There was an informative little Q&A exchange at the MEDEA+ Forum last week.
Dr Ulrich Schaefer of Bosch was asked why the car manufacturers didn’t make upgradeable electronics like the PC makers do.
“You have to change the car to get upgraded electronics’ complained the questioner.
Schaefer replied: “I would not like to answer this question. It concerns our customers”.
By ‘customers’ I don’t think Schaefer meant you and I.
MEDEA+, the European microelectronics R&D initiative, has a tricky dilemma. As an organization which works on R&D which is four to five years away from the market, it has to make a judgment about when nanotechnology will become commercially feasible in relation to electronics.
In the case of nanotechnology, i.e. manipulating material at the atomic or molecular level, MEDEA, has to try and do better than the Americans who appear to have jumped in too early.
In his book, Merchants of Debt: KKR and the mortgaging of American business, George Anders tells the story of how Kohlberg Kravis and Roberts (KKR) invented the private equity company buy-out industry and loaded up corporate America with debt via highly leveraged deals which took public companies private.
Some of the companies prospered, more often they did not. In almost every case the dealmakers made a nice return.
Sitting on a panel in front of 350 technologists at the MEDEA+ Forum in Monte Carlo, I was suddenly asked a question of which I had less than five minutes notice.
The question was: should pan-European R&D programmes, like MEDEA+, invite participants from other regions like China, the USA and Korea.
Thinking fast I stumbled out with the view that it might be useful to invite the USA but, seeing that neither China nor Korea had a university rated among the top 200 universities in the world, their participation was probably not going to add a lot.
The truth is that Europe and the USA are level-pegging in microelectronics R&D these days with the rest of the world lagging.
IMEC and the Albany cluster are neck-and-neck on EUV (with Japan a year behind, and they are much-of-a-muchness on 45nm.
Some would say IMEC has the advantage in terms of having a more catholic input of view, while Albany is dominated by IBM, but Albany can probably out-gun IMEC in the scale of its finance.
The opening afternoon of the 2006 MEDEA+ Forum, the best attended forum ever, took place on a warm, sunny, shirt-sleevey sort of day, and ended with a slap-up meal at Monte Carlo’s poshest hotel, the Hotel de Paris.
A word of warning. If you’re ever having rack of lamb at the Hotel de Paris, don’t bother to ask for mint sauce. They haven’t got any.
Royal openings are common in the microelectronics business, so a royal opening of the MEDEA+ annual forum covering the year’s achievements in pan-European microelectronics research, was no surprise.
The royal in question was His Serene Highness Prince Albert of Monaco, and a touch of serenity is exactly what the industry needs at the moment what with talk of over-capacity, over-inventory and slipping demand.
HSH is following a noble European tradition of royal openings. Queen Elizabeth II opened no less than three fabs, those of NEC, Fujitsu and Siemens. Not that it did those three companies much good, none of them own the fabs now.
The King and Queen of Spain opened AT&T’s fab outside Madrid some years ago, before AT&T exited from the microelectronics business. The Prince of Orange opened a Philips fab which is still going under Philips ownership – clearly an exception to the ill-omened royal opening norm.
Where a royal can’t do the biz, a President or Prime Minster can do quite well. Prime Minister John Major of the UK presided over two microelectronics openings, NEC’s second fab at Livingston and the ground-breaking of LG’s proposed fab in Wales. The first closed, the second was never built.
Clearly Prime Ministers have no better a record in opening fabs than Royals.
President Jacques Chirac of France opened Crolles Fab 2 and, since then, two of the three Crolles partners, Philips and Freescale, have been taken over by private equity funds.
Maybe it would be better to get a performing seal.
Democratisation should figure strongly in business plans for high-tech start-up companies.
Ted Hoff, who invented the microprocessor at Intel in 1971, said that its significance was that it democratised the computer.
And it did. In the 1970s only banks, governments, universities, research institutes and companies could afford computers. Now everyone can.
So it was interesting to hear, at the recent Silicon South-West meeting, the Co-Founder and Chief Technology Officer of Cambridge Silicon Radio, James Collier, say that one of the ambitions they had when they set up CSR was to “democratise the wireless industry”.
"We were fed up with PTT-funded companies monopolising wireless equipment like Ericsson and Motorola," said Collier.
CSR’s contribution to democratisation was to become world leader in Bluetooth chips using open standards which anyone could access.
What’s the next candidate for democratisation? Obviously telecommunications needs more democratisation if obscure payment plans, roaming charge rip-offs and dodgy networks are ever to be things of the past.
And VOIP over WiFi is one route towards getting to free wireless telephony for everyone.
