy standalone Atom chips will buy them from Intel, and Intel has not altered its Atom roadmap or production.

Intel, however, has also made the Atom a cornerstone of a system-on-a-chip strategy, such as the "Moorestown" and "Lincroft" for the mobile Internet device market. Now, an Intel customer will be able to use TSMC's process flow, tools, and intellectual property (both from TSMC and its partners) to create their own Atom-based system-on-a-chip products, which will be sold under the Intel brand.

"It's enabling Atom on TSMC,"said Anand Chandrasekher, general manager of Intel's Ultra Mobility division, during a conference call Monday morning. "It will allow TSMC to go after new market segments and allow Intel and TSMC to go after new market segments together."

This deal will inevitably be more beneficial for TSMC but it will also enable Intel to penetrate other market segments more easily and one would guess enable system-on-chip designers to leverage some of the advantages of the Intel Atom processor for their own designs. Its an interesting partnership to say the least.

PC Mag: Intel, TSMC Strike Atom Design, Foundry Deal

25% of 2008 Intel Revenue from Taiwan

Digitimes reports Taiwan was responsible for 26% of Intel 2008 revenue.

While Intel's sales were flat in 2008, Taiwan was one of the few geographic regions where sales increased. According to the chipmaker's recently released annual report, revenues from Taiwan increased about 15% in 2008 to US$9.9 billion, while the company's overall sales of US$37.6 billion were down a slight 2%. Leading the way in terms of sales growth in 2008 for all geographic regions was the Americas (outside of the US), where sales were up 16.5%. Japan was the only other sales region that saw growth in 2008, at a slight 1.5%.

Taiwan accounted for more than 26% of Intel's sales in 2008, up from 22% in 2007.

Amazing! Honestly, still shows there is some traction in Taiwan's tech sector when everyone is busy writing them off.

Digitimes: Taiwan accounts for more than 25% of Intel revenues in 2008

AMD Loses Their Manhood

In July in Is AMD Going to Spin-Off their Manufacturing we noted foundry industry observers were commenting AMD were going to have to spin-off their fabs to stay viable. Later we noted in AMD's Asset Smart Strategy: What is it? AMD had adopted an asset-smart strategy. Although this strategy was not clear it was predicted that AMD meant they would be dumping their fabs. Well, its come to pass. AMD will no longer manufacture their own chips. According to the New York Times (NYT) AMD are going to split into two companies. One will focus on chip design and the other on manufacturing. According to the NYT:

Advanced Micro Devices said Tuesday that it would split into two companies — one focused on designing microprocessors and the other on the costly business of manufacturing them — in a drastic effort to maintain its position as the only real rival to Intel.

In addition, the company said two Abu Dhabi investment firms would inject at least $6 billion into the two firms, mostly to finance a new chip factory that A.M.D. planned to build near Albany, N.Y., and to upgrade one of the company’s existing plants in Dresden, Germany.

A.M.D., based in Sunnyvale, Calif., makes graphics, computer and server processors. It will own 44.4 percent of the new entity, which has been temporarily named the Foundry Company, a reference to the technical term for a chip factory. The Advanced Technology Investment Company will own the rest.

Advanced Technology, which was formed by the Abu Dhabi government, has promised to put up $2.1 billion immediately and contribute $3.6 billion to $6 billion more to build or upgrade chip fabrication plants, also known as fabs. A.M.D. said the two companies would share voting control equally.

The Mubadala Development Company, an Abu Dhabi company that bought 8 percent of A.M.D. in November, will pay $314 million for 58 million newly issued shares, increasing its stake in the presplit company to 19.3 percent. It will also get warrants to buy 30 million shares. A.M.D. stock closed Monday at $4.23 a share, down 30 cents.

“We generally believe this deal is a game changer for the industry,” said Khaldoon Al Mubarak, chief executive of Mubadala. “It’s bold, and I think it’s smart.”

Coming up with the billions of dollars needed to construct each new chip plant has proved to be a huge drain on A.M.D., the perennial No. 2 to Intel in the market for microprocessors, the powerful chips that control the functions of personal computers and the larger corporate machines known as servers. As of June, A.M.D. reported that it had $5.3 billion in debt and just $1.6 billion in cash.

With the constant need to devise smaller, faster, more energy-efficient chips to keep up with Intel, A.M.D. was forced to turn to outside help.

Well this turn of events was certainly not unexpected. AMD have been smashed around for the better part of three years in a ruthless price war with Intel. They are on the ropes and there is nowhere to go except to be broken up and allow the latent value in either firm to be unlocked somehow.

This will however have an impact on the global semiconductor industry. A new foundry provider in these dark times will increase the competitive environment in the pure play foundry business and smaller competitors may feel the pinch of it. I suspect TSMC, the world's pre-eminent pure-play foundry, will not be effected initially but they certainly cannot ignore the emergence of a new player in the game.

So why is this piece titled "AMD Loses Their Manhood"? The NYT answers (emphasis added):

The split, which has been in the works for more than a year, did not come easily to A.M.D. According to company lore, A.M.D.’s co-founder and longtime chief executive, W. J. Sanders III, known as Jerry, once remarked that “real men have fabs.”

