Silicon Valley Watcher - at the intersection of technology and media

Despite Intel's recent settlement of a legal dispute with AMD, the Federal Trade Commission (FTC) is continuing its investigation of the world's largest chipmaker, reports Arik Hesseldahl in BusinessWeek.

AMD agreed to withdraw its complaint against Intel with FTC as part of a settlement which included a payment by Intel of $1.25 billion.

But the FTC is still investigating the legal dispute between Intel and Nvidia, the graphics chip maker, says BusinessWeek.

However, it's not clear what the FTC is concerned about in regards to Intel and Nvidia because it normally investigates allegations of anti-trust business activities. The dispute between Intel and Nvidia is over rights to key chip technologies related to a 2004 cross-technology licensing agreement.

Intel said the pact didn't give Nvidia the right to make Nehalem-compatible chipsets. Nvidia argued the opposite. Intel sued in the Delaware Court of Chancery. Nvidia countersued in the same court in March, alleging breach of contract, accusing Intel of unfair dealing, and asking a judge to terminate Intel's rights to Nvidia patents covered in the agreement.

Nvidia has been taking some pot shots at Intel. It launched a site called "Intel's Insides." It consists of black and white cartoons poking fun at Intel.

The FTC has said it will be tougher under the Obama administration on misbehaving US corporations but it will have a tough time putting together as lawsuit against Intel if all it has is the Nvidia contract dispute.

In November there were reports that Nvidia was secretly preparing an Intel-compatible microprocessor. [Nvidia Could Be Prepping Intel Compatible Chips.]This is likely a tactic to put pressure Intel to settle their dispute.

It's unlikely that the lawsuits will reach court. These types of disagreements are nearly always settled out-of-court and usually with a new cross-license agreement.

By Matt Grimshaw, Editorial Director of the Semiconductor Technical Journal Future Fab International.

According to the latest round of Q3 financial results we should all be partying like Rockstars because the recession is officially over, profits are back and Elvis has been found alive and well working in a Walmart in St Louis.

Everyone in the supply chain is posting record (relatively speaking) sales and I'm sure lots of C-Level Executives will be enjoying a big fat bonus come Christmas to celebrate while continuing to lay off staff.

Hell, even Ford has made a profit - there is a Santa Claus!

There should however be a declaimer attached to the squashy feelings of joy, for it's now time to rebuild and I suspect that it's not going to be easy. Short term will not be a problem, there are so many out of work engineers it's a buyers market. However, what about the mid to long term?

The Semiconductor industry as a whole may have shot itself in the foot in it's now ubiquitous habit of hiring and firing... for is has inadvertently posted a big advert saying "Come on; JOIN the chip industry - where you are a merely number on a balance sheet!" Of course, in the final reckoning everybody's just a paycheck when it comes to corporate accounting - but if you think about it from another perspective this trend in the industry is alarming.

If you are a schoolkid and you're looking at setting up a career in some kind of tech sector. You look around at the various industries and see that Internet start ups are certainly doing well although they suffer high rates of start up failure. It's an acceptable gamble as you might be one of the sacred two hundred at the next Google.

The internet is still a relatively young business segment (the chip industry's been around for more than 40 years) that has massive growth potential through mobile and the proliferation of new ideas.

Staring at a computer screen all day isn't for everyone though so how about the tech manufacturing disciplines?

Well, LED, Medical Devices and the Photo-Voltaic sectors all seem pretty safe bets, all making money, all poised for massive growth with bright futures ahead of them. So what about the chip sector? Surely the driving force behind all this technology is a good bet?

Nothing but nothing works today without come kind of computer chip doing the thinking/measuring/timing/observing, so surely that's a good field to be in? Well, it's not when you know that the Chip industry sheds tens of thousands of jobs every time there is an economic blip.

For such is the pricing volatility in the industry that if the economy even coughs in the wrong tone of voice, many companies go into anaphylactic shock and lay off staff faster then a quarterback lays off the ball on a 4th down play...

Oh, and when it turns around again, you might get re-hired, but this time as a contractor so they don't have to give you healthcare or any assurances of work from month to month. Nice.

Engineers have become expendable assets to companies these days, and I actually find it distasteful that some in the industry feel it's OK to treat the front line troops in such a manner. It may well turn into a case of 'you don't know what you've got 'till it's gone' with the Engineering community.

