Freescale's Rich Beyer on semicon and industry trends

Here's the synopsis of the keynote address by Rich Beyer, chairman and CEO, Freescale Semiconductor at FTF India 2009, at the Hotel Leela Palace Bangalore, on September 02, 2009.Rich Beyer, chairman and CEO, Freescale Semiconductor

This year, we have 64 hours of technical training classes apart from extensive selection of Freescale and third-party demos in our Technology Lab. Since we met last year, the industry has experienced the greatest economic challenges in generations that had an unprecedented global impact, and no region has been immune from its effects.

India, Asia’s third largest economy, seems to have been less affected by the global economic slowdown, primarily because India’s economy is driven largely by domestic demand and is not as dependent on exports. Interest rate cuts and a fiscal stimulus equivalent to 7 percent of India’s GDP helped the economy grow by almost 6 percent in the first quarter of this year, making it the world’s fastest growing economy after China.

From a global perspective, the markets are stabilizing, and we hope that the worst is over. However, in order to compete effectively, businesses will need to become more efficient and more agile, at least for the next few years.

One of the core purposes of this FTF is to demonstrate our efforts and progress in providing you with the best possible solutions to help develop products and systems that enable your companies to win.

On networking
In networking, multicore processors are essential to delivering the industry-leading levels of integration, performance and energy-efficiency required for next-generation communications systems. However, testing and optimizing application software for systems based on embedded multicore processors can be a time-consuming task. To help solve this challenge, Freescale has introduced our VortiQa software, a production-ready, application-level software specifically for our multicore solutions to dramatically reduce the time needed by you, our customers, for your development tasks.

To enable rapid prototyping for our microcontrollers, we have introduced the Freescale Tower System, a modular development platform with reconfigurable hardware that enables developers to mix and match MCU and peripheral boards to save both money and months of development time through rapid prototyping and tool re-use.

Sensor toolbox
To streamline embedded designs with our acceleration, pressure or proximity sensors, Freescale has introduced the Sensor Toolbox. This is a unified set of development software, customizable plug-and-play boards and complimentary sensor algorithms to help you get the most out of your sensor-related designs.

For the past several years, we have concentrated on three major trends that we feel represent the engines of our future growth i.e. Net Effect, Health and Safety and Going Green.

India is the world’s fastest growing mobile market, and 3G high-speed transmissions of voice, video and data is seen as the next growth driver for telecom firms in India. In Health and Safety, Freescale is helping enable monitoring solutions like glucometers and insulin pumps.

Our embedded processing technologies deliver best-in-class performance with low-power consumption and integrated RF connectivity that help diabetes patients avoid acute complications like hypoglycemia and kidney failure. Real-time cardiac monitoring solutions are allowing patients with heart disease to live a life without constant fear.

Our high-performance 32-bit embedded processors, digital signal processors and digital signal controllers help provide accurate and secure portable heart monitoring solutions for those suffering from hypertension, arrhythmias and cardiac failure.

On wellness and fitness, safety
In wellness and fitness applications from pedometers to treadmills and digital bicycles are beginning to incorporate functions like calorie counters and heart rate monitors. Freescale’s microcontroller portfolio delivers one of the best price-performance ratios available for these applications.

Safety is also an extremely important trend in the world today and is the utmost requirement in the automotive market. Safety features introduced years ago like anti-lock braking, air bags and tire pressure monitoring systems are being integrated with completely new capabilities like active safety equipment that can actually help prevent accidents before they happen.

Advanced safety systems like adaptive cruise control, lane departure warning and radar for object detection will add embedded intelligence to the vehicle for a higher level of safety, efficiency and convenience. We will begin to see vehicle-to-vehicle and vehicle-to-infrastructure wireless communications.

Embedded intelligence in the vehicle will be able to recognize traffic signs –- to maintain the proper speed limit or alert the driver about approaching stop signs. And sensors will be able to detect pedestrians around the vehicle and monitor that the driver is alert and aware.

Going Green!
Our third growth trend is Going Green. Energy is embedded in virtually every aspect of our lives energy efficient devise will make an enormous difference. The prospect of rising oil prices and global warming has intensified the demand for more fuel efficient vehicles while at the same time meeting ever-tightening standards on emissions.

In the consumer market, many countries around the world are instituting new standards to eliminate “vampire electronics”, those devices that consume a huge amount of energy even as they spend time in standby mode. The industrial sector accounts for about 37-percent of the global energy consumption. Through the use of high-efficiency motors, improved process control, automation, information processing, and robotics, we can help save the energy output equal to hundreds of coal-fired power plants.

On Indian industry
So, those are the global trends that we feel will drive our markets today and for the foreseeable future. Now I would like to talk about the growth opportunities we see here in India and provide some insights into what Freescale is doing to address these.

Automotive industry
Let’s start with the automotive industry.

India’s automotive industry has reached a pivotal moment. The rise of ultra-low cost four-wheel vehicles is expected to grow the domestic market by more than one million units by 2013.

By 2012, India is expected to account for 20 percent of the increase in global car sales, surpassing the markets in Italy and Spain. At that point, India could become the leader in small-car growth. For India to become a major player in the global automotive market, a key challenge will be to engineer cars that meet stringent international emissions and safety standards.

Freescale is uniquely positioned and strongly committed to helping develop the capabilities of the India automotive industry. We have partnered with the industry’s leading manufacturers and suppliers to help drive standards for component software and interconnectivity.

As emerging automotive markets like India continue to gain momentum, vehicles will need cost-optimized solutions that incorporate more advanced chassis and safety systems, like airbags, tire pressure monitoring systems, and electronic stability control. Freescale offers a full range of system solutions that can scale to higher performance as needed.

India’s networking infrastructure
Next, I want to talk about the growth of India’s networking infrastructure. Over the last few years, India’s telecommunications landscape has seen rapid growth. The 3G wireless spectrum will allow the transmission of voice, data and video at high speeds to mobile devices. Freescale is playing a key role in delivering the performance improvements and the cost reductions required to bring these next-generation networks to life.

We are the global leader in embedded communications processors. The ever-increasing amounts of digital data are continuing to push the need for high-speed data processing. And along with this need for speed are the increasing expectations of reliability, security and the overall quality of service.

As an industry, we have been talking about 3G technology, but 3G is just now coming into widespread adoption, and with the latest innovations in Long-Term-Evolution, or LTE, we are seeing even more broadband capability becoming available.

Freescale has played a leadership role in this infrastructure growth with our RF, communications processor and DSP technology.

Our QorIQ multicore communications platforms are providing new levels of performance and low-power consumption. These products are all based on our e500 Power Architecture cores and are designed for 45-nanometer technology.

Earlier this year, we began sampling our first dual-core QorIQ communications processor. Given the positive feedback, we are accelerating the introduction of our eight-core QorIQ processor. This device is being combined with our new six-core DSP to provide a comprehensive solution for wireless infrastructure equipment for advanced 3G and 4G systems.

Together our Starcore DSPs and QorIQ-based microprocessors in 45 nanometer technology can help reduce the bill-of-material costs in a 10 MHz LTE base station by as much as 60 percent, while simultaneously reducing power consumption by 50 percent.

On energy
More than a century after the invention of the light bulb, today’s energy grid is little different from the one envisioned by Thomas Edison 127 years ago. The smart grid will play a critical role in the development of India’s economy in the future.

India is home to more than one-point-one billion people, making it the world’s second largest population. And by 2025, India’s urban population is expected to increase by 50 percent.

The Indian government is investing heavily in new power plants, and this includes renewable sources such as wind and solar energy. However to take advantage of these new sources, there will need to be a new delivery system, or smart grid, that can handle a generation mix with a high percentage of renewable energy sources.