Under the deal proposed by A.M.D., the company would retain many of the traditional benefits of fabs, since part of Foundry will be dedicated to serving A.M.D. and will remain in close communication with the company’s engineers.

“We feel like we’re still pretty manly at A.M.D.,” Mr. Meyer said. Noting that Mr. Sanders made his quip over a decade ago, he added, “Frankly, the math has changed.”

Welcome to a whole new semiconductor landscape, the future will be interesting.

New York Times: A.M.D. to Split Into Two Operations

Morris Chang Looks to the Future

Morris Chang, founder of Taiwan Semiconductor Manufacturing Corporation (TSMC) believes the future of the semiconductor industry, and speficially the manufacturing side of the industry is in the hands of three global giants: Intel, Samsung and TSMC. The Statesman commented on a speech by Morris Chang saying:

As Morris Chang looks to the future of the semiconductor industry, he sees technical and economic challenges that will strain chip makers' bankrolls and their intestinal fortitude.

In a decade or so, he expects to see only three companies still devoting major resources to pushing chip manufacturing technology dramatically forward.

The final three, he says, will be Intel Corp., the long-standing kingpin of the industry, South Korea's Samsung Electronics Co., the biggest maker of memory chips, and Taiwan Semiconductor Manufacturing Co.

The Statesman continues saying:

Chang believes the chip industry can gradually push ahead to the next two or three generations of advanced chip-making technology before really big challenges start to appear.

When that happens, the number of chip makers that will keep spending heavily on research will start to shrink.

The reason only three will remain is the prohibitive cost of the technologies and the plants. One plant costs in the region of US$5 billion. The Statesman wrote:

State-of-the-art chip factories now cost as much as $5 billion to build, and they require enormous production runs to operate efficiently. Fabless smaller companies would rather let TSMC take care of the chip manufacturing while they concentrate their efforts and their money on innovative design and aggressive marketing. And so would increasing numbers of large companies.

It is hard to see anyone else from capturing market share in the future from these three companies. AMD tried to compete with Intel and got hammered into the ground during an extensive price war over the past few years that has left the company teetering on the brink.

Digitimes recently reported that TSMC had "94% of all profits generated by four wafer foundries in Taiwan." According to Digitimes:

TSMC "revenues were up 25% on year to NT$170.8 billion (US$5.39 billion) in the first half, whereas net profits increased 28% on year to NT$56.9 billion during the same period.

United Microelectronics Corporation (UMC) saw its net profits decline 59% on year to NT$2.6 billion due to falling non-operating income, losses incurred from foreign exchange transactions and declining financial asset values, the company said.

That is not to say the fabless design model is without its threats and dangers. One recent analyst suggested companies like Nvidia may have to reavluate their relationship with TSMC as TSMC is unable to guarantee them production runs. EETimes comments:

Nvidia Corp. is not getting the 55-nm capacity it needs from silicon foundry giant Taiwan Semiconductor Manufacturing Co. (TSMC), a problem likely to worsen as the graphics chip maker moves to the 40-nm node, according to Doug Freedman, an analyst at American Technology Research.

In a report published Thursday (Sept. 11), Freedman wrote that the "fabless business model seems to be getting stressed out" and that the Nvidia-TSMC relationship "sounds problematic" and "needs to evolve."

In order to minimize its own risk, TSMC is building less capacity as it ramps new technology nodes, according to Freedman. TSMC doesn't get enough visibility from its smaller customers such as Xilinx Inc., Altera Corp. and Broadcom Corp., Freedman wrote, so the foundry cannot take the risk of building new capacity to support larger customers. Nvidia is TSMC's largest customer, he noted.

TSMC's board of directors last month approved a $795 million capital spending plan that includes a push into 45-/40-nm CMOS processes and MEMS.

Maintaining high capacity utilization and managing the risk of not receiving sufficient orders for maximum utilization rates is a delicate balancing act for TSMC. One which they will have to manage.

Maybe Morris Chang will be proved right, then again maybe not. We will have to wait and see in 2018 who is still around.

The Statesman: A chip prediction: In the end, three will dominate R&D
Digitimes: TSMC tops Taiwan wafer foundries in revenues and profits in 1H08

Intel Shifts the Memory Controller

Intel have finally moved their memory controller from the graphics memory and controller hub (GMCH) a.k.a. Northbridge chipset onto the processor allowing faster access to memory resources by the processor and combining both the processing and memory control functions. Bloomberg reports:

Intel Corp., the world's biggest semiconductor maker, today showed off a new chip that has direct access to memory in computers, invading one of the last market niches dominated by Advanced Micro Devices Inc.

Intel for the first time is combining the memory and processing functions into a single chip, instead of using two. The result is a processor that helps pull up data and perform calculations faster. Other features boost the ability to handle video and sound files, and share work among computers.

While AMD has had a memory-controlling chip on the market since 2003, new processors using the design were delayed and didn't catch on with customers, analyst David Wu said. Santa Clara, California-based Intel will have a performance lead until 2010, he said.

As the article notes, this used to be AMD's domain. Intel have now caught up. It definitely seems Intel is on the attack on all fronts. In Nvidia vs. Intel we highlighted how Intel was aligning their sights on Nvidia by challenging Nvidia's core graphics technology strength. One wonders how far Intel can stretch themselves? It is difficult to see any company overtaking Intel now. They will be the dominant player for years to come. I don't think this is good myself and as I have said in the past, I hope to see a strong, competitive AMD rebound and continue to push Intel. This is good for the consumers.