Almost all the engineers I know would jump out of the chip business in a heartbeat if they got an offer somewhere else, and that's really a sad state of affairs.

If I were in school I'd not be tempted to jump into the chip industry, even if you dangled a solid gold carrot in front of my nose. There's easier money to be made elsewhere.

The chip industry could find itself facing a brain drain. I've heard and seen many presentations that in the not too distant future there's going to be a shortage of engineering talent in the chip industry.

If that happens it will have a profound effect on every other industry, as without the chips to run the servers, there is no internet. Without the chips to run your phone... of course I'm being extreme, but I'm sure you get the picture.

By Matt Grimshaw, Editorial Director of the Semiconductor Technical Journal Future Fab International.

As the year draws to a close I've been trying to take stock of where the semiconductor world stands as we collectively look forward to a period of growth and try to put the disasters of 2008 and 2009 behind us.

I've been having many conversations and meetings with some of the largest semiconductor PR firms and gurus on just what the hell is going on in an attempt to get a handle on what the future holds for the semiconductor segment and in particular the media in this space.

The results were unsurprisingly about as clear as mud; I have never in my ten years in this industry seen such a mass of confusion as to what to do - it makes a riot look like a Gold medal synchronized swimming team.

Fear is the prevailing emotion; communications people at vendor companies in all segments of the semiconductor support ecosystem are being asked to come up with answers to unanswerable questions. Questions like "If I give you X dollars how much money is that going to make the company?"

By Matt Grimshaw, Editorial Director of the Semiconductor Technical Journal Future Fab International

Back in 1999 when I was just starting out in the chip business I was lucky enough to be involved in an editorial focus we ran called Millennium Visions which we ran in the January 2000 issue to celebrate the turn of Y2K.

It essentially featured many of the industries top CEO's & Execs putting together a short piece on where they thought the industry would be in ten years time. It featured many of the biggest names in business at the time (some still are); Tetsuro Higashi (Pres/CEO - Tokyo Electron Ltd), Jim Morgan (Chairman/CEO - Applied Materials), Yoon Woo Lee (Pres/CEO Semiconductor Business - Samsung) and even Mike Splinter when he was still head of manufacturing at Intel (he's now CEO at Applied Materials).

My personal favorite was the vision from Pasquale Pistorio who was President & CEO of ST Microelectronics and was far ahead of his time in his thinking. While all the visions were interesting, Pistorio's struck a chord with me because he genuinely gave a damn about things that are bigger than making money and growing a business.

By Matt Grimshaw, Editorial Director of the Semiconductor Technical Journal Future Fab International

Another week gone of 2009 and almost no-one I know will be sad to see the back of this most depressing of years. However amidst the empty trade shows, wafer thin magazines and ominously empty ad spots on websites I saw some news this week that warmed the gloomy skeptic that's hidden in the dark parts of my soul: Texas Instruments is finally kitting out its 300mm Richardson, Texas Fab (RFAB) that it broke ground on in 2004.

I'd sourced and run a number of papers on the construction of the facility itself a few years back as it was the first (and I think only - apologies if I'm wrong in this) LEED Gold certified semiconductor manufacturing facility in the world - meaning that it's so green the Environmental Protection Agency wants to give it a big hug and introduce it to the wild.

It was doubly impressive because chip fabs are not exactly what you'd call green. They consume enough power in a day to light up a small city, more gallons of water per day than flow down many rivers and generally have a pretty sizable environmental impact including the use of some not very nice chemicals and materials.

By Matt Grimshaw, Editorial Director of the Semiconductor Technical Journal Future Fab International

I was prepping some editorial when I happened to glance across some news that scared the pants off of me. It was a story in EETimes regarding the alleged sad demise of one of my favorite semiconductor equipment vendors, Canon.

Not the whole company of course, Canon will no doubt continue to pump out excellent cameras, printers and the like, but the lithography equipment division. It highlights a really alarming trend that sooner or later has to either break, or break the industry. The trend is cost escalation.

By Matt Grimshaw, Editorial Director of the Semiconductor Technical Journal Future Fab International

This week's announcement that GlobalFoundries' parent Advanced Technology Investment Company of Abu Dhabi, has tendered an offer to buy Chartered Semiconductor for $3.9 billion, has prompted this post. For a connection was made in my head regarding some rather odd events of recent times that I couldn't make sense of until now.

