Monday, June 29, 2009

Altera Cyclone III LS -- first low power FPGAs with anti-tamper, design security, design separation

Altera has developed the industry's first low power FPGAs with anti-tamper, design security, and design separation. Extending low-power leadership, these low power FPGAs offer double the resources for less than 0.25W!

The image highlights how Altera is striving to extend its low power leadership with the Cyclone III LS devices.Source: Altera.

The Cyclone III LS devices offer up to 200K LEs for less than 0.25W of static power. It is said to be targeting power- and board-space-sensitive applications in all market segments. "Any market that requires low power and security features will require this product," said Ms Susan Chang, AP marketing manager for Cyclone Series, Altera, underlining the growing importance of low-power FPGAs into power-constrained applications. The devices are shipping to customers now.

A closer look at the Cyclone III LS FPGAs reveals the following:

Low power: 200K LE (logic elements) for under 0.25W; TSMC 60nm low-power (LP) process; and Quartus II software power-aware design flow.

* Information assurance design suite: Offering data protection for information-assurance applications, features include anti-tamper, design security, design separation and IP, design examples, etc.

* High functionality: Featuring densities ranging from 70K to 200K LEs; up to 8.2 Mbits of embedded memory; and up to 396 embedded multipliers.

The Cyclone III LS FPGAs are said to have the most comprehensive IP protection in an FPGA. It protects the IP with anti-tamper and design security. "There is a JTAG port protection to prevent reverse engineering," Chang added.

Security features include CRC to monitor for configuration changes, zeroizing the device if tampering is detected, and an on-chip oscillator that acts as an uninterruptible clock source for system monitoring.

Design separation features include single-chip redundancy and supporting information-assurance applications. This leads to reduction in power and board space, as well as reduction in BOM (bill of materials) cost -- by about 50 percent.

Yet another feature is that of data assurance with design separation. Designers can now create physically isolated partitions with design separation. This protects against time-dependent faults and SEU, and increases the system uptime as well. These enable achieving a higher level of integration on a single device.

Military market and SDR
According to Chang, the military market will be among the most important ones for these devices. Hence, Altera's clear thrust on design security and prevention of reverse engineering!

Focusing on the size, weight, and power (SWaP), these will support next-generation SDR waveforms with small footprint and low power (e.g., MUOS, SRW), night-vision goggles, and secure communications. It features crypto-modernization moving toward standardization.

The Cyclone III LS devices also support existing SDR (software-defined radio) applications. Chang said that SDR is one common design trend in the military market.

The next-generation software-defined radio (SDR) waveforms require more memory and logic for networking in the field and low power for extended battery life. Some other key requirements include small footprint for board space, data security for multiple channels in a single chip, and IP security and anti-tamper.

As far as the next-generation SDRs are concerned, these devices will facilitate reduction of the overall board space by up to 50 percent, an increase in the battery life by up to 2X, besides facilitating a single-chip secure SDR solution.

Saturday, June 27, 2009

SMB strategies from Intel, ASUS and Gigabyte

Small businesses (SMBs) are said to be facing many critical decisions in the currently tough economic climate. One of these include how to address computer needs. To better understand the environment, Techaisle recently conducted a study research that demonstrated how SMBs are responding to the economic meltdown and what factors are influencing their PC decision making.

The research study on SMBs was recently highlighted by executives from Intel, ASUSTek and Gigabyte during a webinar.

Speaking on the global economic impact on SMBs, Robert Crooke, GM and VP, Business Client Group, Intel Corp., said that the new study demonstrated significant issues for SMBs who are trying to extend their PC lives beyond three years.

According to the study, there have been 58 percent more virus attacks for desktop and notebook PCs; up to 38 percent more SMBs have been experiencing system failures; SMBs have had to shell out up to $709 as the average annual maintenance cost on older PCs.

He added that now, the payback for new PCs is approximately one year. In this regard, both ASUSTeK and Gigabyte have announced new SMB strategies.

The small businesses are optimistic about a recovery, however, there is no consensus on when that would happen! According to the study, 85 percent of small businesses expect an economic recovery!

However, Crooke added that holding refresh for recovery may not be the right strategy! IT budgets are still positive, although the SMBs are keeping their PCs for longer.

Net projected 2009 global SMB IT budget growth rate: 4.6 percent
o Net projected emerging market 2009 growth rate: 9 percent
o Net projected mature market 2009 growth rate: 3.4 percent
Source: Techaisle, 2009

Extending the replacement has been causing more security incidents! The older systems experience a higher frequency of virus attacks, and more incidents means more downtime. That further higher rates of system failure (see image). On the contrary, new systems can provide payback in as short as one year!Source: Intel

Crooke announced the Intel Core 2 Duo with Intel vPro technology-based system starting at $699 for desktops and $830 for notebooks. These would reduce maintenance cost and security risk.

Other aspects to consider for SMBs would be: up to 23 percent reduced downtime from viruses, improved energy efficiency, enhanced productivity -- average system downtime can be reduced 32 percent, and lower total cost of maintenance.

Intel also announced the Core 2 Duo systems starting at $540 for desktops and $700 for notebooks... Key aspects to consider for SMBs would include reduced maintenance cost and security risk, improved energy efficiency, and improved productivity.

Gigabyte's commitment
Next, stressing Gigabyte's commitment to support SMBs, Tony Liao, Associate Vice President of Sales & Marketing, discussed the company's high quality motherboards for this market segment.

According to him, the key challenges facing SMBs include increasing security incidents, increasing maintenance costs and limited budgets.

However, there are future growth opportunities for SMBs, as they are helping lead the economic recovery. ALso, SMBs will enter a PC upgrade cycle starting this year.

Gigabyte is delivering SMB platforms to help them improve security and productivity, and reduce costs. These include:
o Intel vPro Technology, Intel Matrix Storage.
o Intel IT Director provides intuitive dashboard for small-business owners.
o Gigabyte unique technologies: Ultra Durable 3, Ultra TPM, DualBIOS, Dynamic Energy Saver.

Gigabyte has partnered with Intel to provide SMBs with tools to help them grow even during the economic uncertainty. The company is said to be leading the global channel MB business with quality, innovative products, stable supply and excellent service/support. It now provides a complete line of boards purpose-built for SMBs.

Liao said Gigabyte is offering a full range of motherboard solutions to meet different business needs, delivering best quality and technology innovations for added value. Up and down the SMB stack, the Intel IT Director provides a dashboard for SMB owners.

In terms of security leadership, the Gigabyte motherboards with DualBIOS provide the best protection from BIOS failures. A 100 percent of the company's motherboards are currently shipping with DualBIOS.

As for the network monitor dashboard, the company has bundled the Intel IT Director into its SMB line up. IT-D is an intuitive software tool that monitors networked PCs for potential IT problems. Run as an easy-to-use dashboard, the IT Director will check that the anti-virus and firewall applications are installed on each networked PC.

ASUS focusing on SMBs
ASUS also provided a brief on SMB solutions. Joe Hsieh, Corp. VP of Motherboard Business Unit, Sales & Marketing, said ASUS and Intel recognize the growth opportunities presented by channel SMB segments.

He said SMBs can respond quickly as business conditions change, and small and mid-size companies have an advantage in a volatile and uncertain economic climate. IT is firmly entrenched as a strategic asset among SMBs and will be viewed as a strategic asset, a cost cutter and a means of increasing employee productivity. Service and responsiveness are key to customer retention for SMBs.

ASUS has introduced a comprehensive range of SMB-ready motherboard solutions. It has a complete, purpose-built set of building blocks for system builders to target SMB customers.

ASUS offers a complete line up products for SMB, bundled with Intel IT Director -- an intuitive software tool that monitors networked PCs for potential IT problems.

The payback for new PCs can approach one year, following these fresh announcements of new SMB strategies from ASUSTek and Gigabyte.

Growing might of Indian embedded companies!

I am always delighted when people leave comments, especially suggesting some names or things that I may have overlooked. One such name I may have missed, especially from the line-up of the formidable embedded systems and software industry of India is Procys, a company, where, a reader has suggested that: "most of the employees of Intel or TI for that matter would have served at Procsys once at least!"

