EC publishes decision concerning Intel's abuse of dominant position

EUROPE: The European Commission has today published a non-confidential version of its Intel Decision, adopted on 13 May 2009 ( IP/09/745 and MEMO/09/235 ), together with a summary of the key elements of the Decision.

That Decision found that Intel broke EC Treaty antitrust rules (Article 82) by engaging in two types of illegal practice to exclude competitors from the market for computer chips called x86 central processing units (CPUs). These practices harmed consumers throughout the EEA.

By undermining its competitors’ ability to compete on the merits of their products, Intel’s actions undermined competition, reduced consumer choice and hindered innovation. On the basis of a significant amount of contemporaneous evidence and company statements, the Decision demonstrates how Intel broke the law.

Intel abused its dominant position in the x86 CPU market by implementing a series of conditional rebates to computer manufacturers and to a European retailer and by taking other measures aimed at preventing or delaying the launch of computers based on competing products (so-called 'naked restrictions'). The Commission's Decision outlines specific cases of these conditional rebates and naked restrictions, as well as how Intel sought to conceal its practices and how computer manufacturers and Intel itself recognised the growing threat represented by the products of Intel's main competitor, AMD.

Conditional rebates
The conditional rebates were as follows:

Intel rebates to Dell from December 2002 to December 2005 were conditioned on Dell purchasing exclusively Intel CPUs. For example, in an internal Dell presentation of February 2003, Dell noted that should Dell switch any part of its CPU supplies from Intel to its competitor AMD, Intel retaliation "could be severe and prolonged with impact to all LOBs [Lines of Business]." In a February 2004 e-mail on the consequences of the possible purchase by Dell of AMD CPUs, a Dell executive wrote: "Boss, here's an outline of the framework we discussed with Intel. (…) Intel is ready to send [Intel Senior executive] /[Intel executive] /[Intel executive] to meet with [Dell Senior Executive]/[Dell Senior Executive]/[Dell Executive] . (...) Background: [Intel Senior executive] /[Intel Senior executive] are prepared for [all-out war] if Dell joins the AMD exodus. We get ZERO MCP [name of Intel rebate to Dell] for at least one quarter while Intel 'investigates the details' (...) We'll also have to bite and scratch to even hold 50%, including a commitment to NOT ship in Corporate. If we go in Opti [Dell product series for corporate customers] , they cut it to <20 percent and use the added MCP to compete against us."

Intel rebates to HP from November 2002 to May 2005 were conditioned in particular on HP purchasing no less than 95 percent of its CPU needs for business desktops from Intel (the remaining 5 percent that HP could purchase from AMD was then subject to further restrictive conditions set out below). In this regard, in a submission to the Commission, HP stated that "Intel granted the credits subject to the following unwritten requirements: a) that HP should purchase at least 95 percent of its business desktop system from Intel…". By way of example, in an e-mail written in July 2002 during the negotiation of the rebate agreement between HP and Intel, an HP executive wrote: ""PLEASE DO NOT… communicate to the regions, your team members or AMD that we are constrained to 5 percent AMD by pursuing the Intel agreement."

Intel rebates to NEC during the period ranging from October 2002 to November 2005 were conditioned on NEC purchasing no less than 80 percent of its CPU needs for its desktop and notebook segments from Intel. For example, in a May 2002 e-mail (when the arrangement was concluded), an NEC executive specified that "NEC will (...) increase [worldwide] Intel market share from [...] percent to 80 percent. Intel will give NEC [support] and aggressive [...] price."

Intel rebates to Lenovo during year 2007 were conditioned on Lenovo purchasing its CPU needs for its notebook segment exclusively from Intel. For example, in a December 2006 e-mail, a Lenovo executive stated: "Late last week Lenovo cut a lucrative deal with Intel. As a result of this, we will not be introducing AMD based products in 2007 for our Notebook products".

Intel payments to Media Saturn Holding (MSH), Europe's largest PC retailer, were conditioned on MSH selling exclusively Intel-based PCs from October 2002 to December 2007. For example, in a submission to the Commission, MSH stated: "It was clear to MSH in this regard that the sale of AMD-equipped computers would result at least in a reduction of the amount of Intel's contribution payments per Intel CPU under the contribution agreements (and thus in a reduction of the total payments received from Intel, even if the total volume of Intel-CPUs sold by MSH would have remained the same as in previous periods), although MSH never actually tested the issue with Intel."

Naked restrictions
The naked restrictions uncovered by the Commission were as follows:

Between November 2002 and May 2005, Intel payments to HP were conditioned on HP selling AMD-based business desktops only to small and medium enterprises, only via direct distribution channels (rather than distributors), and on HP postponing the launch of its first AMD-based business desktop in Europe by six months. For example, in an internal September 2004 HP e-mail, an HP executive stated: “You can NOT use the commercial AMD line in the channel in any country, it must be done direct. If you do and we get caught (and we will) the Intel moneys (each month) is gone (they would terminate the deal). The risk is too high."