Which happens to be CSR’s latest area of interest with a WiFi-on-a-single-chip which is low-powered enough to give a VOIP/WiFi phone 20 hours talk-time and 400 hours standby with a $20 BOM.
Good luck CSR, may the chip bring nearer the prospect of free wireless telephony.
Also ripe for democratisation is the consumer electronics industry.
Look at the proprietary consumer products foisted upon us by the consumer giants. Take Sony, which not only has a proprietary memory stick, but keeps bringing out different versions of its proprietary memory stick so that you can't use a stick from one product in another product.
That ensures you keep buying new generations of the memory stick for every Sony product you have.
It’s such a b.minded approach that it encourages me to resist the succulence of Sony products and buy stuff which uses SD cards and standard USB sticks.
Bumped into Rodger Sykes last week. The former President and CEO of parallel processing specialists Picochip, and the co-founder and CEO of powerline start-up SiConnect, is President and CEO of MMIC solutions based in Malvern.
He said that everything he told me about MMIC solutions was off the record, but the web-site for the company gives a flavour.
‘The focus of MMIC solutions activity is advanced mm wave chip sets and modules for frequencies ranging from 35GHz to 110GHz. . . . . . . . . .MMIC solutions technology massively reduces development and manufacturing costs to finally bring these frequencies into commercial exploitation.’
Sykes sees the revolution in the UK electronics industry in the last 25 years, which has seen the disappearance of the large companies like GEC, Ferranti, STC, Plessey, Thorn and Marconi, as being very positive for the start up scene in terms of making engineers willing to risk working for start-ups.
In the old days it was almost impossible getting an engineer to leave one of the big companies to join a start-up.
Now the UK attitude is much more Silicon Valley though, on the Continent, things haven’t changed so much.
Hermann Hauser, founder of Acorn Computers and Amadeus Capital Ventures, describes the contrast this way: In Germany, if you’re an engineer working for Siemens and say you’re going to join a start-up, your girl-friend will ditch you; in California, your girl-friend will ditch you if you’re an engineer with a big company and turn down the opportunity to join a start-up..
Oh, by the way, watch out for MMIC solutions in Q1 2007. The first product could be coming out around about then.
An excellent question was asked at the Silicon South-West meeting last week.
“How many people have got a Bluetooth pairing to work which wasn’t a pairing between an earpiece and a mobile phone?” asked Peter Gardner, technology sector head for wireless communications at 3i, the venture capital house.
Out of the audience of a hundred people involved in the wireless industry, one of which was the CTO of the No.1 Bluetooth player CSR, only five put up their hands, and Gardner seemed surprised it was as many as that.
One of the odd things about life today is that people are so afraid of being thought to be technologically incompetent that they’d rather admit to having a sexually transmitted disease than that they can’t get a consumer electronics product to work.
If only people spoke up more often about the difficulties of getting stuff to work, then manufacturers would be pressured to make products more straightforward, and people like me would stop feeling so ruddy inadequate.
The Freescale acquisition gets curiouser and curiouser. First there was the $17bn+ value put on it compared to the $11bn valuation put on NXP – both similar-sized companies.
This was partly explained at the time by saying that the new owners would get rid of fab costs. But with Freescale fabbing 80 per cent of its chips internally, this can’t be done quickly.
Another part of the explanation for the valuation was that they’d bought Freescale at the bottom of the semiconductor cycle. No one else thinks it’s the bottom of the semiconductor cycle.
Then came the loading up of Freescale with vast amounts of debt. The companies’ customers are already worried if the company whether Freescale will be able to afford the interest payments. Freescale generates $1bn of cash a year, but how much of that will be needed to service $7bn+ of debt? Maybe most of it.
Then, bizarrely, two months after the annoucement of the deal, it appears that the management haven’t been engaged by the new owners to run the company yet.
There is little to be gleaned from the private equity fund owners about their intentions. They like to stress their privacy.
So everyone remains in the dark, customers, suppliers, management, and even Her Majesty’s Press.
Can this new bunch of FPGA start-ups succeed where so many have failed? Not if you believe the Big Boys.
What the start-ups like Achronix, Cswitch, Mathstar, Velogix etc have in common is they are targeting the high-performance end of the FPGA market.
“If there is a market for very high speed designs, I’d like to know about it. High speed is a small percentage of total sales,” says Wim Roelandts, CEO of Xilinx which currently has a 53 per cent market share in FPGA and therefore has something considerable to protect.
“There is no third party place and route software”, says Roelandts who helpfully points out: “The place and route software at Xilinx runs to 20m lines of code.”