Smart electric meters will be one of the first steps toward establishing two-way communication between the home and the utility companies. Freescale is an industry leader in smart meter technology. We offer low-power and low-cost solutions for single-phase and three-phase meter measurement.

Our product portfolio includes microcontrollers with LCD drivers, and digital signal controllers for power modem functions, integrated ZigBee solutions for wireless communication, and accelerometers for antitamper security.

Once smart meters are deployed, building automation networks will help create an energy gateway to connect to home thermostats, smart appliances and other energy-intensive devices. Countries around the world are beginning to implement smart grid technologies to increase energy efficiency and incorporate renewable energy sources that will reduce our global carbon footprint.

New category of handheld devices
There is a new category of handheld devices that deliver connectivity and convenience for an integrated multimedia experience. These include e-book digital readers that are transforming paper-bound media into connected infotainment devices, and they include the new smartbook Internet devices that are filling the gap between traditional notebook computing and smartphone communications.

These devices are driven by the common market characteristics of affordability, portability, Internet connectivity and all-day battery life. Freescale is delivering a common solution based on our i.MX multimedia application processors.

I am excited about the opportunities for growth in India, and I am constantly impressed by the innovation and ingenuity demonstrated by India’s talented engineers.

We are grateful to have the opportunity to share our product directions and tell you about the new and innovative solutions that we are bringing to the marketplace.

Let’s go make the world a smarter place.

Malaysia deepens electrical and electronics sector

KUALA LUMPUR, MALAYSIA: Malaysia has developed itself into an epicenter for semiconductor manufacturing for the last 30 years. In fast tracking up the value chain of Electrical and Electronics (E&E) industry, Malaysia has been involving in research, design and development.

The next focus areas are advanced analog, radio frequency, mixed signal and power management, IC design manufacturing and fabrication.

The Minister of Science, Technology and Innovation (MOSTI) for Malaysia, Datuk Dr. Maximus Johnity Ongkili in his statement, has emphasized on the importance of human capital development in supporting the growth of E&E industry in Malaysia. Currently, the sector employs some 462,000 people or 43 percent of total employment in the overall manufacturing sector. In ensuring that Malaysia continue to be competitive, MOSTI collaborates with a network of global technology leaders to induce technology transfer and capacity building program.

MOSTI will also continue to provide tangible incentives on commercialization and innovation efforts, in supporting the designed and development of electronic products in Malaysia.

Through its key agencies including the Malaysian Industry-Government Group for High Technology (MIGHT), MIMOS, SIRIM and Technology Park Malaysia, MOSTI promotes international R&D alliances between Malaysian companies and leading-edge global organizations. This is to ensure the progression into the next-generation of semiconductors involving green initiatives, bio-electronics, nanotechnology, as well as migration towards integrated system solutions.

In effort to grow the E&E industry in Malaysia through innovative design and development, MIGHT, Malaysian Institute of Microsystems (MIMs) and International Society for Quality Electronic Design (ISQED) have taken a joint initiative to gather representatives from global E&E industrial entities and leading universities at the 1st Asia Symposium on Quality Electronic Design (ASQED '09) on 15-16 July 2009 in Kuala Lumpur. This initiative was supported by MOSTI and Malaysian Industrial Development Authority (MIDA).

ASQED '09 was intended to gather and share the electronic design knowledge in bridging the gap between electronic design tools and processes, to achieve optimum design quality. It is the first ever ISQED event held outside the United States, after being a successful and sustainable annual event in the in the United States for the past 10 years.

The symposium also involved the exchange of documents between ISQED and MIMs to mark the rights extended to the latter, to annually organise the ASQED event in Malaysia for the next four years.

The finale of ASQED 2009 was the Partnership Exchange session involving the Deputy Minister of MOSTI representing the Minister, ASQED Committee Members and notable industry figures on electronic design both locally and overseas. The session involved exchanges on impactful suggestions from the industry, as well as insights on MOSTI's direction in further deepening and strengthening the E&E industry in Malaysia.

In moving forward, the 2nd ASQED will be held in Penang, the 'Silicon Island' of Malaysia in July 2010.

Infineon's Q3 revenues up 13 percent Q-on-Q

NEUBIBERG, GERMANY: Infineon Technologies AG reported results for the third quarter of the 2009 fiscal year, ended June 30, 2009.

Infineon’s revenues in third quarter were Euro 845 million, up 13 percent compared to the second quarter and down 18 percent year-over-year. Infineon’s third quarter Segment Result improved significantly compared to the previous quarter, net loss was Euro 23 million.

“Thanks to higher sales, higher factory loading and the cost savings from our IFX10+
cost-reduction program, we improved our operational performance considerably during
the third quarter compared to the previous quarter. Together with strict cash
management, we generated positive free cash flow from continuing operations of Euro
152 million and reduced our net debt position significantly”, said Peter Bauer, CEO of Infineon Technologies AG.

During the third quarter, Infineon implemented a series of measures to improve its balance sheet and to achieve a more focussed product portfolio. The company launched a cash tender offer for a portion of its outstanding bonds and issued new convertible bonds.

In July 2009, it announced the sale of its Wireline Communications business and launched the pending rights offering, backstopped by Apollo. “If successful, these steps would complete the refinancing of the company”, said Peter Bauer.

The sequential increase in revenues reflects increased revenues in all of the company’s five operating segments. The Wireless Solutions (WLS) segment achieved by far the strongest percentage increase in revenues, with the segments Industrial & Multimarket (IMM), Automotive (ATV), Wireline Communications (WLC), and Chip Card & Security (CCS) following at some distance.

Third quarter earnings improved significantly compared to the second quarter. The drivers of the improvement included significant cost reductions, mainly due to the IFX10+ cost-reduction program, higher factory loading as Infineon carefully adjusted production according to the improved demand environment, and higher sales levels driven by the company’s strong product portfolio.

All of the company’s operating segments achieved positive Segment Result, except the ATV segment which posted a Segment Result of negative Euro 17 million.

Net loss from continuing operations for the third quarter was Euro 20 million, resulting in basic and diluted loss per share from continuing operations of Euro 0.03. For the second quarter, net loss from continuing operations was Euro 150 million, and basic and diluted loss per share from continuing operations was Euro 0.20.

Infineon reported loss from discontinued operations, net of income taxes, of Euro 3 million for the third quarter. As a result of Qimonda’s application to open insolvency proceedings on January 23, 2009, Infineon deconsolidated Qimonda during the second quarter.

For the third quarter, Infineon reported group net loss of Euro 23 million, and basic and diluted loss per share of Euro 0.03.

In the third quarter, Infineon’s free cash flow from continuing operations was Euro 152 million, compared to a free cash flow from continuing operations of negative Euro 22 million in the second quarter. This strong improvement was driven by improved operating results and the company’s strict cash management.

ST's revenues of $1,993 million, up 20pc sequentially

SINGAPORE: STMicroelectronics (reported financial results for the 2009 second quarter and first half ended June 27, 2009.

“ST’s second quarter results reflect solid progress across several key fronts,” said President and CEO Carlo Bozotti.

He added: “Revenue results of $1.99 billion for the second quarter came in above the high end of our internal planning target range of $1.73 to $1.93 billion, principally driven by stronger-than-expected performance across most market segments including Computer, Automotive, Telecom and Industrial and in China and Asia-Pacific.
Bookings steadily increased through the second quarter despite a still uncertain environment.

"Our strong actions on fab loading to reduce inventory levels have led to a reduction in inventories of almost $400 million in just six months, accelerating inventory turns sequentially to 4.1 turns from 2.9 turns. As expected, these actions have driven our second quarter gross margin to an extraordinary low level.

