Weeklyroundup Jun 30 Jul 07 06

ISA Weekly Roundup
June 30-July 7, 2006
• Korea seeks to bolster economic status
With China considered by many the most dynamic Asian economy and India an
up-and-comer, South Korea is often overlooked as a global economic
powerhouse.
But at the Korea Investment Forum held here Wednesday (June 28), speakers
representing South Korean economic and trade groups said the country, with
world's tenth largest economy, is primed for strong future growth and thus is an
attractive investment target.
The speakers pointed out South Korea's already strong position in sectors such as
electronics, information and telecommunications, and parts and materials, and
hinted of fledging development in areas such as biotechnology. They also pointed
to a strongly educated workforce and progress in solving past problems such as
labor strife.
The Forum was organized by the Ministry of Commerce, Industry and Energy
(MOCIE), the Korea Trade-Investment Promotion Agency (KOTRA) and Invest
Korea, and supported by numerous Korean trade and economic groups.
Keynote speaker Sye Kyun Chung, minister of MOCIE told a packed audience that
while Korea faces challenges such as rising raw material costs and energy prices,
its economy should see a double-digit percentage increase in exports this year.
South Korea "ranks sixth in patent applications," said Chung. And "50 percent of
Fortune 500 countries do business in Korea."
MOCIE noted that Korea's 2004 gross domestic product (GDP) was $679.9 billion.
The country had a trade surplus of $38.2 billion, reflecting growth in exports of
wireless communications equipment, semiconductors, and computers.
Chung brushed aside any lingering notion that Korea was leery of foreign capital
coming into the country, stating, "We welcome all foreign investment. We want to
see Korea be an open economy." He added that the country is now negotiating a
free trade agreement with the U.S.
Tami Overby, president of the American Chamber of Commerce in Korea, echoed

Chung's sentiments, noting that the free trade agreement is the only one being
negotiated between the U.S. and a Far East country. "If we can complete the
deal, there will be enormous new investment."
Overby added Korea's government has been keen on reforming its economy since
1997, when a severe economic crisis hit the country. "Ten years ago, Korea was a
difficult place to do business," she conceded.
Improving labor relations
South Korea's past economic problems were partially attributed to uneasy

relations between the government and labor. Labor problems still exist in sectors
ISA, June 30- July 7, 2006 1

such as pharmaceutical and public service but are being eradicated elsewhere,
according to Yong-Deuk Lee, president of the Federation of Korean Trade Union.
Lee is intimately familiar with Korean labor issues, admitting to having been jailed
twice for past participation in labor actions. But improving labor relations have
turned him into a staunch proponent of foreign investment in Korea.
"If you or your colleagues worry about investing in Korea, don't," Lee said.
Investors may not need a strong marketing pitch in sectors like electronics and
information technology, where Korea already has an established presence.
Data from the Korea Electronics Technology Institute (KETI) noted Korea is fourth
in electronics sales behind the U.S., Japan, and China; third in semiconductors;
first in displays; and second in mobile phones.
Choon-Ho Kim, president of KETI, pointed out that Korea was the incubator for
WiBro (Wireless Broadband Internet), heavily adopted into the technology profile
of the IEEE 802.16e mobile WiMax standard. Korea-based KT Corp. is
spearheading efforts to build a global belt for WiBro service.
KETI noted that 60 percent of Korea's population already has broadband Internet
access, while 80 percent has mobile phone access.
Besides WiBro, Korea is delving into terrestrial digital multimedia broadcasting (T-
DMB) and high-speed downlink packet access (HSDPA), said Kim.
But even more advanced technologies will be needed to give Korea an edge over
nations with clear labor cost advantages, such as China, according to Kim. He
said Korea will need to develop advanced technologies that cut across multiple
disciplines, such as electronics and biotechnology.
Source: EETimes, June 28 2006
• EDA returned to double-digit growth in Q1, EDAC says
EDA revenue was up 10 percent year-to-year during the first quarter, the first
time EDA posted double-digit growth in more than two years, according to a
report issued Thursday (June 29) by the EDA Consortium (EDAC)'s Market
Statistics Service.
Worldwide EDA revenue reached $1.215 billion during the first quarter, up from
$1.108 billion in the first quarter 0f 2005, though the difference was attributed in
part to new company participation, according to EDAC. Total product revenue,
without services, increased more than 10 percent to $1.136 billion in the first
quarter, EDAC said.
The first quarter marked EDA's highest quarterly year-to-year growth since the
fourth quarter of 2003, when EDA revenue was up 13 percent year-to-year. Since
then, EDA has posted two flat quarters, one quarter of revenue decline, and five
quarters of lukewarm growth of 6 percent or less.
Does 10 percent growth mean that EDA is back to form as a high-growth

segment?
ISA, June 30- July 7, 2006 2

"It was a good quarter," said Walden Rhines, chairman and CEO of Mentor
Graphics Corp. and vice-chair of the EDA Consortium. "If the semiconductor
industry continues to expand, EDA is positioned to continue this strong growth."
EDA's largest tool category, computer-aided engineering, generated revenue of

$512 million in first quarter, up 10 percent from the same period of 2005, EDAC
said. First quarter IC physical design and verification revenue increased 13
percent to $315 million, intellectual property (IP) revenue grew 12 percent to
reach $225 million and services revenue increased 3 percent to $79 million, EDAC
said. Printed circuit board and multi-chip module revenue totaled $84 million in
the first quarter, down 4 percent year-to-year, EDAC (San Jose, Calif.) said.
Regionally, North America, EDA's largest region, purchased $569 million of EDA
products and services during the first quarter, a 14 percent increase compared
with the first quarter of 2005. First quarter EDA revenue from Japan grew 3
percent to reach $291 million, revenue from Western Europe increased 13
percent to total $218 million and revenue from the rest of the world was up 4
percent, reaching $137 million, EDAC said.
Reporting companies employed 23,128 professionals in the first quarter, up 4

percent from the 22,236 reported in the first quarter of 2005, EDAC said.
• Ness, Pulsic set up India development center
Global IT solutions provider Ness Technologies Inc. has established an extended

development center (EDC) with Pulsic Ltd., a supplier of physical design solutions
for analog, mixed signal and custom digital design. The development center is
located at Ness' facility in Bangalore, India.
The center's establishment is a part of a three-year, multi-million dollar contract

between Pulsic (Bristol, U.K.) and Ness Technologies (Hackensack, N.J.). Pulsic
has established an R&D team in Bangalore, working with Ness Technologies,
which will assist Pulsic's R&D efforts in India with the necessary infrastructure and
know-how.
"Ness is an ideal fit for Pulsic. We have aggressive plans to accelerate product
development and increase geographic reach to meet our growth plans," said Ken
Roberts, CEO, Pulsic, in a statement. "India has an abundance of outstanding
engineers, and Ness EDC provides Pulsic with the right mix of processes and
additional senior management capability to build a productive team quickly and
hasten product development."
• Qualcomm looking for Indian startups
Qualcomm, which outsources services to several Indian software and hardware

firms, is seeking a startup in India, either through acquisition or an equity
investment by its Qualcomm Technologies & Ventures division.
Sanjay K. Jha, who headed the investment arm previously and is now president
of Qualcomm CDMA Technologies, the IC and software sales arm, said, "We are
definitely interested in acquisitions in India." Predicting that India is likely to have
ISA, June 30- July 7, 2006 3

3G services in the 18 months, he said India, China and the U.S. are the three fast
growing markets for the company, where it is committed to invest.
On the tussle regarding royalties in India, Jha said Qualcomm will have to address
whatever issues this market throws up, as "it is a large marketplace with large
growth potential."
• Polysilicon shortages seen curbing semi growth
A polysilicon shortage could cause semiconductor market growth to fall short of

2006 industry estimates and possibly stagnate in 2007, according to an analyst
with market researcher J-Star Global Inc.
Yoshihisa Toyosaki, J-Star's president, CEO and former head of iSuppli Japan,
said material supply chain conditions were as important as demand in predicting
semiconductor market growth. Though the industry has been growing on the
assumption that silicon is inexhaustible, it now needs to focus on how to secure
polysilicon, Toyosaki said.
"There are forecasts of about 10 percent growth for semiconductor market this
year and next year, based mainly on the analysis of demand from electronics
devices that employ semiconductors. But if semiconductors and solar cells both
continue growing, there will be a gap between polysilicon supply and demand
from them. Polysilicon shortages will be a new impact on the silicon cycle,"
warned Toyosaki.
J-Star estimated total polysilicon production was 30,000 tons last year, about
two-thirds of which was allocated to semiconductor production. The remaining
third was used for solar cell production, which has grown 45 percent annually
since 2001. J-Star estimated that polysilicon production will reach 40,000 tons in
2007 thanks to suppliers bolstering capacity. However, polysilicon demand by the
solar-cell industry is slated to double to nearly 20,000 tons over the same period.
One polysilicon supplier is responding by expanding production. Wacker Chemie

AG (Munich, Germany) said this week it would expand its polysilicon production
capacity by an additional 4,500 metric tons to a total of 14,500 metric tons by
the end of 2009.
Should the allocation ratio of polysilicon to IC and solar industries remain the
same, J-Star predicted chip market growth of 6.3 percent this year and 8.7
percent next year—lower than the World Semiconductor Trade Statistics group's
10.1 percent forecast for 2006 and 11 percent in 2007.
If the solar industry absorbs more polysilicon, the percentage of polysilicon it

consumes will increase to 35 percent this year and 40 percent next.
Consequently, semiconductor market growth will slow to 3.6 percent this year
and 0.3 percent in 2007, said Toyosaki.
"I don't foresee the allocation balance changing, and expect 8.7 percent growth
for the semiconductor market next year. But there is a risk that change in
polysilicon allocation brings a worse-case scenario for the semiconductor
industry," he warned.
ISA, June 30- July 7, 2006 4

He called on chip makers and OEMs to make strategic procurement plans that
take polysilicon shortages into account.
For some time, polysilicon has been a hot topic in recent times. Prices for
polycrystalline materials have soared amid ongoing and severe shortages in the
marketplace.
Leading polycrystalline or polysilicon vendors — Hemlock, MEMC, Mitsubishi

Materials, REC and Wacker — cannot keep up with huge OEM demand and are
reportedly sold out of these materials for the next two to three years, according
to industry sources
An investment banking firm recently increased its forecast for solar-cell

production in 2006 and 2007, but noted that polysilicon material shortages will
continue to plague the industry.
• Synplicity's Synplify Premier Software Wins the Semiconductor