First of all, many thanks for that reminder, friend. However, please don't forget that I am merely a blogger putting down my thoughts. My list of India's top 10 embedded companies is probably not the final list! Nor am I connected with any media house to qualify as someone who's list should be considered as an authority!

I just want to remind readers that this blog is merely an honest attempt to be part of the Indian technology ecosystem. As I said, I don't represent any media house. My thoughts are personal and do not represent the industry status or opinion.

I've mentioned earlier the difficulties I've had to face, and continue to face, while blogging! Why, some people have outrightly looked down on my blogging! ;) Some others have said -- What are you writing? If it is not about IT, who will read that stuff? Don't try to do such things in India! :)

However, it pleases and humbles me to find that some readers of this blog think so! ;) All I can say is a warm thanks to all of those who care to stop by this blog!

What pleases me even more is the continuing interest in the now known might of the Indian embedded systems and software (and services) industry.

According to the ISA-IDC report of 2007 on the Indian semiconductor and design industry: the embedded software industry in India accounts for a $5.98 billion or 81 percent of the projected share of overall revenues in 2008. This has been further projected to grow to $7.29 billion or 81 percent of the projected share of overall revenues in 2009! That is quite a substantial growth!

This may be a tough year in comparison. However, have full faith in India's embedded systems and software industry. It will continue to rule for a while, am sure!

Friday, June 26, 2009

Pretty ordinary bloggers survey leaves several unanswered questions!

The Bangalore, India, arm of Text 100, a well known PR firm, sent me a presentation this Friday, which is about a global bloggers survey! This survey received inputs from 449 technology, news and lifestyle bloggers across 21 countries.

On receiving it, I wondered why I was never part of this list? This puzzled me a lot since the Text 100 India team is always speaking with me at least once a week for something or the other! Perhaps, I am a blogger from India and not so important! :) Never mind! The folks at Text 100 India will always remain my good friends!

The survey results however, are quite predictable and hardly surprising! There's nothing new in it and that's disappointing! For those interested, the results are:

1. Growing influence of bloggers -- Corporations are increasingly recognising the influence of bloggers.

As though this point needed any acknowledgement or a survey! TechCrunch, Engadget, etc., don't need any introduction! There are several other bloggers of repute and their words definitely count!

2. Social media releases -- Corporate news releases are out: Social Media Releases will experience far greater usage!

I wonder if the second point is true! Given the mountain of releases I receive, I don't really know what to make it! To accommodate those, I spun off several other blogs. Bear in mind that PR companies think nothing of this effort! If you talk about charging for hosting releases, they shy away! In fact, I was most amused when a PR firm recently called me up to inquire about my blog's traffic, saying it needed that figure for 'internal usage.' Wonder what that means!!

3. RSS is key -- If your company is not making their information available via RSS feeds, you are missing opportunities.

Again, this one seems a bit like -- too much, too late! RSS has been around for quite a while now! If people don't bother to use them suitably, who is to blame? Whether PR folks use RSS at all is something I won't know.

4. Part-time bloggers: The majority of bloggers are still part-timers -- adjust your strategies accordingly!

Quite accurate and already known! Only the very brave give up full-time jobs to blog, with or without any financial or other support!!

5. Cultural differences -- Despite being global, there are still cultural differences to be respected.

Even the rest of the findings are ordinary. For instance, computers, technology and the Internet are the subjects most blogged by surveyed bloggers. The preferred content is news and reviews of new products, opinionated comments on their blogs, and interviews with key people. Corporate news announcements are of least interest.

What the survey doesn't mention!
What the survey hasn't mentioned or spoken about is how can PR firms help bloggers make some financial gains out of blogging! Nor is there any mention of any such methods that could be adopted by bloggers and PR firms.

The absence of this critical piece of information renders this survey ordinary! If it were a part of the survey, bloggers would have really appreciated the effort. Sadly, it completely misses or overlooks this extremely critical point!

Several bloggers, including yours truly, offer a variety of services, to make some financial gains. Even this aspect is completely missing from the survey!

It would have been good to cover this aspect as it would educate everyone about the kind of services offered by bloggers. In fact, it would inspire more people to take up blogging as a career -- another aspect given a complete miss by the survey!

Need to answer basic questions
There are basic questions that need to be answered, such as:
1. Why should anyone choose blogging as a career?
2. How can he or she make money by blogging?
3. What are the services he or she can offer via the blog?
4. What kinds of services are being made available by bloggers?
5. Should bloggers get advertising? What types? To what extent and duration?
6. What would be the advertising charges? Would it be different from print media or the Web portals?
7. How can PR firms work better with bloggers?
8. How can PR firms develop a win-win situation and help bloggers gain financially?
9. Should bloggers charge a fee for queries received from elsewhere?
10. How good or popular are sponsored posts? Are PR firms doing anything to boost this and help bloggers?
11. There are so many blogs (including mine) on Blogger and Wordpress. Is it still a blog or a web site -- especially when PR firms look for online coverage?
12. Which blogging platform is more preferable?

Am sure there are several bloggers out there with a whole lot of other questions I may have missed!

One other point carried in the survey is a comment from a blogger in Ireland, which says: "Press releases don't work for bloggers, we are not journalists, we don't need to copy and paste nonsense we get sent. Plus, the big issue with coverage on a blog is being first. If you are sending the same release to the press, why would I want to blog about it? I am not unique then and am the same as a paper."

The headline -- Don't bombard bloggers with press releases -- could actually work very well in favour of the PR companies IF the PR folks worked out various strategies and ways of helping bloggers. They seriously need strategies, where currently, none seem to exist!

On the other hand, this survey also tells me -- perhaps, I should close down all of my other blogs -- which I recently started to host all of those press releases that I get bombarded with -- a point mentioned by some other well wishers as well!

What do you think friends? Should I? :)

Sunday, June 21, 2009

Get ready for Webdesign International Festival (WIF) 2010!

A couple of months ago, I had mentioned about my first experience regarding the Webdesign International Festival (WIF) 2008, which was held in Limoges, France, and also updated those interested to participate in the 2010 version of the event!

I had a very interesting conversation today (a couple of hours ago, actually) with my good friend, Aude Bourliataux, Chef de Projet, Webdesign International Festival, where I asked her about the next edition's agenda, the new organizing territories, as well as the key messages from WIF 2010.Copyright © Eric Roger, POINT CARRE

First up, it would be interesting to know the agenda for WIF 2010. Those who follow this blog probably know that WIF 2010 is the fourth edition of this global event.

According to Aude, the new version of WIF's website was launched last week. Since then, signing ups for the webjam have be opened. "Just as a reminder, every single competitor has to subscribe on our website to get access to team making and then to attend either physical or online preselection stages," she advised.

Interested competitors (or participants): note that two different kinds of shortlists will be organized to select the 35 finalist teams: physical preselection stages will be held in WIF's partner countries between mid-October 2009 to mid-February 2010, and on February 12-13, 2010, an online preselection stage will be set up. Finalists will be announced on 1 March 2010. The grand finale will be held during WIF 2010 on June 3-5 at Limousin Expansion, Limoges, France -- hopefully, at the the majestic ESTER Technopole, again!

Organizing territories -- Italy, new entrant!
Apparently, there are going to be new organizing territories this time around. Aude said: "As far as international development is concerned, we are planning to have more or less 15 organizing territories. The four partners from WIF 2008 -- Tunisia, India, Brazil and Japan -- are likely to get involved this year. We are working with them to prepare their next event." Preselection dates will be announced later.

She added: "The first new country to be involved this year is Italy [this is an exclusive news, folks! On top of these five countries, we are working on Belgium and Switzerland whose representatives showed tremendous interest last year. We have a lot of work to do to present the WIF abroad.

"Therefore, from now on and till October, we are going to look globally for some new partner countries. I will be visiting Argentina and Brazil this summer and then Canada, Sweden and Norway this fall. USA and China will also get our attention."

Folks in all of the countries mentioned -- get ready to get going! WIF is definitely an experience not be missed!

Coming back to WIF 2010, for competitors whose country of origin do not belong to the partner WIF countries, here's what they would need to do to participate.