Yousef Khalilollahi of Achronix, recognizes that: “We need to develop that” and adds: “Having a familiar architecture like ours allows you to buy existing place and route tools, and modify them to fit the architecture.”
Another problem for the start-ups is obtaining IP. “Half of a Virtex 5 is an ASIC, and half is an FPGA, it’s no longer just silicon”, points out Roelandts.
Khalilollahi responds: “IP vendors have to modify ASIC IP for current FPGAs because current FPGA performance is so much worse than ASIC performance, but our performance meets and exceeds ASIC performance, so we don’t burden them with the need to modify their IP. You just plug in the ASIC RTL code.”
A third problem for the start-ups is process. . “None of them is shipping 65nm but, by the time they are out with 65nm, we’ll be out with 45nm,” said Roelandts.
A more comprehensive demolition of the FPGA start-ups ambitions comes from John East, CEO of Actel: “Getting into the programmable logic business now means you’re going to be 20 years behind the leaders,” he says “no matter how many engineers you have, you still don’t have 20 years of experience, 20 years of orders, and 20 years of understanding what’s good and what’s not good.”
There is, of course, a long list of Johnny-come-latelys which tried and failed: Intel, Toshiba, Texas Instruments, IBM, Motorola (now Freescale), NEC, Philips (now NXP), AMD, Agere.
It has often occurred to me that the people who design electronic consumer goods must be players of electronics games.
When you buy any electronics product, the excitement of unwrapping it is almost immediately followed by the heart-sinking realisation of what you need to do to get it to work.
This is the doing of the gamers. When they’re gaming they’re used to overcoming problems, seeing their way around riddles and mysteries, solving conundrums and finding clues as they progress along in their game.
So when it comes to designing electronics goods the gamers adopt the same mentality.
If you, the purchaser, can surmount all the tests and trials the designer puts in front of you, if you can correctly understand and interpret the obscurely worded instructions and correctly act upon them, if you religiously and precisely follow the interminable rigmarole of steps you’re obliged to follow then, Hey Presto, you’re actually allowed to use the product you’ve handed over your hard-earned wonga to buy.
A punchy piece in EETimes regrets the lack of Q&A at the Electronica CEO Forum.
This could well be because of the current insecurities of the CEOs of NXP and Freescale. It seems that Freescale’s CEO has not even got a contract from the new owners.
NXP’s CEO didn’t have an agreement settled with the new owners at the time of the press conference.
These CEOs may well be in a contractual limbo, controlled by groups of super-secret financial types who could easily parachute in an entire new management team if they took it upon themselves to dislike the cut of the CEO’s jib.
Possibly a sign of things to come. As the faceless money men move in on the industry, the ability of execs to speak their minds may well reduce.
As for the sudden no-show of STMicroelectronics’ CEO Carlo Bozotti, this probably wasn’t such a loss to the Forum.
Just as the Popes used to be named ‘the Good’ or ‘the Magnificent’, Bozotti should be dubbed ‘the Speechless.’ Questions don’t usually get answered very fully.
I have to say I love the sound of Xg Technology whose shares started trading in London today.
Xg boasts an outrageously ambitious technology with the potential to wipe out the established wireless telecommunications industry and provide free, or almost free, telephony for everyone.
It’s like the promise of the PC to ‘democratise the computer industry’. And the PC did just that, wiping out a raft of huge computer companies like Burroughs, Wang, DEC, etc.
XMAX, the name for Xq’s technology, claimed to be able to build a pan-US VOIP wireless network for just $15m. Wow!
However not everything was good about Xg. Requests to talk to senior management were refused. The workings of the technology were never explained. Previous ventures by the founders had ended messily.
Today, Xg’s shares started started trading on the London AIM stock exchange after an inauspicious roadshow.
They’d come to London hoping to raise £30m which would have valued the company at £400m, and in fact raised nothing. During the road show of potential investors, the company learned that there was no interest in investing at that level.
But they got their listing, and some of their seed investors sold their shares at $4.50 a pop and that put a value of $287m on the company.
Nonetheless potential investors gave the company non-binding expressions of interest in buying £63m worth of convertible preference shares.
I like the sound of Xq because it’s claiming to be able to do something so totally revolutionary in an age when all the new companies seem to offer only incremental improvements to what is currently on offer.
But now I can actually buy shares in the company, would I do so? Would you? OK, it sounds too good to be true, and that means it usually is.
But Intel set out to reduce the cost of computer memory by 100X. That sounded too good to be true. But they did it.
Electronica success
The show had 78,000 visitors which is an excellent result. Anything above 70,000 is good. This year’s total beat the 75,000 of 2004 and is the highest ever.