Intel payments to Acer were conditioned on Acer postponing the launch of an AMD-based notebook from September 2003 to January 2004. For example, in a September 2003 email, an Intel executive reported: "good news just came from [Acer Senior Executive] that Acer decides to drop AMD K8 [notebook product] throughout 2003 around the world. We've been talking with them all the way up to [Intel senior executive] 's […] level recently including [Intel executive] , [Intel senior executive] … and [Intel executive]… . They keep pushing back until today, after the call with [Intel executive] this morning, [Acer Senior Executive] just confirmed that they decide to drop AMD K8 throughout 2003 around the world. [Acer Senior Executive] has got this direction from [Acer Senior Executive] as well and will follow through in EMEA [Europe Middle East and Africa region]".

Intel payments to Lenovo were linked to or conditioned on Lenovo postponing the launch of AMD-based notebooks from June 2006 to the end of 2006. For example, in a June 2006 e-mail, a Lenovo executive reported that: "[two Lenovo executives] had a dinner with [an Intel executive] tonight (…). […] When we asked Intel what level of support we will get on NB [notebook] in next quarter, [he] told us (…) the deal is base[d] [sic] on our assumption to not launch AMD NB [notebook] platform. (…) Intel deal will not allow us to launch AMD".

Concealment
The Commission found that Intel generally sought to conceal the conditions in its arrangements with PC manufacturers and MSH. For example:

The rebate arrangement with Dell was not subject to a written agreement but was concluded orally at various meetings. In this regard for example, in a submission to the Commission, Dell stated that " there is no written agreement between Intel and Dell concerning the MCP [rebate] discount, rather, the discount is the subject of constant oral negotiations and agreement".

There was a written agreement with HP but the relevant conditions remained unwritten. In this regard for example, in a submission to the Commission, HP stated that the " unwritten conditions (...) were stated to be part of the HPA1 agreement by [Intel executive] , [Intel executive] and [Intel senior executive] in meetings with HP during the negotiations;

The written agreement with MSH contained a provision that the deal was non-exclusive. However, the evidence demonstrates that at Intel's request, the arrangement was in fact exclusive. In this regard for example, in a submission to the Commission, MSH stated that " It was clear to MSH that despite the non-exclusivity clause the exclusive nature of the relationship remained, for Intel, an essential element of the relationship between Intel and MSH. In fact, [MSH executive] recalls that Intel representatives made it clear to him that the changes in the wording of the agreement had been requested by Intel's legal department, but that in reality the relationship was to continue as before, including the requirement that MSH sell essentially only Intel-based computers."

Other statements from computer manufacturers and MSH outline how the various Intel conditions were an important factor in their decisions not to partially switch to or buy more x86 CPUs from AMD, Intel's main competitor in the x86 CPU market. For instance, in a submission to the Commission, HP stated that it " can confirm that Intel's inducements (in particular the block rebates) were a material factor in determining HP's agreement to the unwritten conditions. As a result (...) HP [Business desktop PC division] stayed at least 95% aligned to Intel."

AMD's growing threat
The evidence in the Decision indicates the growing threat that AMD's products represented to Intel, and that Intel's customers were actively considering switching part of their x86 CPU supplies to AMD.

For example, in an October 2004 e-mail from Dell to Intel, a Dell executive stated that " AMD is a great threat to our business. Intel is increasingly uncompetitive to AMD, which results in Dell being uncompetitive to [Dell competitors]. We have slower, hotter products that cost more across the board in the enterprise with no hope of closing the performance gap for one to two years." In a submission to the Commission, Dell also stated that as regards Opteron, "in Dell's perception this CPU generally performed approximately […] better than the comparable Intel Xeon CPU at the time." As regards AMD's Athlon PC CPU, an internal HP presentation from 2002 stated that it "had a unique architecture", was "more efficient on many tasks" , and had been "CPU of [the] year [for] three consecutive years".

The fact that AMD had improved its products is also recognised by Intel itself. For example, in a 2005 submission to the Commission, Intel stated that "AMD improved its product offerings dramatically with the introduction of its successful Opteron processor". This is also confirmed by contemporaneous documents from Intel. For example, in a 2004 internal Intel e-mail, it is stated that "Opteron is real threat today… Opteron-based single WS [Workstation] benchmarks beat [Intel's] Xeon in all cases."

Procedure
Before the Commission adopted its final Decision, it carried out a comprehensive investigation of the facts. During the proceedings, Intel was able to comment fully on all the Commission's evidence outlined in the Decision. Indeed, the Commission went beyond its legal obligations in safeguarding Intel's rights of defence.