The situation is very similar to Microsoft. They have hardly any challenegers and are therefore able to release flawed operating systems such as Vista. It is doubtful they would even consider sending out Vista with flaws if there was a viable competitor on the horizon. Market dominance does not neccessarily mean better products. It only means less alternatives and that the company with all the money, even with inferior products, can crush any competitor with better offerings. Do I sound lie a cheerleader for the open source crowd? Don't mean to!

Bloomberg: Intel Invades AMD Niche With Memory-Controlling Chip

AMD's Asset Smart Strategy: What is it?

An excellent article on the Guardian covers most of what AMD have been going through over the past couple of years. The Guardian writes:

Advanced Micro Devices Inc's future depends on still-murky details of a plan to overhaul its manufacturing, and Wall Street is impatient.

AMD now lags far-larger rival Intel Corp in chipmaking technology and could be about nine months behind Intel when it introduces chips with elements as small as 45 nanometers in the second half of this year.

The company has also reported seven straight quarterly net losses in a row, and it's hard-pressed to afford building a new, next-generation chip plant, which can cost $3.5 billion, with $5.6 billion in long-term debt on its books.

Together, Intel and AMD control virtually the entire market for microprocessors, the electronic brains of personal computers and server computers that comprise corporate networks.

AMD's future hinges on what it calls Asset-Smart strategy: whether it adds capacity by striking a deal to use foundries of an Asian contract chipmaker such as Taiwan Semiconductor Manufacturing Co Ltd, or perhaps signing an agreement with longtime partner International Business Machines Corp.

"I don't know what Asset-Smart looks like, but anything is better than today. Anything is better than going out of business because you run out of money" said Stifel Nicolaus analyst Cody Acree. "It might be a partnership with IBM or TSMC or it might be an outright sale of their manufacturing."

Executive Chairman Hector Ruiz, who led AMD as its CEO for more than six years and stepped aside in mid-July to hand the reins to Dirk Meyer, is driving the plan to completion and has repeatedly promised answers by the end of the year.

We have been following this story for some time and the above quotation is a good summary of the situation as it stands now. Honestly, good luck to AMD to staying in the game. I personally think much of the innovation and acceleration in product design by Intel has been because of AMD punching above their weight. Without at least a minor competitor how fast will Intel develop products? I recall earlier this year Intel wanted to delay the rollout of some processors as there was no reasonable external competition and they felt the newer processors would compete directly with their earlier generation of processors. They denied the rumor but it wouldn't be out of the realm of possibility. Ultimatey this doesn't benefit the consumer.

Also, the brutal price war between AMD and Intel has signifcantly lowered the prices of processors. If AMD are pushed out of the game, Intel will monopolize the market (haven't they already?) and set prices as they please similar to what Mircrosoft does.

So seriously, here's hoping AMD can pull out of their slump and get back in the game, with or without fabs.

Guardian: AMD manufacturing plan key to chipmaker's future

Core i7 Processors from Intel

Intel have decided their new high-end processors will retain the Core brand name. The new processors will be branded Core i7 and will come with two, four or eight cores. According to the Intel press release:

Intel Corporation announced today that desktop processors based on the company's upcoming new microarchitecture (codenamed "Nehalem") will be formally branded "Intel® Core™ processor." The first products in this new family of processors, including an "Extreme Edition" version, will carry an "i7" identifier and will be formally branded as "Intel® Core™ i7 processor." This is the first of several new identifiers to come as different products launch over the next year.

Products based on the new microarchitecture will deliver high performance and energy efficiency. This "best of both worlds" approach is expected to extend Intel's processor leadership in future mobile, desktop and server market segments.

"The Core name is and will be our flagship PC processor brand going forward," said Sean Maloney, Intel Corporation executive vice president and general manager, Sales and Marketing Group. "Expect Intel to focus even more marketing resources around that name and the Core i7 products starting now."

Personally I am glad they finally branded it. In my industry their codenames (e.g. Nehalem, Penryn, Wolfsdale etc.) cause a great deal of confusion. I have even seen how Centrino platforms are confused (even by Intel representatives). For example a Centrino platform must have three essential chipsets: an Intel processor from a specified list, a mobile Intel chipset from a specified list and a wireless Intel chipset. However, last week an Intel rep. told one of our project managers that for embedded systems if the wireless chipset is replaced with an Intel southbridge then it could be called a Montevina system, which is codename for Centrino 2. When I asked the project manager (who then asked the rep) why we couldn't brand it Centrino 2 the rep. was confused saying it was a Montevina system but could not be branded Centrino 2.

Yeah, these code names really confuse the heck out of me and most people outside Intel. Evidence suggest some people inside Intel also get confused too. At least now we know the next Intel processor will be Core i7, that is easy enough to remember.