"It is clear that the global recession has negatively impacted our financial results in the first half of 2009, but it has not slowed our efforts to develop leading-edge products.

"In the second quarter our pace of innovation continued as we brought to the market many next-generation products including analog controllers and power MOSFETs for power management in computer motherboards, high-voltage MDMesh power MOSFETs for switched-mode power supplies, MEMS gyroscopes, and advanced GPS solutions. Additionally, we ramped-up 55nm technology in ICs for set-top-boxes and, in wireless, we shipped in volume TD-SCDMA devices.”

Q2 review
ST’s net revenues for the second quarter of 2009 total $1,993 million and include the complete integration of the former Ericsson Mobile Platforms business into ST-Ericsson and $18 million from the licensing of technology.

Net revenues increased 20 percent sequentially reflecting an increase in demand across ST’s served market segments, as well as in all regions, with particular strength in China and Asia Pacific. Net revenues declined in comparison to the year-ago quarter in all market segments except Telecom, and in all regions except Asia Pacific, due to business conditions.

On a sequential basis, all market segments posted growth with Computer increasing by 36 percent, Automotive by 19 percent, Telecom by 14 percent, Industrial by 7 percent and Consumer by 1 percent.

Distribution registered the strongest sequential improvement by 44 percent reflecting the better alignment of inventory to current demand levels and improving market conditions. In comparison to the year-ago quarter, performance was led by the 17 percent growth of Telecom driven by the NXP Wireless and ST-Ericsson wireless transactions.

All other market segments decreased in the year-ago period with Computer down by 13 percent, Consumer by 33 percent, Industrial by 37 percent, and Automotive by 38 percent. Distribution decreased 36 percent reflecting a destocking of the channel and weak industry conditions.

Gross margin in the second quarter of 2009 was 26.1 percent, in-line with the first quarter of 2009 gross margin of 26.3%. As anticipated, ST’s second quarter gross margin was at an extraordinary low level due to significant unused capacity charges, inefficiencies related to manufacturing operations and a negative mix impact driven by the market demand in certain geographies, in particular, China.

In comparison to the year-ago period, lower manufacturing efficiencies, volumes and price more than offset the improved contribution of product mix, the positive effects from currency, licensing ST’s technology and the inclusion of the wireless transactions.

In the 2009 second quarter, combined SG&A and R&D expenses were $896 million compared to $837 million in the prior quarter and $751 million in the year-ago quarter.

As anticipated, combined SG&A and R&D expenses in the second quarter increased sequentially due to the integration of one additional month of the former Ericsson Mobile Platforms business into ST-Ericsson and a higher number of days in the second quarter, but were partially offset by ongoing cost reduction programs.

During the second quarter, the Company’s cost realignment initiatives were focused on completing the phase-out of wafer manufacturing operations in Carrollton, Texas, the ongoing reduction in workforce programs and the announced cost reduction actions at ST-Ericsson.

In conjunction with these efforts, ST posted second quarter restructuring and impairment charges of $86 million compared to $56 million and $185 million in the first quarter of 2009 and year-ago period, respectively.

WCQ expands into Taiwan

SAN FRANCISCO, USA: West Coast Quartz Corp. (WCQ), a privately held and globally-renowned manufacturer of silicon crystal for the semiconductor and solar industries as well as premier fabricator of precision quartz and silicon components for semiconductor wafer process equipment, today announced the establishment of a new wholly-owned subsidiary in Taiwan.

WCQ’s facility in Taiwan is located in Hsinchu and represents a million dollar investment in equipment and facilities customization for fabrication of critical components. This is the first of a multi-million dollar phased investment project.

Heading up the Taiwan operation will be WCQ’s Mark Byrne, a distinguished materials and methods professional in the semiconductor critical components field for many years.

According to WCQ president Paul Maloney, the new facility replicates the first-rate standards of the company’s California operation: “We are responding not only to our global customers’ need for low-cost-geography-manufacturing of high-quality WCQ parts, but also to the Taiwan market’s stated preference for local fabrication. Our vertical integration, especially in silicon crystal, plus our strong Original Part Manufacturer (OPM) experience for all the major OEMs, significantly enhances opportunities for us and for our customers.”

The satellite Taiwan facility includes inter-linked implementation of WCQ’s state-of-the-art management information systems, and will fabricate quartz and silicon critical consumables strictly based on WCQ Headquarters processes-of-record and proven, repeatable methods.

iSuppli trims 2009 chip and electronics forecasts, but sees second-half rebound

EL SEGUNDO, USA: Amid lingering economic woes and continuing poor visibility into future demand trends, iSuppli Corp. is reducing its forecasts for global semiconductor and electronic equipment revenue in 2009.

Worldwide electronic equipment revenue is set to decline to $1.38 trillion in 2009, down 9.8 percent from $1.53 trillion in 2008. iSuppli’s previous forecast in April predicted a 7.6 percent decline in revenue.

Global semiconductor revenue is set to fall to $198.9 billion in 2009, down 23 percent from $258.5 billion in 2008. iSuppli’s April forecast called for a 21.5 percent decline.

“The global economy and technology industry have undergone a period of uncertainty and volatility,” said Dale Ford, senior vice president, market intelligence services, for iSuppli. “With technology companies downgrading their forecasts, and with little visibility into future demand trends, conditions appear to be worse than previously expected in 2009.”

While all electronics segments are expected to suffer contractions in 2009, the automotive sector is the major culprit behind iSuppli’s downgrade.

“The decline of worldwide automobile sales, particularly in North America, has had a major impact on overall electronic equipment shipments,” Ford said. “iSuppli has cut its 2009 automotive electronics forecast to $75.2 billion, down 24.4 percent from $99.6 billion in 2008. This is a reduction of 3.8 percentage points from iSuppli’s previous forecast.”

The other five major electronic equipment categories—data processing, wired communications, wireless communications, consumer and industrial—all had their growth forecasts revised downward by rates ranging from less than 1 percentage point to nearly 6 points, reflecting overall technology market turbulence and lack of visibility.

Fig. 1 and 2 presents iSuppli’s quarterly electronic equipment and semiconductor forecasts.

iSuppli Fig. 1: Global Quarterly Electronic Equipment OEM Revenue Forecast (Billions of US Dollars)Source: iSuppli, July 2009

The chips are down—but not out
The weakening outlook of the electronic equipment market has prompted iSuppli to trim its semiconductor forecast. However, with the start of the second half, conditions are looking up for both semiconductors and electronic equipment.

“There were signs that the economic decline was becoming less pronounced near the end of the first half,” Ford said. “Even after trimming their expectations for the year, key semiconductor companies are entering the second-quarter financial reporting period with revenue guidance averaging 13 percent sequential growth compared to an overall revenue decline of 18.8 percent posted in the first quarter of 2009.”

iSuppli Fig. 2: Global Quarterly Semiconductor Revenue Forecast (Billions of US Dollars)Source: iSuppli, July 2009

The semiconductor industry in the first quarter was severely impacted by Japanese chipmakers, which experienced a severe decline in production during the period. However, Japan’s semiconductor makers now have reduced their excess inventories and have resumed production.

After a 7.1 sequential increase in the second quarter, iSuppli predicts global semiconductor revenue will rise by 10.4 percent in the third quarter and by 4.9 percent in the fourth.

Following a 19.4 percent plunge in the first quarter, global electronic equipment revenue rose by 1.9 percent in the second quarter and will increase by 10.4 percent in the third and by 8.9 percent in the fourth.

While these sequential increases won’t be enough to generate annual revenue growth for chips or electronic products, they likely will pave the way for a better year in 2010.