For example, despite the fact that Intel chose not to reply to the Commission's supplementary Statement of Objections (see MEMO/08/517 ) by the extended deadline of 17 October 2008 but instead sought to suspend the Commission's case, the Commission took full account of Intel's belated written submissions relating to the supplementary Statement of Objections.

The full text of the decision, together with a summary, is now available on the Europa website:

http://ec.europa.eu/competition/sectors/ict/intel.html

Huawei, NEC, NeoPhotonics and Source Photonics join Vitesse led FTTX technology ecosystem

SHENZHEN, CHINA: Vitesse Semiconductor Corp., a leading provider of advanced IC solutions for carrier and enterprise networking, announced a substantial expansion of its FTTX (Fiber-to-the-Home, Building or Premise) Technology Ecosystem with the addition of four industry-leading system, component and module vendors: Huawei Technologies, NEC Electronics, NeoPhotonics and Source Photonics.

The Ecosystem is a forum for companies across the entire passive optical network (PON) hardware spectrum to work together to accelerate the deployment of next-generation 10G-PON FTTX platforms. These four new organizations join technology innovators such as Cyoptics, Emcore, ETRI, NEC, Teknovus, ZTE and Vitesse.

New FTTX Technology Ecosystem members
Huawei is a world-leading telecom solutions provider focused on building long-term partnerships with telecom operators. Huawei’s products and solutions are deployed in over 100 countries and serve 36 of the world’s top 50 operators, as well as over one billion users worldwide.

“We are delighted to contribute towards the Ecosystem’s growing PON technology expertise,” said Jiang Zuoqian, vice president, access network product line, Huawei Technologies. “Vitesse and Huawei have an extensive working relationship in developing technically advanced network solutions. With our leading network product solutions, Huawei is committed to delivering high-quality next-generation FTTX deployments.”

Source Photonics provides a broad array of optical transceiver solutions for telecom and datacom networks, including modules for PON deployments with its optical subsystem products used in Fiber-to-the-Premise (FTTP) deployments.

“It has always been Source Photonics’ commitment to promote and deliver high-performance and cost-effective fiber optic components and subsystems for FTTX applications. This continues with the development of next-generation PON solutions. The collaboration with Vitesse is an essential element in supporting and ensuring proven interoperability with systems and component solutions, while meeting demanding time-to-market expectations,” stated Thomas Liljeberg, senior vice president of product development and product line management of Source Photonics.

NeoPhotonics currently has an extensive portfolio of GPON and EPON transceivers for FTTP applications and is one of the highest volume manufacturers of optical access transceivers.

“We are pleased to work with Vitesse to embody our commitment to innovation and technology leadership in next-gen optical access components. Joining the 10G-PON ecosystem will enable us to work closely with leading technology companies to collectively address and advance development of next-generation, end-to-end, passive optical networking (PON) systems for FTTX applications,” said Chris Pfistner, vice president of product marketing at NeoPhotonics.

NEC Electronics has long been a leading innovator and manufacture of high-speed opto-electronics. The company presently provides complete TOSA, ROSA, and BOSA optical assemblies, along with subcomponents into many of today’s deployed PON systems.

“Given the module-level focus at CIOE this year, this announcement solidifies a number of leading vendors for this round of the FTTX Technology Ecosystem expansion,” said Gary Paules, Vitesse product marketing manager. “In addition, we are very happy to have leading PON system vendor Huawei join the Ecosystem. Vitesse is dedicated to helping drive the deployment of next-generation PON deployments worldwide by coordinating close working relationships among our stellar group of Ecosystem members.”

CIOE/FTTX China PON Demonstration
Along with selected Ecosystem members, Vitesse will demonstrate various PON solutions at CIOE/FTTH China. At the Vitesse CIOE booth (#4352), Teknovus and Vitesse will demo Teknovus’ true burst-mode symmetric 10G-EPON solutions.

Additionally, Vitesse will present technical developments and trends in FTTX and next-generation networks during “FTTX and Next-Generation Optical Access Network Technology” on September 7, 2009, from 14:40-15:00 in the Shenzhen Convention and Exhibition Center (fifth floor of Rose Hall-3).

NEC selects Berkeley Design's analog FastSPICE

SANTA CLARA, USA: Berkeley Design Automation Inc. a provider of Precision Circuit Analysis technology for advanced analog, mixed-signal, and RF integrated circuits (ICs), announced that NEC Electronics Corp. has selected its analog FastSPICE circuit simulator for complex-block characterization and full-circuit performance simulation of its leading-edge analog, RF, and mixed-signal integrated circuits and IP cores.

NEC Electronics required fast time to market for the design and characterization of complex analog, RF, and mixed-signal circuits for semiconductor products in the high-end computing, broadband networking, mobile handset, PC peripherals, automotive and consumer markets.