Industry News' LSI of the Year Award; The FPGA Physical
Synthesis Software Recognized for Its Innovative Graph-Based
Physical Synthesis Technology
Synplicity, Inc. (NASDAQ:SYNP), a leading supplier of software for the design and
verification of semiconductors, today announced its Synplify(R) Premier software
with graph-based physical synthesis technology was awarded the prestigious LSI
of the Year Award's first-place Grand Prix Award. Winning the award in the Design
Environment/Development Tools category, the Synplify Premier software features
Synplicity's innovative graph-based physical synthesis technology, merging
optimization, placement and routing to generate a fully placed and physically
optimized design. The Graph-based physical synthesis technology within the
Synplify Premier software improves timing closure by means of a single-pass
physical synthesis flow for 90nm FPGAs. Synplicity received the award during a
ceremony on June 28 at the 9th Embedded Systems Expo & Conference being
held at the Tokyo Big Sight in Japan.
The Semiconductor Industry News established the LSI of the Year awards in 1994
to promote market development and technology in the semiconductor industry.
The award acknowledges the most remarkable LSI products and technology in
two categories -- the Device category, and the Design Environment/Development
Tool category. Nearly 250 products were nominated for the 2006 award with the
Synplicity Premier software receiving first-place recognition by receiving the
Grand Prix Award.
"We are extremely honored to receive the prestigious LSI of the Year Award for
our Synplify Premier product," said Gary Meyers, president and CEO of Synplicity,
Inc. "The Synplify Premier software represents a breakthrough achievement and
this award demonstrates our continuing leadership position in the FPGA synthesis
market. We remain committed to offering innovative software solutions that
enable the rapid and effective design of complex, high-performance
semiconductors."
"Synplicity holds a dominant share of the FPGA logic synthesis market," said Dr.
Eng. Hiroto Yasuura, professor of Kyushu University, Chairman of the review
committee. "Synplicity's unique FPGA physical synthesis technology ensures fast
ISA, June 30- July 7, 2006 5

timing closure and improves operation speed. The Synplify Premier software is
highly evaluated as an essential method for 90nm FPGA designs."
This award marks the fourth time Synplicity's tools have won an LSI of the Year
award. Previous products from Synplicity that won the prestigious award include:
the Amplify(R) Family of Structured/Platform ASIC synthesis tools (2005 Semi-
Grand Prix award winner); Identify(R) RTL Debugger software (2004 third place
LSI of the Year award winner); Amplify(R) FPGA Physical Synthesis software with
TOPS(TM) (Total Optimization Physical Synthesis Technology) (2002 Jury's
Special award winner).
Source: BusinessWire, June 29 2006
• Come, Produce, Sell, Export: Interview with Thiru Dayanidhi Maran
The IT and telecom minister, believes in knocking at doors for selling India.
Obviously, his views on FDI wouldn't please the Left. He measures his
performance, he says, in the billions of dollars he is able to bring into the country.
His Left partners will differ, but Dayanidhi Maran, IT and telecom minister,
believes in knocking at doors for selling India. He measures his performance in
the billions of dollars he is able to bring into the country. And his efforts are
paying off.
The issue of FDI in certain sectors is a subject of heated debate. What is

your take on FDI?
IT and telecom are the fastest growing sectors and need huge investments. We
have allowed FDI in these sectors. In IT we have allowed 100% FDI, in telecom
manufacturing 100% and in services 74%. Investors feel comfortable with this
and we have been able to address their fears and give them security from the
government. They believe in the first miracle, after which all will happen.
With companies like IBM indicating large investments, are you revising
your FDI expectations up from the earlier $10.3 billion?
If we look at the last three years, our expectation was that around $9-10 billion in
FDI would flow in. Now, I expect to double my target by year end. This month I
am going to Korea to sell India as an investment destination. After that, I am
back to Singapore, a nation from which I have high expectations. I always believe
in knocking at doors for selling India, there is nothing wrong in it. I think my duty
is to explore the possibilities and highlight the advantages of doing business in
India.
What is your sales pitch to prospective investors?
I always start my speech by saying that the PM, who was the Finance Minister in
1991, is the father of reforms in our country. I say, take a look at the policies and
you’ll find the government’s attitude has always been encouraging. True, we are
a democratic country and we argue, we argue very, very loudly, but when we
take a decision we never go back. Consecutive governments, whichever party
they may be, have been quite supportive. That’s one side. The other good thing is
that the opportunity in India is enormous. My big selling point is that I come from
a country with 1.2 billion people of which 60% are below the age of 35 years. We
have a market. So manufacture in our country, sell in our country and export
from our country.
ISA, June 30- July 7, 2006 6

Which new segments are you focusing on for FDI?
I feel new areas like LCD and flat screen displays should attract a lot of
investment. It’s a huge market. Today alone we are selling 150,000 flat screen
sets in the country. I am looking to attract display manufacturers like LG and
Samsung to set up shop in the country.
A policy is being circulated for this and will be adopted soon. Another area we are
looking at is large-scale manufacturing of photo voltaic cells.
The other important area where we are missing is semiconductors. Last year, on
June 7, when I was in Silicon Valley, it struck me that we needed to kick-start the
semiconductor business in India. There is a major initiative being undertaken for
the creation of a semiconductor industry in the country. The ministry is actively
considering the draft policy for this. We realise it is important to bring in private
enterprise for creation of such facilities as they not only bring in the technology
and marketing skills, but also make the project viable. Further, this is a capital-
intensive industry and every three years you need to reinvest as things change
fast—from 250 nano metres (nm) we are moving to 90 nm and in a matter of
time we will migrate to 45 nm. This is the right time to be in this field and I
believe we should target the high value segment of the industry.
People have questioned the viability of setting up semiconductor

facilities in India. Intel has also not committed any investment in this
area. How do you propose to make this business attractive?
All multinationals have their own reasons and plans. To invest $3 billion just like
that is not an easy decision. AMD has come to India and we are in talks with
Intel. The door is not closed for others, but those who come in now will have an
early bird advantage. We want to grow fast in this business and are taking
necessary steps for it. The government is considering viability gap funding to
make the business attractive for prospective investors. This is essential because
the investment is large. We have seen this in the United States, the United
Kingdom, Japan and Korea, China, Germany and Taiwan. The government funds
the industry there. We too have to look at such alternatives. We are looking at
equity partnerships. We are very clear that we don’t want any second-hand
equipment coming to India. The technology should be at par with that in other
parts of the world.
This is an industry where the asking investment keeps going up, a firm investing
$3 billion today will be investing $6 billion in the next five years and $12 billion in
the following five years. The government has understood that this is a high
growth area.
Steps are being taken to establish core component supply to companies such as
Nokia, Motorola, LG, Flextronics and Solectron, which have set up their
manufacturing centres in India over the last two years. And there is interest in
the business in India. This despite the fact that we are a late entrant in the field.
Semiconductors, today, are largely manufactured in China and Taiwan. A recent
study by Frost & Sullivan shows that in seven to eight years, the semiconductor
business alone would be a $40 billion opportunity offering employment to 9
million people.
Talking of handset makers and hardware companies, how do they react

to your proposals for Rs 1,000 handsets or Rs 10,000 PCs?
ISA, June 30- July 7, 2006 7

All major handset makers have set up shop in India. Nokia is making 2 million
handsets a month. Motorola, from January 2007, will start producing one million
handsets a year. They know what sells. They will not manufacture items that will
not sell. At the end of the day it is all demand based. Mobile phones are too
personal. They are more personal than a wallet or a watch. In fact, we are selling
more than 30 million handsets each year, more than what was once the largest
selling item in India: cycles. Cell phones have become so common, so essential.
They are no more a luxury.
So you are saying the market is the final driver. But how do you deal with
issues such as the Hutch-Essar tangle? Do you leave the companies to
decide?
The ministry is very clear. We are not here for resolving internal problems of
players. I think they should behave. The ministry is not here to do any policing.
The ministry is here to be a catalyst, a facilitator.
Beyond wrangles, for telecom services players the lack of spectrum is

holding up growth. How is the issue being resolved?
Right now there is more demand for spectrum. We need spectrum for rollout of
3G as well as the present 2G services. The defence forces have occupied a lot of
it. A coordination group has been formed with the department of
telecommunication (DoT) and defence and has agreed to vacate 45 MHz. By year
end more spectrum should be available to DoT for distributing it equitably. For
now, the growth has not stopped due to lack of spectrum. All the operators in
consultation with DoT are exploring areas of infrastructure sharing, not only in
rural areas but urban areas too. We have started with Delhi and within a month
there will be sharing of towers. If we succeed, it can be done in other places too.
Telcos want spectrum, BPOs want low-cost bandwidth. How are we

looking to address this need?
It’s a numbers game. The international long-distance plan that I am working on

seeks to reduce the bandwidth cost by increasing competition in the international
long distance area. This will internally help the BPOs because 15% of their total
cost is bandwidth.
If we really derive the cost for India, from here to the United Kingdom is the most
expensive. From UK to United States is the cheapest because there are many
fibres going down there. From here to Singapore is expensive, but from
Singapore to US it is cheap. Given that 40% of our BPO exports are to the United
States this is an important factor for the industry. The government is trying to
provide a level-playing field, and I am in a hurry. The reason is China, which has
realised that it needs to look beyond manufacturing where the commodity cost
keeps increasing. China is taking up software very seriously. It has started
making English a part of the curriculum. And China can work faster than us. They
also pump in a lot of resources. So we have to make sure that we give our Indian
entrepreneurs an edge. We have to see that they can look beyond big cities, and
that they enjoy a cost advantage in bandwidth.
Is the Chinese threat behind your backing the industry’s demand for
extending the Software Technology Park scheme, despite opposition
from the finance ministry?
It is evident that one of the successful policies that the government has worked
out is giving a single window clearance and now we are talking about $32-billion
ISA, June 30- July 7, 2006 8

IT-enabled services’ exports. It is working extremely well and the industry has
benefited. Today when you see other countries following us they give the same
incentive and if we stop the clock in 2009 then all our companies will start looking
at China, Sri Lanka. So we have to maintain this. We employ so many people,
why should we give up? Every state is competing with the other. Today, ITES is
what everybody wants, they don’t want anything else. As the information
technology minister, I support it. I think this catalyst should continue.
Source: Outlook India.com, June 29 2006
• Taipei tops hotspot survey
The Taipei municipal Wi-Fi network in Taiwan has been crowned the world's
biggest hotspot by market researchers JiWire.
"Taipei's municipal Wi-Fi network is the most impressive in the world," JiWire CEO
Kevin McKenzie said Thursday, noting that the network won out from among
115,000 hotspots in 128 countries.
Deployed by local ISP Q-Ware for some $30 million and supported by the
project's general consultant Hewlett-Packard, the Taipei hotspot has some 40,000
paid subscribers who pony up about $12.50 a month for the service. The hotspot
is expected to have 200,000 paid subscribers by the end of the year.
"This is only the beginning of our promise to the people who visit, work, or live
(here,)" said Taipei Mayor Ma Ying-jeou in a statement. "More advanced
infrastructure will be deployed and more applications will be developed here."
Reportedly in the works to attract additional subscribers is a service for Sony PSP
portable game machines as well as a Web telephone calling offering.
One reason Taipei's 2.6 million inhabitants haven't signed up in droves for the
new service is the proliferation of free hotspots in the city and its environs. The
city deployment serves hard-to-reach subway and train stations. The hotspot's
134-square-kilometer downtown area covers almost 90 percent of Taipei's
population.
• University builds microscope for ultra-fast chips
A research team of the Braunschweig university has developed a microscope for

testing semiconductors at operating frequencies of up to 1000 GHz. The device
generates images that combine the topology with the electrical activity of the
chip.
The research group equipped the cantilevers of an atomic force microscope with
superconducting Josephson contacts, explained Meinhard Schilling, head of the
research group and manager at the Institute of electrical measurement
technology at the university. Thus, the instrument can scan the chip surface from
a distance of a few microns. While the atomic force microscope generates an
image of the topology of the chip surface, the Josephson contacts detect
electromagnetic fields with frequencies of up to 1000 GHz, Schilling said. Spatial
resolution is 10 nanometers.
ISA, June 30- July 7, 2006 9

The combination of the two images can be used to check for the correct functions
of the chip at transistor level. Thus, the microscope is a prerequisite for the
design of new, ever-faster chip generations, Schilling explained. But it could be
used for production tests as well - as soon as the industry produces such fast
devices, said Schilling. According to the scientist, the new device could replace
today's production test probers with a typical maximum frequency of about 70
GHz.
Chipmaker Infineon was involved in the development of the microscope. Now, the
company will be able to test and optimize it for industrial adoption, Schilling said.
• Mobile Phone Industry Looks to 4G
Several mobile players have come together to form an organization that backs
the creation of a 4G mobile phone network standard that they says will coexist
with, and eventually replace, existing standard networks.
The organization, Next Generation Mobile Networks (NGMN), was started by KPN
Mobile NV, Orange SA, Sprint Nextel Corp., T-Mobile International AG & Co KG
and Vodafone Group PLC. The partners say they have extended an invitation to
other members of the mobile industry to join the organization.
"The vision of the initiative is to provide a platform for innovation by moving

towards one integrated network for the seamless introduction of mobile
broadband services," according to a statement on the organization's Web site.
"The initial objective of the initiative is the commercial launch of a new

experience in mobile broadband communications by 2010 to ensure a long and
successful cycle of investment, innovation and adoption of new and familiar
services that would benefit all members of the mobile ecosystem," the group
added.
Target mobile technologies for the group include Packet Switched network
architecture, HSDPA, HSUPA and EVDO. NGMN further said it addresses other
industry issues, such as intellectual property rights.
Source: Electronic News, June 30 2006
• Micronas Chairman steps down
Franz Betschon, Chairman of the Board of Directors of Micronas Semiconductor

Holding AG, has decided to step down with effect from end of June 2006.
Betschon, aged 65, gave personal reasons for his decision.
The chairmanship will pass to present Vice Cheirman Thomas Lustenberger.