So Electronica is showing no signs of the fate which has overtaken so many of the great electronics shows. It is not declining. That’s an excellent thing. It means the industry has at least one, unspecialized, unfocussed event where everyone goes to meet suppliers, customers, rivals, and colleagues.
At last I see the ‘naked lady of Halle A6’ who I’d missed in Munich. In fact there were two of them which hadn’t realised before. Thanks to Matthew for sending me a video-link.
If there’s still no one who’s seen the talking point of Electronica 2006, then here’s the link:
http://video.yahoo.com/video/play?&ei=UTF-8&gid=g_20467ff00bc003b3ba1ef3e7ead0048e.20467ff00bc003b3ba1ef3e7ead0048e&vid=20467ff00bc003b3ba1ef3e7ead0048e.1222653&b=1
My apologies to Green Hills whose stand I had previously thought they were on. In fact they graced the Congatech stand.
Stock Options
Rule number one on meeting CEOs and the like: the greater the gravitas, the dodgier the business practices.
Remember the remark: “The more he talked of his principles, the faster I counted the teaspoons.”
Before we’ve got bored with CEOs moaning about how unfair Sarbanes-Oxley is to them, we find they’ve been fiddling the dates of their stock options. And it gets worse.
They’ve not only been fiddling the dates the stock options were granted, so as to maximize the increase in their value, but they’ve also been also fiddling the date the option was exercised, to minimize the tax liability.
High-tech US companies have, reportedly, set aside over $5bn to cover potential liabilities.
For some people the good times have been rolling again before the ink is dry on the regulations designed to curb the excesses of the last boom.
That was a much more exotic boom. One will never forget the birthday party for the wife of Tyco’s CEO, Dennis Kozlowski, where a life-sized statue in ice of Michelangelo’s David had neat vodka running out of its penis.
The party, it transpired later, cost $2m and half of that was charged to Tyco as ‘Chairman’s Meeting’.
It’s a grand, if vulgar, life for some.
People at Electronica reacted warmly to the fears about the private equity funds expressed by Xilinx CEO Wim Roelandts who dubbed them get-rich-quick schemes for a few individuals at the expense of companies’ long-term strategies.
“Wim’s saying what everyone else is thinking”, is a typical response.
The takeover of NXP and Freescale by these funds has sent ripples of fear through the industry’s customers and managers.
The fear was evident at the Electronica Forum where two CEOs who have had their companies bought by these funds, Frans van Houten of NXP and Michel Mayer of Freescale, defended the funds to a standing-room only audience.
Linear Tech’s CEO, Lothar Maier, meeting customers on the Linear stand, said that a lot of customers have been asking him about it because Linear Tech is often mentioned as a potential buy-out candidate, and its customers are worried that they won’t get the same level of support as they do now, from a company which could be run only to meet the financial targets of a small group of investors.
Managements are worried because they see their companies being destroyed by a rush for excessive short-term profitability at the expense of long-term sustainability.
Talking to executives at the companies which have been taken over suggests that they are being fed the message that it’s business as usual. No significant changes are planned.
But at one of the bought-out companies, Freescale, it appears that none of the management have been formally engaged to run the company after the buy-out which was announced two months ago.
Meanwhile Freescale’s customers are anxiously seeking reassurances about future strategy from managers which don’t know if they are part of that strategy.
There is the fear that the private equity funds will parachute in their own top managers with orders to slash R&D, burn investment plans, sell-off business units and dump long-term strategy to maximise short-term profitability.
Adding to the general misery is the secretiveness of the private equity fund which insist that they are ‘private’ and apparently regard themselves as answerable only to their investors.
And who are the investors? Rich guys who simply want to get richer.
Why has Electronica stayed so large when other electronics industry trade shows withered? After a long chat with Suneil Parulekar of National Semiconductor we came to the conclusion that everyone comes to Electronica because everyone comes to Electronica.
You can meet a supplier, a customer, a partner or a rival because Electronica encompasses the whole electronics food chain from components to sub-systems to systems.
Having said that, some people noticed a drop in numbers. The queues for restaurants in the Messe were no as long as in previous years.
Hopefully the final figures will show no decrease. In an Internet-centric world the pleasure of the unexpected encounter with old friends and colleagues and old-fashioned interactions over beer and bratwurst make Electronica something to be treasured.
The turnstiles at Electronica, of which there are many, have the annoying habit of prodding your backside as you go through as if to say: 'On your way, sunshine'.
It's silly to get paranoid about an inanimate object but one can still get prickly thinking about the schadenfreude of the designer as he built this in.