“iSuppli is projecting the semiconductor industry will show improvements beginning in the fourth quarter of 2009, which will provide the basis for overall growth of 13.1 percent in 2010,” Ford said. “Global electronic equipment revenue also will rise by 4.9 percent in 2010.”

SEMI and Semi-Directory launch semiconductor supplier guide

SAN JOSE, USA: SEMI, the industry association serving the manufacturing supply chains for the microelectronic, flat-panel display and photovoltaic industries, and Semi-Directory, the most comprehensive semiconductor buyers guide on the Internet, have jointly launched a new, industry wide supplier directory.

Comprised of approximately 7,000 listings spread over almost 1,000 categories, the directory provides a unique platform on which every semiconductor supplier across the industry spectrum can showcase their products and services, while customers can research multiple vendors all in one location.

SEMI members will receive more exposure and promotion since member companies are highlighted in the directory with a SEMI member logo.

“Semi-Directory was created to help decision makers formulate more knowledgeable purchases by giving them a resource that would provide information on all product and service suppliers in the semiconductor industry. In order to achieve this goal, we are committed to building the largest knowledge base of semiconductor vendors, manufacturers, events and technology areas.” says Darren Savery, Managing Director of Semi-Directory.

“To be recognized as SEMI’s approved supplier guide confirms how comprehensive, up to date and valuable this directory is to everyone who uses it,” continued Savery. “With the support of SEMI, we now have an opportunity to make the directory even more wide-ranging and expand the tools and features available to make it a truly indispensable resource.”

A specialized version of the Semi-Directory is available on the SEMI website, providing site visitors with access to semiconductor supplier companies and a variety of new promotional and marketing opportunities.

“We are excited to partner with Semi-Directory, which offers a relevant and comprehensive information set to our members and the industry as a whole,” said Thomas Viano, Director of Interactive Services at SEMI. “By incorporating this approved supplier directory into the SEMI.org site, we are able to provide our members with easy access to the most up-to-date supplier information, enabling them to make more informed purchasing decisions.”

DSO highlights Dubai’s dynamic business environment during Japan visit

DUBAI, UAE: The Dubai Silicon Oasis Authority (DSOA), the regulatory body for the region’s leading high-technology park, today announced a high-ranking delegation held a five-day visit to Japan to meet with top officials and highlight the business potential of Dubai, particularly the investor-friendly environment of Dubai Silicon Oasis.

Led by Dr. Mohammed Al Zarouni, Chief Executive Officer of Dubai Silicon Oasis Authority, the delegation officials met with the Tsunehiro Ogawa, Director General-International Trade Policy from the Ministry of External Trade and Industry (METI), and the Yasuhiro Yamada, Executive Vice-President of Japan External Trade Organization (JETRO), as well as CEOs of leading Japanese corporations operating in the field of Semiconductor and Microelectronics industry. Discussions focused on the possibility of establishing business ties as well as exchanging views on a wide range of issues of mutual interest.Dr. Mohammed Al Zarouni with H.E Tsunehiro Ogawa-Director General, International Trade Policy from the Ministry of External Trade & Industry (METI).

Commenting on this visit, Dr. Al Zarouni said: "Dubai is already seen as a gateway to the Middle East and North Africa region. This is why we are keen to engage major Japanese firms in a dialogue that will lead to partnerships with DSO. Our talks specifically highlighted the advantages that DSO offers as a destination for Japanese firms to set up their regional base.

“The UAE is already one of the most IT enabled societies with a high degree of technology adaptation in the region. We believe the visit will further consolidate the existing synergy between technology companies in Japan and DSO and take our business ties to the next growth phase.”

Dr. Al Zarouni and the delegation also met with CEOs of leading Japanese corporations operating in the field of advanced technology, and briefed them on the investment opportunities that DSO offers.

The state-of-the-art infrastructure and facilities in Dubai in general and DSO in particular, which are specifically tailored to host technology companies, were also highlighted. The DSOA delegation additionally held discussions with senior officials of reputed banks and financial institutions that could support companies seeking to operate out of DSO.

The delegation later called on His Excellency Saeed Ali Al-Nowais, the UAE Ambassador in Japan. The diplomat expressed his willingness to facilitate all communication channels between the UAE and the Japanese companies planning to commence their operations in DSO and promote the investment opportunities in DSO especially for companies operating in the Semiconductor and Microelectronics industry. Dr. Al Zarouni also commended the role the UAE Ambassador is playing in strengthening the
bilateral trade between both countries.

DSO is a free zone technology park for semiconductors, microelectronics and other high technology-based companies looking to set up their regional headquarters and R&D facilities in the Middle East and North Africa region. DSOA is the regulatory body for DSO, the region’s premier integrated innovations hub for high-tech industries.

Broadcom to intro GPON IAD semiconductors in China

IRVINE, USA: Broadcom Corp. will introduce a new family of Gigabit passive optical network (GPON) integrated access device (IAD) semiconductors to telecommunications providers and original equipment manufacturers (OEMs) in China this year.

The Broadcom BCM6800 family of GPON gateway processors are designed to enable more cost effective optical network terminals (ONTs) or optical network units (ONUs) used in conjunction with service provider networks.

As a result, service providers that deploy Broadcom's BCM6800 family of gateway processors will leverage increased bandwidth for such offerings as high quality triple play services, high definition (HD) video, gaming, wireless and voice over IP (VoIP) supporting Fiber-to-the-Home (FTTH) and Fiber-to-the-Node (FTTN) applications.

With unparalleled levels of integration and increased throughput performance, Broadcom's GPON products will offer Chinese telecommunications carriers high performance and feature-rich passive optical network (PON) capabilities that are built on years of Broadcom's experience in the Chinese broadband access market.

The GPON specification is based on the International Telecommunications Union (ITU) G.984 GPON recommendation that offers Chinese carriers a global standard for PON deployments, with economies of scale built on interoperability and driven by deployments around the world.

GPON further offers network timing that is compatible with existing TDM voice networks in carrier infrastructures that allows carriers to transition existing TDM traffic to a more cost effective network, resulting in a greater revenue return on legacy services with corresponding declines in operating costs.

"Broadcom is pleased to provide our Chinese customers with a reliable and cost effective, stable, long term source of GPON silicon," said Greg Fischer, Vice President & General Manager of Broadcom's Carrier Access line of business. "Our presence and commitment to the carrier market in China is well established with leadership in DSL, Ethernet and wireless LAN products. The global GPON standard provides next generation FTTH and FTTN opportunities for China and we look forward to extending our leading access technologies and investments in this area."

The Broadcom BCM6800 family of GPON solutions are comprised of Fiber-to-the-X (FTTX) products spanning Gigabit bridges through full IAD capabilities. When used with Broadcom's leading ADSL2+, VDSL2 and Gigabit Ethernet products, they comprise a complete FTTN or Fiber-to-the-Building (FTTB) portfolio for remote nodes and multi-dwelling units.

Broadcom will begin production of these GPON devices later this year and is actively supporting customer designs immediately.

Global semiconductor sales forecast results: Cowan LRA model

This is a continuation of my coverage of the fortunes of the global semiconductor industry. First of all, I'd like to acknowledge and thank Mike Cowan, an independent semiconductor analyst and developer of the Cowan LRA model, who has provided me the latest numbers.

