1. Fabless business model 'stressed out,' says analyst
| Nvidia reportedly not getting enough 55-nm capacity from TSMC |
|
| Dylan McGrath (09/11/2008 3:27 PM EDT) URL: http://www.eetimes.com/showArticle.jhtml?articleID=210601146 |
|
|
SAN FRANCISO—Nvidia Corp. is not getting the 55-nm capacity it needs from silicon foundry giant Taiwan Semiconductor Manufacturing Co. (TSMC), a problem likely to worsen as the graphics chip maker moves to the 40-nm node, according to Doug Freedman, an analyst at American Technology Research. In a report published Thursday (Sept. 11), Freedman wrote that the "fabless business model seems to be getting stressed out" and that the Nvidia-TSMC relationship "sounds problematic" and "needs to evolve." In order to minimize its own risk, TSMC is building less capacity as it ramps new technology nodes, according to Freedman. TSMC doesn't get enough visibility from its smaller customers such as Xilinx Inc., Altera Corp. and Broadcom Corp., Freedman wrote, so the foundry cannot take the risk of building new capacity to support larger customers. Nvidia is TSMC's largest customer, he noted. TSMC's board of directors last month approved a $795 million capital spending plan that includes a push into 45-/40-nm CMOS processes and MEMS. Last month, Nvidia reported second quarter financial results which included a charge of $196 million to cover a recall of faulty chips. An Nvidia spokesman initially blamed TSMC for the recall, due to a ''weak die/packaging material'' in select devices. The spokesman later recanted, saying Nvidia "worked closely with TSMC on packaging and the material.'' On Tuesday, a New York law firm said it filed a fraud class action lawsuit on behalf of Nvidia investors accusing Nvidia of failing to disclose "unusually high failure rates" or mobile video adapters. The suit, brought by Shalov Stone Bonner & Rocco LLP, names Nvidia, CEO Jen-Hsun Huang and Chief Financial Officer Marvin Burkett and alleges that they issued a series of misrepresentations and omissions relating to the failure rates of the recalled chips. According to Freedman's report, none of the chips shipped by Nvidia were bad. Some chips were being run at cycle times that were too high for notebooks which led to packages cracking, Freedman said. According to Freedman, the parts Nvidia was shipping were good, but being run in the wrong notebooks. Freedman also said Nvidia underestimated Advanced Micro Devices Inc.'s latest graphics chip offerings, including the price and performance. Nvidia cut its own prices to stop market share loss, which appears to be working, Freedman wrote. Last week, Tristan Gerra, an analyst with financial management company Robert W. Baird & Co., said TSMC is seeing orders down substantially in the fourth quarter and could see its manufacturing utilization rates drop to their lowest percentage in five years. Last month, Mehdi Hosseini, an analyst with Friedman Billings Ramsey & Co. Inc., cut his forecast for TSMC due to lower-than-expected demand from foundry customers. |
|
Top
_____________________________________________________________________________________________________________
2 NEC joins IBM on chip project
TOKYO (Reuters) - Japan's NEC Electronics Corp, the world's No.12 chipmaker, said on Thursday it would team up with IBM and others on next-generation microchips in a bid to beat mounting development costs.
Chip makers are working together to shrink chips and squeeze more power out of them, even as they try to keep costs below sliding prices.
NEC Electronics will be the eighth manufacturer to join an alliance of companies that comprises IBM, Samsung Electronics Co Ltd, Toshiba Corp, STMicroelectronics, Infineon Technologies, Freescale Semiconductor, and Chartered Semiconductor Manufacturing Ltd.
They have said they would work through 2010 to develop and produce 32-nanometre chips. A nanometer is a billionth of a meter, or roughly the amount a person's fingernail grows in one second.
