25th April 2011

India’s latest fab push

Setting up fabs has been a point/initiative that keeps popping in and out in the Indian semicon landscape; and has been happening ever since India’s main fab (SCL) in Mohali had a major fire in late ‘80s!
(incidentally STMicro and IME/S’pore owe a lot to that as the SCL employees moved to these and other pastures following the fire!)

As mentioned in the article, a couple of years back the fab initiative again got some major push courtesy SemIndia as well as Hindustan Semiconductor Manufacturing Corp/Infineon combo but never took off.

While there are several proponents for building semicon fabs in India, personally I am not too gung-ho about the same J, mainly because

·        India does not have the apt environment and infrastructure needed for a fab (these fabs can help a lot on the local employment scene, though)

·        Fabs are too costly to be handled by small players. I do not see the big ones entering here in India w/o being incentivized by sizeable subsidies/tax breaks from the govt.  Intel was an interested player (though I think for backend fab) but the govt. and the tech bellwether could not come to anything mutually beneficial.
·        Even if the fab comes, the technology produced is another question. Are we talking about the low end technos (how will that develop “localized content and value-addition to the Indian made electronic products”?) or the high end ones (which IDM/foundry will opt for this?)
·        With fabs increasingly being seen as only a big players’ game (or of a consortium of big players) and IDMs going fab-lite, there is not much fiscal sense in pushing for a domestic fab in India. Even strategically (long term), it is a too high cost game for new players. However, should it be for some analog process (which generically trails behind the digital ones), it may make sense – will TI be interested (it already has a big R&D set-up in India)
 

 ·       I personally see hardware morphing into a diminishing role in the electronic products – software (embedded as well as application) is growing into a differentiating niche. India can leverage its strengths in embedded design, software development and large domestic market to attract the big global players further and climb up further in the value-chain. It has already been doing so (moving from routine tasks outsourced from the global HQs to local offices to chip development and now slowly on to system development)

 Domestic fabs can spawn the right eco-system to catalyse India into a big player but right now the odds are too much stacked against it – and am not sure if the projected gains are sufficient to warrant this path….

posted in Semiconductor, Business, Foundry | 0 Comments

24th April 2011

Oracle vs. HP and Intel’s Itanium – a semiconductor perspective

Recently a friend mentioned about the tremendous impact on Intel from Oracle’s March 22 announcement of its discontinuing development on Itanium.

While I had known about this announcement, I had not really given it much thought from the semiconductor perspective. So when I heard this comment, I started digging up…!

A bit on the background first: Using an architecture (based on explicit instruction level parallelism - in which the compiler decides which instructions to execute in parallel; as opposed to the superscalar architectures in which the processor manages the instructions dependencies at run time) that originated at HP and was later jointly developed along with Intel, Itanium is a family of 64-bit Intel microprocessors. The architecture was formerly called IA-64.

By 2009, the chip was almost entirely deployed on servers made by HP, which had over 95% of the Itanium server market share making HP-UX the main operating system for Itanium.

Ironically, the hardware competition to Intel’s Itanium comes from a chip from its own stables – the Xeon (Intel’s response to AMD’s x86-64 Opteron in 2004) that has cranked up its market share in the server pie over the years.

In comparison with its Xeon family of server processors, Itanium has never been a high-volume product for Intel. Majority of Intel’s server business is x86 and it will in the end suffer only a token loss of revenue as a result of Oracle’s announcement. Itanium has become such a niche product for Intel that the announcement had little effect on the chipmaker’s stock - Intel shares were up .02%, to $20.15 the morning after.

Here are some figures:

In the fourth quarter 2010, both Gartner and IDC saw x86 server revenues grow more than 20 percent. According to Intel (which cites figures by IDC), revenues of Itanium-based servers was $4 billion in 2010. By contrast, x86-based server sales was around $33.3 billion in 2010. With the x86 server market being eight times larger than that of Itanium, it does not make much sense for Intel to invest into Itanium’s development. On the other hand, it also cannot simply ignore the $4B Itanium market especially with the fact that the sockets for Itanium and Xeon are NOT interchangeable – as yet. Intel shared some information and re-iterated its commitment on the Itanium roadmap this month.

Btw, Intel recently announced 2 more server makers into its Itanium roster: Huawei Technologies and Inspur – that’s a 50 per cent growth rate in the Itanium OEM base.

posted in Semiconductor, Product, Business | 0 Comments

13th April 2011

IC Insight’s revised capex forecast

IC Insights revised its capex forecast last week in which they indicate that semiconductor industry capital spending is projected to grow to $60.4 billion in 2011, up 17 percent from $51.8 billion in 2010,

I had done some number chewing from the earlier (Jan) report in a previous blog. So was curious to look at the changes. Looks like a couple of big ones in this revised one from the previous (Jan ‘11) forecasts - and they are for ST and Sandisk.

ST’s is 100% (from Jan’s 750M$ to April’s 1500M$) and Sandisk’s is 77.7% (from Jan’s 900M$ to April’s 1600M$). TSMC’s % change from previous is 23.8% increase.

Sandisk had already reiterated its 2011 capex budget of $1.4-$1.6 bn in Feb’11 and IC Insights’ new table reflects that (where did the earlier figure of 900M$ come from??). ST had also announced its capex plans ($1.1 -$1.5b) in as early as late Jan ‘11 (reflected in IC Insights’ latest table)

posted in Semiconductor, Business, Foundry, Forecasts | 0 Comments

12th April 2011

Japan quake and the semiconductor supply chain

The infrastructure (transport, power etc.) disruption has indeed caused problems to the supply chain. The effect is not so immediate due to the inventory stock available with most customers. People here in Singapore while worried do not generally anticipate much problem in the semicon supply chain. Most of the companies here have enough inventory to last at least the next one to two months. In the meantime, they are exploring how to diversify their supply chain as well. Japan has however, is still experiencing aftershocks.

Having said that, I think that it will be the electronics supply chain (as compared to the semiconductor one) which will be more impacted. Japan is a big player in consumer electronics but not necessarily in semiconductors. (It accounted for 13.9$% of 2010’s global electronic equipment revenue and 16.5% of consumer electronics). Plus other than a TI fab, most others escaped damage.

But as Japan is the world’s largest supplier of silicon, raw wafer inventory will soon get depleted.
The infrastructure disruption is likely to cause short supply and higher ASPs (analysts foresee higher than expected global semicon revenue).  Affected parts are likely to include NAND flash, DRAM, microc, LCD panels and parts.

In fact on the electronics supply chain (a smooth semicon chain will not be of much help with a disrupted electronic one!), there was a recent interesting article in WSJ reporting a possible delay in iPod production because of the shuttering of a polymer (called PVDF and being used as a binder in batteries) manufacturing facility, owned by Kureha (it holds 70% of the PVDF market)., near the Japanese earthquake’s epicenter.  Reminds me of the old adage – for want of a nail, the battle was lost…

posted in Semiconductor, Business | 0 Comments

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