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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (11044)	7/29/2004 10:56:49 AM
From: Proud_Infidel	Respond to of 25522

Unanswered Questions By Ed Sperling -- Electronic News, 7/29/2004 Hans Stork, chief technology officer at Texas Instruments, sat down with Electronic News to talk about the future of Moore’s Law, the digital consumer and new growth areas for TI. What follows are excerpts of that interview. Electronic News: Is Moore’s Law finished from a practical standpoint? Stork: If you look at whether we’re able to build transistors down to 6 nanometers, the answer is yes. But have people been able to build stuff that yields and is cost effective? Right now, we’re at 90 nanometers. What we don’t know is at what point will it not be cost effective. We can develop new materials and there is enough circumstantial evidence that it will be possible to build out another two or three generations. But can you do that without more than a two times investment every time? Electronic News: How important is that 2x number? Stork: When your gas bill increases two times, you don’t worry about it. When the bill for your car goes up two times, you think about it. But when your house goes up two times, you can’t afford it. Now we’re dealing with the house. Electronic News: But won’t this be like other generations of chips where the costs eventually were taken out? Stork: We’re seeing a lot of reaction throughout the entire pipeline for chip development. That will take care of a lot of it, but maybe not enough. People are less worried about the cost of the fab because no one starts a fab and builds it all the way through right away. There are other factors. How much capital do you need to put in for 1,000 wafers? The price has come up, but not ridiculously so. The cost of development is the same or more. There are new materials, and more defects. But when you look at tools, a single tool set will cost multi-hundred millions of dollars. It’s also more difficult to do explorative things these days. Electronic News: So why rush to the new geometries? Stork: We didn’t. The cost of developing 300mm wafers was extremely high. TI is moving late to 300mm. It was a cost decision. We stayed on 200mm technology until now. Electronic News: Texas Instruments has begun using outside foundries to offset those development costs. How has that affected your business? Stork: With our advanced CMOS, a good percentage -- about 50 percent -- is through foundries. With advanced 130nm, we had that running in eight different fabs around the world. It’s a management nightmare for the operations guys, but it made us very responsive. Things like SARS had very little impact for TI. We use three primary foundries, UMC, TSMC and SMIC. With SMIC, they provide the copper interconnect on the back end only. We build the front end in Dallas, and they build the interconnect in China. The IP is heavily weighted to the front end. This arrangement works surprisingly well. A lot of the SMIC folks are former TIers. Electronic News: Where do you see the biggest growth opportunities for TI? Stork: There are a number of areas. Analog, from a revenue standpoint, is a very strong opportunity. ADI and ST are the big competitors. In the end, the world is analog. You always need to interface with analog, and there will be an opportunity to get into more business on the digital side. I also believe that the broadband market will shake out, and those who are left standing will enjoy a solid market. The same is true of digital TV, which drags along memory, processors, signal processing and analog. We are poised to take advantage of HDTV. Cell phones also will continue to grow. The sophistication is increasing, but for 3G to become successful it has to drop in price. Electronic News: There seems to be a lot of convergence in the communications space, but there also are a lot of conflicting standards. Stork: There needs to be seamless communication between various modes of communication. That involves application software, interfaces, architecture, circuit design and process technology. You can cut across those areas with product design and architecture very effectively, but when you step over to software it’s not as smooth, especially when it comes to broadband and wireless handsets. In the consumer market, you have a maximum amount of integration to make it small, reliable and relatively cheap. Electronic News: Will it all fit on one chip? Stork: Not necessarily. With processors, we’re starting to see multiple cores on die, with parallelism so you can have identical functions. The performance and power equation is there. We have difficulty in scaling CMOS because of issues of power consumption and leakage. Power dissipation drove the cost up so high that it’s sometimes better with slower technology. It’s the same as the airplane model. The 747 and the Concorde were designed at the same time, but the Concorde no longer exists. Electronic News: Does that mean TI will begin working more with other companies? Stork: We will be forced to. TI used to do everything itself. That is shifting.