Intel Press Release: Next-Generation Intel PC Chips to Carry Intel Core Name

AMD's Foundry Business

As we have noted on and off over the past AMD seems to be becoming an asset-lite or fabless design house (see Is AMD Going to Spin-Off their Manufacturing). AMD have denied they are spinning off their manufacturing and insist they will keep their fabs. The problem is if they keep their fabs they will be less competitive against Intel as the fabs suck up a lot of money. The relevance of this to Taiwan tech firms is that if they do spin-off their manufacturing, the chances are they will use Taiwan's pure-play foundries to manufacture their products. An excellent commentary on EE Times highlights the difficult choices facing AMD.

EE Times says:

In the future, AMD is supposedly planning to split the company into two parts. It will supposedly spin out its manufacturing unit, turning AMD into more or less a design house.

The manufacturing spinoff may take ownership of AMD's fabs, especially its leading-edge plant in Dresden, Germany. Reports have surfaced in the media that AMD will also have its parts made on a foundry basis by Chartered, TSMC and possibly United Microelectronics Corp.

Sources say otherwise. TSMC is expected to get the lion's share of AMD's foundry business--leaving Chartered on the outside looking in, according to one source. Chartered may make some of AMD's products, but the many of AMD's key parts have already migrated to TSMC's fabs, according to the source.

In any case, the strategy is risky. There is little or no evidence that a foundry can keep up in the high-volume processor game against Intel. Foundries can make processors, but they have typically worked with small, third-tier suppliers over the years. Competing with Intel is a different story.

On second thought, there's a good change the strategy will succeed. By the time AMD makes its asset lite announcement--and based on the company's recent execution--the processor vendor could lose what's left of its status and become a second- or third-tier player.

Maybe not a third-tier player, but one that is fighting to stay relevant.

I find it interesting the commentary argues the foundries won't be able to maintain their high-volume processor manufacturing. I don't think the pure-play foundries have ever competed with Intel directly as the business models are different. I imagine the problem here would be the utilization rates of the fabs. To compete evenly with Intel a significant amount of the fabs processing capacity will have to be used to manufacture the processors. This will have a negative effect on the pure-play foundry's other customers. Its an interesting dilemma that they will have to solve themselves.

EE Times: Commentary: Who won AMD's foundry business?

AMD vs. Intel

An interesting story over the past few years in the processor industry is the brutal price war between Intel and AMD. The price war has shattered AMD and left them struggling for survival with suggestions they might have to give up their fabs and go fab-lite or fabless. The war was started by Intel and then Hector Ruiz, the then CEO of AMD, used the price war to try and gain market share. However, delayed product rollouts by AMD and losing the performance advantage they had for a short while meant a loss of market share and a change in AMD leadership. Of course, one of the big causes of the business downturn was the purchase of ATI by AMD which was in excess of US$1 billion.

In the meantime, AMD has long accused Intel of unfair business practices. A trial pertaining to AMDs complaints is set to start in 2010 and will continue for an extended period of time. The Mercury News writes:

Buried in more than 150 million pages of documents compiled in the legal dispute between Silicon Valley chip makers Advanced Micro Devices and Intel is a remarkable tale of alleged corporate nastiness that could keep the courts and regulatory bodies buzzing for years.

AMD claims its larger rival Intel has used under-the-table payments, threats and other "dirty tricks" to deter computer makers from buying AMD's semiconductors. It says Intel, among other wrongdoings, offered a Tech Data executive a $1 million bribe, browbeat Acer into backing out of an AMD promotion and sold software that crashed computers running AMD chips.

The pages of AMD's suit accuse Intel of so many acts of market intimidation they "read like a chapter from 'The Godfather,' " according to Nathan Brookwood, a research fellow at the Saratoga market consulting firm Insight 64.

Intel insists it has done no more than provide legitimate incentives to use its products and that its business practices have helped keep computer costs low.

Still, the accusations by AMD - whose stock has plunged in recent months to nearly a 20-year low - have sparked a worldwide furor. Authorities in Japan, South Korea and Europe also have accused Intel of wrongdoing. Moreover, the Federal Trade Commission and New York's attorney general in recent months have launched investigations into its practices.

How all this plays out could have multibillion-dollar implications for both companies as well as for consumers, experts say. But determining what really has gone on in the chip industry could prove monumentally daunting.

A special master assigned to the case estimated that the documents dredged up by the suit so far would produce "a pile 137 miles high." Yet depositions with key industry figures are just beginning and the fact-finding could drag on for years.

"This case is on track to be the largest in terms of discovery in the history of civil litigation," said Intel spokesman Chuck Mulloy.

This case will be interesting to watch over the next few years. I am just glad I will not be the one reading the 150-million pages entered into evidence!

The Mercury News: 'Dirty tricks' or fair play by Intel in rivalry with AMD?

VIA's Nano Outperforms Intel's Atom

PC World reports at least three reviewers have found the VIA Nano low-cost processor consistently outperformed the Intel Atom processor. Both processors were designed specifically for low cost PCs which are currently selling out around the world. PC World writes:

Performance comparisons of Via Technologies' Nano processor and Intel's Atom chip conducted by several hardware-enthusiast sites Tuesday confirmed what many industry observers have long suspected: the Taiwanese processor company has produced a chip that outperforms Intel's offering for low-cost computers.

