Selected articles from Semiconductor Business News......................
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Story posted at 8 p.m. EDT/5 p.m. PDT, 12/5/97
ElectronicsAlert!
Weekly News Analysis for Senior Industry Executives
Monday, Dec. 8, 1997
Vol. 6, No. 26
c 1997, CMP Media Inc.
By Robert Henkel
The following is a summary and analysis of stories appearing in the Dec. 8
editions of Electronic Buyers' News and EE Times.
Intel's network computer
Forget about all those comments Andy Grove made about network
computers. Intel has conceded the NC has a real place on corporate
desktops after all. This past week the chip giant provided a glimpse of the
guidelines it's drafting for the design of NCs that will use its older Pentium
MPUs.
However, the "lean client" plan does not go far enough to address the
emerging market the company recognized and tagged "Segment Zero" earlier
this year, Anthony Cataldo & Rick Boyd-Merritt report in EE Times. The
plan calls for at least a 100-megahertz Pentium MPU, 8 megabytes of
fast-page mode or EDO RAM, and a standard Pentium chip set. It's
targeted at business users who would link the NCs to Pentium II servers.
Looks like Larry's NC,
Intel insists that its new "lean client" design is not a substitute for desktop
PCs, but rather will replace existing dumb terminals in the corporate
environment. It figures 5 million units will be sold in 2000, a small percentage
considering the overall PC market is close to 100 million units per year.
The spec takes on a look that's similar to the conventional network PC that
has been touted by Oracle's Larry Ellison and others. They have insisted
desktops used on the network need only a minimum processor configuration
without a hard drive. Intel plans to make a reference design available by
January.
But some OEMs don't like it
Some OEMs reacted strongly against Intel's NC plans and specs. "Intel
doesn't want to re-design the Pentium or its chip sets for this market, so they
are simply offering a half-baked strategy," says one PC engineer who has
been reviewing the Intel spec. "We believe this lean-client spec is practically
useless, he says, adding the spec fails to address design issues that will be
faced by $500 machines and the servers they will be tied to.
Intel may be even more at risk if its new spec meets with market success,
another PC designer says. "Intel's business model is predicated on being
able to keep its price points high and moving the technology ahead rapidly,"
he notes. "But we are at the point where corporate users don't need any
more horsepower . . . they just want a given performance level at lower
cost."
Big bad Tom Kurlak
Merrill Lynch's Tom Kurlak is scaring investors again. This past week the
controversial analyst said that the semiconductor industry is in a major
market correction, "the kind that can take years to resolve itself.
It's a slowdown that started in August and has been gaining momentum," he
says. "We're concerned it will get worse before it gets better." Some chip
makers this week were warning the Street about mediocre results. Altera
sees flat sales and earnings in the 4th quarter, without the 5% hike in net it
had predicted earlier. LSI Logic also sees 4th quarter flat sales, if not down
slightly, Crista Souza writes in EBN.
But opinion is divided
Other analysts are more upbeat and predict the chip industry next year will
show a slight recovery, if not a return to more normal growth patterns.,
"Growth is still positive; it's just at a lower rate," UBS Securities' Charles
Boucher tells EBN.
It also will take at least another quarter to determine what effect, if any,
Asia's economic woes will have on the global chip market, Boucher says.
Meanwhile, chip makers are building lots of new capacity. But VLSI
Research's Dan Hutcheson says "there is not really excess capacity.
Everyone's running at capacity right now," he insists. "I don't see things being
tough next year."
Action in embedded risc
Two deals going public this next week illustrate the scramble going on
among RISC chip vendors to line up partners in the embedded-control
sector, a market where RISC is thriving after having failed to make much of
a dent on the Intel-dominated desktop. Hitachi has licensed its Super H
(SH) processor core to SGS-Thomson, which will use it in a range of
consumer products, EE Times' Anthony Cataldo & David Lammers
learned.
And NEC is licensing its low-power, 32-bit V850 RISC core to Lucent
Technologies for use in Lucent's 0.35-micron standard-cell library. Lucent is
expected to employ the core immediately in a disk-drive controller. The
Toshiba deal should give the SH chip much more visibility in Europe.