Aude said: "We had 40 different nationalities involved in competition for WIF 2008, which is really satisfying. We can animate an international community with more than 150 nationalities visiting our website every single day. However, it is difficult to create a dynamic ecosystem everywhere. It is also difficult to find some reliable partners to organize short-listings in all of these countries.

"As I mentioned, we are going to look for partners till beginning of October. We'll announce each new partner, place and date as one goes along. For competitors -- whose countries are not involved in WIF 2010 with the organization of a short-listing, an online preselection stage will be organized on February 12-13, 2010."

Those taking part in physical or online short-listings have:
* to register individually on;
* to constitute a team of, one, two or three competitors;
* if a shortlisting is organized in their country, they will be sent to the local organizer; else, they will be automatically registered for the online preselection stage.

For the moment, a partnership with India has not been totally finalized. As a matter of fact, dates have not been chosen yet. Competitors have to visit WIF's web site regularly to figure out each new preselection stage, she added.

Webjam registrations
Registrations for the webjam were open last week. As per WIF, anyone can participate: webdesigners, artistic directors, developers, webmasters -- either professional or amateur. There is no minimum equipment required to participate, and competitors can use whatever hardware, software, technologies, etc., they would like to.

Adding further on the online shortlistings, Aude noted that an international jury -- chosen by WIF's staff -- will be set up. The jury will be composed of professionals: artistic directors, specialized journalists, design center directors... For the physical shortlistings, every partner country will need to set up its own jury. WIF will request every partner to constitute its jury with local professionals.

Finalists and the big final!
So, when will the finalists be announced post the shortlisting? Aude said that 10 days after each shortlisting, each partner country will let the WIF know its two selected teams. The names of the selected teams will be kept secret till the end of all the preselection stages. The final list of all finalists will be published on 1 March 2010.

The grand final will be held during WIF 2010 (June 3-5). The webjam will be the heart, of course, but WIF will also organize:
* An international marketplace to create commercial exchanges and industrial partnerships in sectors of new interfaces, new uses and digital innovation;
* An international congress: conferences and workshops, training sessions, round tables, debates on innovative themes (web 3.0, sensorial design, home automation interfaces, web security, accessibility, ergonomics, etc.);
* Job fair speed-meeting sessions;
* Events for general public including exhibitions, discovery workshops and "mini WIF" for school children.

Key messages from WIF
So what are the key messages that WIF wants to give out to the world: WIF is simply about innovation and interaction! Aude said: "We want the WIF to be seen as a FESTIVAL, a festival where people can attend: a renowned and extreme international challenge; an international market for interface design, interactive creation and digital content; an international centre of thought, of emulation, of new competences and new practices; and, a place of project development resulting from meetings with other professional people."

She added: "We want them to get a chance to show off their dynamism in a fast-growing market, to emphasise their skills in their field and establish themselves as innovative participants, and finally, to integrate in an international network of over 2,500 key contacts. We want to develop research potential of innovative enterprises and develop education and culture linked to interface design and to further exchanges between universities, professional sectors and researchers.

That's what's WIF 2010 is all about, friends! Let's meet in June 2010!!

Saturday, June 20, 2009

Green shoots or desert? V, U, W-shape or alphabet spaghetti?: Semicon update Jun'09

Here are the excerpts from the Global Semiconductor Monthly Report, June 2009, provided by Malcolm Penn, chairman, founder and CEO of Future Horizons. There are a lot of charts associated with this report. Those interested to know more about this report should contact Future Horizons.

It will be quite interesting to see whether the so-called fab shortage does happen in 2010, given that there might not be enough capacity to handle demand... (Are Indian fab backers listening?) In the meantime, I am awaiting Malcolm's responses. So, watch this space!

Executive overview
"On the face of it, April's data showed a 7.6 percent decline in total semiconductor sales versus March 2009 but, after adjusting for the five-week long March, this translates into a whopping 15.5 percent growth. The corresponding numbers for total ICs were minus 9.3 and plus 13.4 percent respectively. This is the strongest April month-on-month growth since April 1996. That's the good news!

Given the still delicate state of the global economy, this growth is not however directly driven by increased end-user demand, instead it is purely a correction to the steep Q4-08/Q1-09 inventory declines.

In other words, the markets clearly over-reacted to the September 2008 global economic collapse, sucking the supply chain dry, paving the way for this counter-balancing period of inventory replenishment. Historically, we can expect this to last through to Q3-09. Beyond that, growth will depend on the underlying end-market demand.

What then does this mean for the 2009 outlook? Whilst much of the current industry tittle-tattle focuses on the 'green shoots of recovery' debate (are there/aren't there?) and/or the 'shape of the downturn' (V, U, W, sharp, stretched, extended, etc), we prefer to take a more sober look at the underlying trends.

As mentioned in our May Global Semiconductor Report, at minus 24.2 percent growth, Q4-08 was a little worse than our 22.5 percent January IFS forecast, whereas Q1-09's 15.5 percent fall was slightly better than out minus 18 percent number.

The counterbalancing overall effect of the two was to put the 2009 market slightly ahead of our official minus 28 percent forecast, to minus 25.3 percent. In our book, this does not constitute a 'forecast revision' given that basic forecast assumptions and analysis had not changed; it was merely 'finetuning the number'. So far, so good!

Q2-09, however, might well be different in that it now looks to be coming in with the growth in the 4-5 percent range, versus our -2 percent January estimate. If true, it would represent a material change to our 2009 forecast, improving it from -28 percent to -21.3 percent, assuming that the second half of the year rolled out as planned, and removing most of the down-side risk potentials. Our verdict on this will be presented at our upcoming July 21st Mid-Term Industry Forecast Seminar in London.

In the meanwhile, here is a snapshot of what is actually going on in the markets. The first quarter was clearly a difficult time for the industry, the combined effect of the global recession on top of the normal Q1 seasonality weakness. Not quite a knockout punch, but a real double-whammy. Based on a reasonable cross industry sampling, the overall result was a net 12 percent fall in electronic equipment sales versus Q1-08.

Aside from government/military -- the only sector to grow -- every market and geographic region was negatively impacted, with Japan and Taiwan/China the worst hit, the latter however being the first to show a rebound.Source: Future Horizons

Looking at the key mobile and PC industry sectors, both of these have been hit badly by the discretional consumer spending slowdown, with Q1-09 phone and PC unit sales down 16 and 20 percent respectively versus Q1-08.

Given the magnitude of these declines -- all markets, all sectors, all regions, all customers, consumers and enterprise -- the industry and chip market exited the first quarter in remarkably good shape relatively speaking. That is, not to say that it will be plain sailing hereon out, far from it, but that the industry has clearly weathered the worst of the storm, bloodied but (mostly) not beaten.

The 12 percent, 16 percent and 20 percent OEM, mobile and PC sales declines are key industry benchmarks in that they represent the absolute worst-case full-year scenarios. Our January 2009 forecast called for 8.2 percent, 15 percent and 22 percent declines here, respectively, which are all well in line with the way the market is unwinding. Given that we expect the Q1-09 12:12 declines to improve as the year rolls out, the downside risks to our forecast are clearly diminishing.

From an economic perspective, our 8.2 percent electronic equipment industry decline was based on the then IMF's World GDP growth forecast of plus 1.8 percent. This however has been subsequently revised down three times, first to +0.5 percent on January 28, then to -0.5 to -1.0 percent on March 13, to the current forecast of -1.3 percent in the April 2009 World Economic Output Report.

Intuitively, one would worry that these downward revisions ought to force a corresponding revision to the electronics equipment market; in reality this does not seem to be the case.

Which in turn beggars the big unanswerably question: "to what extent are these downward revisions to world GDP growth the cause or effect of the electronic equipment industry decline and what impact will their downward revision, and for that matter subsequent recovery, have on the 2009 and beyond electronic equipment industry absolute growth number?"

The bottom line answer? No one really has the faintest idea; moreover, it is impossible to calculate. While anecdotally and intellectually, there is an obvious link between GDP and electronic equipment industry growth rates, the electronic equipment industry represents only 2-3 percent of total world GPD. In contrast, at their peak, the financial derivatives markets totalled 120 percent of world GDP!