The three reviews are listed below:

• PC Perspective: VIA Nano and Intel Atom Review - Battle of the Tiny CPUs
• Hard OCP: Intel Atom vs.VIA Nano
• Hot Hardware: VIA Nano L2100 vs. Intel Atom 230: Head to Head

This news is interesting. As far as I can tell VIA have been in the low cost CPU game for a long time. I remember when I first started in the technology industry here, VIA were already launching low power processors and people were laughing them off. They were, if I recall correctly, focusing on green technologies at a time when Intel were trying to ramp up their processor speeds. It therefore doesn't surprise too much that the VIA processor currently outperforms the Atom processor. VIA have been in the game for a long time.

However, I do think first, the Atom processor will outsell the VIA processor. The Intel marketing machine is a phenomenal one and they have far more experience than VIA. Secondly, I also think in time the Intel low power processors will get better and outperform the VIA processors. Although VIA will still have a place in the market with their niche processors, I doubt they will gain a dominant position in the low power processor market.

PC World: VIA's Nano Processor Tops Intel's Atom in First Reviews

40nm GPUs Coming Soon

TGDaily reports Taiwan Semiconductor Manufacturing Corp. (TSMC)will soon take the lead in chipset development when they roll out production processes for 40 nm graphics processor units (GPU). Although the development of 40 nm processing technology is fairly old news (we blogged about it in 40nm Processing Technology at TSMC), TGDaily offers a fairly interesting perspective. TGDaily writes:

Intel is proud of its dominant position in semiconductor in production technology and especially the fact that, for as long as we can remember, has led the industry in terms of the smallest chip structures. Its 45 nm technology is still at least one year ahead of AMD. But it appears that Intel will have to give up that lead next year, at least for a few months, when GPUs will make their transition to 40 nm.

This was bound to happen sooner or later. After speaking with several of our sources at ATI (AMD GPG) and Nvidia, we were told that a 40 nm GPU manufacturing process is on the way for first half of 2009. In fact, both companies are working on parts that should capture the spotlights at CeBit 2009 in Hannover. Both low-end and mainstream products are ready to be manufactured in 40 nm soon and should be on display at the tradeshow.

It appears that TSMC’s previously announced $10 billion investment in manufacturing technology is yielding results already, since the company is now able to develop 45 nm and 40 nm processes at the same time. The next step for TSMC is either 32 nm or 30 nm - or below. Samsung is investing heavily in 30 nm, but that is for DRAM only.

Intel has 32 nm CPUs still in development at its research, development and production facilities in Hillsboro, Oregon. 45 nm Nehalem CPUs will be the focus at the upcoming fall IDF, but it is generally expected that prototype 32 nm processors will be first shown at the company’s spring developer forum in H1 2009. Production of the chips should begin early in H2 2009, with volume shipments beginning in late Q3 or early Q4. First chips should surface in commercial products in late 2009, while 32 nm will be a 2010 topic for the mainstream buyer.

However, by that time, millions of 40 nm GPUs will have shipped already and you can bet the farm on the fact that both AMD and Nvidia will be pitching that story to the media in the same way Intel did in previous years.

Its good to see a Taiwanese company taking the lead for a change. Although Intel will catch up soon, it shows Taiwanese companies are as innovative and competitive as ever. TGDaily sums it up best:

Kudos to TSMC for developing the 45 nm and 40 nm half-node die-shrink at the same time.

TGDaily: Intel to lose its lead in chip manufacturing tech in 2009, sort of

Solar: The New Frontier

Solar panels have been around for a long time. How long I am not exactly sure but certainly for as long as I can remember. Many Taiwanese companies have jumped on the solar panel bandwagon. Yesterday the news from accross the Pacific was that Intel are jumping into the production of photovoltaic cells. They will do this through a spin-off with an initial investment of US$50 milllion. The Wall Street Journal says:

Intel's move is the latest in a scramble among Silicon Valley companies to jump on the clean-energy bandwagon. Applied Materials Inc., for example, is branching beyond machines for making chips to sell equipment for use in making photovoltaic cells. Chip maker Cypress Semiconductor Corp., by contrast, spun off a maker of solar cells called SunPower Corp. that now boasts a market capitalization of about $7 billion.

Intel jumping into this industry will change the landscape. They have the engineering expertise, the manufacturing expertise and the money. Taiwan's solar companies will battle to keep up.

Article: Intel Spins Off Solar-Technology Startup

Low Cost Processors: The Competion Heats Up

On Monday Nvidia launch what they are calling the "world’s first single-chip computer." From their press release:

Today, NVIDIA Corporation (Nasdaq: NVDA) introduced the Tegra family of processors, the world’s first single-chip computer capable of the rich high definition and internet experiences we’ve come to expect from our PCs, but on small pocket type devices. NVIDIA Tegra is a tiny computer-on-a-chip, smaller than a US dime (10-cent piece), designed from the ground up to enable the “visual PC experience” on a new generation of mobile computing devices while consuming the smallest amount of power.

As many commentators have mentioned, this chip is meant to take on Intel's Atom processor. Atom is a fairly new processor launched a few months ago. Both the Tegra and Atom are aimed at Mobile Internet Devices (MID) e.g. smart phones and PDAs. However, Jack Schofield notes on the Guardian some of the problems associated with the Tegra.

The obvious drawback with the Tegra approach is that it runs Windows CE (or Windows Mobile) not Windows XP, which was written for x86-compatible chips. And if you want to run real Windows software, Tegra doesn't do the job.