The latest forecast estimates, as derived via exercising the Cowan LRA Model, are based upon the recently-released April 2009 actual global semiconductor sales by the WSTS (note -- includes, by the way, very minor upward revisions -- i.e., an increase in sales -- for each one of the previous three months of the year: Jan., Feb., and Mar.).Source: Mike Cowan

As the high-level results table portrays (see above), the year 2009 sales forecast estimate "kicked up" strongly (by $8.52 billion) to $192.50 billion from last month's sales forecast estimate of $183.99 billion with a corresponding improvement (increase) in the 2009 year-on-year sales growth forecast to minus 22.6 percent (from last month's sales growth forecast estimate of minus 26 percent).

It should be pointed out that this latest updated sales growth forecast estimate (-22.6 percent) is in good agreement with the latest forecast revisions just released by Gartner (-22.4 percent), the WSTS (-21.6 percent), and the SIA (-21.3 percent).Source: Mike Cowan

Sales growth forecasts
It should also be highlighted that this month's momentum indicator improved (increased) significantly to plus 19.6 percent. This is relatively good news when compared to the actual monthly momentum indicators from Oct08 through Jan09, that is, -12 percent, -26 percent, -35 percent, and -31 percent, respectively.

Historical tracking of this particular indicator over the past seven years is also available. The historical long-term trend correlates with the significant collapse in industry sales during the time period just mentioned; a corresponding reversal looks to be in the making based upon this month's strongly positive momentum indicator (record high positive percent since Cowan has been running the model and tracking this particular indicator).

With this month's momentum indicator (MI) moving into very high, positive territory, it bodes well relative to a possible relatively strong recovery in sales over the near-term.

Cowan mentioned in his last month's analysis, that this monthly indicator bears continued watching over the coming months in order to monitor the trend in this indicator -- in order to verify that the present very strong uptick is highly suggestive that a "turning point" in the industry's near term sales is real and will be sustained.

However, the model's next month (May 2009) predicted sales forecast estimate is projected to be $14.686 billion which would represent a yr-o-yr monthly sales growth of -27.5 percent -- not very encouraging relative to sustainability of a sales improvement trend if the model's May09 sales forecast is born out.

Time will tell! And, stay tuned for next month's update.

P.S.: I will be getting into further conversations with Mike Cowan, as well as Future Horizons' Malcolm Penn this month.

SIA forecast: 2009 sales will decline by 21.3pc YoY

SAN JOSE, USA: The Semiconductor Industry Association (SIA) released its annual mid-year forecast projecting worldwide sales of $195.6 billion for 2009, a decline of 21.3 percent from sales of $248.6 billion in 2008.

SIA projects that sales will begin to rebound in 2010, with year-on-year growth of 6.5 percent to $208.3 billion, followed by 6.5 percent growth in 2011 to $221.9 billion.

April semiconductor sales increase MoM

SAN JOSE, USA: Worldwide sales of semiconductors rose to $15.6 billion in April, an increase of 6.4 percent from March when sales were $14.7 billion, the Semiconductor Industry Association (SIA) reported today.

April sales were 25 percent lower than April 2008 when sales were $20.9 billion. All sales numbers represent a three-month moving average of global semiconductor sales.

“The better-than-expected 6.4 percent sequential increase in April sales was driven by moderate improvements in a number of end-demand drivers and inventory replenishment,” said SIA President George Scalise.

“The PC market -– a major consumer of semiconductors – has been stronger than predicted earlier in the year. Consensus forecasts currently project that PC unit sales in 2009 will decline by about 6 percent compared to earlier forecasts of a decline in the range of 12 percent. Analysts are also more optimistic about cell phone unit sales, which are now projected to decline by around 7 percent compared to earlier forecasts of 15 percent. PCs and cell phones account for nearly 60 percent of all semiconductor consumption,” Scalise stated.

SIA noted that the worldwide automotive market, which accounts for about 7 percent of total semiconductor sales, remains weak. Corporate information technology spending has also lagged normal patterns as companies have lengthened replacement cycles.

The consumer electronics sector presents a mixed picture: analysts project increased unit sales of digital televisions and hand-held game players and lower unit sales of most other consumer electronics products.

“Visibility remains limited,” Scalise continued. “Two consecutive months of sequential sales growth may be an indication of a return to more normal seasonal sales patterns in some market sectors, albeit at lower sales levels than last year,” Scalise concluded.

Semiconductor and PCB industry forecasts: BPA

SURREY, ENGLAND: BPA Consulting recently released its Semiconductor and PCB industry forecasts. Comparing the world PCB forecast with the semiconductor forecast in Fig. 1 it can be seen that, indeed, where the PCB trough falls to -20 percent, the semiconductor trough has fallen further to -25 percent.

We can also see that this decline in growth started from a peak that was lower than the 2001 decline. At that time inventory levels were at an all time high in anticipation of orders for computers and networking infrastructure equipment that never came. You will remember the dotcom boom that did not materialise.

The circumstances are not the same this time around. As can be seen from the chart below we believe the contraction will not be as great as it was in 2001 (Although one can see from Fig. 1 it comes quite close!). Why? There are three major reasons:

* The growth rates did not reach the extraordinary high peak as those in 2001,
* The levels of inventory are not of the same magnitude.
* The slowdown has been seen over a longer period of time before demand went negative.

Fig. 1: Comparison of PCB and semiconductor growth 12/12Source: BPA Consulting

On the demand side, semiconductor manufacturers late in the first quarter reported minor improvements in order rates and capacity utilization rising above the 50 percent levels, the first quarter on quarter increase since the 2nd quarter of 2008. Typical utilization rates are 85 percent or above during a normal growth phase. (Eg., UMCs utilization rate for Q3 2008 was reported to be 85 percent.)

Responses to BPA’s quarterly survey* indicate that output from many Asian and European fabricators has declined by more than 40 percent in Q1 09. North America has been in slow decline for more than a year and its first quarter revenues have not been hit quite as badly.

High volume manufacturing has disappeared from North America and Europe, with the exception in the latter case for automotive PCBs which have still been made in mid-sized volumes in Germany. Indeed it is estimated that between 40 percent and 50 percent of the country’s output is in this sector, compared to an worldwide sector figure of approximately 4 percent of total PCB shipments.

Surplus inventory is now all but used up, with laminators in particular reporting a slight increase in demand. However this is coming from a level that is only half of what it was a year ago. The quarterly results indicate that there has been no significant overall increase in the order books for quarter 2 (where some companies have won, others have lost), and so Q2 is expected to remain dampened to the same level as Q1.

From such a low base, even with recovery in Q3 and Q4, it will be impossible for the industry to stage a full recovery in 2009 and only low growth is expected for 2010.

To further compound the fabricators misery, the competitive marketplace has put intense pressure on the prices, which have been forced down by 5-10 percent at a time when most fabricators were hoping to push prices up a bit to compensate for the higher raw materials costs experienced in 2008 as fuel prices surged.

This has resulted in BPA reducing its value forecast made in November 2008 for 2009 from just under -10 percent to around -16 percent for this year. A small percentage growth is predicted in 2010 as the trend line emerges past the 0 line by the end of the first half of 2010. By 2012, BPA’s forecast PCB demand will be back to 2007’s level of just over $49 billion.

*The PCB service includes a regular quarterly survey of the PCB Industry, and the supply industries worldwide.

Elections 2009! India's IT, semicon, telecom sectors welcome UPA's victory!

The results of India's 15th General Elections are nearly all out! The people's verdict -- voting Dr. Manmohan Singh and Indian National Congress (INC) led United Progressive Alliance (UPA) to a second successive term!

Undoubtedly, this is a vote for stability, continuity and good governance. It is hoped, the nation will have good governance that can be devoid of external pressures of coalition partners. In some ways, the verdict is a vote in favour of the economic policies of the Indian government leading to continued liberalization as well.

This 'pleasantly surprising' result of India's latest general elections has been welcomed overwhelmingly by leaders in India's IT/ITeS, telecom and semiconductor industries.