With recession, cutbacks clearly hit the electronic equipment industry early, as both enterprises and consumers hit the 'stop spending' button relatively quickly. In the case of the 2008 downturn, for 'relatively quickly' read 'instantaneously fast'. The impact on the chip market is immediate, aggravated by the associated component and WIP inventory burn, with overshoot inevitable.

Inventory levels clearly stabilised during Q1-09 and are being rebuilt in Q2, most probably targeting an electronics equipment production level 12 percent down on this time last year, i.e. in line with first quarter actual. This being the case, the industry will have adjusted much faster than in previous cycles, with today's inventory imbalance levels already peaked and much more in line with the 2H-06 'course-adjusting' excess than the post-dot com bubble burst 2001 flood.

To summarise, the downside risks to the 2009 market are clearly abating with our 13 percent third quarter growth forecast still looking reasonably robust, given the current inventory rebuild plus a touch of seasonal strength. Likewise, it is still credible for this to be followed by a seasonally weak 3 percent forth quarter growth given the normal end of year inventory clean out.

With the global economic recovery then starting to gain traction in 2010, a 'normal' quarterly (-2 percent, +2 percent, +14 percent, +3 percent) 2010 growth pattern would be reasonable, yielding a 2010 annual growth of around 17 percent, well in line with our '15 percent with lots of upside potential' January 2009 forecast.

While the slightly revised 2009 quarterly growth pattern would call for an (upwards) formal forecast revision to the actual 'growth number', the underlying market analysis and assessment presented at our January 2009 Forecast Seminar will not have materially changed, either for 2009 or 2010.

Market summary
We tracked the worldwide and European 12/12 industry growth rates for ICs, Opto, and Discrete Devices from January 1998 to date. These show the current month as compared with the same period 12 months ago, and are a useful industry momentum indicator. We also show 15-month rolling worldwide and European sales by major product category.

Industry capacity
Overall MOS wafer fab capacity decreased by 7.8 percent in Q1-09 versus Q4-08, from 2110.4k 200mm equivalent wafer starts per week to 1945.1k. Whilst no category was immune, the decreases were highest in the 200mm and below wafer sizes, and at 150nm and tighter feature sizes.

These cutbacks add to the previous quarter's 1.6 percent decline and compared with a 1.7 percent quarterly growth this time last year. Whilst some of the decline can be attributed to closing of older lines due to the recession, for the most part they are the direct result of the deliberate slowdown in capital expenditure that began mid-2007, well before the current recession started.

The 300mm wafers now account for 50.1 percent of the total MOS capacity, up from 48.2 percent in Q4-08 and 40.7 percent from the same period last year. 300mm wafers now account for over half the total capacity, with 200mm in second place at 37.7 percent, down from 39.1 percent in Q1-09 and 45.7 percent in Q1-08.

At 733.5k wafer starts per week, Q1-09 200mm capacity continued its absolute value decline, from 826.0k in Q4-08, a fall of 11.2 percent. 200mm capacity is now down 22.8 percent versus the same period last year.

Even advanced capacity (i.e., 0.08 micron and below) declined, primarily due to the DRAM firm's bankruptcy problems. Only the 120-159nm category, escaped with capacity up 1.4k wafer starts per week, or 0.6 percent.

Despite sizeable capacity decrease, Q1 utilisation rates plummeted still further to 57.2 percent, from 87.5 percent in Q3-08 and 68.4 percent in Q4-08. The comparable figure for Q1-08 was 90.7 percent. Advanced IC capacity, i.e., 0.08 micron and below, also fell to 69.9 percent (from 84.4 percent in Q4), whilst 300mm and 200mm wafers checked in at 72.8 percent (Q4 = 83.2 percent) and 44.0 percent (Q4 = 55.5 percent), respectively.

The fall in Q4-08/Q1-09 utilisation rates was a result of massive order cancellations and demand collapse triggered by the September 2008 Lehman Brothers ollapse and was much faster and deeper than the 2001 dot-com driven recession. Q1 is however expected to be the trough, with rates climbing back fast in Q2 and thereafter.

Given the significant cutbacks in capex since mid-2007, we expect to see utilisation rates trending back to the 90 percent 'full capacity' threshold much faster than in previous recessions, accelerating the supply-side recovery dynamics by at least four quarters.

Fab shortage waiting to happen?
Looking ahead to 2010, demand should start to accelerate in line with the anticipated global economic recovery, tightening the capacity screw still further. And, with 2010's capacity fixed by 2009's spend, at a currently estimated $20 billion, this spend represents barely one third its 2000 $60 billion peak. That means, in round numbers, 2010's new capacity will be only 40k 200mm wafer starts/week minus any capacity closures.

We have said it before and we will say it again. There will not be enough 2010 capacity in place to meet demand... this is a fab shortage waiting to happen!"

March's data validated forecast; Q1 WAS cyclical bottom! Semicon update May'09

Here are the excerpts from the Global Semiconductor Monthly Report, May 2009, provided by Malcolm Penn, chairman, founder and CEO of Future Horizons. There are a lot of charts associated with this report. Those interested to know more about this report should contact Future Horizons.

This will be followed by the update for June, and I am speaking with Malcolm Penn to find out more!

Executive overview
"At $14.085 billion, March's IC sales were up 28.4 percent versus February, equivalent to plus 2.7 percent on a five-week month adjusted basis. Whilst this still puts the market down 31.2 percent versus March 2008, the momentum that started in January 2009 continues to steadily gain traction.

Overall, the ICs in Q1 were down just 13.4 percent in value, comprising a 19.6 percent fall in units offset by a whopping 7.8 percent gain in ASPs. At the total semiconductor level, sales came in at $17.271 billion, up 27.1 percent on February (1.7 percent on a 5-week month adjusted basis), slightly higher than our $17.019 billion April Report estimate.

Q1 was thus down only 15.7 percent on Q4, sizeably better than our 18.5 percent estimate. This is good news for industry... 'ah but' say the sceptics!

During our January 2009 International Forecast Seminar, we took the view that, from an economic recovery perspective, things would stabilise during the first half of the year, starting to gain traction by the end of 2009, given the dramatic economic stimuli since September 2008. The recovery would then accelerate quite fast in 2010-11, i.e. following a similar pattern as to what happened after the 2000 dot-com crash. There is every reason to believe this will still be the case.

Until recently, the big industry problem was uncertainty but there have been no horrible surprises now for several weeks and things do seem like we are bumping along the bottom. The global economy has stabilised; there have been no new gut-wrenching surprises and the 'unknown unknowns' in the economy have subsided. This means we are now left facing the 'known unknowns', which is clearly something that industry can adjust to and deal with.

Despite its severity, there are also many mitigating circumstances. At the personal level, this recession is quite like no other. For those without a job, or on short-time working, it is clearly bad news as no one is currently hiring. But, those with a job ironically have never been better off, with inflation, mortgage interest rates and repayments (the single biggest expense item on the personal expense budget) at rock bottom levels. This is very unlike the past recessions, which were accompanied by high inflation and cripplingly high interest rates.

Another factor is that no one really knows how much of the current GDP shrinkage (and for that matter the previous five-years above average growth) is (was) smoke and mirrors. With CDIs valued at 1.2x total world GDP in 2007 only to be written down to junk bond status the following year, the absolute GDP and growth rate numbers have been compromised. That makes it hard to judge what they mean from a top down perspective, more so when one considers the total electronics manufacturing industry's contribution to world GDP is barely 3 percent.

Finally, even though cars, mobiles, PCs etc may fall in unit terms by '15-30 percent' this year, that still means '70-85 percent of the market' remains. With inventory levels everywhere in the value chain at all-time lows, we are currently back now building to demand from newly bought components, albeit some 20 percent lower than the 2008 highs.

At the chip level, the market is obviously driven by the economy but it also has its own drivers, especially capacity and ASP trends. Thus, whilst the existence of a link between the chip market and the economy is clear, mathematically the nature of this link is imprecise. Dislocations in growth dynamics are thus relatively frequent.