More than a decade ago, Microsoft wrote Windows CE as a whole new operating system precisely because it thought x86 chips cost too much for casual buyers, and consumed too much power to offer long battery life. It thought there was a market for Mobile Companions, webpads and other devices among people who didn't actually need the laptop/desktop version of Windows, or its vast library of programs.

Microsoft turned out to be wrong, at the time. It will be interesting to see if times have changed enough to make it right.

Intel's Atom takes the opposite approach of trying to reduce the overhead of the x86 code from the past (smaller, cheaper, lower power consumption). And from Computex, it looks as though the Intel Atom is the one that has pulled in the PC manufacturers.

But this might be the first step by NVIDIA to move towards competing more directly with Intel. A few month's ago at the Intel Developer Forum in Shanghai Intel said they were trying to move the graphics core into the processor. This generated an interesting response from the NVIDIA CEO. Eflux Media notes:

NVIDIA CEO and co-founder Jen-Hsun Huang went on an Intel-related rant on Thursday at a meeting with financial analysts. The context is that Intel is trying to move the graphics processing unit (GPU) from the motherboard's chipset into the CPU, merging the two processing units on a single die for increased performance.

Last week at the Intel Developer Forum in Shanghai, Intel representatives boldly stated that discrete graphics cards will eventually become "unnecessary" for the regular consumer in the future."

Claim after claim after claim. They're just false. They cross the line of fair play," Huang said. "Here's another one. nVIDIA's gonna be dead. Because we're (Intel) sticking the graphics in the CPU and (nVIDIA) will have no place to stick it," nVIDIA's CEO said.

It certainly seems battle lines are being drawn between these companies. According to Computer World:

"There's a battle emerging here," said Nathan Brookwood, an analyst at research firm Insight 64. "This is going to be a very exciting area. It's perceived to be one with huge growth over the next few years. Everyone is going to want an in if they can pull it off."

Both NVIDIA and Intel make great products. No doubt! However, NVIDIA would be wise to think twice before enaging in a war with Intel. AMD did it over the past three years and although Intel's margins suffered significantly, they were the ones left standing. AMD are now doubting their future and are looking at becoming fabless.

However, with all the current noise being made surrounding NVIDIA and Intel, spare a thought for VIA. VIA were the first ones as I recall to see the potential for low cost processors and have had them in their catalog for quite some time. It just seems people are preferring the Intel Atom processors. To better establish their competitive position VIA have recently launched their own VIA Nano processor which many observers says will also compete with the Atom as well as some of Intel's other low power processors.

This market is heating up and competition seems to be growing. I guess we will know within a year or two who the real winners and losers are. But always remember the words of the VIA CEO who said a few years ago:

The Internet will be the biggest driving force. For Internet applications, the processor is not the main requirement -- the pipe is more important than the engine. It's like the auto industry: It used to be that people build bigger and bigger engines. But the road was only so wide, and car drivers were more limited by the road than by the engine. So people started looking at efficiency of the engine and went to smaller engines.

NVIDIA Press Release: NVIDIA Tegra: Tiny Computer Packs Massive Punch!
Guardian Article: Tegra's ARM-based chip to take on Intel for mobile market
Eflux Media: nVIDIA Boss Goes on Intel Rant
Computer World: Nvidia takes swing at Intel with new Tegra chips
VIA Press Release: VIA Nano™ Processor
Interview: Wen-chi Chen: Taiwan's Answer to Andy Grove? [PDF File]

Effect of Sichuan Earthquake

The huge earthquake to hit Sichuan province will not, many believe, have a significant impact on the chipset supply chain.Both Intel and Semiconductor Manufacturing International Corporation (SMIC)have operations in Chegndu but no one is expecting these to effect the supply chain. Digitimes says:

Despite concerns the 7.8-magnitude earthquake in Sichuan, China may have a possible impact over ongoing IC supply as Intel and Semiconductor Manufacturing International Corporation (SMIC) both run IC backend facilities in the region, industry players from Taiwan caution against overreacting.

Most industry players from Taiwan believe that impact from the quake should be short-lived. Recalling experience from the 921 earthquake that shook central Taiwan nine years ago, sources at Advanced Semiconductor Engineering (ASE) indicated that company operations were only affected for one day. They added in saying that industry players should not overreact and noted that other packaging and testing houses would not "benefit" from a sudden influx of orders.

Sources at SMIC's Chengdu Cension Semiconductor Manufacturing fab said the fab activated anti-quake measures and production resumed during the evening of May 12. Monthly capacity of 7,000 8-inch wafers was not affected, they added. This Chengdu fab mainly focuses on power management IC (PWM IC), high-voltage IC and niche memory production.

The Chinese-language Economic Daily News (EDN) quoted SEMI senior director of industry research and statistics Dan Tracy as saying that Intel is flexible enough to adjust its capacity mix, meaning the quake impact should be limited. Tracy also commented that impact should be limited for other semiconductor companies such as SMIC.

Some sources from the packaging and testing industry were also quoted by another EDN report as saying that the majority of backend production at the Intel fab in Chengdu is dies instead of wafers, meaning that any damaged chips could be replaced relatively quickly. They also added in saying that Intel outsources up to one-tenth of its IC backend production orders to other partners.