Dr. Ganesh Natarajan, vice chairman and CEO, Zensar Technologies and former chairman, NASSCOM, says: "We welcome the results of the election, which are indicative of a stable government at the Centre. In the current global economic environment, it is important that India has a stable and progressive political environment that can focus on long-term policies for the sustainable development of the country, even as it takes decisive steps to immediately put the economy back on a high-growth trajectory.

"The Indian IT-BPO sector is both an engine and a catalyst for the development of the Indian economy and we are confident that the government will continue to partner with this sector for leveraging the benefits of IT for India's domestic economy and through international trade. We also look forward to working with the government to promote inclusive growth and social benefits through the innovative use of IT. It is noteworthy that the biggest electoral process in the world -- the globally-admired Indian elections -- is through the use of EVMs, itself symbolic of the significance of IT for the country."

According to Dr. Pradip Dutta, corporate VP and managing director, Synopsys (India) Pvt Ltd: "There is an element of decisiveness in the election results this time, which bodes well for the industry. An anxiety around a fractured and short-lived coalition has been replaced by a confidence that the new mandate will provide a government capable of delivering sustainable long term benefits for both economy and business."

Jaswinder. S. Ahuja, corporate vice president and managing director, Cadence Design Systems (I) Pvt. Ltd, and former chairman, India Semiconductor Association (ISA), adds: "I am encouraged by the result. It is pro-progress. Also, the fact that Congress has a clear mandate should ensure that they can do the right things and make the bold moves that are needed at this time in order to ensure that India can claim its rightful place on the global stage, unencumbered by the compulsions of a fractured coalition."

N.K. Goyal, president, Communications and Manufacturing Association of India (CMAI), chairman Emeritus, TEMA, chairman, CTIA, and vice chairman, ITU APT India, notes: "The country has given a clear message that it wants development and growth, and has rejected the approach of divide, religion, caste, etc. The long awaited liberalization agenda will get a boost now. The industry is sure that there would be stimulus in economy, growth in manufacturing and sustained policies for economic uplift.

"Infrastructure development will also get encouragement. India's GDP growth will surpass 10 percent within the next three years. The telecom sector will see deeper penetration in rural areas, and broadband will match voice subscribers. We can expect 500 millions Internet connections by 2012."

S. Uma Mahesh, co-founder CEO of Indrion Technologies, points out that UPA's win is attributable to the following reasons:
* Rural support -- unemplyment program (though it had more party orientation), and loan waiver (though it didn't quite address all loaned people);
* Defocussed campaigning by other parties;
* Local factors (like 'poor campaigning', divided votes in AP);
* A 'seasoned-company' like approach by Congress that has to be commended, and the media support (similar for Democrats in US);

He adds: "Now the UPA has a chance of a lifetime -- with no excuses. They should be able to do 'real reforms', and provide 'real governance' over the next four years at least, before getting into elections mode again. This should include -- insurance reforms, labour laws, legal reforms, more liberal FDI, media reforms, and not to forget the rural sector, as well as the infrastructure."

Quite correct! I am very sure that the new UPA government, which should be sworn in quite soon, will take all of the necessary steps to boost India's IT/ITeS, telecom, semiconductor and solar photovoltaic sectors. There are several solar photovoltaic and semiconductor fab proposals that, I believe, need clearance as well.

Bundeep Singh Rangar, chairman, IndusView Advisors Ltd, the India-focused cross-border advisory firm, said in a statement today: "The government will have its task cut out with more than $700 billion worth of investments to be channeled in to India's infrastructure, power, telecom and pharma sectors over the next five years to provide the country a strong foundation to achieve the aspirational growth of 10 percent."

I would really like to see industry folks set their expectations before the new government at the center. If I can play a small role in carrying their messages, it would indeed be an honour!

Semicon driving force behind US energy efficiency gains

WASHINGTON DC, USA: Semiconductor technologies are so essential to advances in energy efficiency gains that the US economy could expand by more than 70 percent through 2030 and still use 11 percent less electricity than it did in 2008, according to a major news study by the nonprofit and independent American Council for an Energy-Efficient Economy (ACEEE).

Titled Semiconductor Technologies: The Potential to Revolutionize US Energy Productivity, the new ACEEE report concludes that semiconductors already are the leading factor behind energy efficiency gains.

The report states: “Compared to the technologies available in 1976, we estimate that the entire family of semiconductor-enabled technologies generated a net savings of about 775 billion kilowatt-hours (kWh) of electricity in the year 2006 alone …

[H]ad we expanded the size and scope of the US economy based on 1976 technologies, it appears that the US would be using about 20 percent more electricity than actually consumed in 2006. Stated differently, had we continued to rely on 1976 technologies to support the US economy today, we might have had to build another 184 large electric power plants to satisfy the demand for goods and services.”

In addition to eliminating the need for 184 additional power plants, the estimated 775 billion kWh savings in 2006 attributed to semiconductor-enabled technologies also can be expressed as: $69 billion dollars in business and consumer savings (or $613 per US household); enough power to keep 64.5 million US households going year round; and the prevention of 479 million megatons of carbon dioxide (CO2) equivalent emissions prevented –- a 20 percent cut in electric utility industry emissions linked to climate change.

John A. “Skip” Laitner, Director, Economic and Social Analysis, American Council for an Energy-Efficient Economy, said: “In many ways, the story of the gains in energy efficiency since the mid 1970s and the mid 1990s, in particular, is the story of the rise of the semiconductor. However, the powerful connection between semiconductors and energy consumption is more than just unappreciated; it is actually misunderstood by some. Despite the immediate growth in electricity demands to power the growing number of devices and technologies, semiconductors have enabled a surprisingly larger energy productivity benefit in that same period.”

Brian Halla, Chairman, President and CEO, National Semiconductor, said: “For many years, it has been a commonly accepted view that future generations will have to lower their expectations and plan to live in a very different world –- a world in which progress will be heavily constrained by energy issues. Fortunately, that pessimistic vision of our future need not come to pass. As the ACEEE study shows, we have the ability to continue to drive economic growth, protect and enhance our environment, and pass on a better world to future generations. Our industry –- the semiconductor industry –- is hard at work today to invent and produce solutions to the most critical energy issues.”

Since their emergence in the 1970s and widespread use in the 1990s, semiconductors have been an essential tool for energy efficiency. Faster, better, and cheaper microprocessors; computers; and telecommunications equipment -– and the improved software capabilities that drive their performance -– have accelerated both the adoption of these technologies and their growing networked use. Semiconductors enable the improved operation of motors and the motor systems that heat and cool our homes, and that provide pumping and mechanical power in our industrial facilities.

Energy solution that are described as “smart” -– from smart buildings to smart appliances to the Smart Grid –- have semiconductor sensors to measure temperature or other variables; communications chips to receive and transmit data; memory chips to store the information; and microcontrollers, microprocessors, and power management chips to adjust energy loads.

Smart grid technologies also enable a more cost-effective deployment of decentralized but cleaner renewable energy resources such as solar panels and wind turbines, which are also enabled by semiconductors. Smart grids may also enable plug-in hybrid cars to stretch gasoline dollars, and provide battery storage units for the nation’s electric generation system.

Report highlights
Bulk of recent energy savings linked to semiconductors: “US energy intensity (energy per constant dollar of GDP) declined an average 1.2 percent annually between 1950 and 1995. The level of US energy intensity further declined to 2.1 percent between 1995 and 2008.

More importantly however, this path-breaking analysis argues that a significant proportion of these energy productivity gains -– especially in recent years -– appear to be the result of the explosive growth in technologies supported and the related shift in the predominant technological paradigm.”