Analog FastSPICE consistently delivered 5x-10x faster characterization with identical waveforms to traditional SPICE for NEC Electronics analog and mixed-signal cores including PLLs, SERDES, DDR I/O, ADCs, consumer, and wireless transceivers. This combination of speed and accuracy was unmatched by any other circuit simulator and NEC Electronics are excited to deploy this tool to their design teams.

Berkeley Design Automation tools include Analog FastSPICE circuit simulation, Noise Analysis Option device noise analyzer, RF FastSPICE periodic analyzer, and PLL Noise Analyzer. The company guarantees identical waveforms to the leading "golden" SPICE simulators down to noise floor (typically 0.1 percent or less), while delivering 5x-10x higher performance and 5x-10x higher capacity.

It achieves this by using advanced algorithms and numerical analysis techniques to rapidly solve the full-circuit matrix and the original device equations without any shortcuts that could compromise accuracy.

Design teams from top-10 semiconductor companies to leading startups use Berkeley Design Automation tools to solve big analog/RF verification problems. Typical applications include complex-block characterization (e.g., PLLs, ADCs, DC:DC converters, PHYs, Tx/Rx chains) and full-circuit performance simulation (e.g., wireless transceivers, wireline transceivers, high-speed I/O macros, memories, microcontrollers, data converters, and power converters).

"We are excited that NEC Electronics, a world leader in semiconductors, has selected Analog FastSPICE," said Ravi Subramanian, president and CEO of Berkeley Design Automation.

"NEC Electronics' success with Analog FastSPICE across a wide variety of circuit types is another example of how our technology is now becoming essential for nanometer analog and RF design. Analog FastSPICE is being successfully used in production by virtually all the leading consumer electronics semiconductor companies throughout the world- a clear testament to the compelling value Berkeley Design Automation delivers in the market today."

TV IC market declines seasonally to 30.8mn units shipped in Q1’09

AUSTIN, USA: The TV IC market declined seasonally to 30.8 million units shipped into flat panel TVs in Q1’09, according to the latest research in the DisplaySearch Q2’09 Quarterly TV Electronics Report.

Shipments were down 4.3 percent Q/Q, but up 11 percent Y/Y. This is in line with the normal seasonal trends, and with the maturing of flat panel TV as developed markets have completed the switch from CRT TVs.

The growth of integrated digital TVs and the analog switch-off in developed regions is profoundly changing the demands of broadcast reception.

While it is clear that analog reception will remain a requirement for some years after switch-off dates, a combination of silicon tuner IC maturity, a more benign reception environment, and cost pressure will bring silicon tuners into the mainstream.

DisplaySearch forecasts that silicon tuners will grow to just under 39 million units shipped into TV sets in 2013, compared to a total of 177 million sets shipped with digital decoding.

By then, Japan, the EU and the US will all have completed analog switch-off, but the fastest growth will be in emerging markets, which are expected to increase from 4 million in 2009 to 70 million in 2013.

“While silicon tuners still have a way to go to exceed the performance of the best ‘can tuner’ modules, they are poised to grow rapidly in television sets” Paul Gray, DisplaySearch Director of European TV Research noted.

Gray added: “Despite the strong growth of digital TVs, it would be unwise to ignore analog transmissions, which will live on for some years in older cable installations, low power transmissions and to support legacy equipment. It will be a brave product manager who makes a digital-only set even in 2013.”

Fig. 1: Shipment Forecast for TVs with Terrestrial Silicon TunersSource: DisplaySearch Q2’09 Quarterly TV Electronics Report.

Industry consolidation took several steps in the quarter, with Micronas completing the sale of its frame rate conversion, audio and demodulator product lines to Trident.

The remainder of its consumer business (including the TV system-on-chip business) will cease by the end of the year. In addition, NEC and Renesas announced an intention to merge, while AMD’s TV IC business completed its first quarter as part of Broadcom, now one of the top five TV system IC suppliers.

Table 1: Top TV System IC VendorsSource: DisplaySearch Q2’09 Quarterly TV Electronics Report.

Other highlights from DisplaySearch’s Quarterly TV Electronics Report include:
* An analysis of the emergence of silicon tuners into TV sets: This includes technical requirements, the future shape of the tuner business and a forecast of silicon tuners in TV sets. DisplaySearch expects that 38.9 million TV sets sold in 2013 will have silicon tuners.
* Forecast and analysis of 200/240 Hz TVs, including a comparison of the different video processing systems used by major set makers.
* Outlook for MPEG-4 enabled TVs for the latest HD DVB broadcast in Europe, networked TVs and sets with DVB-S2 reception: DisplaySearch forecasts that almost 110 million MPEG-4 ICs will be built into TVs in 2012.

Elpida to get funds from government, Taiwan Memory

This is a very important news, courtesy, MarketWatch!

By Lisa Twaronite, MarketWatch
TOKYO (MarketWatch): Elpida Memory Inc. will receive 50 billion yen ($521 million), the government said Tuesday, much of it as part of Japan's new recapitalization program for struggling non-financial companies.