"During more than eight years in which I have served Micronas Group as Board
Chairman, the company has become one of the market leaders for complex
semiconductor systems in its core business areas. It is a fitting moment for me to
bow out and make way for fresh blood," commented Franz Betschon on his
retirement.
ISA, June 30- July 7, 2006 10

During Betschon's time as Chairman, the chip manufacturer, which is listed on
the SWX Swiss Exchange, has more than trebled its consolidated net sales from
CHF 280 million ($227 million) in 1998. Micronas' product spectrum focuses on
application-specific semiconductors for consumer and automotive electronics.
• Spartan recall could cost Xilinx $30 million, analyst says
A recall on Spartan-3 FPGAs could cost programmable logic supplier Xilinx Inc.
$20 million to $30 million in revenue, according to Satya Chillara, an analyst with
American Technology research.
As reported by EE Times earlier this week, Xilinx issued a recall for Spartan-3, 3E
and 3L devices made between early September 2005 and late April of this year.
The recall was issued after one Xilinx customer reported a packaging-related
technical problem on a small percentage of the chips.
In a research note published Friday (June 30), Chillara said the recall could pose
"a major risk as customers who have already used these chips in high-end
consumer applications might be very concerned with the quality issue."
According to the research note, American Technology believes that the recall does
not affect devices that are already consumed by customers. Spartan-3s are being
used in applications such as plasma TVs and digital TVs, according to American
Technology Research.
Chillara said American Technology Research believes it has identified the mold
compound issue that prompted the recall, and that it could take time to fix,
"thereby causing volatility in next quarter's numbers.
Chillara said American Technology Research believes the Spartan-3 recall poses a
material risk to Xilinx' stock, but the firm maintained its "buy" rating and price
target of $25. Xilinx traded at $22.65 in early afternoon Nasdaq trading Friday.
• South Korea's RFID market to reach $500M, says report
South Korea's RFID market will exceed $500 million this year, an industry group
predicted.
In a report to an information technology forum hosted by the Ministry of

Information and Communication, the Korea Association of RFID/USN said the
country's RFID-related equipment and device shipments would reach 524.2 billion
won ($551.8 million) this year, compared with 290 billion won last year and
153.5 billion won in 2004.
The association forecast the volume to grow up to 1.2 trillion won by 2010.
Overseas RFID shipments will grow from 33 billion won in 2005 to 52.5 billion this
year, according to the association.
ISA, June 30- July 7, 2006 11

• SPF: All About Power, Performance
The official motto of this year's Spring Processor Forum (SPF), held May 15-17 in
San Jose, California, was "power-efficient design", and in his opening keynote
speech Chuck Moore, senior fellow at AMD, outlined the major problems in the
processor world: "Our industry is driven by elements of balanced system
performance." Moore believes that the balance between system-level bandwidth
and power consumption is currently the industry's biggest challenge, closely
followed by the balance between single-thread versus multi-thread performance.
When Dan Dobberpuhl, president and CEO of PA Semi, spoke at the event, he
reduced the entire dilemma to a single sentence: "Very often SoCs become
limited by their power dissipation and not by the ability to integrate."
Mark Hartman, staff applications engineer at National Semiconductor, presented
with National's PowerWise technology an adaptive voltage scaling (AVS)
technology. "Our angle is to get feedback from the load," Hartmann said. "We
developed IP for a power controller that is located on the microprocessor. So
basically we are using the silicon to monitor the silicon performance. We are not
regulating the performance, just the voltage. The voltage will settle to a value
that allows the delivery of the performance needed." In order to do so several
HPMs (hardware performance monitors) are "...spread all over the processor
chip."
While National Semiconductor's PowerWise technology was the only solution

presented by a non-processor company, several processor designers also talked
about this idea in their own presentations, but used different descriptive terms.
For example, Ty Garibay, ARM cores program manager, Wireless Terminal
Business Unit, Texas Instruments, explained how TI optimizes the power
consumption for the performance required: "AVS is the solution, and the voltage
also adapts with the temperature."
Mike Olivarez, principal staff scientist, Freescale Semiconductor, discussed
Freescale's Smart Speed technology: "We have several sensors on the core and
depending on these we can start adjusting the voltage. However, temperature
compensation must be coupled with software and power management companion
ICs. Without the relevant software we only get minimum benefits from the
systems."
Configurable Processors
Every time the topic comes to configurable processors people talk about one
company: ARC International. Up to now this company was only known to sell its
configurable processor IP for integration into SoCs, but at the Spring Processor
Forum ARC announced that it has also entered the EDA industry to some extent,
because ARC and Toshiba Corp have entered into a strategic collaboration
intended to grow the semiconductor industry's adoption of configurable
technology.
Under the terms of the agreement, Toshiba has taken a multiyear license for
ARC's ARChitect processor configurator, which offers a comprehensive set of
design tools and resources using a drag-and-drop graphical user interface. The
companies will also collaborate on development of a next-generation version of
ARChitect that is more closely suited to Toshiba's Media embedded Processor
(MeP), Toshiba's proprietary configurable processor, thereby opening up the
benefits of configurability to a wider range of customers.
"This collaboration with Toshiba is a milestone in ARC's history and an example of

things to come," said Carl Schlachte, president and CEO of ARC. "We were just
ISA, June 30- July 7, 2006 12

taking the capability that we had in-house and expanded it to other companies."
Yukata Murao, senior fellow and general manager at Toshiba said: "We are
creating a new world for the development of complex SoCs and we will provide
the designers with a possibility to design cost-effective and flexible SoCs for use
in consumer electronics devices. In doing so configurability becomes a natural
ingredient of the design-flows. By the way: the market potential for
configurability is huge."
MeP, the core of Toshiba's media-centric processors, offers a 32-bit configurable,

asymmetric multiprocessor design that can be customized to support diverse
media applications. Toshiba will leverage a version of the ARChitect processor
configurator that has been customized to MeP.
Multicore
Several companies presented multicore solutions and according to Moore parallel

processing "is the holy grail, but it is also a very tricky thing to do". Moore added:
"The reason why we have so many single-threaded applications is that we have
taught so many students to think and program this way." But especially in the
area of multimedia and video processing there were many papers on multicore
processors.
For example, the T9000 content processor from Tarari of California combines
"computing hardware and optimized algorithms to deliver the industry's first
comprehensive content processing solution". The device contains nine processor
cores as well as several interfaces including an integrated system I/O (64-bit PCI-
X at 133MHz) for data transfers of up to 8Gbps. It supports operating systems
like FreeBSD, Linux (32- and 64-bit), Windows XP, Solaris and VxWorks. The IC
dissipates an estimated power of about 3 to 5W and is intended, for example, for
HD-Video encoding.
"Efficiency is derived by working from the algorithms to the architecture and not
vice versa," said Dr Hans Volkers, senior system architect of Hannover, Germany-
based Sci-Worx. "Architectures are not good or bad but suited or unsuited and
suited means efficient for the desired classes of algorithms." In its MuViStar
(multi-standard video decoder and encoder) Sci-Worx uses the Tensilica Xtensa
LX core and the Xtensa core adaption methodology in order to implement vector
processing for efficient video coding in H.264, MPEG4, H.263, etc. "With custom
extension we achieve a more than tenfold processing power improvement,"
Volkers said. The implementation of an H.264 D1 decoder single core needs
6mm2 in TSMC's 0.13G process while consuming 60mW.
Charles Moore, CTO of IntellaSys, which is headquartered in California, pointed

out that the company's new SEAforth chip (SEA: scalable embedded array)
"raises the performance-per-watt bar in embedded applications that need to
operate at high speed and low power". The SEAforth-24 device works with 24
identical 18-bit cores (so-called nodes) located in high-density
arrays. The entire operation is asynchronous which means that no central clock is
needed. Each core can operate at 1 billion instructions per second; however, the
IC dissipates only 150mW in a typical application.
With 24 cores operating independently on the chip, designers can dedicate groups
of them to handle specific tasks. Simultaneously, processors share the computing
load by talking to each other, passing data, status signals and even code blocks.
Each core automatically communicates with its nearest neighbors through
dedicated registers. A core waiting for data from a neighbor goes to sleep to
conserve power, which leads in combination with the asynchronous system
ISA, June 30- July 7, 2006 13

architecture to the low operating power. Programming of the device is performed
by a special dialect of the Forth language.
Handshake Solutions, a subsidiary of Philips, presented a clockless processor

version based on the ARM architecture. The new IP, dubbed ARM996HS, "is the
industry's first licensable clockless processor and directly addresses the needs of
design engineers for technology optimized for robust and real-time chip designs,"
claimed Arjan Bink, chief design engineer at Handshake Solutions.
ARM presented its new Cortex-A8 with the first implementation of the ARMv7
instruction-set architecture including the NEON extension. The dual-issue,
superscalar microprocessor core is equipped with a 13-stage main integer
pipeline, a 10-stage NEON media pipeline as well as integrated L2 cache. A first
implementation in TSMC's 90G process technology delivers 2,000 DMIPS at clock
frequencies above 1GHz while consuming 0.58mW/MHz including RAMs.
DSP
The outstanding DSP solution presented at the forum was Freescale's MSC8144
which delivers a performance of 16 GMACs. It is based on a multicore Starcore
architecture and contains four DSP cores each running at 1GHz. "It integrates the
industry's largest embedded memory at 10.5 Mbytes in a single package, virtually
eliminating the need to attach external memories," explained Odi Dahan, chief
architect of Freescale's DSP SoC Design Center in Israel.
Several fast interfaces like Serial Rapid I/O-Ports (4 x 3.125 Gbaud), SERDES
(with two receive and two transmit lanes) as well as LVDS lines, a messaging unit
and a DDR-400 capable memory controller establish contacts to the outer world.
Since the device's instructions are a superset of the current SC140 instructions,
MSC8144 software is fully binary and assembly-code compatible with Freescale's
existing portfolio of multi- and single-core DSPs based on StarCore technology.
Source: Nikkei Electronics Asia, July 2006
• Brazil picks Japan TV standard -- and gains fab?
In return for a possible semiconductor production plant, Brazil has selected a

high-definition TV standard from Japan over competing technologies from Europe
and the United States, according to a report from the Associated Press on Friday
(June 30).
Brazil's government chose Japan's ISDB standard over rival U.S. and European
technologies, according to Reuters. Brazil, which boasts an emerging market of
180 million people, is expected to buy nearly 11 million TV sets this year, up from
10 million in 2005, according to reports.
Brazil has been evaluating HDTV technologies for months.
In return for the HDTV award for Japan, Brazil will receive technology transfers,
investments in semiconductor manufacturing operations and financing of up to
$500 million from the Japan Bank for International Cooperation, according to the
report from the AP. No other details were given about the semiconductor
production plant, however.
Last year, Brazilian authorities announced plans to establish a semiconductor

industry in the state of Minas Gerais, where a technology park spanning 990
acres is being dedicated to semiconductor manufacturing and design.
ISA, June 30- July 7, 2006 14