What then of our January 2009 quarterly growth pattern (Q1 -18 percent, Q2 -2 percent, Q3 +12 percentand Q4 +3 percent)? Clearly Q1, at -15.7 percent, was better than forecast which, if the rest of the growth pattern continues as planned, would rein in the full year market decline slightly from -28 to -25.3 percent, but still within the forecast margin of error. Q1 has thus reinforced, not altered, our January prognostications.

If Q1's stronger momentum however carries through into Q2, Q2 would come in much stronger than our 2 percent decline, say to plus 2 percent instead. This would positively change our forecast dynamics with a further two percentage points improvement on the full year's number, improving our forecast from -28 percent to -23.2 percent. Whilst we are not yet prepared to call for a formal forecast revision, the odds are in its favour and the downside forecast risks dispersed.

Clearly Q1 was the cyclical bottom; from here on out the growth trends will be up. Once the inventory purge is over, excess capacity will soon be absorbed with a corresponding strong recovery in utilisation rates. Given capex is currently at an 18-month all time low, with no near-term correction in prospect until late Q3-Q4 at the earliest, the industry will enter 2010 staring into a new net capacity famine.

We definitely will be revising our 2010 forecast up, from the current +15 percent to the mid-to high twenties.

Industry capacity
The table C1 shows the quarterly semiconductor equipment sales trends for the period Q1-2008 through Q1-2009 inclusive. The total Q1-2009 equipment sales were $3,235 million, down 31.4 percent from Q4-2008, which in turn was down 28.1 percent from Q3-2008. This represents the biggest sequential falls in the history of the chip industry.Source: Future Horizons

Wafer processing equipment represented 76 percent of the total, just slightly higher than its 75 percent average. Total Q1-2009 investment represented only 7.3 percent of the quarterly semiconductor sales, although it must be remembered that an equipment sale in Q1-2009 will not produce incremental semiconductor sales until three quarters later, namely Q4-2009.

Q1-2009 wafer fab equipment sales were down a staggering 69.4 percent on Q1-2008, the fourth consecutive quarterly high double-digit drop, with further declines in the prospect. Capex levels are now running at levels not seen since the early 1990s when the overall chip market was one-third its current size.

As mentioned earlier, Q1-2009 was down 31.4 percent versus Q4-2008, on top of the three previous quarterly declines of 28.1 (Q4 vs Q3), 16.3 (Q3 vs Q2) and 25.8 (Q2 vs Q1) percent respectively. It should not be forgotten that these cutbacks were not triggered by the current chip market recession; the first two quarterly drops, namely Q2 and Q3-2008, took place against a backdrop of strong IC unit growth, i.e., well before the Q4-2008 chip market collapsed.

The cutbacks were a clear intent to engineer tight capacity, a strategy that would by now have bitten home were it not for the cruel interruption on the Q4-2008 market collapse. We have never before seen such an extensive cut back prior to a collapse; ironically this will help the recovery process, albeit for the wrong reasons. It will also underpin the underlying strategy -- post recession IC capacity is going to be tighter than tight.

We also tracked the total semiconductor equipment sales by month since January 1988, both in absolute value and as a percent of semiconductor sales. One significant feature that can be seen from these trends is that the absolute value of the total semiconductor equipment sales has been significantly lower than the previous 1999-2000 investment peak, despite the fact the total semiconductor market has expanded in size.

During this same time period, the investment trend relative to the size of the total semiconductor market has also been trending well below its long-term 16.75 percent average, despite this being a period of heavy 300mm conversion.

The corresponding data for the Wafer Processing equipment sector, shows an increasing trend as a percent of semiconductor sales. This trend, however, is not a sign of excess investment, rather that the wafer processing portion is gaining overall market share, currently at around 75 percent of the total equipment spend, up from around 60 percent in the late 1980s.

We also tracked the total capex spent as a percent of semiconductor revenues on an annual basis since 1990-2008, and data but for the total semiconductor equipment spend. We also tracked the relative relationship between the wafer processing and total semiconductor spends.

These show that a higher proportion of revenues are being spent on the wafer processing sector, a trend that we believe is likely to continue.

We believe that the current levels of capex expenditure are unprecedentedly low and cannot be wholly accounted for improvements in productivity and factory loading. Even if they are, these gains are one-off improvements; once they have been realised there is no more gain in prospect and expenditure levels will return to 'normal' trends.

We tracked the wafer processing equipment spend versus the corresponding increase in capacity on a quarterly basis since Q1-1999 but with the capacity increase delayed by three quarters.

Once the three-quarter slippage in introduced into the equation, the overlay of the two curves, whilst not perfect, is a very good fit. In short, it takes three quarters for increases in wafer processing spend to translate into new capacity. This is the time it takes to hook up and calibrate the kit and make it volume production ready. Add to this an additional one-quarter delay through wafer fab and assembly process, the net result is a one year delay from wafer processing spend to incrementally more IC shipments out.

Adding in a further one-quarter lead-time for equipment delivery, results in a typically 15 month delay for an existing clean room structure from wafer processing investment decision to increased unit sales, one year longer still if a new building is required.

These long lead-times, however, have a positive side in that one has excellent visibility three quarters out into how much additional capacity is due to come on stream, just by analysing the front-end capex spend numbers. Once the frontend
capex is committed, the addition capacity is inevitable, needed or not, the difference being determined by the capacity utilisation number.

One is thus making an investment decision based on a unit demand forecast 12 months down the road, which would not be so problematic were demand more predictable.

As can be seen, however, from the unit sales charts in the Market Summary section of this report, IC unit demand fluctuates violently from its underlying long-term ten percent per year annual growth rate on a month-by-month basis, quarter-by-quarter basis, not withstanding the inevitable -- and unavoidable -- routing inventory adjustments.

The biggest single problem with semiconductor capex is thus both the long time delay from investment decision and additional IC units out and the non-linearity of the month-by-month unit demand. It is this mismatch that gives rise to the investment uncertainty. Getting the investment timing right, however, is not an exact science; there are bound to be ongoing capacity mismatches within this overall favourable trend.

Entering 2009, the current new capacity investment is trending well below the long-term trend, and is projected to slow even more so in 2009 as the economic recession bites home. This means over-investment is not going to accentuate the current industry downturn, as has so often happened before.

This time it seems investment has been deliberately slowed in order to improve the return on capital employed. The seeds have also been sown for the next market shortage in 2010-11. Foundry wafer prices will rise; dust down the 'makebuy' Excel spreadsheets ... the 'fablite'/IDM debate dynamics has yet to run its course."

Thursday, June 18, 2009

ISA's BV Naidu on India's way forward in semiconductors

B.V. Naidu, Group Chief Executive Officer, Genexx Enpower Corp. Pvt. Ltd, and currently Vice chairman Of Matrix Enport and Group CEO, VANPIC Projects, recently took over as the chairman of the India Semiconductor Association (ISA). He brings over 23 years of experience in developing the IT industry across India as part of the Department of Information Technology/Software Technology Parks of India (STPI).

Naidu's tenure at ISA's helm should turn out to be a very interesting one, given that India now has a new Union Government and Union Cabinet in place, and the latest Union Budget is likely to be announced soon. In this interview, Naidu also talks about the industry's expectations from the Central Government, on the fabs vs. fabless debate, and on the need for building a system for incubating Indian start-ups, respectively.

A very interesting development would be the ISA's proposal of the India Semiconductor Vision 2020 Document for the country. When this document is tabled, it should interest those countries, and companies, looking to invest in India -- as the document would lay out all of the clear, long term goals for the Indian semiconductor industry. Exciting times seem to be ahead for the Indian semiconductor industry. Excerpts:

Main goal for ISA
Naidu said that the ISA needs to get adopted to the changing dynamics in the industry with the increasing domestic market. It is necessary for India to enhance the product design capabilities -- which are made in India for India. In view of this, the ISA is enhancing its scope to cover the embedded software and systems companies.

"As a result of the new semiconductor policy, there has been spurt of the growth of the solar PV industry in the country. ISA has spearheaded the semicon policy, ISA is also covering the solar PV industry. Thereby, ISA is spreading its reach to cover the embedded software, electronic products as well as photovoltaic sectors," he said.