Currently ASE is partnered with Intel for the packaging and testing of southbridge chips and some NAND flash memory, while Siliconware Precision Industries (SPIL) is also partnered for southbridge and some networking chips, according to industry players.

However, since some of the production capacity has been affected, Intel are considering moving some of their production to other plants. According to China Economic News (CENS):

Intel Corp. is reportedly mulling delegating part of its production at its test and assembly factory in the earthquake-stricken Sichuan Province of mainland China to its other factories and pure assemblers including Advanced Semiconductor Engineering (ASE) and Amkor.

CENS also speculates that Intel will have to outsource some of its testing to other companies. CENS says:

Taiwanese industry watchers estimated Intel might contract ASE and Siliconware to test and assemble south-bridge chips for the chipsets and some logic chips waiting at the Chengdu factory. ASE is running a factory outfitted with 1,500 wire-bonding machines in the mainland. The factory will double output capacity by the end of this year.

Although the the factories may not have been damaged, the damage on the overall infrastructure in Chengdu may have an effect. Shortly after the September 21 earthquake in Taiwan in 1999 (921)there were rolling power cuts for a month. The same may happen in Chengdu. CENS reports water and electricity have already been cut. I should also imagine many of the transportation routes have also been cut off and the remaining routes saturated with humanitarian aid. It will take some time for the infrastructure to be ready for full production capacity and for the supply chain to run smoothly.

Of course the priority now for the authorities there must be to deal with the human tragedy.

Article 1: Taiwan packaging and testing companies caution against quake-impact overreaction
Article 2: Intel May Switch Production From Quake-stricken Sichuan Plant to Shanghai

AMD to Oustource CPU Manufacturing to TSMC

Yesterday Digitimes reported:

In addition to its GPU production, AMD is planning to also outsource CPU production to Taiwan Semiconductor Manufacturing Company (TSMC) in the second half of this year, according to industry sources.

Although Hector Ruiz, CEO of AMD did not mention any plans to outsource production during the company's recent investors conference, the industry sources revealed that TSMC has already started testing procedures for a SOI manufacturing process in order to land manufacturing orders for AMD's Fusion CPUs.

This is speculation however many believe AMD are trying to reduce their operating costs to become more competitive. If the outsourcing goes well they will be able to sell some of their manufacturing equipment and recoup some money too. This comes as no surprise. IC Insights predicted AMD would possibly look to become fabless in their recent ranking of the top IC foundries. In a press release, IC Insights said:

Considering its 1Q08 financial results, AMD could be a company that is forced to go fab-lite or possibly completely fabless in the near future.

AMD have recently been hammered by Intel and are trying to return to profitability. Divesting from their manfuacturing is one way to reduce costs, especially fixed overhead. To be honest, AMD products are not bad at all and have sufficient power and functionality for most day-to-day computing tasks. However, when you set yourself up as a competitor to a cash rich company like Intel, there will be problems since Intel have been known to initiate price wars and scale up their technology whenever they are threatened.

I hope AMD can return to profitability and continue to innovate. A few years ago Intel made a few mistakes and gave AMD an edge in the market. AMD even came to dominate the desktop chipset market in Q1 2006. Having an alternative in the market put pressure on Intel to innovate and be creative. I am sure that some of Intel's innovation has been driven by AMD's competitive pressures.

Article 1: AMD planning to outsource CPU production to TSMC in 2H08, say sources
Article 2: IC Insights Ranks Top Foundry Suppliers
Article 3: AMD vs Intel -- the stakes get higher (2006 article)

WiMAX Explosion in Taiwan

Yesterday we noted Intel's commitment to investing US$500 million in Taiwan's WiMAX industry. Apparently the commitment is even deeper than that. Intel are also committing to entering in joint ventures with Taiwanese companies to develop broadband networks on the island. China Economic News (CENS) has more:

Intel will spend US$500 million over the next five years ending in 2013 on its WiMAX investment and procurement of the equipment in Taiwan, in addition to its original pledge to invest an undisclosed amount of capital to open WiMAX joint venture in Taiwan, according to an Intel top executive.

Intel Executive Vice President Sean Maloney noted the procurement items would include WiMAX chips and consumer premise equipment. Taiwanese suppliers likely to benefit from the procurement deal include MediaTek Inc., Faraday Technology Corp., GemTek Technology Co., Ltd., D-Link Corp. and Zyxel Communications Corp.

In reaction, CENS reports that President elect Ma Ying Jeo has committed to attending the WiMAX trade show to be held in Taiwan in June. In the same article CENS reports Intel has opened a WiMAX office in Taiwan and also notes the following observations:

Taiwanese industry watchers estimate the latest and previous commitments to cost Intel around NT$20 billion (US$666 million at US$1:NT$30) in investment capital.

The joint venture will assess plans to put money into Taiwanese network-communications equipment makers and WiMAX-service providers. Taiwanese companies of both sectors reported to receive the investment capital include GemTek, D-Link, Tatung InforComm Co., Ltd., First International Telecom Co., Ltd., and Global Mobile Corp. However, Intel said it was still assessing.