Called the Minas Gerais Technological Park, the site will be anchored by Brazilian
semiconductor manufacturing venture Companhia Brasileira de Semiconductores,
which is planning to build an analog and mixed-semiconductor wafer fab there
that will run high-voltage CMOS, bipolar, BiCMOS, and other specialized
processes. The fab is slated for completion by early 2007.
• India's Patni Acquires ZAiQ Technologies
Patni noted ZAiQ's strengths in ASIC design and IP, in addition to its expertise in
FPGA and SoC technologies.
Patni Computer Systems, an India-based outsourcing firm, said Thursday it has
acquired ZAiQ Technologies of Woburn, Mass, in a move by Patni to boost its
semiconductor business.
Patni noted ZAiQ's strengths in ASIC design and IP in addition to ZAiQ's expertise
in FPGA and SoC technologies.
"The addition of (ZAiQ's) expertise and customer base will enable us to meet the
growing demand we have been experiencing for ASIC-based services in vertical
markets such as consumer electronics, telecom, computing and wireless," said
Ajay Chamania, Patni's head of product engineering services, in a statement.
Patni's founders pioneered the offshore outsourcing phenomenon and initially

focused the efforts of the firm on IT services particularly in insurance and
financial services segments. The ZAiQ acquisition will beef up its effort in the
development of complex, high-performance systems and integrated circuits.
Jim Pena, ZAiQ vice president, said his firm has nearly 500 design and verification
projects underway.
Panti said that Indian IT export revenues from engineering, R&D, and offshore
product development have jumped ten times from $300 million in 2001-2002 to a
projected $3.9 billion by the end of fiscal year 2005-2006. The company said its
product engineering unit accounted for 7.5 percent of its 2005 revenue.
Source: Techweb.com, June 30 2006
• Second-half forecast: hang on to your hat
We've dusted off our crystal ball again to provide some insight into where the
industry's headed for the remainder of what is shaping up as a turbulent year.
Chip industry forecasts are retooled on a seemingly weekly basis as the list of
unknowns grow. Rising interest rates, still-high energy costs, materials shortages
and unrelenting globalization continue to baffle industry watchers. Here's our take
on where things stand and where we see the industry heading in the second half
of 2006.
Semiconductor roller coaster
This is the time of the year when chip industry watchers agree to disagree.
Some forecasters have recently raised their chip predictions for 2006, while
others have lowered their numbers amid lackluster growth in the PC and
ISA, June 30- July 7, 2006 15

consumer sectors. "There are also inventory concerns in the market," warned
Mark Bachman, an analyst with Pacific Crest Securities Inc. (Portland, Ore.).
Current IC growth forecasts among analysts range from 6-11 percent for 2006
over 2005. Two mavericks— Future Horizons (Sevenoaks, England) and Semico
Research Corp. (Phoenix)—remain at the high end of the scale with bullish
predictions of around 20 percent and 17 percent growth, respectively.
As usual, there is plenty of uncertainty in the market. The problem is that the
industry analysts rarely get their forecasts right and are always changing their
predictions based on current market conditions.
One of the more sobering and realistic predictions, is from iSuppli Corp.. It has
increased its IC forecast by a half-percentage point, going to 7.9 percent, up from
7.4 percent. Worldwide IC revenue is expected to rise to $255.7 billion in 2006,
up from $237 billion in 2005, according to iSuppli (El Segundo, Calif.).
Despite decent demand for equipment, the semiconductor market outlook isn't all
rosy, iSuppli warned. The higher-than-expected growth seen in the first quarter
will be followed by some sluggishness in the second half. Second-half growth of 5
percent is less than the normal seasonal expectations for the industry. Orders
appear to be weakening as inventories rise, it warned.
Another concern is reported delays with Apple's next-generation iPod products—a

key driver for NAND flash, MP3 processors and other devices.
But even before the reported iPod delays, analysts were already jumping on the
bear bandwagon following at least one red flag in the market: sluggish chip sales
in April.
April's dismal numbers prompted Wedbush Morgan Securities Inc. (Los Angeles)
to lower its 2006 semiconductor growth forecast one point to 10 percent. For
2007, Wedbush projects the IC market will slow, growing by only 6 percent over
2006.
In a new report, Handelsbanken Capital Markets projects that the semiconductor

market will now grow 5 percent in 2006 over 2005, down from 6 percent in its
previous forecast. The investment banker blamed the lowered forecast on the
worldwide PC slowdown.
Handelsbanken also expects lackluster sales in May. The three-month average of

May chip sales is projected to hit $19.37 billion, compared to $19.6 billion in
April, according to the firm.
Not all are in the bear camp. Industry cheerleader, the Semiconductor Industry
Association (SIA), recently boosted its projected worldwide chip sales forecast for
2006, and now projects growth of 9.8 percent to $249 billion, up from its
previous estimate of 7.9 percent growth to $245 billion. SIA (San Jose, Calif.)
said the correction is mainly due to better than anticipated demand for chips by
the mobile phone sector.
The revised forecast also includes more optimistic projections for industry sales
from 2006 through 2009. SIA said the industry will grow by 11 percent in 2007,
12 percent in 2008 and 4 percent in 2009.
ISA, June 30- July 7, 2006 16

The World Semiconductor Trade Statistics (WSTS) organization also raised its
semiconductor forecast. The global IC market is expected to grow 10.1 percent
on an annualized basis to $250 billion in 2006, according to WSTS's spring
forecast. Projected growth worldwide will accelerate to 11 percent in 2007 and
12.8 percent in 2008, according to the organization.
EDA's surprising strength
EDA may be as healthy as its been in years heading into the second half of 2006.
The industry returned to double-digit growth earlier this year and is now gearing
up for its premier event, the Design Automation Conference in July.
Yield issues continue to pain chip makers, and there is a good deal of money at
stake for vendors who can provide the oft-discussed but elusive design-for-
manufacturing (DFM) solutions. The industry has recently witnessed a
breakthrough in what had been considered one of the most pressing DFM
logjams: silicon foundry giants Taiwan Semiconductor Manufacturing Co. Ltd.
(TSMC) and United Microelectronics Corp. (UMC) offering fab data models
designed to give fabless customers information about manufacturing processes.
The move could level the playing field between fabless companies and IDMs on
DFM issues.
Dennis Wassung, an analyst and vice president with Canaccord Adams, recently
said the market for DFM tools is currently worth $350 million to $400 million
annually, and is poised for substantial growth.
Precise definitions of the market for DFM tools differ, and executives like Aprio
Technologies President and CEO Mike Gianfagna have noted that if EDA vendors
can find a way to sell into chip makers' manufacturing budgets—which are
significantly larger than design budgets—it could mean a windfall for the EDA
industry, providing a much needed new source of revenue.
There are indications that DFM tools are starting to come into their own after
years of development. DFM has been little more than a marketing push, but now
at least some DFM tools have entered production. Deepchip.com moderator John
Cooley recently published the results of a census that included, among many
other things, what he believes to be the first published user review of a DFM
tool—UMC's Chien Kuo Wang reviewing ClearShape Technology's InShape tool.
Elsewhere, electronic-system level (ESL) tools, supposedly EDA's other big

technology driver, have yet to catch on, at least in the U.S., according to an
analysis of available data. But ESL vendors and some observers, notably Gartner
analyst Gary Smith, said the ESL tool flow is finally robust. Most observers agree
that designers will move to ESL eventually. The question is when.
For now, evidence suggests that ESL use is still primarily concentrated in Japan
and, to a lesser degree, in other markets outside the U.S.
So how will EDA fare in the second half of 2006? As Mentor Graphics Chairman
and CEO Walden Rhines told EE Times this week, EDA could maintain a pace set
with its 10 percent year-to-year growth in the first quarter. This depends on
whether the IC market continues to expand. With most analyst predicting chip
growth ranging from 6 to 20 percent. Hence, 2006 could be a strong year for
EDA.
ISA, June 30- July 7, 2006 17

Display volatility
The relentless expansion of manufacturing capacity appears to be catching up

with the flat-panel display industry as it faces a volatile second half of 2006.
Although flat-panel display shipments remain strong, several suppliers in recent

weeks have scaled back sales and earnings expectations due to slower-than-
anticipated demand, growing inventory and falling prices. In addition, at least one
major LCD panel supplier said it would scale back production.
Rapidly falling prices are compounding profitability concerns.
LCD TVs have experienced some of the sharpest drops, with some analysts noting
that panel prices for 32-inch TVs fell 50 percent between the first quarter of 2004
and fourth quarter of 2005, from $1,200 to $600.
According to data compiled by another market researcher, DisplaySearch Inc.

(Austin, Texas), prices for 32-inch WXGA LCD TV panels dropped from an average
of $550 in January to $450 the second half of June. For 42-inch WXGA LCD TV
panels, prices fell from an average of $1,050 to $815 over the same period.
Plasma display prices also continue falling in price. DisplaySearch reported 42-
inch high-definition plasma TV screens fell from $759 in January to $682 in June.
"Each time the flat-panel market has undergone a reduction in pricing, revenue
has dropped, profit margin has dipped and then players have dropped out of the
market," Sweta Dash, director of LCD and projection research for iSuppli, said
during a recent display industry conference.
So far, there's no indication that anyone is dropping out. But Dash said LCD
suppliers will continue to be pressured to lower panel prices amidst intensifying
competition in the TV market.
Some suppliers are taking precautions. LG.Philips LCD Co. Inc. downgraded its
second-quarter forecast, adding it would scale back production to address
inventory concerns. LCD glass supplier Corning Inc. also lowered its second-
quarter forecast, though still expects to glass volume to grow 40 to 50 percent for
the year.
But Samsung Electronics said its LCD business remains profitable, and would post
single-digit profit margins in the second quarter.
If you believe the display industry will follow its historical pattern of alternating
cycles of weak pricing/weak demand followed by stronger pricing/stronger
demand, the second half should be better. Analysts believe attractive prices will
stimulate demand for the holiday season, in turn depleting excess inventories and
eventually slowing down the rate of price erosion.
Such a scenario held true last year, when some display companies reported
lagging profits at the end of a less-than-stellar first half. But sales surged toward
year's end as flat-panel TVs went mainstream. LCD suppliers continued to pour
hundreds of millions of dollars on 7th and 8th generation fabs, and plasma
display makers also opened new fabs.
Backdating blues
ISA, June 30- July 7, 2006 18

On top of rising interest rates that will increase the cost of capital, steadily rising
energy prices and shortages of key materials like polysilicon, add to the second-
half industry outlook the specter of a full-blown stock-option backdating scandal.
This past week, the scandal reached as high as industry stalwart Apple
Computer.. There is growing unease that the practice is widespread in an industry
built on stock option incentives, attracting unwanted scrutiny from regulators..
Responding to pressure, the U.S. Securities and Exchange Commission is

expected to hit the industry with new guidance on the backdating of stock options
any day now. Either way, a lot of industry earnings reports will likely have to be
restated.
Another financial issue is emerging that could affect the way capital flows within
the global industry. An industry analyst is arguing that U.S. financial disclosure
rules approved by Congress in the aftermath of the Enron debacle may sharply
curtail U.S. high-technology IPOs. According to Charley Lax, managing general
partner of GrandBanks Capital, provisions of the Sarbanes-Oxley Act may be
forcing high-tech startups to list instead on the London exchange.
Energy costs continue to exact a price on company earnings, but have also
prompted some suppliers to shift their focus to new markets beyond
semiconductors and consumer electronics. Case in point: Germany's Wacker
Chemie AG said this week it will expand polysilicon production to meet growing
demand by the solar cell industry. The Munich-based manufacturer said it hopes
to boost capacity to 14,500 metric tons by the end of 2009 to meet soaring
demand from the energy sector as well as from traditional semiconductor
customers.
The announcement could foreshadow a fundamental industry shift to new

markets as semiconductors increasingly become commodity items.
• Mobile TV Demand Driving Down Chipset Prices
"As video and images go digital, it's a billion-dollar opportunity in the next five
years," Greg Delagi, general manager for digital signal processors at Texas
Instruments said. Yet, smaller companies, like DiBcom, Frontier Silicon,
Imagination Technologies, Newport Media, and Siano Mobile, as well as other
start-ups, have the advantage that mobile TV is their primary focus, said
Varghese.
A new study by ABI Research indicates that an array of semiconductor developers

have designed US$10 chipsets for receiving and displaying TV on mobile phones -
- a price point that marks the first important benchmark for the growth of mobile
phone-based TV and video applications.
"This ramp-up in market penetration will begin to happen by early 2007," said
Alan Varghese, principal analyst for wireless semiconductor research at ABI. "At a
$10 price tag for chipsets, mobile TV will start to gain serious traction in high-tier
handsets and smartphones."
ISA, June 30- July 7, 2006 19