Top five points on ISA's agenda
BV Naidu: According to ISA, these should be:

i. ISA would work along with industry, academia and the Government, and formulate the strategy for the growth of fabulous design companies, product design companies, ecosystem companies and solar PV companies.
ii. ISA would also propose the India Semiconductor Vision 2020 Document for the country.
iii. ISA would enhance its activities focusing on increased product desired companies.
iv. ISA will put up a plan for working along with entrepreneurs, mentors, venture capitalists and academic institutions to enhance entrepreneurship and IP creation.
v. ISA will work with the Union Government to enhance the growth of the solar PV sector, its visibility and Government incentives to make this industry viable for growth in India.

Building semiconductor ecosystem in India

BV Naidu said that the ISA is taking several steps. These are:

ISA will strive to enhance the strategic value to its member companies -- semicon, systems and solar -- by creating balanced eco system around the its stakeholders -- industry, government and academia.

ISA should be accepted as a tier 1 industry body and think tank/advisory body for influencing policy for the Central and State governments. ISA would also encourage an entrepreneurship ecosystem focus in innovation and design. As for talent, ISA will aim for 100 PhD enrollments in research in medical and energy over the next five years.

With regard to what ISA would be doing in the coming year and in the current economic scenario, it would include the following:

For the government:

* Aim to remove anomalies in duty structure for semicon companies (Mo Fin/Com).
* Grow further fabless design companies in India (DIT).
* Roadmap for electronic manufacturing in India (NMCC).
* Take forward recommendations of SPV report (MNRE).
* Take forward the Semicon Policy implementation.
* Strengthen ties with state governments.

For SMEs/startups:

* Create platforms for mentoring & funding interaction with VCs.
* Make the ISA website a resource centre on the Indian semicon industry.

Market facing activities:

* Increase domestic market.
* Made in India for India.
* Increase competitiveness of product design, mfg & market reach.
* Position India as solar PV hub.
* Publish market sales data on a quarterly basis.

For talent:

* Aim for at least 20 PhD enrollments in research in medical and energy over the next 12 months.

Education and research perspectives
BV Naidu added that the participation of education and research would be as follows:

* Aim for 100 PhD enrollments in research in medical and energy over the next five years.
* Close working partnership between ISA and VSI to drive research agenda.
* Strong existing commitment to this agenda from VSI through corpus.
* Need each ISA member to sponsor at least one full time PhD student each year over the next five years.
* Commitment to be financial (Rs 25,000 pm), mentoring and test chips.
* Sponsorship amount will also cover international paper presentation, faculty support, kits, etc.
* ISA will work with DST to potentially match the aid from industry.
* VSI will work with universities and sponsoring companies to identify and mentor the scholars.
* All fundamental IP from the research will be available to the pool of sponsoring companies.

ISA's goal is to drive the fundamental pre-competitive semiconductor research in medical and energy in India.

Boosting semicon manufacturing
According to BV Naidu: India’s chip manufacturing has been restricted to captive centers for defense and aerospace to date. The announcement of the semiconductor policy 2007 is likely to see the opening of doors to global investors in both chip manufacturing and its ecosystem, and related hi-tech manufacturing.

The Government of India has announced a national semiconductor policy. It seeks to establish India as an attractive destination for global investors. The policy has financial subsidies and it is necessary that due diligence takes place before these benefits are sanctioned. The appointment of the Appraisal Committee and the setting up of guidelines to evaluate investments are the key for the long-term effectiveness of the policy and to build the sector.

The solar photovoltaic industry has received a real boost with the introduction of this policy and given India an opportunity to be a global player. It has also opened up opportunities for investments and employment.

Given the current economic climate, it would not be an uncommon request if the semicon policy is extended from 2010 to at least 2014/2015!

"ISA, particularly, will work along with the Government of India and various state governments to create manufacturing clusters around the country. The ISA also conducts the Excite exhibition to bring all the ecosystem players who could bring the manufacturing industry together," he added.

Fabs vs. fabless
Fabs vs. fabless has been an interesting debate. What should be the way forward for the Indian industry?

BV Naidu said: "Currently, the Indian semiconductor companies mainly focus on IC design services comprising VLSI design, board design and embedded software and are mostly in services, with a small number of product companies. There is also some amount of board level fabrication and testing activity.

"India has the potential to become a global design centre and a leader in product design, development, testing, fabrication and distribution. As a strategy, one should focus initially on product design, development, assembly and test, while leveraging wafer fabrication capability from the most competitive sources in the region."

Incubating start-ups
We haven't seen many start-ups in the recent past. How can the India industry go about trying to build a system for incubating Indian start-ups?

BV Naidu: It would be appropriate if the Government of India could provide seed and start-up capital for the new ventures and set up a focused venture fund of about Rs 200 crores. The technology development board could administer these funds and the fund may provide up to 80% of the approved project cost with equity balance being brought in by entrepreneur.

The Government can also subsidize the acquisition of EDA tools by start-ups and other SMEs in this sector.

Prototype development centers with adequate fabrication facilities can be set up as well. These centers can be managed by industry associations. Recurring costs could be met by charging user fees. ISA can be given a grant for this purpose.

The above steps will encourage entrepreneurship eco-system focus in innovation and design.

Finally, what are the industry's expectations from the new Central government?

BV Naidu said that the key areas of focus include the following:

a) Semiconductor manufacturing
i. Extension of Semicon Policy

b) Semiconductor design
i. STPI extension
ii. Transfer Pricing

c) Solar PV
i. Duty structure (point no. 3 under chapter VII on Solar PV in our pre-budget memo).

We have also made the following requests with the Government of India:

* Significance of semiconductor industry – need to accord it National Agenda status.
* Government of India Semiconductor Policy 2007 – suggested amendments.
* Domestic electronics hardware manufacturing – proposals to enhance its competitiveness.
* Fabless design companies – recommendations for growth.
* Semiconductor related research – a focus area.
* Other key proposals
* Solar PV manufacturing – Recommendations to promote domestic industry.

Wednesday, June 17, 2009

Is Q1 a cycle bottom? Time for 2009 reality check! Semicon update Apr'09

Here are the excerpts from the Global Semiconductor Monthly Report, April 2009, provided by Malcolm Penn, chairman, founder and CEO of Future Horizons. There are a lot of charts associated with this report. Those interested to know more about this report should contact Future Horizons.

This will be followed by updates for May and June, and I am speaking with Malcolm Penn to find out more!

Executive overview
"February's IC sales were up 4.3 percent on January, down 26.5 percent on the same time last year. If March behaves true to historical norms, we can expect to see sales up 26 percent on February, at 14.3 billion (on a calendar month basis), equivalent to plus 0.8 percent, four-week month adjusted.

This would see Q1 sales down around 15 percent on Q4-2008, just slightly ahead of our 18 percent forecast decline. Whilst March's data point is right now still an estimate, the year to date data and trends give strong guidance on what is actually happening. Time therefore to reflect on our 2009 chip market forecast and growth pattern outlook for the year as a whole.

At our January 2009 International Forecast Seminar in London, we forecast growth for the 2009 market at -28 percent. This was the most pessimistic of all the industry watchers!Source: Future Horizons

The forecast reflected the unprecedented Q4-2008 industry meltdown that started on Sept 16 with the Lehman Brothers collapse. December was an especially a traumatic month, with several firms reporting negative net monthly sales (i.e., cancellations were higher than new orders), with zero guidance visibility on the outlook for Q1-2009.

Our forecast estimated Q4 would decline a 22.5 percent versus Q3, followed by a similar (but slightly slowing) decline of 20 percent in Q1, bottoming out in Q2 (at -2 percent versus Q1) followed by reasonably strong seasonal recover in Q3 and Q4 of plus 12 percent and plus 3 percent respectively.

Once December's results were published in February, we modified this profile slightly to reflect December's actual 24.2 percent decline (versus our 22.5 percent estimate), reducing the first quarter decline slightly (from -20 percent to -18.5 percent) thereby maintaining the overall year-on-year 28 percent decline.

Ironically, despite having the most pessimistic overall year-on-year forecast, we were widely criticised at the time for predicting a 'V-shaped' recession. Yet, to achieve the more favoured 'U-shaped' recovery would have meant a very low single digit quarterly decline in Q1, something we did not believe was realistic or likely. Our most optimistic (rose coloured glasses) scenario pegged Q1 growth at -8 percent, yielding an 18.7 percent annual 2009 decline.