In a separate article CENS observes that the Taiwan government is trying to get 8 million on-island WiMAX subscribers during 2008. According to CENS:

Taiwan has been actively engaged in developing WiMAX (worldwide interoperability for microwave access) network technology, and planned to have a total of 8 million users of services based on the technology by the end of this year, according to Chen Chao-yih, director general of Industrial Development Bureau (IDB) under MOEA.

PC manufacturers are also getting on this bandwagon. Digitimes noted yesterday that Acer is currently testing WiMAX enabled notebooks that they hope to launch in June. The notebooks will be based on the fifth-generation Centrino code-named Montevina.

WiMAX is going to change the world no doubt. It provides added wireless convenience and enables easy connectivity over long distances. One wonders though what the packages will be like. The push towards WiMAX in Taiwan is not surprising. Under now president elect Ma Ying Jiou Taipei became the worlds first wirless city in 2006 with thousand of Wi-Fi nodes distributed throughout the city. However, as noted by the New York Times, the system had a very low adoption rate in the beginning. Of course WiMAX's big advantage is the bandwidth and the speed with which data can be dowloaded. But still, how will it be packaged?

Article 1: Intel Pledges to Up Ante On Taiwan`s WiMAX Biz
Article 2: Taiwan Aims to Attain 8 M. Users of WiMAX in 2008
Article 3: Acer to launch WiMAX-enabled Montevina-based notebooks in June-July
Article 4: What if They Built an Urban Wireless Network and Hardly Anyone Used It?
Website 1: WiFly Website
Website 2: WiMAX Show Website

Growth of Low Cost PCs

ASUSTek has recently launched an 8.9-inch Eee PC. China Economic News (CENS) predicts shipments for these products will reach 1.3 million in Q2 and 5 million for the year. CENS notes this is ASUSTek's first low cost Intel platform. Intel however do have a competing product yet, according to CENS:

Asustek indicated that Intel, though already launching Classmate PC, a competing model against Asustek`s Eee PC, concentrates more on its sales of CPU (central processing unit) and hence has helped Asustek garner numerous governments` tender projects so far.

Digitimes notes that ASUSTek is very optimistic about these products and plan to launch a 10-inch display model later in 2008. Digitimes also notes that while ASUSTEk is aggressively pursuing this market, other players are being far more conservative.

Asustek is believed to have ordered 2.5-3 million Atom processors from Intel, while Acer has ordered around one million and may place another one million unit order depending on market demand for corresponding low-cost PCs in the later half of the year, according to industry sources. Meanwhile, Dell has been more conservative in only ordering around 300,000-500,000 Atom CPUs, while previous reports indicate Hewlett-Packard (HP) has placed an initial order for 100,000 VIA Technologies C7-M ULV CPUs to be used in its Mini-Note products, which will increase to 500,000 units by year's end. Other players including Micro-Star International (MSI) and Gigabyte Technology are even more conservative, ordering far lower volumes than their competitors, according market watchers.

Low cost PCs are also breaking into the industrial PC market with Digitimes reporting that Nexcom will also be launching a medical tablet PC based on the Atom processor.

Watching the growth of this market sector will be interesting. Currently 50% of all demand is in Europe and it will be interesting to see how the regional mix changes over the next year or so. I am personally thinking of buying one of these low cost PCs. I think they are perfect. Light, easy to carry and easy to hook-up to a big external hard drive at home. I guess the real question is why do you need to carry all the storage capacity you don't really use or access? Of course some people will prefer the high-end notebooks but these low price PCs are definitely carving out their own market sector.

Article 1: Asustek Unveils 8.9-inch Eee PC
Article 2: Intel Atom-based Eee PCs in June, 10-inch displays later in the year, says Asustek president
Article 3: Nexcom planning Atom-based industrial tablet PCs

Quanta and ACER get behind WiMAX

Recently Digitimes noted the formation of a WiMAX consortium here in Taiwan. According to Digitimes:

Four Taiwan WiMAX licensed operators – Global Mobile, Vastar Cable TV System, Tatung Telecom and First International Telecom (Fitel) – on April 15 formed the Consortium of Mobile Broadband (CMB) with an aim to facilitate the development of the WiMAX industry in Taiwan.

China Economic News (CENS) reported shortly thereafter that Taiwanese PC manufacturers are supporting the WiMAX standard. CENS reported:

Taiwan's top two PC makers-Acer and Quanta Computer-recently joined the island`s telecom providers to form an alliance christened "Consortium of Mobile Broadband (CMB)" to promote WiMAX technology.

The article continues:

Industry watchers on the island said the allying suggests that makers of network-communications equipment PC makers have emerged as another major force pushing the formation of the next-generation mobile industry in Taiwan.

Intel has is also getting behind the development of WiMAX in Taiwan. Reuters reports:

Intel Corp said on Monday it will invest $500 million in Taiwan over the next five years, with a large amount of the investment targeted at the island's WiMAX sector.

As I also noted last week, at the top of NEC's procurement list were WiMAX components. WiMAX is growing in Taiwan.

Article 1: Taiwan licensed WiMAX operators form consortium
Article 2: Taiwanese PC Makers Join WiMAX Camp
Article 3: Intel to Invest $500M in Taiwan to Boost WiMAX
Previous: NEC to Purchase Components Worth Three Billion USD
About WiMAX: WiMAX Forum, Wikipedia