Affordable for Consumers
The research consultancy predicts that the price of these chipsets will fall to $5
within just a few years. "The $5 price point is important: that is when a function
migrates from the high-end to the mid-tier handset, and hits the 'hockey stick'
inflection in its take-rate," said Varghese. "At that stage, large numbers of
consumers will join the early adopters in choosing mobile TV handsets."
The electronic "ecosystem" of frequency allocations, technology choices, operator

strategies, and partnerships with content creators is still evolving, so price is not
the only factor that will determine the success or failure of mobile TV, said
Varghese.
A number of broadcast frequencies and technologies -- VHF, L band, DVB-H, T-

DMB, ISDB-T and MediaFLO -- are already in use around the globe, as developers
hope to address every potential market. Some integrated circuit (IC) vendors are
even demonstrating solutions that support multi-band and multi-standard mobile
TV.
"The mobile TV marketplace means different things to different chipset vendors,"

said Varghese.
Huge Opportunity
For example, pioneering semiconductor vendors, including Analog Devices (NYSE:

ADI), Freescale, Philips (NYSE: PHG), ST Micro and TI have a decided advantage:
they already understand the workings of the cell phone. What is more, they know
how the mobile TV section has to operate with the existing RF, baseband,
applications, power management and display sections for optimized performance
and low cost.
years," Greg Delagi, general manager for digital signal processors at Texas
Instruments (NYSE: TXN) said.
Yet, smaller companies, like DiBcom, Frontier Silicon, Imagination Technologies,

Newport Media, and Siano Mobile, as well as other start-ups, have the advantage
that mobile TV is their primary focus, said Varghese.
Excess Inventories?
Although excess semiconductor inventories in the electronics supply chain are

expected to swell by 11 percent on quarter to $1.3 billion by the end of the
second quarter, research firm iSuppli believes that stockpiles aren't large enough
to raise alarms.
Semiconductor companies are reporting that their inventories remain within

expectations, generated by all these new applications and demand for processing
power, and remain manageable according to the research firm, iSuppli.
The current expansion in surplus stockpiles appears to be restricted to the PC

supply chain, not to the mobile phone market, and unmanageable excess
inventory levels are not expected in the third quarter.
ISA, June 30- July 7, 2006 20

Semiconductor suppliers remain optimistic as the second quarter of 2006 comes
to a close, this month, despite the major gains in inventory.
The consensus opinion among chip companies, iSuppli reports, is that the June
quarter will end as expected, with no surprising surges in inventory. Channel
sources tell iSuppli that inventory levels throughout the supply chain are healthy.
Figures from the trade group, the Semiconductor Industry Association (SIA),
mirror comments from suppliers that iSuppi is speaking with, and indicate that
the sales of analog devices, DSPs and certain memories are faring quite well. The
communications and industrial sectors exceeded expectations, while mobile
phones met expectations.
Global Growth
This growth in demand for chips is global, not just domestic. Digital signal
processors (DSPs) will top the Indian semiconductor market by revenue in 2006,
accounting for some $863 million of the country's total market of $3.62 billion,
according to a study conducted by the India Semiconductor Association.
Microprocessors with a market of $583 million will be the second biggest

category, followed closely by microcontrollers at $469 million and memory
products with $444 million.
"DSPs and microprocessors have emerged as the leading semiconductor product

categories, as the Indian market for mobile phones is expanding at a faster rate,"
the study said. It was carried out by Frost & Sullivan for the India Semiconductor
Association.
Source: Ecommerce Times, June 30 2006
• ArchPro launches new R and D centre
EDA (Electronic Design Automation) startup ArchPro Design Automation today

announced the opening of its new R and D Centre here.
Headquartered in San Jose, California, the company was formed in March 2004
and has top tier semiconductor customers across the US and Japan, it said in a
statement.
Puneet Jethalia, Managing Director of ArchPro India said the new facility can
house almost 75 engineers.
"We started with a small team to begin with and have grown since. We now plan
to grow very rapidly in the next 12 months and are building a world class product
development and product engineering and support team to be effective with our
customers across the globe," Jethalia said.
Source: tmc.net, June 30 2006
• German industry, science community close ranks
Five German companies and research institutes have announced to bundle their
R&D activities in information and communication technologies. The initiative is
intended to strengthen the competitiveness of the members.
ISA, June 30- July 7, 2006 21

Deutsche Telekom, Siemens, DaimlerChrysler, Fraunhofer Gesellschaft and the
Technical University of Berlin have jointly founded an institution to coordinate
their R&D activities. The scope of the European Center for Information and
Communication Technologies (EICT) will be to bundle the members' R&D
activities in information and communication technologies and create well-defined
projects in these areas.
With the EICT foundation, the members are targeting to strengthen their
competitiveness in the respective technology segments. By bringing together
partners from industry, research and science communities, EICT will have the
task to improve innovation transfer and speed up the implementation of real
world products, the organization informed. Also, with the move the members
intend to offer attractive, practical jobs to scientists within their institutions.
Facing the persistent leading role of the USA in information and communication
technology and increasing competition from Asia, we need to bundle our R&D
competencies and create an European platform", described Christopher
Schlaeffer, Corporate Development Officer for Deutsche Telekom, the EICT scope.
EICT founding members have defined seven cooperation areas as the basis for
their joint application and research projects. These are multimedia and
multimodal communications, services and platforms, security, ambient
intelligence, machine-to-machine communication, terabit data networks, and
access technologies. "EICT will develop best-in-class products, solutions and
services and bring them to the public in an optimized way", explained Thorsten
Heins, CTO and member of the board for the Siemens communications division.
Initially, the EICT partners started research works for three of these cooperation
areas. The development of these first projects is focused on applications and
services in an ageing society, broadband networking technologies, and sensor
networks with applications for vehicles and mobile users.
The projects will be coordinated and funded from early research phases through
market launch, the organization said. "We are convinced that the close
cooperation of research institutions and industry within the EICT we will be able
to identify relevant issues faster, speed up innovation cycles and transform
fundamental research results faster to applications", explained Stefan Jaehnichen,
manager of the Fraunhofer institute for computing architectures and software
technology.
The EICT is open for further interested parties. For the time being, it remains
unclear if the initiative is meant to be a purely German one, since despite its
European ambition, so far there is no non-German member on board.
The institution is headquartered on the campus of the Technical University of

Berlin.
• Life after DFM
Could DFM mean the death of custom "in-silicon" chip design?
For the past couple of years, the Design Automation Conference (DAC) has been
awash in vendors touting their software as design for manufacturing (DFM) tools.
ISA, June 30- July 7, 2006 22

Although Gary Smith, Gartner's EDA analyst, says most of the brouhaha is just
"design for marketing," the fact that so many vendors are leaping into the fray
emphasizes that their customers take the DFM concept very seriously indeed.
And well they should. According to some analysts, DFM could be a harbinger of a
time when it will no longer be practical for any but the largest firms to custom-
design their chips directly into silicon. Instead, in the post-DFM world, it may be
more economical for many electronics firms to employ standard chips with
programmable logic for any application that can't drive huge chip volumes. If so,
DFM could ultimately mean the end of custom chip design work targeting state-
of-the-art manufacturing processes.
In its broadest sense, DFM implies merging the design and manufacturing
process. This has enormous implications for chip makers, according to Mike
Fazeli, manager of EDA strategies at Texas Instruments. "We see a lot of
challenges connected with DFM, including different interfaces and protocols and
entirely new kinds of tools," Fazeli says.
Meeting these challenges will not come cheap. DFM will force design teams to
address the peculiarities of the target manufacturing process and draw
manufacturing engineers into increasingly arcane design issues. What was, before
DFM, a simple series of logical steps will become, post-DFM, a complex iterative
process of communication between groups with different skill sets and disciplines.
"With DFM the design rules will number in the thousands, or tens of thousands,
rather than in today's hundreds," says Franklin Kalk, research fellow at DuPont
Photomasks.
Although the net effect of DFM may be "better, faster, cheaper" chips down the
line, it will add complexity and expense to all stages of the process of preparing a
chip to be manufactured. "We're moving into an era in which there will need to be
a great deal of interaction between designers and manufacturers at all levels,
meaning a huge collaboration effort to implement a realistic DFM strategy," says
Chuck Byers, director of brand management at TSMC.
Because the need for collaboration between design and manufacturing will
increase with each successive node, the high cost of bringing a chip into
production will continue to increase as well. And that's a tad ominous, considering
that custom chip design is becoming a beleaguered business model without the
help of DFM, according to Jim Tully, vice president and chief of research at the
market research firm Gartner.
Costs going out of reach
"The cost of designing a custom chip at the smaller geometries has slipped
outside the financial reach of smaller electronics firms," Tully says. As that trend
continues, the cost of designing a state-of-the-art chip could balloon to as high as
$100 million by 2010—a sum far beyond the means of many established medium-
size firms, let alone a startup (see the "Cost of design for an 8-million-gate PDA
SoC" graphic). Given the up-front expense, such chips are economical only when
they're to be manufactured in huge volumes. "As a result, we expect far fewer
designs at those nodes," Tully says.
The need for each design to drive big numbers complicates another important
financial trend: the increasing cost of building a fab. By 2010 chip makers will
need to recover capital investment costs approaching $5 billion. With ballooning
ISA, June 30- July 7, 2006 23

design costs reducing the overall number of designs, each design that actually
goes into production will need to achieve even higher volumes than might
otherwise be the case.
This overwhelming incentive for greater volumes will force designers and
manufacturers in the post-DFM world to make chips that are usable for multiple
applications. "The ideal business model will be to make general-purpose chips
that can be reconfigured as needed," says Tully.
Although Tully says he believes that there will still be some fully-custom single-
application work at the newest nodes, he sees the bulk of chips made at the
smaller geometries including programmable logic to extend their useful lifetime
and thereby increase overall manufacturing volumes.
"Fewer companies will look to custom design of 'hardwired' circuitry to create a

competitive advantage," Tully says. "Instead, they'll figure out how to reconfigure
and reuse a fairly standard set of chips to do new and innovative things."
That's a scenario that the programmable logic chip firms are expecting to
develop, according to Ronnie Vasishta, vice president of technology marketing for
LSI Logic.
"What we've tried to do is build automation into our products so designers don't
have to worry about the complexities of manufacturing, such as RET and, in the
future, DFM," Vasishta says.
What emerges is a semiconductor industry that's very different from that of

today. Rather than numerous fabs manufacturing numerous designs at the
newest nodes, there will be far fewer fabs—perhaps only two or three—
manufacturing a very small number of designs but in enormous volumes. And
rather than designing innovation directly into the silicon, the design firms of the
future will work at a higher level.
"The emphasis will shift to system design tools that allow designers to add value
at either the software level or at the programmable logic level of the chip," Tully
says. "Designers will need to be more concerned with reconfiguration than just
with optimizing silicon."
Demographic reality
This post-DFM scenario is reinforced by the demographics of the design

engineering community, according to Wally Rhines, chairman and CEO of Mentor
Graphics. "There isn't likely to be sharp growth in the number of trained design
engineers, so the industry will need FPGA technology simply to increase engineer
productivity enough to cope with the added complexity of electronics products in
future years," he says. "There will be fewer fabs making digital chips, and those
fabs will be more commodity-like, with more designs utilizing FPGA circuitry."
Not everyone agrees that the future lies in general-purpose chips. Gary Smith,
the Gartner analyst who covers EDA, points out that the issue isn't so much the
need for greater volume but the need for greater value.
ISA, June 30- July 7, 2006 24