Despite December's worse than forecast results, February's data, both in its absolute value and underlying momentum, added credence to our 'V-shaped' scenario, despite the emergence of a new popularist theory of a W-shaped recovery.

As such, we are sticking to both the shape of the recovery -- V, not U or W -- and profile; there is even some indication that the recovery is happening slightly earlier than we estimated. Now that, if true, would soften the depth of the 2009 decline.

Based on January and February's WSTS data, March now looks like coming in at $17.019 billion, which would see Q1 reach $43.642 billion, down 16.4 percent on Q4-2009, which is 2 percentage points lower than the 18.4 percent we were forecasting. If this is the case, Q1 will mark the recession cyclical bottom.

Industry capacity
The Q4-08 total MOS IC capacity was up just 3.1 percent versus Q4-07, which in turn was up 13.6 percent on Q4-2006. Quarter on quarter growth was -1.7 percent, compared with +1.1 percent for Q3-08, plus 2 for Q2-08 and +1.7 percent for Q1-08. This dramatic slowdown in net new capacity is in direct response to the slowdown in capex that has been gaining momentum since the second half of 2007.

It should be remembered that there is a 'nine-month delay' between a capex spend and saleable units out, so capex in year 'n' drives capacity expansion in year 'n+1'. As such, the capex spend is now growing much slower than the underlying unit demand, and the impact is an eventual increase in the capacity utilisation rates.

Do not be misled by the sharp falloff in Q4-08 utilisation; this was the direct result of the September financial crisis near-term inventory purge driven demand slump and not representative of the underlying trends. We expect this to bounce back quite rapidly once orders readjust during the first half of 2009.

Although due to timing, inventory and seasonality issues, supply and demand will never identically track, utilisation rates have been straddling the 90 percent level since mid-2003. We expect this trend to resume by the end of this year.

With capex spend averaging around US$8 billion per quarter between Q3-06 and Q1-08 spending plunged dramatically in Q2-08 reaching under half this average in Q4-08. Given the current front-end capex book-to-bill trends, this spend will shrink still further at least through 1H-2009. Interestingly, this cutback happened well before the Q4 market meltdown, the impact of a premeditated strategy to dramatically tighten supply and thereby increase wafer and IC average selling prices.

The level of new front-end capital equipment orders has now been sizeably lower than sales for 31 consecutive months, the last four at unprecedentedly low levels, aside from two short-lived incursions into positive territory circa Q4-06 and Q4-08. The 2008 capex spend was down 30.6 percent on 2007's level, with the outlook for 2009 looking to be at least a further 30 percent lower. That would put 2009's capex spend at well under half 2000's peak.

No amount of productivity gains can offset this slowed investment, especially now the one-off 300mm conversion gain has been absorbed. Net new capacity addition is thus condemned to shrink even further during 2009, the effect of which will be masked in the near-term by the current inventory /demand adjustment process.

With near-term demand having shrunk in Q4, this strategy has essentially been blocked but not reversed. Unlike 2001, when recession hit during a period of capex expansion, the bounce back from the current dip will be quite sharp and sudden. It is only a matter of time before capacity gets squeezed and wafer process rise. We expect this trend to bit hard in 2010, possibly even leading to shortages and allocations, just as the economic recovery starts to gain momentum.

The interim period of 'plentiful capacity in 2009', will feed the perceived wisdom of a sense of supply security, those with an inkling of a medium-term plan need to tie down their supply positions whilst the going is good. Today's era of cheap and plentiful wafers, like the discredited 'debt is cheap and free' era, are number and counting down.

Just to make the point deeper we tracked the book-to-bill ratio against future capacity adjusted for the three quarter lead-time delay. It shows both a good trend correlation and the depth of the problem. Once again, it reinforces all of the other anecdotal and hard evidence that net new capacity growth is condemned to slow even further. When the unit demand recovers, the capacity simply will not be there, especially at the leading edge technologies."

Friday, June 12, 2009

Global semiconductor sales forecast results: Cowan LRA model

This is a continuation of my coverage of the fortunes of the global semiconductor industry. First of all, I'd like to acknowledge and thank Mike Cowan, an independent semiconductor analyst and developer of the Cowan LRA model, who has provided me the latest numbers.

The latest forecast estimates, as derived via exercising the Cowan LRA Model, are based upon the recently-released April 2009 actual global semiconductor sales by the WSTS (note -- includes, by the way, very minor upward revisions -- i.e., an increase in sales -- for each one of the previous three months of the year: Jan., Feb., and Mar.).Source: Mike Cowan

As the high-level results table portrays (see above), the year 2009 sales forecast estimate "kicked up" strongly (by $8.52 billion) to $192.50 billion from last month's sales forecast estimate of $183.99 billion with a corresponding improvement (increase) in the 2009 year-on-year sales growth forecast to minus 22.6 percent (from last month's sales growth forecast estimate of minus 26 percent).

It should be pointed out that this latest updated sales growth forecast estimate (-22.6 percent) is in good agreement with the latest forecast revisions just released by Gartner (-22.4 percent), the WSTS (-21.6 percent), and the SIA (-21.3 percent).Source: Mike Cowan

Sales growth forecasts
It should also be highlighted that this month's momentum indicator improved (increased) significantly to plus 19.6 percent. This is relatively good news when compared to the actual monthly momentum indicators from Oct08 through Jan09, that is, -12 percent, -26 percent, -35 percent, and -31 percent, respectively.

Historical tracking of this particular indicator over the past seven years is also available. The historical long-term trend correlates with the significant collapse in industry sales during the time period just mentioned; a corresponding reversal looks to be in the making based upon this month's strongly positive momentum indicator (record high positive percent since Cowan has been running the model and tracking this particular indicator).

With this month's momentum indicator (MI) moving into very high, positive territory, it bodes well relative to a possible relatively strong recovery in sales over the near-term.

Cowan mentioned in his last month's analysis, that this monthly indicator bears continued watching over the coming months in order to monitor the trend in this indicator -- in order to verify that the present very strong uptick is highly suggestive that a "turning point" in the industry's near term sales is real and will be sustained.

However, the model's next month (May 2009) predicted sales forecast estimate is projected to be $14.686 billion which would represent a yr-o-yr monthly sales growth of -27.5 percent -- not very encouraging relative to sustainability of a sales improvement trend if the model's May09 sales forecast is born out.

Time will tell! And, stay tuned for next month's update.

P.S.: I will be getting into further conversations with Mike Cowan, as well as Future Horizons' Malcolm Penn this month.

Dr. Bobby Mitra, TI and ISA on the Indian semiconductor industry

Dr. Biswadip (Bobby) Mitra, Vice Chairman, India Semiconductor Association (ISA), and President and Managing Director, Texas Instruments India, really needs no introduction.

He has been actively involved with TI India since its inception, and is among the well known and respected stalwarts within the Indian semiconductor industry.
Dr. Mitra was recently nominated as the vice chairman, ISA.

Naturally, it was interesting to get into a conversation with him to find out more about ISA's agenda in the coming year, and the impact it could have on the Indian semiconductor industry. I also quizzed him regarding the steps ISA be likely taking for building and strengthening a semiconductor ecosystem in India. Excerpts:

Key points in agenda
Let us start by finding out the key points on his agenda for the ISA in the coming year and why?

According to Dr. Bobby Mitra: The Agenda... "I believe, we have a once-in-a-generation opportunity to transform India from an emerging economy to an emerged economy through technology innovation. A robust technology infrastructure must be the foundation of the future Indian economy.

"We can leverage technology to make healthcare and education affordable and available to the masses. Technology can also play a pivotal role in the greening of the environment through a variety of highly energy-efficient solutions. The future of our security infrastructure can also be built on the foundation of technology innovation.

"A large number of system design and manufacturing OEMs in India, and a few large and many medium/small-sized companies, are at the forefront of driving this technology innovation in India, and other emerging economies. Semiconductor solutions are the engine behind such innovations.