Now, on Electronica's second day, I have devised a way of avoiding this boot up the bum by performing a forward pelvic thrust as I insert my access card into the turnstiles reader.
Now I'm paranoid about looking rather silly as I go through the turnstiles but I feel it's a small victory.
The other depressing thing about today is that I still haven't seen the 'naked woman of HalleA6'.
Everyone on the train home was talking about her. She's reputed to be a barmaid from the Hofbrauhaus which means she won't be a fragile little thing. An ST exec told me she was on the GreenHills stand but she wasn't when I (very surreptitiously) looked
One CEO who won’t be entertaining the private equity guys is Wim Roelandts, CEO of Xilinx.
After private equity companies bought both NXP and Freescale in deals worth $11bn and $17bn respectively, it seems that the semiconductor industry has become a target of these people. But Roelandts will be strongly resisting that fate for Xilinx.
“Private equity buy-outs are a scheme for a few people to get rich quickly”, says Roelandts, “they’re not looking at the strategic direction of a company. They buy a company, leverage the hell out of it, sell bits and pieces, cut the R&D spending and go public to get their money back.”
“Whatever they say about returning value to the shareholders, what they’re really doing is putting value into their own pockets.”
“I could make Xilinx very profitable by cutting out the R&D and it would have no effect on the company for a couple of years”, said Roelandts.
Why does he think these people are targeting chip companies? “First they have a herd mentality, like VCs”, replies Roelandts, “second, a lot of people see semiconductors as a more mature industry. I think they’re wrong. I think there are still upcycles and downcycles and if you have a downcycle in the semiconductor industry, these investments are going to look very foolish.”
The private equity purchasers of NXP and Freescale are claiming that they made their acquisitions at the bottom of the cycle. Roelandts disagrees: “If anything we are probably at the top of the cycle”, he says, “people are talking about a downturn in 2007/2008.”
If you see a ruddy-faced Bavarian going into a business meeting at 10 am with a massive glass of cloudy yellow beer in his hands, then you know it’s Electronica.
So many of Europe’s trade shows have declined or died, but Electronica has stayed huge.
“I don’t know if much business gets done there”, says an executive who has been to every Electronica for 30 years, “but it’s a terrific party.”
As everyone who made the journey to the World Cup Finals found out, Germans know how to throw a party, and whether much business is done, or not, everyone comes back from an Electronica with a good appreciation about what is going on in the industry, who is doing it, and what their friends are up to.
Unfortunate Electronica remark: at a Silicon Valley meeting in October between a group of European hacks and a US company, the CEO signed off with a cheery: “Come and see us at Electronica. We’ll have a barrel of beer on the stand”.
“American beer or German beer” asked a hack.
At this, up jumps the company’s PR officer: “Why should that make any difference?” she asked sharply.
Amid the hacks’ stunned silence, the CEO could just be heard shushing his patriotic, but obviously non-beer-savvy, PR specialist.
Against all the odds, a rash of new FPGA start-ups have appeared, among them Achronix, C-Switch, MathStar and Velogix.
Why is it against the odds? Four reasons:
The 25 year-old FPGA market is seen as settled into a two-horse affair with Altera and Xilinx owning over 80 per cent of the market and their much smaller rivals Actel, Lattice and Quicklogic with single figure market shares.
It is too expensive for a start-up to develop the tools.
No one will develop IP for start-ups’ architectures.
Everyone else who’s tried FPGA has failed including Intel, Toshiba, Texas Instruments, IBM, Motorola (now Freescale), NEC, Philips (now NXP), AMD, Agere.
“Getting into the programmable logic business now means you’re going to be 20 years behind the leaders,” says John East, CEO of Actel, “no matter how many engineers you have, you still don’t have 20 years of experience, 20 years of orders, and 20 years of understanding what’s good and what’s not good.”
Nonetheless, the newcomers are here. “There’s more FPGA start-ups now than there’s been in decades because of the market fragmentation”, says Andy Haines of Synplicity which develops design and verification tools for FPGAs
“We’ve had conversations with a number of FPGA start-ups which are all in stealth mode. There’s a lot bubbling under the surface”, says Jim Tully of analysts Gartner Dataquest.
The market fragmentation referred to by Andy Haines, occurred because of the power density ceiling imposed by the physical limitations of 65nm processing.
These limitations encouraged Xilinx and Altera to adopt different product variations for their Virtex-5 and Stratix-3 product families, with each variation optimised for particular application areas e.g. low power or high performance, rather than having a one-size-fits-all FPGA family at each node.