More than 2-to-1 return on investment in more semiconductor energy efficiency: The ACEEE report outlines an investment model to achieve the most from semiconductor-enabled energy efficiency.

“We estimate these to begin with a modest $7.1 billion of incremental investments in 2010, rising to as much as $28.7 billion by 2030. The average annual investment over the next two decades is about $22.5 billion. Cumulatively, the market for these new technology investments is about $472 billion over the period 2010 through 2030. But there is a hefty return on these investments. We estimate the electricity bill savings to average just over $61 billion over that same period of analysis, producing a cumulative electricity bill savings on the order of $1.3 trillion over that same time horizon. What’s the bottom line? The savings are about 2.7 times the investment cost.”

Huge additional energy efficiency gains seen over the next 20 years: “By our calculation here, the cumulative net electricity bill savings enabled by semiconductors might exceed $1.2 trillion through 2030. Perhaps not surprising, a more productive economy might also support some 935,000 more jobs while substantially reducing environmental impacts –- notably a reduction in energy-related carbon dioxide emissions that would exceed 700 million metric tons, also by 2030.”

The need for 300 more power plants could be eliminated: Smart investments “can facilitate productivity gains that reduce electricity use to only 3,364 billion kWh by 2030. The resulting savings of 1,242 billion kWh in 2030 means that the economy may actually consume 11 percent less electricity than it did in 2008.

In other words, semiconductor-related technologies may support an economy in 2020 that is 35 percent larger than today, but one that uses 7 percent less electricity. And by 2030 those policies may support an economy that is over 70 percent larger but uses 11 percent less electricity than in 2008 ... By 2030, we would need to build 296 fewer power plants.”

Major advances made in semiconductor industry energy efficiency: “According to data from the US Census Bureau’s Annual Survey of Manufacturers (2006), the semiconductor industry purchased 11.8 billion kilowatt hours of electricity in 2006, which was about 1.3 percent of manufacturer consumption and 0.3 percent of total US consumption. Perhaps even more impressive, the Bureau of Economic Analysis (2007) reports that while the economy as a whole increased energy use by 13 percent over the period 1997 through 2007, the semiconductor industry actually cut energy use by half over that same period.”

March chip sales rebound slightly from February

SAN JOSE, USA: Worldwide sales of semiconductors were $14.7 billion in March, a gain of 3.3 percent from the prior month when sales were $14.2 billion, the Semiconductor Industry Association (SIA) reported.

Sales for the first quarter of 2009 amounted to $44 billion, a 29.9 percent decline from the first quarter of 2008 when sales were $62.8 billion. Sales declined by 15.7 percent from the fourth quarter of 2008 when sales were $52.2 billion.

Sales in all geographic regions except Japan showed month-to-month gains. Sales in Japan were sharply lower, reflecting a drop in the country’s economic output. All geographic regions reported lower first-quarter sales compared to the same period of 2008.

"The modest sequential rebound in worldwide sales in March suggests that demand has stabilized somewhat, albeit at substantially lower levels than last year," said SIA President George Scalise. "While all major product sectors showed month-on-month growth, there continues to be limited visibility in end markets. There are some bright spots such as 'smartphones' and 'netbook' PCs, but there are no clear signs of early firming of demand in other major end markets such as automotive, corporate information technology, and consumer electronics."

"The global chip industry continues to reflect the influence of the worldwide economic slowdown," Scalise continued. "We expect economic stimulus measures in the US, combined with other countries will begin to impact sales as we enter 2010," Scalise concluded.

Source: Semiconductor Industry Association

2011 peak year for SD DTT STB semicon: In-Stat

SCOTTSDALE, USA: The semiconductor opportunity in standard definition (SD) Digital Terrestrial TV (DTT) set-top boxes will peak in 2011 at nearly $500 million.

High-definition DTT STBs also offer a short-term spike in semiconductor opportunity. However, SD DTT STBs are the more sustainable opportunity for semiconductor manufacturers, reports In-Stat.

"The US analog shut-off is driving a surge of HD converter boxes in 2008 and 2009," says Gerry Kaufhold, In-Stat analyst. "However, this bubble will wane, while the SD DTT market continues to grow across a broader set of geographic markets."

Recent research by In-Stat found the following:
* Key component categories include the Demux/CPU/AV decoder and the MPEG-2 MP@HL/Graphics IC.
* The European DTT STB Market Value will peak in 2011 at $1.6 billion.
* On a European country basis, UK leads the market, followed by Spain, France, Germany, and then Italy.
* Total DTT STB unit shipments will peak at 44 million in 2009.
* Standard Definition DTT Set Top Box unit shipments will peak in 2011.

Freescale to close fabs Japan and France?

AUSTIN, USA: Freescale Semiconductor announced financial results for the first quarter ended April 3, 2009.

Highlights for the first quarter include:

* Net sales of $840 million for the first quarter;
* Trailing 12 month adjusted EBITDA of $1.03 billion;
* Cash, cash equivalents and short-term investments of $1.42 billion at April 3, 2009.

Net sales
Net sales for the first quarter of 2009 were $840 million, compared to $1.41 billion in the first quarter of 2008 and $940 million in the fourth quarter of 2008.

"Even though our first quarter results were impacted by continued economic and market challenges, we made significant progress on our restructuring initiatives and improvements to our capital structure,” said Rich Beyer, chairman and CEO. “Our plan to reduce our annual operating costs by $600 million is on track, and we reduced our long-term debt by approximately $1.9 billion through the debt exchange.”

Operating results
Net sales for the first quarter of 2009 declined 11 percent from the fourth quarter of 2008 and 40 percent compared to the same period last year. During 2008, the company announced that it was exploring strategic options for its cellular handset business and that it had ended its previous contractual supply agreement with Motorola. Excluding sales in its cellular products group, revenues for the company’s remaining businesses declined 15 percent from the fourth quarter of 2008 and 31 percent compared to the first quarter of 2008.

The reported loss from operations for the three months ended April 3, 2009 was $351 million, compared to a loss of $152 million in the first quarter of 2008. The adjusted operating loss (defined in Note 1 to the Notes to the Consolidated Financial Information attached to this press release) for the three months ended April 3, 2009 was $140 million compared to earnings of $206 million last year.

Net earnings for the first quarter of 2009 were $1.76 billion. Included in net earnings was a one-time net gain of approximately $2.26 billion as a result of the long-term debt eliminated as part of the debt exchange completed by the company. Upon completion of this transaction, the face amount of the company’s outstanding long-term debt obligations decreased by approximately $1.9 billion and the related expected annual cash interest expense decreased by approximately $140 million.

Adjusted EBITDA for the 12 months ended April 3, 2009 was $1.03 billion.

A description of Adjusted EBITDA and adjusted operating earnings/loss and the reconciliations to our GAAP results are included in the tables and notes attached to this press release.

Product revenues
The company’s net sales figures for the first quarter of 2009 are as follows:

* Microcontroller net sales were $246 million in the first quarter of 2009, compared to $304 million in the fourth quarter of 2008 and $458 million in the first quarter of 2008.
* RF, Analog and Sensor net sales were $184 million in the first quarter of 2009, compared to $232 million in the fourth quarter of 2008 and $259 million in the first quarter of 2008.
* Networking and multimedia net sales were $228 million in the first quarter of 2009, compared to $273 million in the fourth quarter of 2008 and $269 million in the first quarter of 2008.
* Cellular net sales were $95 million in the first quarter of 2009, compared to $64 million in the fourth quarter of 2008 and $318 million in the first quarter of 2008.
* Other net sales were $87 million in the first quarter of 2009 compared to $67 million in the fourth quarter of 2008 and $101 million in the first quarter of 2008.