<<SNIP>>
Intel's new DTV pitch
Intel is pulling back from the computer industry's original DTV proposal, in
which Intel, Microsoft, and Compaq Computer demanded that broadcasters
roll out DTV broadcasting in lockstep with the computer industry's PC '9X
road map. Intel managers now admit the DTV team's proposal was "a
smashing failure" and that they had "a naive notion of how the business
works," Junko Yoshida writes in EE Times.
Trying to mend fences with broadcasters and eager to help TV studios start
broadcasting digital video and data applications, the chip giant this past
week outlined sweeping new DTV strategies that are much friendlier to
broadcasters' own DTV plans, and independent of plans from Microsoft and
Compaq.
<<SNIP>>
Analog Devices looking good
Analog Devices is humming. The chip maker reported record results this
past week, with 4th quarter sales rising 9.1% and net growing 15.8%. That
added up to $1.24B in sales and $178.2M in net for all of FY97, Ismini
Scouras reports in EBN.
Next year is looking even better. Smith Barney's Kevin Spoor predicts
Analog in FY98 will show a 25% increase in revenue and 30% growth in
net. And a new design win from 3Com to supply a DSP-based
system-on-a-chip for 56K modems could mean "huge sales volumes," he
says. "The ability to integrate an analog front-end with a DSP is the future of
many emerging high volume consumer applications," says Forward
Concepts' Will Strauss. ***[Wouldn't it be nice to have an MPEG2 decoder that includes a DVD-ROM controller, data recovery circuit, etc.?]***
Asian IC market slows down
The Asian IC market got a bloody nose from the region's economic crisis.
Dataquest has already cut its forecast for the Asia-Pacific chip market this
year. Originally expecting 15% growth to $34B, it now forecasts an increase
of 8.3% to $32B. ***[What's $2B among friends?]*** Most people expect the region to take at least a year to
work itself out of these problems, Mark LaPedus writes in EBN.
But Dataquest sees a dramatic rebound in '98, with Asia-Pacific outpacing
the world by growing 20.7% to $38.6B. Dataquest's Daniel Heyler says the
growth will come from a surge in demand for PCs and consumer products.
Some chip makers are less optimistic. Other than China, the other
Asia-Pacific chip markets "don't look so good," says a source at LG
Semicon.
A China backlash?
Asia's current economic turmoil could cause a backlash in China's
fast-growing electronics industry. With the Chinese and Hong Kong
governments refusing to devalue their currencies, the two countries are
becoming less competitive as exporters, Sandy Chen writes in EBN.
"This means product orders [from OEMs] could shift from China to other
parts of Asia," says Nicholas Leung, marketing manager at Hong Kong's
Avnet WKK Components. This would be bad news for foreign companies
with Chinese plants. For now, forecasters like Dataquest predict China will
keep growing. By 2000, it predicts China will become the world's No. 2 PC
market. PC sales this year will grow from 1.5M units in '96 to 2.5M.
<<SNIP>>
Troubles for Korean Big 3
Are South Korea's Big 3 chip makers (Hyundai, LG Semicon, and
Samsung) in danger of becoming entangled in that country's current
economic mess? Not yet, says Dataquest Asia-Pacific's Daniel Heyler, who
expects Korea's electronics exports to remain strong. but other experts
predict a fall for the Big 3 chip makers, reports EBN's Mark LaPedus.
Raising capital will get more expensive since the three firms float
U.S.-dollar-denominated debt. Another big problem is the plummeting
DRAM market. "The situation is not so good," admits a source at LG
Semicon, who now expects the DRAM glut to last to the end of '98.
<<SNIP>>
Koreans worry Brits
South Korea's financial problems are upsetting the Brits. Reports are flying
in the UK that the turmoil will end up killing plans by Korean producers to
invest several billion dollars in UK consumer electronics factories and wafer
fabs, Peter Clarke writes in EE Times.
Reports that Hyundai was delaying its $3 billion investment in Scotland were
denied by the company, which says it "remains fully committed" to the first of
two fabs. But reports claim Hyundai has not secured financing for
production gear and could have problems doing so now. LG Semicon,
which is building a fab in Wales, claims it's still on schedule to start
production late next year. Samsung, on the other hand, is postponing
indefinitely an expansion of its factory in England that would have turned out
fax machines and PCs.
<<SNIP>> |