"The thinking is that consumers will drive most of the IC
spending in the future and that they will spend $5 for an
IC," he says. "But with the introduction of the SoC, the IC
is almost all of the system, so you must compare system
cost with SoC cost, rather than comparing a $5
'component' with an SoC—an apples-and-oranges
comparison." In other words, it may still be economical to
custom-design specialized chips in smaller volumes,
providing that those chips perform enough valuable
functions to command a high price. "The Intel
microprocessor has been an SoC for a while now, and it
does not sell for $5," Smith points out.
However, Ted Vucurevich, chief technology officer at

Cadence Design Systems, points out that SoC designs are
themselves a vehicle for chip reusability. "SoCs needn't be designed for a single
application use," he says. "SoC programmability at the software level will make it
possible to spread the payback for a chip design over a longer period of years."
Some analysts even envision "universal" SoCs that have multiple copies of many
different types of IP, which software and firmware programmers can choose to
activate (or leave quiescent) at will. "If current trends continue and the cost of
design becomes staggeringly high, we may eventually get to a stage where it
makes more sense to make one large batch of chips where you don't use all the
functionality that's inside," says Klaus Rinnen, a semiconductor analyst at
Gartner.
Others question whether state-of-the-art fabs will be as rare as Tully seems to

think. Industry analyst Boris Petrov, of the Petrov Group, for example, believes
that alliances and consortia will allow smaller players to participate in the building
of newer fabs, citing the successful example of IBM, AMD and Chartered, all of
which have been involved in partnerships to share fab-building expenses. "In
such alliances, each partner has a very different agenda and its own needs, yet
their cooperation is genuine and very substantial," he says. Having more fabs at
the newer nodes would presumably create more competition, driving the cost of
manufacturing down and making it more economical for smaller firms to continue
to do custom design work.
Similarly, 50-year industry veteran Fred Zieber, of Pathfinder Research, believes

that the semiconductor industry will figure out a way to make the smaller
geometries more efficient and hence more cost-effective.
Economic incentive needed
"I have to believe that a $250 billion industry will figure out some way around
these problems," Zieber says. He admits, however, that high design costs may
eventually scuttle the economic incentive to do custom design work at the
smallest nodes: "There's going to be some point where smaller dimensions don't
pay off any longer."
Vucurevich says he thinks foundries may still be able to attract custom designs
from smaller firms by combining designs from multiple companies onto a single
wafer. "The foundries need to start thinking of a manufacturing run as being
more like a shuttle bus than a passenger car," he says. "Getting multiple
companies to coordinate their designs to take advantage of economies of scale is
a relatively simply supply chain problem."
ISA, June 30- July 7, 2006 25

Breakthroughs in process technology could also make custom design more viable
at the newest nodes, according to Rich Wawrzyniak, an analyst at Semico
Research. "Employing nanotech in chip manufacturing might make
nonphotographic processes more efficient," he says, "making it easier to design
chips at an acceptable yield without the extra overhead of DFM."
However, some analysts are even more pessimistic than Tully when it comes to
the long-term future. Dr. Robert Castellano, of The Information Network, for
example, believes that the increasing expense of design could be a harbinger of
the collapse of Moore's Law as the economic basis of the semiconductor industry.
"We may just really reach a point where its more cost-effective to stop making
chip components smaller but instead make them a bit bigger but cheaper to
manufacture," he says.
Similarly Risto Puhakka, president of VLSI Research, sees a future in which the
industry may need to move beyond the silicon-based product model. "What's very
clear is that the classical CMOS is starting to see its end of life," he says.
Although the DFM-driven doomsday may still be years away, the mere fact that
DFM remains on the agenda argues that the fundamental relationship between
design and manufacturing is changing. And if that change greatly increases the
cost of preparing a chip to be manufactured, then it's inevitable that electronics
firms will be looking for ways to save money, even if that means throwing the
concept of custom design work onto the scrap heap of high-tech history.
Source: Electronic Business, July 1 2006
• Semiconductor International Announces 2006 Editors' Choice Best

Product Award Winners
Semiconductor International bestowed its 2006 Editors' Choice Awards on 20

commercially proven industry products for excellence in semiconductor
manufacturing. These awards will be presented at a ceremony during SEMICON
West, to be held in San Francisco on Wednesday, July 12. The 2006 entrants
exemplified state-of-the-art equipment and materials installed and used in
numerous fabs around the world.
ISA, June 30- July 7, 2006 26

The 2006 Editors' Choice Best Product Award winners are:
Advantest T2000 Open Architecture SoC

Test Platform
Applied Materials Producer HARP System
Applied Materials Uvision Inspection System
Applied MicroStructures MVD100
ASM Technology Singapore OSPREY
Asymtek Axiom X-1000 Series
Aviza Technology Sigma fxP
Brion Technologies Tachyon RDI System
Cascade Microtech eVUE
Cimetrix CIMPortal
Keithley Model 4200-SCS Characterization System
KLA-Tencor Puma 9000 Series
Kulicke & Soffa Maxum Ultra
Lam Research 2300 Versys Kiyo Etch System
MKS Instruments TOOLweb Sensor Integration Platform
Novellus Systems ALTUS PNL Tungsten Deposition System
Palomar Technologies Model 3500-II Automatic Component
Placement Cell
Particle Measuring Systems AirSentry-IMS System
Philips AMS IR3000 MBIR
Ricor MicroStar Water Vapor Pump
"Advances in semiconductor technology are only possible because of the kinds of

products being honored in this year's Editors' Choice Best Product Awards
program," said Pete Singer, editor-in-chief of Semiconductor International.
"Chipmakers rely on these products to create electronics that are smarter,
smaller, faster, less expensive and more reliable. We congratulate the people and
the companies that have had the insight and fortitude to bring these products to
the market."
Source: BusinessWire, July 1 2006
• Europe continues to lag in chip sales, says SIA
Sales of semiconductors in Europe are continuing to underperform other regions,

according to the Semiconductor Industry Association.
The SIA said Monday (July 3) that year to year sales in Europe grew by just 0.5
percent, from $3.19 billion in May 2005 to $3.21 billion last month. This
compares with a 9.6 percent growth in the North American market to $3.52
million for May 2006, an impressive 15 percent for Asia Pacific, to $9.23 billion,
and 4.6 percent in Japan to $3.78 billion.
Worldwide sales of semiconductors of $19.7 billion in May grew by 9.4 percent

over the May 2005 sales of $18.1 billion according to the Association.
Month on month sales on a geographical basis show a drop of 0.7 percent in

Europe, compared with a larger decline of 2.1 percent in the U.S. The Japanese
and Asia Pacific markets both grew over last month, Japan by 0.9 percent and
Asia Pacific by 2.2 percent. Total sales rose by 0.7 percent from April 2006, when
sales were $19.6 billion.
ISA, June 30- July 7, 2006 27

Sales of cell phones and other consumer electronics products were again the
principal contributors to growth, according to George Scalise, SIA president.
"Sales of analog chips grew by 21.5 percent from May of 2005, while digital signal
processor (DSP) sales grew by 13.7 percent," said Scalise.
Source: EETimes, July 3 2006
• Consumers drove chips in May, says Scalise
A generally bullish global economy and the ups of mobile phones and digital
consumer equipment outweighing the downs of the personal computer business
drove chip sales in May, according to George Scalise, president of the U.S.
Semiconductor Industry Association.
The three-month average of worldwide sales of semiconductors in May came in at

$19.75 billion, up 9.4 percent over May 2005 equivalent sales of $18.05 billion,
according to WSTS numbers from the SIA.
This was because electronic equipment is now so dominated by consumer

applications that the ups and downs of the global economy are the biggest
determinant of equipment sales and therefore of components sales. This worked
to the benefit of the semiconductor industry in May, Scalise said.
"As consumer products drive an increasing proportion of microchip sales, the

growth of the semiconductor industry more closely reflects overall economic
growth," Scalise said in a commentary, which accompanied the numbers.
"Sales of cell phones and other consumer electronics products once again were
the principal contributors to growth in semiconductor sales. Sales of analog chips
grew by 21.5 percent from May of 2005, while digital signal processor sales grew
by 13.7 percent," he added.
"Strong growth in sales of NOR flash memory products and optoelectronic devices
are indicators of continued growth in sales of digital cameras and cell phones.
Unit sales of personal computers have continued to run ahead of expectations,
contributing to 13.7 percent year-on-year growth in sales of DRAMs. Sales of PC
microprocessors declined by 2 percent from May of 2005, reflecting both robust
competition and some inventory corrections in this major market segment.
Consumers continue to benefit from this competition, as the average selling price
for a notebook computer has fallen below $1,000 for the first time ever," Scalise
said.
"We expect to see global semiconductor sales running 9 to 10 percent ahead of

last year's pace for the next several months. End market demand, inventory
levels, and capacity utilization all indicate generally favorable conditions for the
industry," Scalise concluded.
Source: EETimes Europe, July 3 2006
• New Europe’s quiet fabs are flourishing
High wages, taxes and stringent labor laws in Europe are part of the reason for
diminished wafer fab investment, which has been a concern for the European
Semiconductor Industry Association in Brussels. But perhaps central and eastern
Europe, sometimes called New Europe, offers a partial solution.
ISA, June 30- July 7, 2006 28

In Roznov, in the northeast corner of the Czech Republic, On Semiconductor
Corp. has been quietly running a profitable fab operation that designs, fabricates
and exports analog bipolar ICs worldwide.
In June, On earmarked funding for an upgrade from running 4-inch diameter

wafers to 6-inch. By next year, the company expects to be capable of 1,000 6-
inch wafer starts per week on top of the existing 19,000 4-inch wafer starts per
week. “Business has been strong,” explained Michael Mandracchia, On’s vice
president and general manager of Czech Republic and Slovakia. “The biggest
challenge here is trying to get enough product out.” On runs another 6-inch wafer
fab producing analog BICMOS devices in Piestany, Slovakia, a two-hour drive
across the border. The combined manufacturing operations employ about 1700
people.
The Roznov and Piestany facilities were formerly part of Tesla, a huge state-
owned electronics enterprise during Soviet times. In the 1990s, Motorola used
Roznov for foundry work and then began transferring lines from the US and
Europe. It also purchased the Slovakia fab. On Semi inherited the plants after
spinning off from Motorola in 1999.
On puts a combined total of $20 million on average annually into the Czech and
Slovak operations for upgrades, Mandracchia said. He estimates $220 million has
been invested in the operations since Motorola acquired them.
In line with Eastern European traditions of self-sufficiency On Semiconductor’s

plants there are capable of many early-stage processes. As well as making ICs
the Roznov site supplies raw silicon wafers and one-fourth of On’s epitaxial silicon
wafer needs. “That’s a tremendous cost advantage compared to buying that stuff
outside,” Mandracchia said.
Mandracchia, who has been in semiconductor manufacturing for 22 years, said he

sees no significant barriers if a company wanted to run a Czech-based state-of-
the-art chip plant. “The Roznov fab is in all respects world class,” he added.
Having seen Motorola and On Semiconductor make a success of the old Tesla
plants the Czech government wants to encourage more advanced chip
manufacturing. Although subsidy competition and a business pre-occupation with
locations further east may make that difficult.
According to CzechInvest, the state investment promotion agency, the Czech

Republic provides up to 50 percent of eligible costs for business activity and up to
35 percent for training costs. Manufacturing investment could also receive a 10-
year tax break, building, land and infrastructure subsidies and job creation
grants.
Europe in the past permitted subsidies worth hundreds of millions of dollars that
attracted advanced fabs to Ireland and Germany, for example. The European
Union now sets funding caps.
Tomas Hruda, CzechInvest’s chief executive officer, said his office did a feasibility
study on semiconductor-related investment and concluded the country is highly
suitable for microelectronics industry growth.
“We will not be competitive with China in mass production, but for specific design,
manufacturing and testing facilities we are in a very good position,” Hruda said.
ISA, June 30- July 7, 2006 29