Business restructuring
The company recently initiated actions to complete the exit of the cellular handset business. These actions encompass employment reductions with certain severance and other exit costs. We anticipate completing these actions by December 31, 2009.

Implementation of this plan and any specific employment actions are subject to satisfaction of legal requirements, including prior consultation on the plan with work councils in some of the countries in which we operate. Severance related charges for these actions are estimated to be approximately $70 million.

As previously reported, the Company is implementing a series of restructuring actions to streamline its cost structure, reduce its breakeven and re-direct some research and development investments into growth markets.

Total severance and related cash requirements associated with these actions, inclusive of the costs associated with completing the exit of the cellular handset business detailed above, total approximately $270 million with corresponding annualized savings of approximately $700 million realized by 2010.

Future manufacturing roadmap
In order to remain competitive and maintain an efficient manufacturing footprint, the company announced today that it is initiating a series of actions to eliminate its 150mm manufacturing capability. These actions will result in the closure of the company’s Sendai, Japan fabrication facility.

In addition, the company has initiated a formal consultation with employees at its Toulouse, France facility. The proposal to close the facility will be evaluated through Freescale’s Toulouse Work Council. These actions are expected to be completed by the end of 2011 with severance costs anticipated at approximately $200 million with ongoing annual cost savings of approximately $100 million upon completion.

Financial position
Cash, cash equivalents and short-term investments were $1.42 billion on April 3, 2009, compared to $1.39 billion on December 31, 2008.

Semiconductor industry revenue to jump 17 percent in 2010!

In order to put some perspective into the current economic climate, it should be noted that this year, Databeans is expecting the chip market to amount to just over $200 billion, which was the size of the market nine years ago. After several years of strong growth, 2008 saw the entire market slip 3 percent from the year before, from $255.7 billion to $248.6 billion in revenue.

The industry agrees that 2009 will be undoubtedly worse due to numerous factors. The inventory issue, particularly in the memory markets, has contributed to falling ASPs and reduced profits. However, Databeans believes that it is the meager replacement rates for typically strong application categories such as mobile handsets, notebook PCs, and consumer electronics, spurred by panic in the credit sector which has hindered consumer spending, and thus reduced demand for ICs.

While this industry recession shows some similarities to the one that occurred in 2001, when semiconductor sales plummeted by 32.5 percent and took nearly three years to return to 2000 levels, Databeans believes this crisis will be far shorter lived.

The primary difference is that the unprecedented growth that occurred between 1999 and 2000 caused such overcompensation in production that the following recovery followed a “bathtub effect” or a rather long and flat stabilization to return to previous profits.

Alternatively, the current crisis caused primarily by temporary macroeconomic issues will recuperate at a much faster rate. After falling 17 percent in 2009, Databeans predicts a “V-Shaped” or “Boomerang” recovery for the semiconductor industry, with a total year-over-year increase of 17 percent from 2009 to 2010.

It is predicted that by 2011, total IC sales will regain momentum and surpass the peak seen during 2007, with $269.1 billion in revenue. We believe that the market reacted swiftly to the financial meltdown and that with little inventory in the channel now, production will begin to flow again and not remain stagnant as it did in 2002.

This improved situation isn’t likely to happen all at once, but certain indicators show that recovery may be sooner than expected. The handset industry, a traditional bellwether for overall semiconductor health, is estimated to have lost nearly 20 percent of its sales in the first quarter, but was still considerably better than the 35 percent decline in Q4 2008.

Nokia, the world’s leading handset supplier with 38 percent of the total market share, is still selling well, particularly in the ever growing Smartphone category, which is expected to perform fairly well throughout 2009. At the same time, the company’s key chipset supplier, Texas Instruments, announced better than expected sales for the last two months. Investors have responded - over the past month, Nokia shares have risen by 45 percent.

China is expected to factor into IC market revival tremendously. Already China's industrial output growth jumped 8.3 percent in March, up from the 3.8 percent rise of the first two months, as domestic demand continued to improve. With low penetration rates for consumer electronics, mobile handsets, and laptop computers, combined with strong cash savings, increasing Chinese consuming habits will likely be a key factor in worldwide recovery.

China’s technology companies have also done surprisingly well during the first quarter, even amidst the global recession. For example, the country’s leading wireless provider China Mobile’s 2008 profit managed to jump nearly 30 percent, as revenue grew 16 percent to $60 billion. The company added more than 7.3 million subscribers per month last year, reaching 457 million customers and enjoys a 70 percent share of China's wireless market. This has been a major factor for Nokia’s continue success in the region, as it is China Mobile’s principal partner in the country’s 3G network infrastructure.

Ultimately, a combination of factors will lead to a gradual recovery in both pricing for ICs and consumer spending habits. This year will still be a difficult journey for many OEMs and semiconductor suppliers, with consolidation, reduction, or restructuring on the horizon. Ultimately, Databeans views the situation as troubled, but still showing signs of improvement.

I listened to you, dear readers -- presenting separate blogs on semiconductors and solar/PV

Ever since I started writing this blog, I've always managed to maintain my affinity toward semiconductors. Publishing and maintaining a semicon blog, especially out of India, is difficult and extremely challenging, and well, suitably rewarding.

Several readers, well wishers and friends suggested that I also start taking in press releases, besides writing my own content! Their logic -- who else can do it better! Wow... I'm really overwhelmed!

So, as always, I have listened to my friends -- my readers and well wishers -- and bow to their request!

Separate blogs on semicon and solar PV
This is just to inform everyone -- readers, friends and well wishers -- that I've rolled out two separate blogs on semiconductors and solar photovoltaics (solar/PV).

1. PC's Semiconductors Blog

2. PC's Solar Photovoltaics Blog

These blogs have been spun out off this very blog, my award winning blog!

Let me make it clear that Pradeep Chakraborty's Blog -- which only has original content, barring a few odd posts, will remain unchanged in quality and nature! It will continue to carry top-quality, world class content! In fact, I will now have to work doubly hard, as I've to try and keep up with all of those press releases :)

For now, these two new blogs include specific blog posts related to either semiconductors or solar/PV from my award winning blog, and other specific blog posts, as well as press releases, industry updates, statistics, etc. I will also add new product announcements, mergers and acquisitions, etc., as and when those happen -- on to both of these blogs.

I am very grateful to my friends for this wonderful suggestion. As and when I roll out my technology portal, I will be having a readymade platform -- of articles and releases to fall back on, and to grow it even further.

I would have loved to announce a further three additional blogs on FPGAs, embedded design and EDA as well. That may happen at a later date. Oh yes, an extra one on chip design trends.

You know what? I have a tremendous liking for telecom -- a major weakness, as well as electronic components, electronics and photonics. Maybe, blogs on these are also in order, well, hopefully, sometime soon!

Thanks for your kind support, dear friends, readers, well wishers and all of those who simply give me a wealth of advice, as always. Suggestions for improvements are always welcome! You all know where and how to reach me! :)

Rolled out Telecoms Blog
PS: Dated April 25th, 2009 -- My friends, I have rolled out a Telecoms Blog after all! Couldn't resist staying away from an industry, which has played such a big role in my development as a technology writer, journalist and blogger.

I look forward to your warm support, as always.

Rolled out Electronics Blog
Urgent PS: Dated April 26, 2009 -- Friends, I have also rolled out a brand new Electronics Blog! This is the area where I first started off as a technology journalist, and later, bloomed, while I was at Global Sources (2005-2006).

I will also try and include as many products and suppliers from the Greater China region, and help you source quality electronics products.

Thanks and look forward to your support as always. :)