Japan's Ministry of Economy, Trade and Industry said Elpida will get 30 billion yen from the Development Bank of Japan by the end of August in exchange for preferred shares.

The infusion is part of a new program is aimed at supporting companies whose failure the government fears could have a broader economic impact.

"Elpida faces a very tough environment," Economy, Trade and Industry Minister Toshihiro Nikai was quoted as saying in several reports from the region. "DRAMs are widely used by major industries in our country, and securing the stable supply of them will benefit people's lives, as well as economic and industrial activities."

Taiwan Memory Co., a chipmaker set up by the island's government, plans to invest an additional 20 billion yen by the end of this fiscal year ending in March 2010, the ministry also said.

Elpida Memory Inc. President Yukio Sakamoto reportedly told a news conference Tuesday that the fund injection under the government's new aid program was the best option available for the chip maker to secure funding and remain competitive.

Last month, Japan's only maker of dynamic random access memory chips posted a group net loss of 178.8 billion yen for the fiscal year which ended in March, deeper than its 23.5 billion yen loss for fiscal 2007.

Pioneer, NEC next?
Other Japanese firms are expected to follow Elpida's move to seek funds.

Pioneer Corp., which anticipates a sixth consecutive year of losses this fiscal year, is now making preparations to apply for a public fund infusion, Japanese business daily Nikkei reported Tuesday.

NEC Electronics Corp. and Renesas Technology Corp. are also expected to consider taking action if their planned merger next April goes through as expected, the report said.

In Tokyo, Elpida shares closed up 1.4 percent, and NEC Electronics gained 4.2 percent. But Pioneer shed 1 percent.

The benchmark Nikkei 225 Average rose 1.8 percent.

Lisa Twaronite reports for MarketWatch from Tokyo.

TV IC market experiences seasonal decline in Q1’09

AUSTIN, USA: DisplaySearch’s latest research indicates that the TV IC shipments declined seasonally to 30.8 million units for flat panel TVs in Q1’09, according to its Quarterly TV Electronics Report.

Shipments were down by 4.3 percent Q/Q, but up 11 percent Y/Y. This is in line with seasonal trends and with the maturing of the flat panel TV market as developed markets have completed the switch from CRT TVs.

“Concerns over the economic outlook caused set-makers to slash inventory in 2008,” noted Paul Gray, Director of Europe TV Market Research. “Despite this, sales in developed regions have remained resilient, and there is some inventory re-build to support ongoing market levels.”

DisplaySearch’s results also indicate that continued industry consolidation has resulted in an increased share for top-tier IC vendors. At the same time, the real expansion of the flat panel TV market is now in emerging regions and in price-fighter models in mature markets.

Specifically, Micronas completed the sale of its FRC, Audio and Demod product lines to Trident, with the remainder of its consumer business (including the TV SoC business) ceasing by the end of the year. In addition, NEC and Renesas announced an intention to merge, and AMD’s TV IC business completed its first quarter as part of Broadcom.

Table 1: Top TV System IC VendorsSource: Q1’09 Quarterly TV Electronics Report

Other highlights from the most recent Quarterly TV Electronics Report include
* Mediatek regained some share as seasonal emphasis returned to the North American market and TV set inventories were rebuilt after a cautious end to 2008.
* Growing rapidly, propelled by a shipment surge from LGE and also showing strength in China.
* Samsung also gained share as their in-house customer continues to grow in the TV market. The depreciating Korean won has also made them more competitive against merchant ICs priced in US dollars.

NEC no. 1 for 32-bit MCUs in 2008, leads in 32-bit automotive MCUs

KAWASAKI, JAPAN, DUESSELDORF, GERMANY, SANTA CLARA, USA & BEIJING, CHINA: NEC Electronics Corp. announced that the company has retained the number one supplier ranking for 32-bit microcontrollers (MCUs) worldwide based on revenue in 2007 and 2008 as ranked by Gartner in its April 2009 report.

In addition, the company has moved into the number one position for 32-bit automotive MCUs, and the number two position for overall MCUs, and the number two position for 8-bit MCUs.

In its March 2009 Semiconductor Market Share Database report, Gartner ranks NEC Electronics as:

#1 32-bit MCU worldwide supplier Maintained ranking from 2007
#1 32-bit automotive MCU worldwide supplier Up from #2 in 2007
#2 Overall MCU worldwide supplier Up from #3 in 2007
#2 8-bit MCU worldwide supplier Up from #4 in 2007

"With more than three decades of experience in MCU design and manufacturing, NEC Electronics has the design expertise to deliver innovative solutions to help position our customers for success," said Shinichi Iwamoto, vice president, Microcomputer Business Unit, NEC Electronics Corp. "These market share positions are evidence that our customers value the company’s commitment to quality, customer service, and advanced technologies."