That’s why the start-ups have mostly gone for high-performance FPGAs. Achronix has an FPGA which runs at 2GHz on 90nm, four to five times faster than Xilinx’s fastest part; MathStar, has a product it calls FPOA (Field Programmable Object Arrays) running at up to 1GHz; C-Switch is targeting telecoms applications and Velogix is also targeting high performance FPGA.
They seem to have one thing in common, they believe that FGA is a silicon play, not a software play.
When Rahul Sud, the founding CEO of Lattice Semiconductor, tried to get STMicroelectronics into the FPGA business with a product called GOSPL, he would say: “What are the three priorities in the real estate business? Location, location, location; what are the three priorities in FPGA? Software, software and software”.
While that remained the case, the established companies, with a couple of decades each of de-bugged, tried and tested software behind them, had a significant advantage over any upstarts.
Now, the upstarts reckon that the market fragmentation, combined with available third party commercial software gives them their opportunity.
For synthesis, Yousef Khalilollahi of Achronix reckons there is enough commercially available third party software. “Our plan is to have a very familiar architecture so the design can map to the silicon as if mapping to existing architectures which have been in the market for a long time. So long as you’re not innovating on architecture you can plug into existing tools, and people want to plug into existing tools”, says Khalilollahi.
“For place and route, the tools have to come from us”, says Khalilollahi, “we need to develop that, and put it in the hands of customers. Having a familiar architecture allows you to buy existing place and route tools, and modify them to fit the architecture, so long as the architecture is not so much out of whack with existing architectures.”
Getting IP for the Achronix cores will not be a problem, reckons the company, because ASIC IP will fit Achronix FPGAs.
“IP vendors have to modify ASIC IP for current FPGAs because current FPGA performance is so much worse than ASIC performance,” says Khalilollahi, “but our performance meets and exceeds ASIC performance, so we don’t burden them with the need to modify their IP. You just plug in the ASIC RTL code.”
If Achronix and the other start-ups succeed in demonstrating that there is enough commercially available FPGA design and place and route software available to allow FPGA start-ups to succeed, then the FPGA business could become a more silicon-centric rather than the software-centric business as it is today.
And that would hugely help the customers of the FPGA industry. If FPGAs become a silicon play, then the focus of the FPGA industry would be on architectural innovation.
The best chip would win, and it would be subject to Moore’s Law pricing.
We might have less power hungry and cheaper FPGAs. How good would that be?
Potholes are high on the priority-list for Silicon Valley executives now that the revenues are beginning to flow again, jobs are less insecure and bonuses are creeping up.
Being driven through Silicon Valley in a Porsche last month, I was surprised to hear the driver, a senior executive at one of the Valley’s most profitable companies, continually complaining about the potholes.
Pot holes? A bit third worldy? Hardly appropriate to an area (once) held up as "the greatest agglomeration of wealth in the history of the planet” (Kleiner Perkins). Well, apparently, it’s all too horribly true, and it’s going to get worse.
According to the Bay Area's Metropolitan Transportation Commission it is going to cost $20bn over the next 25 years to fix the Valley’s potholes, but less than half that amount is going to be made available to fund it.
A case of ‘private affluence and public squalor’, as JK Galbraith once said.
So spare a tear for the Valley’s execs as they ride the current upswing and the new sets of fancy wheels its allows them to acquire. So many Porsches; so many expensively trashed suspensions.
When your boss says: ‘Here’s your Blackberry’ do you:
a) Blush with pleasure and mumble your thanks?
b) Wonder if you’ll be able to work it?
c) Ask for a pay-rise?
The right answer is c).
‘Here’s your Blackberry’ really means: ‘Your customers can now reach you 24/7’.
Instead of working a 40 hour week you’re now on-call 168 hours a week. That deserves a mega pay-raise
In the Wild West days of the semiconductor industry, you’d get fifteen manufacturers investing in enough capacity to each achieve fifteen per cent market share in a particular product area, and think nothing of it.
If, they argued, the resultant over-capacity resulted in driving down prices, then that would work to expand the market. The thinking was that, as prices fell, new applications were found for the chips, so the market grew, so the over-capacity got absorbed, and everyone went away happy.
It hasn’t quite worked like that for sometime as end markets have become saturated, and fewer suppliers has meant there is more control over end prices.
However, with NAND flash, there is, once again, a feeling that this is a product with such infinite promise, such wide potential application and with such a rapid current ability to scale, that it’s worth building apparently massive over-capacity.
After all, non-volatile chip storage is so much more attractive a proposition than disc storage, bringing with it visions of totally solid state, lightweight, instant-on, low power, laptops, tiny camcorders with hours of storage, massive USB dives to store video, computer-like storage capabilities for mobile phones and the like.