"As part of the ISA, our focus will be to provide an impetus to these companies by developing an electronic design and manufacturing ecosystem that is globally competitive and efficient.

"As part of ISA, we will also focus on developing a technology research agenda in India that is targeted at seeding the right solutions for the emerging economies. This will require deep insights into the intricacies and characteristics of an emerging economy -- and the technologies that can accelerate their growth. Through targeted research in healthcare, energy, education etc., we will develop future technologies that will drive the transformation of India from an emerging to an emerged economy."

By working closely with other emerging economies and global industry associations and research bodies, we will also build a roadmap in thrust areas such as energy, healthcare, education and security.

…and the Opportunity to Impact:

Dr. Mitra added that the opportunity to impact is huge. According to the ISA-Frost & Sullivan report (2006):
* The direct impact of semiconductor driven industry will be $202 billion by 2015 contributing to more than 12 percent of country’s GDP.
* The induced impact will be $226 billion by 2015 contributing to additional 15.9 percent of the country’s GDP.
* The combined impact will be more than 27.9 percent of our country’s GDP.
* No single industry will have the ability to impact the nation’s economy in a similar manner.
* In India, direct impact of hi-tech driven industry will be $202B by 2015 contributing to more than 12 percent of the country’s GDP.

"For India, to seize this once-in-a-generation opportunity, we need to build a robust technology infrastructure as our foundation for the future. ISA with its member companies playing a defining role in developing and implementing this roadmap for the future.

"Most importantly, by maniacally driving this agenda, we can make a lasting difference to the lives of the millions of people in our country," he noted.

Product development in India
What can be really done to trigger off more product development in the semicon space in India?

According to Dr. Bobby Mitra, the best trigger to more product development lies in building long-term credibility. Success in building world-class products and technologies, and doing so consistently over time, will go a long way.

He said: "As much as successes, we also need to be humble in learning more from our failures and scars. We also need to increase our focus on building deep competencies in designing complex semiconductor solutions, increasingly with a systems and applications mindset.

"I believe that we also have a major opportunity ahead of us in the electronic product development space in India. By having electronic system designers, and semiconductor design and test engineers working collaboratively, we can support our OEMs in developing the right products that are competitive. By anchoring semiconductor product innovations on our customers, we can win together."

Thursday, June 11, 2009

Pradeep's Thoughts -- Photonics in Asia

Friends, I did mention some time ago that I shall start blogging or talking about photonics -- yet another subject close to my heart!

Well, that dream has been realized, thanks to -- the world's leading site on the subject, from Laurin Publishing, USA.

Announcing:Pradeep's Thoughts -- Photonics in Asia! (

How many of you are aware that some of the best work done in photonics in Asia is carried out in India? Are you aware that one of the best institutes in the country is located down south -- in Cochin -- known as the International School of Photonics at Cochin University of Science and Technology.

It is in this very institute that the Photonics Society of India (PSI) was founded in 2000, which also administers the society. The PSI is a professional organization of people, institutions and companies working with photonics in India.

The PSI has some very distinguished gentlemen at the helm. Professor P. Radhakrishnan, International School of Photonics, is its president. He is assisted by Dr. Reji Philip, vice president, and associate professor, Optics Group, Raman Research Institute, Bangalore. Professor V. P. N. Nampoori, International School of Photonics, is general secretary.

In fact, it was a pleasure to recently visit the famous Raman Research Institute (RRI) in Bangalore, where I had the good fortune of interacting with some of the best and renowned researchers that India has on this subject.

The various kinds of equipment the RRI has at the labs is mind boggling! Makes you wonder -- these folks are really bright and highly talented to be doing such exemplary work.

Enough said! May I take this opportunity to thank Laurin Publishing for helping me realize another dream. I hope you all enjoy my Photonics Blog! Thanks for your support, as always, dear friends.

Semicon recovery in sight? Hope both Intel and AMD are ready -- for today, and tomorrow!

Where were we? Yes, the famous Intel and AMD server battle, and Computex!

Is server battle the only ground Intel and AMD are and should be looking at? Perhaps, not! Has AMD won the server battle? Perhaps, yes, in this particular round, for now, as statistics may suggest. However, statistics also have a bad habit of hiding certain vital statistics -- like conditions, etc.

A couple of days ago, iSuppli reported that Intel had lost some share in the global microprocessor segment in Q1-2009. AMD, in fact, had managed a comeback.

As per iSuppli, Intel suffered a 2.5 point drop in share. Its global revenue dropped to 79.1 percent, down from 81.6 percent in Q4-2008. During the same period, AMD moved up from 10.5 percent to 12.8 percent -- an increase of 2.3 points.

AMD's turnaround has been attributed to its strong performances in each area of its microprocessor portfolio, particularly, notebooks. This is impressive, given the downturn and the weakness in the PC and server markets. So, is AMD a winner in the servers market? Not so soon!

The gap between Intel and AMD is still quite significant. We've had the EC ruling, we've had the various server platform launches, and we are done with Computex.

Recovery in the offing?
There have been indications from other quarters that the global semiconductor equipment market is likely to begin recovery by October 2009. Also, latest data from SEMI suggests an increase in investments for fab construction projects and fab equipping in H2-2009, with the trend continuing into 2010.

Further, iSuppli has also reported that after three quarters of contraction, the pure-play foundry semiconductor manufacturing industry will probably enjoy robust growth during the second quarter.

Given all of these interesting statistics and developments within the global semiconductor industry, a likely recovery for the industry could well be in the offing!

So, if AMD and Intel are done with their server wars, the real game is likely to begin shortly! Maybe, it is time for both to get over the "today and tomorrow affair," and focus on the future. I hope both are adequately prepared for today, and tomorrow!

Monday, June 8, 2009

Whose (server) round is it anyway? Intel's or AMD's?

What a week, what a day, what a show! I am referring to the recent developments at Intel and AMD -- to their respective product launches and announcements, and of course, to Computex, in Taipei, Taiwan! Oh, and to the ongoing battle between AMD and Intel in the global servers market!

First Intel... Late May, Intel previewed the Nehalem-EX, a processor that will be at the heart of the next generation of intelligent and expandable high-end Intel server platforms, which will deliver a number of new technical advancements and boost enterprise computing performance.

The Nehalem-EX is said to feature up to eight cores/16 threads, 24MB of shared cache, integrated memory controllers, four high-bandwidth QPI links, Intel Hyper-Threading, Intel Turbo Boost, and 2.3B transistors. The Nehalem-EX is said to be on track for H2-09 production.

Some time later, Intel put out an in a local news daily, about "Sponsors of Tomorrow" -- a global campaign that conveys the message that gigantic advances of the digital age have been made possible by silicon -- the key ingredient in microprocessors.

And guess what, AMD promptly came up with an invitation to its Istanbul launch, stating that a smarter product today would help battle the slowdown, rather than look at tomorrow!

Quite appropriately, soon after, AMD launched its Istanbul six-core Opteron processor this week, which delivers up to 34 percent more performance-per-watt.

AMD's poking fun at Intel didn't really quite go down well at some quarters. I have always respected and appreciated -- may the best one, win, and if you really have the guts, do it yourself! And let the market decide who is the winner!!

I would surely expect the two heavyweights of the global semiconductor industry to not resort to such tactics. Instead, it would do both of them good to focus on their core businesses. Poking fun at each other will not bring in the dollars!

One AMD executive even went to the extent of highlighting the 'today vs. tomorrow' story on the dias, adding that when Intel comes out with an eight-core processor, AMD will come out with a 12-core processor. And, most importantly, that Intel is talking about tomorrow, but AMD is talking of today! Quite interesting!!

So, who is the winner of round one -- according to me, no one!

Now, switch to Computex Taipei, Taiwan! First AMD announced a flurry of launches -- such as its two new dual-core desktop processors. This was followed by a new chip for HDTV-on-the-PC reception.

Similarly, Intel made a flurry of announcements too, starting with the introduction of four new processors for ultra-thin laptops. Later, Intel's Sean Maloney outlined the industry growth opportunities, especially, future growth throughout the computing and communications industries, particularly in mobile and wireless.

Let's continue this in the next post, lest this grows too long! ;)