(Reporting by Mayumi Negishi; Editing by Chris Gallagher)
_____________________________________________________________________________________________________________
_____________________________________________________________________________________________________________
4. SanDisk CEO downplays Samsung takeover talk
Tuesday, September 9, 2008
SanDisk CEO Eli Harari said Monday that his company has the financial strength to weather the economic slump alone, but called partnerships essential and did not rule out being acquired, following rumors that Samsung might be looking to acquire the Milpitas maker of flash memory chips.
Harari made his remarks during an hourlong interview at The Chronicle just days after reports of the South Korean electronic giant's interest began circulating Friday, elevating SanDisk shares 31 percent before they returned some of those gains on Monday.
SanDisk, which Harari co-founded 20 years ago, calls itself the world's largest supplier of flash memory data-storage products. They are the components that retain stored information when a device's power is turned off, in contrast with dynamic memory, which performs computations but doesn't work without power. Flash memory is used in digital cameras, cell phones and subnotebook computers, commonly called netbooks.
After repeating prior statements that SanDisk talks with many firms, including Samsung, but does not discuss rumors, Harari said a glut of flash memory chips has already spooked some new players from entering the market and downplayed the need for his company to be acquired.
"Consolidation is going on in that regard in terms of fewer players, and where it is going to end will depend very much on how long the current down cycle continues," Harari said, adding: "We have a very strong balance sheet, and I believe that we are managing our business to allow us to survive through this down cycle, even if it takes quite longer than anybody expects. We are not counting on any miracles."
At the same time, the veteran chipmaker, who has been in the industry for 35 years including 20 at the helm of SanDisk, left the deal-making door ajar.
"There's no such thing as no partnerships in today's world," he said. "If you are swimming in the big ocean, you really need to make friends with a few large fish out there, some white sharks and some friendly fish."
In particular, Harari addressed SanDisk's relationship of roughly nine years with Toshiba, the Japanese electronics giant. Together, they own four semiconductor manufacturing plants, the last two of which cost slightly more than $5 billion apiece, he said.
SanDisk's close relationship with Toshiba was noted in the Friday research note issued by Lehman Bros. analyst CW Chung, who floated the rationale for Samsung's interest in acquiring the Milpitas firm - Samsung pays SanDisk upwards of $400 million in royalties per year to license SanDisk's flash memory patents - and then torpedoed the rumor by noting the difficulty of untangling the Toshiba-SanDisk manufacturing combine.
Nevertheless, the prospect that SanDisk might be in play drove its shares up $4.18 on Friday, a gain of 31 percent. Its stock fell back $1.04, or nearly 6 percent, on Monday after USB AG analyst Uche Orji cut his sales projection for the company, saying flash memory makers are overproducing these chips at a time when a U.S. economic slump is forcing consumers to tighten their belts. On that dour note, SanDisk shares closed at $16.60 on Monday.
In his question-and-answer session, Harari cited investor fickleness as one of the most pronounced changes in the innovation climate of Silicon Valley.
"Silicon Valley has perhaps not changed so much as much as the investment community scenario has changed, very, very much," Harari said, adding: "The hedge fund environment, which is extremely short-term oriented, short term as in a few seconds to a few minutes, makes it very difficult for a company that is truly dedicated and believes passionately in long-term investment and long-term strategy and big plays. But big plays don't happen overnight."
Harari spent the bulk of the interview articulating those big plays - including SanDisk's efforts to seed cell phones with receptors for memory chips that could play songs; its effort to revolutionize memory by replacing the current single-story chip design with the electronic equivalent of multistory structures for greater storage density; and his belief that mini-laptops, using slim and power-miserly flash memory, will fall dramatically in price.
Citing a potential of 3 billion consumers, Harari dubbed one-third of that mini-notebook market "the Cupertino crowd" willing to pay for the latest and greatest. But the other 2 billion, he said, cannot afford the current $400 price of low-end mini-notebooks "and would do anything to get their hands on a $50 to $100 device" - a price point he thinks commercially feasible in time.
_____________________________________________________________________________________________________________