These, it is hoped, will be the sort of new applications for NAND flash memory which will be driven by a substantial price fall.
On the capacity side, the build-up is awesome. The Intel/Micron joint venture, IM Flash, is currently bringing up three 300mm fabs for NAND flash at Utah, Virginia and Boise, Idaho. It says it will start building a new fab next year in Singapore and will add others, on a yearly basis, thereafter.
The STMicroelectronics/Hynix joint venture NAND fab in Wuxi, China produces its first wafers this quarter; the new SanDisk/Toshiba fab plans to kick off with 2,500 wafers a month next year; SMIC the Chinese foundry, has started sampling NAND flash, while Samsung remorselessly pursues its $33bn fab-building plan to build eight 300mm fabs between 2005 and 2011.
A wild card in the NAND line-up is Spansion which has announced it is producing a 4-bit-per-cell NAND memory based on the NROM technology it licenses from the Israeli firm Saifun.
Spansion is reluctant to disclose its plans, performance specs, reliability and manufacturing yield for the technology, which it calls Quad-Bit.
“I’m sceptical.”, says Joe Unsworth, principal analyst at Gartner Dataquest, “you have to give Spansion some credit for achieving better output than any of the other licensees of Saifun’s NROM technology. But can they get it into volume production with decent performance and reliability? If they can only do it in 90nm, then who cares, with the rest of the NAND flash industry on 50nm and 60nm?”
Obviously 50nm 2-bits-per-cell is going to be just as dense and just as cheap as 90nm 4bits-per-cell with, very likely, better read and write speeds.
With or without Spansion, the capacity being put on in the NAND business is worrying a lot of people.
“It’s very concerning that pricing is down 66 per cent this year and folks are still adding massive amounts of capacity. We think this could impact both the DRAM and the flash businesses”, says Unsworth.
Intel’s diversification into NAND flash is going to be interesting. It says it’s bringing up its first part, a 4Gbit memory, in three different 300mm fabs and is currently outputting samples. That sounds like a triple-risk, triple-expensive sledgehammer to crack a nut.
Intel says it will add a new fab every year for NAND, which seems excessive when Samsung, Sandisk/Toshiba and STMicroelectronics/SanDisk are all either building or bringing up 300mm fabs for NAND flash, when prices fell over 60 per cent this year and when analysts predict further price erosion next year.
“There’s going to be an almighty collapse in the NAND market”, says Andrew Norwood, senior analyst at Gartner Dataquest.
It will also be interesting in the light of Intel’s previous failures at diversification i.e: two attempts at consumer electronics; two attempts at ASICs, and one attempt each at video-conferencing, programmable logic and chips for mobile phones.
Intel has developed in quite distinct phases. Under Noyce and Moore it was the most admired chip company; under Grove it became the most feared; under Barrett, it diversified; under Otellini, it appears to be faltering, if this year is any measure of what is to come.
In April it forecast a Q2 sales decline - its first forecast of a quarterly decline in five years. In June, it said profits could fall 23 per cent this year and it sold its mobile phone chip division to Marvell for $600m.
In July, Intel made four announcements: a 57 per cent drop in Q2 profits; the lay-off of 1,000 managers; that it might not make its four year forecast; a 21 per cent rise in unsold chips.
In August Intel sold its media and signalling business. In September, 10,500 lay-offs were announced. In October the Q3 results saw revenues grow by 9 per cent, but margins and prices slip. Inventory reached $4.5bn.
Of all these moves, the most depressing for Intel was its withdrawal from the mobile communications market.
It was a major attempt at diversification followed by Intel’s realisation that it couldn’t hack it.
To many people the reason was obvious. Intel’s behaviour in the PC market means that other markets are barred to it.
“The mere fact of Intel’s domination of PC markets is why doors are closed to Intel when it looks elsewhere”, says Jim Tully, vice president at Gartner Dataquest, “people are very nervous about letting Intel extend its reach into other areas.”
“The Wintel experience left people very wary”, agrees Malcolm Penn, CEO of UK analysts Future Horizons, “it’s hard to see how that could ever be allowed to happen again.”
“The whole cellphone industry is paranoid about the Wintel thing,” concurs Stephen Entwistle, vice president at Strategy Analytics.
Meanwhile, heavyweight telecoms chips suppliers like NEC, Qualcomm, Texas Instruments, Freescale, STMicroelectronics, Infineon, Renesas and Agere were strong enough to see off Intel.
This is bad news for Intel. If it can’t diversify, it is stuck in the fast-commoditising PC industry with an increasingly feisty and effective competitor.