The Czech Republic turns out 1500 graduates in electronics and related fields
annually, he added.
Mandracchia said staffing operations with local engineers is not a problem. The
legacy of Soviet Tesla is an education system with strong electronics and related
disciplines. On also has established links with universities in Brno, which is new
Europe’s top R&D center, and in Bratislava, Slovakia’s capital. Skilled labor in new
Europe can be up to five times cheaper than in Western Europe. “The wage
differential makes the factory hugely competitive,” Mandracchia said, adding that
the workforce in new Europe is different from their Western counterparts.
“People here have been hungry,” he said. “They want the opportunity and will
work very hard because it’s a way to a better life.”
• India's Small Biz Sees IT Growth
India's SMBs will spend some $1.2 billion on Internet infrastructure this year.
Almost one-sixth of all IT spending this year will come from small and midsize
businesses in India that are investing in their Internet infrastructure, a recent
study by AMI-Partners notes. Those SMBs will spend some $1.2 billion (U.S.);
total IT spending is forecast at $7.7 billion.
A government policy, "Broadband Policy 2004," was specifically created to assist

in accelerating the growth of broadband services in India. It offers tax incentives
to companies offering Internet services, broadband networks, and other telecom
services, and it encourages multinational corporations to take advantage of the
policy.
The study found that the biggest spenders on Internet technologies among small
businesses are those in the retail sector; among midsize businesses are those in
manufacturing. India's economy grew by slightly more than 8 percent in 2005.
SMB spending on Internet access is forecasted to amount to nearly $830 million
this year, a 24 percent increase from last year.
Almost all midsize businesses and more than half of PC-using small businesses
already have access to the Internet, but much of that is through dial-up rather
than broadband access; the study found there is a growing demand for faster
connectivity. Because Internet access provides a cost-effective communication
link between firms, Internet demand is expected to grow further as Indian SMBs
expand and increase their locations/branches.
Source: InformationWeek, July 3 2006
• Avnet Electronics Marketing Wins Texas Instruments Gold

Regional Resale Award
Avnet Electronics Marketing Asia, an operating group of Avnet, Inc. (NYSE: AVT),
has added another award to its list of industry accolades. The organization
received the Gold Regional Resale Award for 2005 from Texas Instruments (TI),
the world leader in digital signal processing and analog semiconductor solutions.
ISA, June 30- July 7, 2006 30

The award, presented at the TI Asia Distribution Conference, signifies that Avnet
Asia has surpassed a significant TI sales milestone by growing TI sales more than
50 percent to exceed US$100M in 2005.
"Avnet Electronics Marketing Asia has played a significant role in boosting sales
and taking a greater share of the booming market in the region," said TI Asia
President Mr. Terry Cheng. "Today, TI is in good shape because its core
competence in DSP and High Performance Analog (HPA) is well proven to be the
key driving force in the coming communication and entertainment era. By
leveraging the sales and technical supports from the distributors and other third
parties resources, TI aims to provide the best-in-class service to the customers
and enable them to deliver more innovative applications timely and cost
effectively. We always believe customers' success is our success."
In addition, Avnet Electronics Marketing Asia received other two awards at the TI
Asia Distribution Conference. Ramamurthy Chandran from Avnet India, was
recognized as the Best Product Manager in the sub-region designated as Rest of
Asia (ROA). The Avnet Electronics Marketing China Team 2 also received special
recognition for extraordinary resale growth in the area of High Performance
Analog solutions.
Accepting the award on behalf of Avnet Electronics Marketing Asia, Stephen

Wong, president of Asia Pacific, pointed out that the success was very much a
team effort. "We are thrilled to receive these awards, and I am especially proud
of the contributions of Ramamurthy Chandran and the Avnet China Team who
received particular mention. I think it illustrates the complementary strengths of
Avnet Electronics Marketing and TI bring to the market. TI is creating the
semiconductor engines of the Internet age, while Avnet Electronics Marketing
delivers the solutions to the customers as smoothly and efficiently as possible."
Source: en.News2u.net, July 3 2006
• SEMI to host Russian exposition
SEMI is to hold the 13th of its annual SEMI Expo CIS in Moscow on October 3-4 to
showcase semiconductor equipment, materials and devices as well as
photovoltaic technology.
This year's event will include a Semiconductor Executive Market Conference on

Oct 3, a Photovoltaic Conference and a Design for Manufacturing Conference on
Wednesday, Oct 4. Conferences will be held at the Hotel National in Moscow,
while the exhibition and the symposium will take place at the nearby New Manege
Exhibition Hall.
Complete transfer from analog to digital broadcasting by 2015, as declared by the

Russian State, and the restoring of the Global Navigation System (GLONAS) by
2008 are among the most prominent upcoming IT projects. IT industries and
infrastructure in Russia will also be the core topics of the Semiconductor
Executive Market Conference.
Their impact on semiconductor related projects as well as investments and

partnerships will be debated with speakers from the Russian Government
including Seguey Mazurenko, Head of Russian Federal Agency for Science and
Innovations, Yuri Borisov, Head of Radioelectronic Industry and Control Systems
Department of the Russian Federal Agency for Industry as well as top managers
ISA, June 30- July 7, 2006 31

from Russian IC manufacturers Mikron and Angstrem, their western partners and
Russian State and private investment funds.
"The Russian IT market increased three fold in 2005, and is projected to reach at
least $40 billion by 2010," said Heinz Kundert, president, SEMI Europe/CIS. "With
$650 million investments planned in the IT sector over the next five years, and
the establishment of four economic high tech zones and technical innovation
areas, Russia offers the semiconductor and related industries a wide range of new
opportunities for future development. Therefore, it is critical to reinforce strong
relationships between industry leaders, government officials and investors."
The Photovoltaic Conference will feature sessions dedicated to local projects

aimed at renewal of former CIS manufacturing facilities and setting up of new
ones to produce raw materials for PV industry (quartz, TCS, polysilicon),
photovoltaic modules manufacturing, as well as photovoltaic technologies and
equipment. This half day conference will feature companies and combines located
in Russia, Ukraine and Kyrgyz Republic (CIS).
The Design for Manufacturing Conference will feature presentations from global
suppliers of software and technologies for the design of ICs, PCB's and
Photomasks to Russia, as well as from Russian major design centers. In addition,
there will be one session on the investments projects led by the Russian
Government for the expansion of a design centre network in Russia and creation
of photomask design, manufacturing and cataloging center in Zelenograd.
At this year's Technology Symposium, SEMI will provide information support to

SID Russia's XV International Symposium – Advanced Display Technologies (ADT
2006), and will arrange one full day of FPD technology sessions devoted to
display electronics, ergonomics and standards in conjunction with the SID Russia
Chapter. Also within the framework of the Symposium, there will be a SEMI
International Standards Workshop with a focus on MEMS and photovoltaic related
standards.
An optional tour to Minsk (Belarus) on Oct 5 will include a visit to Integral, the
largest semiconductor device manufacturing company in the CIS, and Planar, a
semiconductor equipment manufacturer.
• Green rules help drive SMT cleaning, says report
The 2006 deadline for removing lead from the electronic manufacturing process is
boosting the mature surface mount technology (SMT) production equipment
market. And as 'green' manufacturing makes gains, more so in Eastern Europe
and China, the cleaning equipment market will also see renewed growth,
according to Frost & Sullivan.
The cleaning equipment market is worth about $35 million, according to Frost &
Sullivan.
"Lead-free manufacturing has caused process changes in the SMT [printed circuit
board production] line that have placed more emphasis on cleaning. With more
residue left on the assembly during lead-free manufacturing, industries that did
not historically clean are likely to do so between 2006 and 2010, creating new
market opportunities," said Keith Robinson, industry manager.
ISA, June 30- July 7, 2006 32

Lead-free assemblies are harder to clean than those using lead, causing concerns
among electronic assemblers about the feasibility of becoming truly lead-free
compliant in 2006. Cleaning lead-free materials is a complex task placing
increased stress on the entire process — from the machine itself to the chemicals
involved, leading many assemblers to doubt the efficacy of SMT cleaning
equipment in cleaning lead-free assemblies.
To overcome this challenge, some companies have been very proactive in

educating customers on how to clean lead-free assemblies effectively. SMT
equipment vendors will need to be very aggressive in addressing customers'
needs in 2006, as this is a critical year for the SMT cleaning equipment market,
Robinson said.
Apart from electronics manufacturing, the medical device, aerospace and defense
industries are likely to increase their demand for SMT cleaning equipment. These
industries are expected to be the main markets for SMT cleaning equipment in
North America and Western Europe.
• Taiwanese chip makers team up on flash memory
Two Taiwanese chip makers have teamed up to meet surging demand for flash
memory.
Powerchip Semiconductor Corp., Taiwan's largest DRAM (dynamic RAM) maker

will work with Macronix International Co. Ltd. to co-develop 100-nanometer
manufacturing technology as the first step in a five-year technology research
partnership.
Macronix will also farm out production of some of its chips to Powerchip, a deal
expected to last seven years, the two companies said late Friday in separate
statements.
Powerchip also said it would pay Macronix NT$5.3 billion (US$163.5 million) for
an advanced, 12-inch chip plant. Macronix built the shell of the plant years ago,
but a chip industry downturn caused the company to delay outfitting it with
production equipment "Demand for [flash memory] is rising faster than our
current facilities can keep up with, so we needed this to facility to help us seize
this business opportunity," Powerchip said in a statement to the Taiwan Stock
Exchange.
Chip manufacturing technology is measured in nanometers, a description of the

size of the smallest feature that can be created on the chip's surface. A
nanometer is a billionth of a meter.
The 100-nanometer chip technology Macronix and Powerchip plan to develop is

not as advanced as the 65-nanometer production lines already in use at some
companies. Advances in chip production technology jumps are important because
they enable chips to be made smaller, speedier and more energy efficient.
Macronix develops NOR flash memory chips, which are most commonly used in
mobile phones, as well as Mask ROM (read only memory) chips.
Source: tmc.net, July 3 2006
ISA, June 30- July 7, 2006 33

• Research team achieves UV-accelerated oxide growth
University College London (UCL) has succeeded in oxidizing silicon using

ultraviolet light rather than a high-temperature furnace. The technique could
impact semiconductor manufacturing processes, according to the researcher who
led the team that developed the technique.
The Department of Electronic and Electrical Engineering at UCL has used

ultraviolet (UV) excimer lamps, to create an oxide coating on silicon. The UV lamp
used in the process emits light at a wavelength of 126 nanometers. It looks like a
fluorescent lamp. It is filled with argon gas that is subjected to a high voltage,
according to online reports.
Silicon dioxide grows slowly at room temperature and so for chip manufacture so
it is typical for the oxide to be grown by heating the silicon in furnaces at
temperatures of 900 to 1200 degrees centigrade, with implications for what
processes can be done before and after the high temperature baking.
UCL’s UV excitation work means such furnaces could be made redundant,

reducing the amount of energy consumed during the silicon manufacturing
process.
Ian Boyd, the UCL professor who led the research, said: “Our finding has the
potential to completely overhaul the way that the microelectronic industry
processes silicon.” It opens up new possibilities for using light instead of heat to
fabricate advanced electronic devices, as well as creating the opportunity to
realize new materials with unique properties.
However, one advantage of growing silicon dioxide at high temperature is that

defects are annealed out leaving a uniform silicon dioxide material. The defect
density performance of UV stimulated oxide growth has yet to be tested in
industrial clean room conditions, the reports said.
• Nordic Semiconductor opens new office in Tokyo
Norwegian fabless semiconductor company Nordic Semiconductor ASA announced