Broad MCU offering
NEC Electronics offers a comprehensive lineup of all Flash MCUs ranging from 8- to 32-bits, designed to meet the price and performance needs of high-volume embedded applications.

NEC Electronics' multi-purpose MCUs serve healthcare, office equipment, industrial, consumer, and emerging smart energy markets. NEC Electronics also provides MCUs for automotive audio, infotainment, safety, chassis, powertrain, dashboard, and body applications. In June 2008, the company reached the one-billionth shipment milestone for its all Flash MCUs.

NEC and Renesas to integrate biz ops, establish world's third largest semicon firm

KAWASAKI & TOKYO, JAPAN: NEC Electronics Corp. Renesas Technology Corp., NEC Corp. Hitachi Ltd and Mitsubishi Electric Corp. today agreed to enter into negotiations to integrate business operations at NEC Electronics and Renesas.

1. Background and goals of business integration
NEC Electronics was established in 2002, separating from NEC, and Renesas was established in 2003, integrating semiconductor units at Hitachi and Mitsubishi Electric. Both as leading semiconductor companies, NEC Electronics and Renesas provide a wide variety of semiconductor solutions, primarily specializing in microcontroller units (MCUs). In light of fierce global competition in the semiconductor market, NEC Electronics and Renesas have agreed to explore the possibility of business integration in order to further strengthen their business foundations and technological assets while increasing corporate value through enhanced customer satisfaction.

By integrating the world’s two largest MCU suppliers, the new company will provide one of the most competitive MCU product lineups throughout the world.

NEC Electronics and Renesas both focus on the fast-growing field of system-on-chip (SoCs) products. NEC Electronics is a leading producer of SoCs for digital consumer electronics, while Renesas is a well established manufacturer of SoCs for mobile phones and automotive applications. By reinforcing the companies’ respective strengths and development resources the new company will provide globally competitive SoC products.

In terms of the discrete semiconductor business, both companies will define strategies to enhance the competitiveness of analog and discrete products that generate synergies with MCUs.

The new integrated company will have three major product groups, MCUs, SoCs, and discrete products, and will become the world’s third-largest semiconductor business. The new company will select and focus on the development of projects covering a diverse range of fields and will expand its comprehensive lineup of globally competitive products.

In order to address the ongoing challenges of the current economic downturn, NEC Electronics and Renesas will each execute structural reform plans in order to strengthen their business frameworks. Upon completion of these structural reforms, the two companies will integrate their operations to achieve synergies and boost profitability. This integration will result in the establishment of a powerful new semiconductor company that is capable of consistently achieving high earnings and maintaining the ability to withstand changing market conditions.

2. Corporate structure following integration
The preconditions for holding future negotiations are to integrate business operations on April 1, 2010, and to maintain public listing for the new company.

To ensure fairness and equitability, the ownership ratio of the integrated company will be decided and announced before the conclusion of the integration contract through negotiations between NEC Electronics and Renesas, based on scheduled due diligence. The new company will announce the company name, the location of its headquarters, the corporate representative, the board members, capitalization, total assets, and financial forecasts following the integration.

3. Schedule moving forward
NEC Electronics and Renesas plan to sign an agreement at the end of July, 2009 to integrate their business operations. The dates and details of the extraordinary general meetings of shareholders for NEC Electronics and Renesas to consider approval of the integration are to be announced following the signing of the agreement.

Implementation of the planned business integration is conditional upon authorization of the integration by the relevant government agencies.

Top 20 global semicon companies -- DRAM, Flash suppliers drop out

IC Insights recently published the May update to The McClean Report, featuring the Top 20 global semiconductor companies. Not surprisingly, there have been some significant movers and shakers. The most telling -- quite a few of the major DRAM and Flash suppliers have dropped out of the Top 20 list!

First the movers! Fabless supplier Qualcomm jumped up four spots, ranking as the 10th largest semiconductor supplier in Q1-08. Next, Broadcom, the third largest fabless supplier, also moved up four positions, up to the 20th position. Panasonic (earlier, Matsushita), moved up to the 19th position, while NEC of Japan moved up to the 13th position.

TSMC, the leading foundry, moved up one position, registering the highest -- 44 percent -- year-over-year Q1-08 growth rate, besides being ranked 5th. Nvidia, the second largest fabless supplier, was another company registering a high YoY growth rate of 37 percent, and moved into the 18th position. Some others like Infineon, Sony and Renesas also climbed a place higher each, respectively. The top four retained their positions -- Intel, Samsung, TI and Toshiba.

And now, the shakers! The volatile DRAM and Flash markets have ensured the exit of several well known names such as Qimonda, Elpida, Spansion, Powerchip, Nanya, etc., from the list of the top 20 global semiconductor companies, at least for now.