Earlier this summer, a true legend of the semiconductor business came out of semi-retirement and I for one (and I'm sure I'm not alone in this) was stunned. Not "oh wow" stunned, but the sort of stunned that only occurs when a blunt object whacks you in the face unexpectedly. Morris Chang, founder of TSMC, the world's largest chip foundry was back as CEO.

By Matt Grimshaw, Editorial Director of the Semiconductor Technical Journal Future Fab International.

I've started to get a little teed off with the 'light at the end of the tunnel' speech. There seems to be a global consensus that the chip industry (and the world as a whole) is finally starting to do an impression of a Hero in a Hollywood blockbuster that's been close to death...first there's the close up of the inanimate body, then the flicker of life before some sort of choking/coughing that brings our saviour back to life.

The chip industry appears to be flickering in the manner mentioned above, but very, very slowly with all the speed of a tortoise walking through quicksand...each month now is showing gains over the preceding month leading one to believe that the much whispered recovery is underway and perhaps the nightmare of the last twelve months can be put behind us so that we can start to bandage our wounds, bury the dead and rehire some of the thousands of engineers that were laid off... But sometimes it's just hard to believe because there's still a massive cloud overhead and some of my industry contacts have all the confidence of a vertigo sufferer standing on the edge of a cliff.

[Guest post by Matt Grimshaw]

By Matt Grimshaw, Editorial Director of the Semiconductor Technical Journal Future Fab International.

In continuation of the topics I started three weeks ago this is the last part in the trilogy, but also the most controversial. If I don't get stoned to death by a raging mob of PhD's then this may well prove to be the transistor gate that broke the camels back.

I'll be the first one to admit that this one is a bit of a stretch as an issue for the next down cycle as the end of the Complimentary Metal/Oxide Semiconductor more commonly referred to as CMOS is probably 15-20 years out, and beyond that in mainstream markets with lower priced devices. The technology is robust and mature and will be around for the foreseeable future.

The reason for its demise is the reason for the success of the semiconductor industry - the oft mentioned Moore's Law. For decades the law has held true but now we are reaching the physical limits of what the technology is capable. Cutting edge chips have features that are 32nm or below - to put that in perspective a strand of DNA is just 12nm in width and it will not be long before even that is surpassed.

[Matt Grimshaw this week continues his look at the challenges of moving to the next major transition for the chip industry, the use of massive 450mm silicon wafers. There is a need for ever smaller wavelengths of light to make ever smaller chip features but these are costly technologies.]

By Matt Grimshaw, Editorial Director of the Semiconductor Technical Journal www.future-fab.com>Future Fab International.

I've been in the industry for a decade now and when I joined in 1999 the much touted continuation of 'optical lithography' (Extreme Ultra Violet Lithography EUV) was 'almost ready for production' (ARFP) meaning it was nearly ready to be rolled out into factories. Back then it was due for the 180nm technology cycle, which it missed.

It then went on to be 'almost ready for production' and consequently miss 130nm, 90nm, 65 nm, 45m, 32nm 22nm with the latest claim of ARFP being 16nm and even this is now looking dodgier then a $9 bill. If you have any doubts - Google "EUV ready for production" yourself and take a look.

By Matt Grimshaw

This article all started earlier in the week; news reached my eyes that France & Germany were "officially out of recession", followed by Hong Kong today. Then closer to my own world the first analyst has broken ranks and claimed that the recession was over for the battered & beleaguered Semiconductor Tool & Equipment vendors, although it may be a little too early to cry Hallelujah and cease ritualistically sacrificing of 300mm test wafers to the great god of productivity, there is light at the end of the tunnel. Downturns are never nice, but this one has been the ugliest I have personally experienced, with hundreds of my friends in the chip sector either floating across to the Photovoltaic industry or becoming 'consultants'. Some have even gone running to the hills to begin lives as professional hermits.

By Matt Grimshaw

It's sometimes depressing to be in the US and working in the chip industry, well at least for the last 10 years at any rate. This week's news that IDT is shutting its Oregon fab and becoming a Fabless chip company is about as welcome as a chocolate bar at a Diet Club; I have a lot of friends that work in that fab.