Thank God for Blair. Not Tony, Eric. In a world where fuzzy words are dreamed up to hide dirty practices, Eric’s nom de plume George Orwell gave us a template for the perversion of language.
‘Extraordinary rendition’ was one of Washington’s linguistic perversions, dreamed up to hide ‘extraditing for torture’.
Out of the HP shenanigans has emerged another. We all know it’s wrong to ring up an organization and pretend to be someone else in order to extract confidential information.
But two US lawyers advised HP executives that such a practice is legal.
Instead of calling it ‘obtaining confidential information by false pretence’, the lawyers called it ‘pre-texting’.
That Washington and Westminster have succumbed to Orwellianism is sad, but not unexpected when politicians are often adrift from reality.
It’s a lot sadder to see a great engineering company like HP adopt Newspeak.
Paranoia corner
Has anyone else come across the phenomenon that, where there’s a paid WiFi connection, the free connections don’t work?
Going through San Jose airport in October, there were about half a dozen network providers, one of which was free. I connected to all the others in turn but was unable to get onto the Web.
Connect up to the paid network and, hey presto, I was able to access anything I wanted..
I’ve noticed the same phenomenon at Munich and other European airports. There are some free networks, you can connect to them, but they don’t then connect you to the Web. Have the pay-for guys somehow managed to scupper the free networks?
The situation is quite different at some airports like the Phoenix Skyport and Budapest where free WiFi is ubiquitous and, as soon as you switch on your laptop, the connected signal is blinking away.
The great hope for WiFi was that it would become the ‘Peoples’ Telephony’ with local authorities, libraries, airports, museums, publicly-minded commercial corporations, hotels, bookshops, cafes etc etc providing the service for free.
Pity if it gets wrapped up into a cellular add-on service.
Convergence is a lovely idea for the chip industry but a poor idea for consumers.
The two best-selling products of the last few years have been the Blackberry and the iPod, both, effectively, single-purpose devices. One a mobile email terminal; the other a mobile music player. Both flying in the face of the contemporary mantra of convergence.
For the chip industry, convergence is a lovely idea because it fits in so well with what the chip industry does best i.e. adding more functions to the same sized piece of silicon for the same cost under the Moore’s Law principle.
But one remembers Gordon Moore expressing his disappointment at the lack of appreciation of convergence by consumers when, some 30 years ago, Intel went into the digital watch business.
“We thought the digital watch would become part of an electronic system which would grow”, said Moore. It didn’t.
Two decades later, the mobile phone industry, despite many efforts to add functionality, has managed only to make camera functions ubiquitous on handsets.
People only wanted digital watches to tell the time. They only want mobile phones to make phone conversations. They want a Blackberry only to send and receive emails. And an iPod to store and play music.
As the October Update of the Future Horizons monthly report points out that:
"The market is favouring low-end phones and the supply chain vice versa."
The report goes on to complain:
"Today's high-end phones are simply too difficult to use and overly complex to operate. By our reckoning an awful lot of people who bought 3G handsets experienced a high degree of user frustration for very little (if any) benefit."
Convergence is a chip industry pipedream. Consumers want it simple.
Seeing the other guy screw up is always a pleasure so it was good last week to see the truly awful state of the US wireless telephone network in Arizona.
Whether you got to finish your call was problematical. Much of the time there was no coverage at all. The networks are grim in Europe. In Arizona they’re 3X grimmer. Arizona’s big, but it’s in the world’s richest country. It can afford a decent wireless network.
“I am amazed that they (network operators in general) get by with such a poor quality of service,” says Michel Mayer, CEO of Freescale Semiconductor, “it’s difficult to imagine video to the phone when so many voice calls lose their connection.”
But fly for a couple of hours Westward from the dropped calls of Arizona and you find the boys of Silicon Valley happily designing chips and technologies for sending video over the mobile networks.
Is anyone really going to watch TV on their mobile phone? Those little TVs from Casio have been on shop shelves for 30 years but they haven’t exactly taken the world by storm.
Although Freescale is the dominant supplier of DVB-H RF tuners, Sandeep Chennakeshu, senior vice president of the wireless and mobile systems group, says “I really find it difficult to believe I’ll watch TV on a little screen. But the behaviour of the younger generation is so very different.”
If the networks were robust, and if mobile phones had a roll-out screen stretching to six inches on the diagonal, then TV to the handset has a chance.
But the world’s laboratories have given up speculating on when the roll-able screen will be with us. And the record of the operators in investing in their networks is such that few people expect the networks to become robust anytime soon.
The teenagers may take a different view.
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