Processor Whispers: About growth and gates
by Andreas Stiller
Bright prospects: everyone is celebrating the economic upswing and the big IT corporations made “no end of money” in the last quarter of 2010.
At 78%, Apple takes first place for growth in profits with a fiscal 2011 first quarter rising to almost $6 billion, although Microsoft still leads with overall profit at $6.6 billion. Next in line is IBM with a large fourth-quarter profit of $5.3 billion. The company, founded as the “Computing Tabulating Recording Corporation” on16 June 1911, will celebrate its centenary this year. IBM had been the IT market leader for decades when Hewlett-Packard took over the role after merging with Compaq. Last year, however, HP had to hand over the title to Samsung, which will probably keep it for now; with an equivalent revenue of about $137 billion, Samsung clearly stays ahead of HP at $126 billion and IBM at almost exactly $100 billion. However, IBM has a much better profit margin than the other two corporations.
With a growth of 48% and a total profit of $3.4 billion, Intel has achieved another best quarter “ever”, to the delight of its shareholders. What’s more, the chip technocrats apparently plan to increase their activity in the entertainment sector. First, they hired the BBC director Erik Huggers, who had been responsible for Future Media and Technology, as general manager of the Digital Home Group, and then, shortly afterwards, they engaged William James Adams Jr., of the hip-hop group Black Eyed Peas, pop star and Grammy winner, better known as Will.i.am. The hip-hop star is supposed to deliver new inspiration as director for Creative Invention.
Intel has again invested in innovative German companies. For instance, the Berlin-based solar cell manufacturer Sulfurcell received an injection of $25 million from Intel and other investors. Sulfurcell develops and distributes thin-film photo-voltaic modules made of copper-indium-gallium-selenide (CIGS); these are much cheaper to produce than cells made of polycrystalline silicon. At the end of 2010, the company achieved a respectable efficiency of 12.6% with its cells. Strengthened by the cash boost, the new goal is to reach 14%.
Google is also planning to hire more new people than ever before. After the latest reported quarterly profit of $2.5 billion, co-founder and new CEO Larry Page could easily set aside $100 million as thanks for the replaced former CEO, Eric Schmidt. Even AMD's sacked boss Dirk Meyer did not leave empty-handed. Although his ex-company's turnover seems to be at a standstill, at least AMD is back in the black with last-quarter profits of $345 million after two quarters in the red. This means a compensation package of $12 million for the sudden separation is economically feasible.
So far, so good – nevertheless, the Cassandra's of this world, in the form of analysts from IDC and Gartner, predict that growth in the PC market will drop significantly this year. Initially, Gartner had anticipated 377 million PCs for 2010, but the final result was 351 million (excluding tablets), an increase of 13.8% from 2009. About one third of these were sold in Europe. Here, the growth rate of almost 13% is largely down to notebooks, as the sales for netbooks (-30%) and desktop PCs (-19%) dropped considerably. And tablets are going to steal an even bigger slice of the PC cake this year.
The whole semiconductor sector experienced an even stronger boost and, according to Gartner, made a profit of $300 billion – an impressive improvement of 30%. However, a significant drop – although to a higher level than the general market – is expected by manufacturers. The semiconductor industry, just as with the manufacturers of displays, energy-saving lamps, magnets and other such products, needs increasing quantities of materials that are on the red list of elements becoming depleted; first of all indium, gallium, germanium, phosphor, hafnium and helium. And the rare earth elements such as terbium, neodymium, and praseodymium are difficult to obtain. The majority of these materials come from mines in China and their prices have increased by a factor of five over the last year. There's no end in sight for the rise in prices and China has announced that exports will be reduced by 35% this year.
Fewer and fewer are companies able to spend the money necessary to build new semiconductor factories (“fabs”); these cost significantly more than $4 billion for the next generation. No wonder new alliances are already in the pipeline: Toshiba apparently plans to sell its chip factory in Nagasaki to Sony and then let Globalfoundries or Samsung manufacture its chips. Within the scope of the Common Platform Alliance, both cooperate closely with IBM in the development of new technologies, anyway. Recently, Samsung and IBM reaffirmed their planned collaboration on the costly route toward 20 nm structures. Meanwhile, ARM and IBM have even agreed to collaborate down to 14 nm. Proudly, IBM presented the first wafer with 20 nm test chips at the Common Platform Technology Forum 2011.
Finally, the alliance for 20 nm has decided to change its manufacturing strategy and switch to the “Gate-Last” technology that Intel and TSMC have been using for quite a while now, and which the alliance had earlier continuously criticised as inferior. Of course, currently the structure sizes are different, 32 or 28 nm, and why should they care about what they said yesterday?
Globalfoundries and AMD can only hope that the current “Gate-First” technology will work well and that AMD's first Bulldozer chips can be released in the second quarter. At the recent quarter earnings conference call, interim CEO Thomas Seifert said that the Fusion processor Llano (Phenom-like cores with DirectX 11 graphics) will probably be the first 32-nm chip to be manufactured by Globalfoundries and that the desktop version with Bulldozer architecture will follow in early summer. Well, this means that the promised second quarter schedule should be met as there will indeed be some days left in June.