Chip manufacturing in the US has been eroding and shifting to the Far East where government incentives and (initially at least) cheaper labour costs have attracted almost all the new Fabrication Plants. There is of course another reason for this shift - the Fabless/Foundry model which was born in Taiwan.

To those not versed in this concept it's about fairly simple economics: Fabrication plants are horrendously expensive propositions, with the latest cutting edge fabs being in the region of $4.2bn US. That's more then the gross domestic product of a number of countries.

The chip industry appears to be recovering from its bust cycle and beginning to enter into its boom cycle - it's a repetitive cycle of around four years in length.

The Semiconductor Industry Association reports a 20 percent drop to $51.7 billion for the second quarter compared to $64.7 billion for the same quarter last year.

The results, however, showed a jump from the first quarter when the recession and low seasonal demand gripped the industry, which sold about $44.2 billion in chips.

Semiconductor sales rise, but down from last year

Foremski's Take: I've covered the semiconductor industry for more than 25 years and it's chief characteristic is that it follows four-year boom-and-bust cycles. Every four years the industry's top representatives talk about how this time this cycle will be different, that this time the boom-and-bust cycles of the past are gone.

They never are. The cycles might vary a little by a few months here and there, but they continue. This is in spite of the most modern supply-chain intelligence, this is despite ever greater transparency into demand cycles, this is despite the most modern forecasting systems.

Chip makers continue to invest in new manufacturing capabilities that provide efficiencies of scale so great that they end up flooding their own markets. They can't cut back on production because the chip fabs are sunk costs, they have to be operated at near maximum capacity or you start to lose even more money.

Fortunately, cheap chips leads to cheap electronic goods of many kinds and thus the demand returns. But can this cycle continue to go on forever? Surely we will reach a point where these monster chip fabs can crank out way more chips than we can soak up in terms of new gadgets and gizmos in any cycle?

Already, the chip industry produces way more transistors on a chip than the world produces printed characters through publishing, newspapers, xerox, personal printers, etc. Yet each transistor requires one the most advanced industrial manufacturing systems ever built by humans and takes about three months. We have an abundance of transistors on a chip.

The chip industry is a corollary for the greater manufacturing sector. Greater efficiencies in manufacturing capacity will lead to ever cheaper goods. They will lead to manufacturing capacities that far exceed our ability as an economy to pay for them all, and to use them all. If we haven't already reached this point, we will soon. What happens then?

Traditionally, productive capacities are destroyed in order to support the profitability of the rest, either through bankruptcies, or war. These methods create shortages out of abundance. Clearly, these are not good choices given the ecological, economic, and ethical pressures we face. Triple "e" will dictate a new type of society, imho.

By Matt Grimshaw

Just as the post Semicon West hangover began to lift, the organizers of the Design Automation Conference, more commonly known as DAC, decided to not only put it in San Francisco this year but also within a fortnight of the Semicon West melee.

Most of my colleagues that cover the Semiconductor space don't care too much about this fact because most don't cover the design segment, but sadly for my inbox (which is again being crushed under the weight of press releases) we do and so I needed to spend at least a day there, which turned out to be Monday.

DAC Christmas

The difference between the first day of DAC and the first day of Semicon West was as contrasting as the day before Christmas and the day itself.

[Matt Grimshaw is the Editorial Director of the Semiconductor Technical Journal; Future Fab International (www.future-fab.com). This week Matt writes about the Semicon West show for chip equipment makers. I remember when Semicon West used to be a huge show, it would regularly outgrow its venues.]

By Matt Grimshaw

Instead of reviewing the news this week I thought I'd try something different and just talk about my experiences at Semicon West; the semiconductor trade show that occurred last week.

Semicon West was, as has been commonly acknowledged by everyone in the media-sphere, much quieter this year then in those glory days of not too long ago, and by the way I'm talking about the Chip segment here not the jam packed Solar/PV exhibit.

Initially it was very sad to see how far the mighty had fallen; looking out across the vista of booths whilst coming down the escalator into the South hall the usual "fight for height" that had become the norm for decades with ever larger and more grandiose corporate logo's spinning, glowing or moving in a strange manner in order to gain attention in a crowded hall was very much muted.