Among the others in the list, the biggest drops were registered by NXP, which dropped to 14th from 11th last year, and AMD, which dropped two places, from 10th to 12th. Two memory suppliers -- Hynix and Micron -- also slipped two places, to 9th and 15th places, respectively. STMicroelectronics also slipped from 5th to 6th. IBM too slipped out of the top 20 list.

The top 20 global semiconductor firms comprises of eight US companies (including three fabless suppliers), six Japanese, three European, two South Korean, and one Taiwanese foundry (TSMC). Also, looking at the realities of the foundry market, TSMC's lead is now unassailable. If TSMC was an IDM, it would be No. 2, challenging Intel and passing Samsung, said one analyst, recently, a thought shared by many.

IC Insights has reported that since the Euro and the Yen are strong against the dollar, this effect will impact global semiconductor market figures when reported in US dollars this year.

There are some other things to watch out for. Following a miserable 2007, the global DRAM module market is likely to rebound gradually in 2008 due to the projected recovery in the overall memory industry, according to an iSuppli report. That remains to be seen.

Some new DRAM camps -- such as Elpida-Qimonda, and Micron-Nanya -- have been formed. It will be interesting to see how these perform, as will be the performance of ST-backed Numonyx.

Further, the oversupply of NAND Flash worsened in Q1-08, impacted by the effect of the US sub-prime mortgage loan and a slow season, according to DRAMeXchange. The NAND Flash ASP fell about 35 percent compared to Q4-07. Although the overall bit shipment grew about 30 percent compared to Q4-07, the total Q1-08 sales of branded NAND Flash makers fell 15.8 percent QoQ to US$3.24bn. Will the NAND Flash market recover and by when?

Power awareness critical for chip designers

The holy grail of electronics -- low-power design, or having the requisite power awareness is extremely critical for chip designers working on both high-performance applications and portable applications. For one, it determines the battery lifetime of a device, besides determining the cooling and energy costs. It is said that several of today's chip designs are limited in terms of power and still require maximum performance.

Touching on the global factors, S.N. Padmanabhan, Senior Vice President, Mindtree Consulting, said the Kyoto Protocol mandates energy conservation efforts.

Low-power design challenges
Asia, as we all know, has been emerging as a major energy consuming society. Shortage of electricity is becoming a major concern. There is a huge strain on nations to meet the rising needs/halt rise. There is also a rapid increase in all types of electronic goods in growing economies. As a result, increased efficiencies and reduced consumption should be beneficial as a whole!

In the Indian context, the country has around 125 million televisions sets, 5 million automatic washing machines, 10 million white goods, 200+ million other electronics, over 90 million cell phones and 50 million land lines, etc. A 1W reduction in white goods and TVs would lead to a saving of 140 Mi Watts of power! And, a 10 mW reduction in phones will save 1.4 Mi Watts!! Therefore, it makes even more sense to go low power!

Mindtree's Padmanabhan said IC power budgets have come down drastically. It is <2W for four out of five chips designed. There has also been a simultaneous manipulation of multiple parameters (P=CV2f). Next, there are several leakage issues in 65nm and smaller geometries, which can no longer be ignored.

Add to all of these are factors that there is a lack of availability of comprehensive tools and techniques, as well as analog designs. In such a scenario, designers need to be very clear about their objectives -- is it achieving lowering average power, lowering the maximum peak power or lowering energy.

Jayanta Kumar Lahiri, Director, ARM, pointed out challenges associated with batteries. Battery storage has been a limiting factor. Battery energy doubles in a decade and surely, does not follow the Moore’s law. Next, there have hardly been major changes in the basic battery technology. The energy density/size safe handling are limiting factors as well for batteries.

He added that the low-power challenge is four-fold in the VLSI domain. These are -- leakiness; more integration means more W/cm^2; EDA tools not that good in low power domain and does not co-relate sometimes with the silicon, and variability of device parameters make things worse.

Toshiyuki Saito, Senior Manager, Design Engineering Division NEC Electronics Japan, said low power is necessary for customer's success -- in form of heat suppress for wired systems and improved battery life time for mobile systems. It also brings cost competitiveness for SoC suppliers in terms of packaging cost, and development cost and turnaround time. Finally, it would contribute to preserving the global environment.

Addressing low power challenges
What are semiconductor and EDA companies doing to address the low-power design challenges? Padmanabhan said several techniques were being employed at the circuit level. However, each one of those had limitations.

These include AVS -- which provides maximum savings, reduces speed, but may need compensation; clock gating -- which does not help to reduce leakage and needs additional gates; and adaptive clock scaling -- which needs sophistication and is not very simple; and finally, the use of multi threshold cells for selective trade-off.

Emerging techniques include efficient RTL synthesis techniques, which is fast, but leaky, vs. slow and low power; power aware resource sharing, which is planning to be done at the architectural level and synthesis, but is not as widely used as other techniques; and power gating methodology -- which makes use of sleep transistors, has coarse and fine grained methods, reduces dynamic and leakage power, and also exploits idle times of the circuit.

He added that power optimization should start at the architecture and design stages. Maximum optimization can be achieved at the system level. Also, the evolving power optimization tools and methodologies required collaborative approaches.

Power Forward Initiative
Pankaj Mayor, Group Director, Industry Alliances, Cadence Design Systems, said low power imperative is driving the semiconductor and EDA industries. He said, "design-based low power solution is the only answer!" Traditional design-based solutions are fragmented. Basic low power design techniques, such as area optimization, multi-Vt optimization and clock gating were automated in the 1990s.

There has since been an impact of advanced low-power techniques. These advanced techniques include multi-supply voltage (MSV), power shut-off (PSO), dynamic and adaptive voltage frequency scaling (DVFS and AVS), and substrate biasing. Cadence's low-power solution uses advanced techniques.

According to Mayor, the Power Forward Initiative (PFI) has created an ecosystem as well. The Power Forward Initiative includes Cadence and 23 other companies across the design chain, as of the end of December 2007.

The year 2007 also saw a continued Power Forward industry momentum. In Q1-07, Common Power Format or CPF became the Si2 [Silicon Integration Initiative] standard. The Cadence Low Power Solution production released V 1.0 in this quarter as well. In H2-07, the industry has seen over 100 customers adopting CPF-based advanced low power solution as well as ~50 tapeouts.

CPF allows holistic automation and validation at every design step. Arijit Dutta, Manager, Design Methodology, Freescale Semiconductor exhibited the advantages of using the CPF in wireless, networking and automotive verticals at Freescale.

Top 10 semicon firms of 2007 by revenue

According to Gartner, the top 10 semiconductor firms for 2007 by revenue are: Intel, Samsung Electronics, Toshiba, Texas Instruments, STMicroelectronics, Infineon Technologies (including Qimonda), Hynix Semiconductor, Renesas Technology, NXP Semiconductors, and NEC Electronics.

Worldwide semiconductor revenue totaled $270.3 billion in 2007, a 2.9 percent increase from 2006, according to preliminary results from Gartner Inc.

Vendor performances were mixed with two vendors in the top 10 that experienced double-digit growth and two vendors that showed declines in revenue.

"Semiconductor vendors need to watch the performance of their end customers even closer as a major part of the industry becomes increasingly tied to consumer spending patterns," said Andrew Norwood, research vice president at Gartner. "Loss of market share in an end-user application, such as a mobile phone, by a customer (a mobile phone manufacturer) can have a dramatic effect on a vendor's business."

Intel grew revenue more than twice as fast as the semiconductor market average, and it is likely to edge up its market share to 12.2 percent in 2007 from 11.6 percent in 2006.

Intel’s growth came primarily from strong shipments of mobile PCs. Armed with a strong product lineup for enthusiast desktops and servers, Intel regained lost share in those markets from AMD.

While the global market for dynamic random-access memory (DRAM) is expected to decline in 2007 due to a severe drop in prices caused by oversupply, Samsung Electronics is likely to increase its revenue by slightly higher than the overall global semiconductor market growth rate (DRAM is one the firm's main products).

Samsung's growth is driven by steady revenue growth in NAND flash memory and strong revenue growth in nonmemory areas such as application processors, media integrated circuits (IC), complementary metal-oxide semiconductor (CMOS) image sensor, smart card ICs and LCD driver ICs.

Toshiba’s revenue increased 27.8 percent in 2007 to $12,504 million, gaining three places in the rankings and moving into third place. The rapid gains mainly came from NAND flash memory.

Toshiba also increased production of CMOS image sensors for mobile phones and application-specific integrated circuits (ASICs)/application-specific standard products (ASSPs) revenue for digital consumer electronics, including LCD TVs, next-generation DVDs (HD DVDs) and video game consoles.

Shifts in top 20 global semicon rankings

If the recent preliminary results released by IC Insights is anything to go by, there have been some movements among the top 20 semiconductor companies of the world during H1-2007. This is best illustrated by the table below.



While the top three -- Intel, Samsung and TI, retain their positions, ST and Toshiba have exchanged the next two positions, as have Hynix and TSMC, while Renesas remains at no. 8!

Freescale has taken a big drop from no. 9 to no. 16, while Sony, NXP and NEC gained one place each. Infineon has climbed back up to no. 12, from no. 16, while Qualcomm occupies the no. 13 position, up from no. 17. AMD dropped two positions, from no. 13 to no. 15.

Will the semicon industry see a tight year ahead? As per reports, IC Insights said that there should be a "noticeable seasonal rebound" in overall IC demand beginning in September 2007, which may cause "significant changes" in the top 20 semiconductor ranking in the second half of 2007. Wait and watch this space!