Friday (June 30) it has opened its first Japanese regional sales office at Minatu-
Ku, in Tokyo (Japan), in order to offer customers both technical and commercial
support as well as application-specific design guidance.
For Nori Shibuya, who has been appointed as the regional sales manager, this
office reflects the importance Nordic Semiconductor is placing on the Japanese
market. He indeed declared: “Japan is an extremely competitive market for
Nordic Semiconductor and we are working hard to establish our name and
presence here especially in the consumer and industrial wireless transceiver
markets.[…] I am aiming to show Japanese companies and designers that there
are viable alternatives to their existing suppliers both in terms of technology and
customer support and focus.”
Based in Tiller (Norway), Nordic Semiconductor offers a range of 433-, 868- or

915-MHz and 2.4-GHz ISM band proprietary transceivers for a wide range of
relatively low data rate applications. Among other examples, the company cites
personal area networks targeted by Bluetooth (including PC, and sports
ISA, June 30- July 7, 2006 34

peripherals plus wireless gaming controllers and MP3 audio streaming speakers
and headphones) and industrial applications targeted by ZigBee (such as many-
node, low-power consumption industrial networks and home automation).
Nordic Semiconductor also has offices in Oslo (Norway), Hong-Kong, and Seoul
(Korea).
• Toshiba To Build New Semiconductor Production Facility In

Thailand
Toshiba Corp and Toshiba Semiconductor (Thailand) Co Ltd (TST) will construct a
new semiconductor production facility at TST in the Bangkadi Industrial Park,
some 35km north of Bangkok. The new facility will boost Toshiba Group's back-
end process capacity for production of small-signal devices and opto devices for
Asian markets.
Demand is growing for the small-signal devices and opto devices for consumer
electronics equipment and mobile phones, especially in Asia. In response, and in
support of a drive to expand overseas production in the discrete business, and to
strengthen the overall profitability of the business, the company decided to
enhance production capacity at TST, a key Toshiba Group manufacturing facility
for discrete devices.
Under the plan announced today, construction of the new building will start in
July, the first phase of a multi-year, ¥2 billion investment program. On
completion, the new building will have a production area over 8,000m² in total,
and undertake production on high efficiency production lines.
Source: Semiconductor Online, July 3 2006
• Crazy customers help chip-maker get ahead of pack
TEXAS Instruments has ridden the wireless wave since the dawn of the cellular
age, with its sales and profits growing along with the popularity of games,
cameras and other fancy mobile phone features that require more computing
horsepower.
Now, as the market for basic mobile phones appears to be saturated in some
parts of the world, the Dallas company whose chips are in about half of all mobile
handsets is looking for ways to expand existing business and find new ones.
The key is video, executives say.
It will be a factor in high-end mobile phones and other gadgets, ranging from
portable media players to surveillance systems.
"Video is the next big thing," Texas Instruments digital signal processors general
manager Greg Delagi says.
years."
ISA, June 30- July 7, 2006 35

For more than two decades, TI engineers designed components that could
receive, store and transmit voice signals for mobile phones.
Video requires changes to hardware and software, but Delagi says the underlying
core of signal processing technology is the same.
Other chip companies, including Broadcom, Pixelworks and Philips, also see
opportunities in making semiconductors for video devices.
Digital video chips can sell for hundreds of dollars instead of the few bucks
fetched by older chips.
"Everybody is trying to get into that market," says Will Strauss, a semiconductor
analyst at research firm Forward Concepts. "It's like moths circling the candle."
Texas Instruments is betting big on a technology package it calls DaVinci.
It says DaVinci chips and software transmit video faster and provide clearer
pictures.
The company began shipping DaVinci development systems in December and

claims to have sent 500 kits to manufacturers, which are using them to design
products relying on TI chips.
DaVinci's complicated design "isn't very elegant, but it works and it works now",
Strauss says.
A more elegant design would be to integrate all of DaVinci's functions on a single

chip, Strauss says.
TI is trying to do that, and so are several of its competitors with their own
technology.
DaVinci draws too much power to use it on mobile phones, but it could be
deployed elsewhere -- from surveillance systems to personal media players,
Strauss says.
Early versions of DaVinci aren't intended for portable, battery-powered devices

and are more likely to wind up in digital video recorders and other plugged-in
gadgets, Delagi says.
There is, however, no reason why DaVinci can't be refined for portable devices in
the future, he says.
It is not easy to predict who will develop the next must-have electronics item.
It is not always the big consumer product manufacturers.
TI officials cite the example of Sling Media, a California startup that developed
Slingbox, a product that lets users watch regular television on any internet-
connected device, including laptops, mobile phones and PDAs.
Slingbox uses TI's digital media processor.
ISA, June 30- July 7, 2006 36

TI also expects growth in processors for medical devices, ranging from portable
ultrasound machines to hi-tech prosthetics.
It supplies a technology called digital light processing for high-definition television

sets and projectors.
It also makes handheld calculators, and mobile phones remain a key market for
TI.
The company says it sells chips to the 10 largest mobile phone makers and six of
the seven largest manufacturers of advanced phones.
Nokia is its biggest customer.
According to researcher Forward Concepts, TI makes 42 per cent of chips in

advanced or third-generation mobile phones, far outpacing Qualcomm, which
makes 14 per cent.
TI is counting on affluent shoppers in developed countries buying phones with

video, still-photo, games and other fancy applications.
It is building more powerful chips for those markets, too.
In February, for instance, the company announced that it had developed a

processor capable of taking 12 megapixel photos or letting users download high-
quality video to their phones for replay on a television screen.
TI still sees a growing market in basic handsets for the emerging consumer
classes of China, India and other areas.
Entry-level phones contain fewer or cheaper semiconductor parts, but TI says

they can be profitable because the company doesn't have to spend money on the
technology, as it has already been developed.
Revenue and profits at TI have risen sharply for three years, since the end of the
last slump in the semiconductor industry.
Sales in 2005 were a record $US13.39 billion ($18 billion) and profit hit $US2.32
billion, the highest level since 2000, during the last hurrah of the tech boom.
TI's stock price peaked around $US100 in early 2000, just before the dotcom
bubble burst.
Shares slid below $US20 by late 2003 but have regained some ground since.
TI executives say the video-driven age is just as certain as the rise in recent
years of fancy mobile phones with powerful communications and entertainment
functions.
Chief executive Richard Templeton says TI knows this from listening to gadget
manufacturers that use its chips.
Several years ago, he says, Japanese phone makers wanted chips that could take
high-resolution pictures and play 3D games.
ISA, June 30- July 7, 2006 37

"They asked us for things that we thought were crazy," Templeton says.
"Here, five years later, we are ahead of the market because we knew enough to
let those customers drive us in that particular segment."
Source: Australian IT, July 4 2006
• NFC Forum Adds to Ranks
The NFC Forum, a non-profit industry association advancing the use of near field
communication (NFC) technology, has added 14 new organizations to its ranks
since February.
Launched early last year, the NFC Forum now includes 80 member organizations
and in June unveiled its technology architecture, which will serve as the
foundation for interoperable NFC products and services.
Organizations joining the forum in the past four months include new associate-
level members ALPS Electric; ARM; Dai Nippon Printing; E-Group (Hungary);
KDDI; MobileLime; OMNIKEY; Oberthur Card Systems; Sprint; SFR; Sirit;
Strategic Engineering Group; and Telenor International. The VTT Technical
Research Centre of Finland has also joined the forum as a non-profit organization.
"Our membership growth is indicative of the heightened interest we see in the

activities of the forum and in the potential of the NFC market,” said NFC Forum
Chairman, Christophe Duverne, in a statement. “This year will be pivotal, as we
lay a foundation for market growth that will put NFC capabilities in the hands of a
billion consumers worldwide by the end of the decade – the reach predicted by
ABI analysts.”
NFC is a short-range, standards-based wireless connectivity technology that

targets contactless transactions, access digital content and connecting electronic
devices as its main usages. The technology has been initially focused on the e-
commerce, entertainment and transportation markets and is being brought to
users through mobile devices, mostly cell phones at this stage in NFC’s
development.
Additional members of the forum include MasterCard International, Matsushita

Electric Industrial, Microsoft, Nokia, NEC, Renesas Technology, Royal Philips
Electronics, Samsung, Sony, Texas Instruments and Visa International.
Source: Electronic News, July 4 2006
• AFDEC sees slowdown in growth
Figures collected by the Association of Franchised Distributors of Electronic

Components (AFDEC) for May show a significant improvement in 'bookings' and
'billings' growth compared to the same month last year.
However, the level of growth is lower than in April which suggests that the overall
rate of growth may be slowing.
ISA, June 30- July 7, 2006 38

According to AFDEC chairman, Adam Fletcher, the Association will need to
analyse the next couple of month’s data, as the sector moves into the generally
quieter summer period, to see if this is a sustaining trend. "We believe our annual
forecast for 2006 remains on track but we will continue to keep it under review in
the light of the statistical evidence."
The overall Book-to-Bill ratio in May increased slightly to 1.09:1. Overall Stock
Turn ratios remained static at 2.5 times, with overall Inventory levels increasing
by 1%. Debtor Days increased by 5 days to a total of 68.4 days.
“The book-to-bill ratio remains positive, which is good news”, concluded Fletcher.
“It’s interesting to note that there has been a significant increase in Debtor Days,
which is normal within the cycle, but we need to monitor this very carefully.”
Total average daily bookings (net sales orders entered) in May declined by 4.8%
when compared to April but increased by 29% when compared to the same
period last year. Sector specific bookings changes compared to April 2006 saw
semiconductor decline by 9.1%, passives decline by 3.8%, electromechanicals
increase by 6.9%, component assemblies declined by 8.1% and other products
declined by 17.1%.
Total average daily billings (net sales invoiced less credits) in May declined by
6.3%, when compared to April but increased by 10.7% when compared to the
same period last year.
• Wireless Cities on the Way
As telecommunications companies vie to deliver a next generation of wireless

services to businesses and consumers, an unexpected upstart has appeared on
the scene in many geographies: the government.
Municipal and county governments from coast to coast in the United States have
announced plans to offer broadband wireless data access to citizens in a true sign
of the eventual ubiquity of such services.
Whether the goal is to attract businesses and residents to the community, offer
more services to citizens, or extend the reach of the digital age to those who
wouldn’t otherwise be able to afford such services, these local governments are
investigating technologies and announcing plans to blanket communities with
access.
Not surprisingly, telecommunications carriers are reluctant to relinquish these

potential markets to governments, and several battles are underway in the
nation’s capital as these businesses struggle to limit the scope of competition
from cities and counties.
City IT managers, public policy attorneys, businesses and non-profit organizations

converged last month in Santa Clara, Calif. at the MuniWireless conference there
to talk about that ongoing battle and their own specific network plans.
ISA, June 30- July 7, 2006 39

“The old generation sometimes doesn’t want the new generation to develop, to
step out on its own,” said Gary Bolles, moderator of the event and former editor
of Network Computing. “There is friction. Sometimes the previous generation
does things to hold back the new generation...”
But the idea of building a new infrastructure of wireless connectivity is one that
serves consumers and businesses alike.
“We are actually following a cycle of building new roads and building new
capabilities,” Bolles said. “We need to focus not just on building these networks
but also what these networks will enable us to do.”
Google offered more details on its previously announced plan to offer ubiquitous
free broadband wireless access in Mountain View, Calif.
“We are not a city and we are not an ISP,” said Larry Alder, product manager for
the project at Google, explaining why his search engine company would embark
on such a project. “We want to understand the needs of traditional ISPs, and we
want to provide a test bed for applications. This is also a community outreach for
us. We are building this network in our home town.”
Alder said that Google has no monetary objective for the network. Plans are to
cover the entire city, which includes 12 square miles and a population of 70,000.
Google is offering the free Wi-Fi for outside use. Those who want to bring the
signal inside will have to install their own modems, Alder said.
The Google implementation will be an 802.11 b/g signal, and the initial service
will be up to 1 megabit per second. Google expects to install a total of 300
nodes. The network is fully built and being tested. Alder said Google is launching
to employees imminently and to the public this summer.
“The service is free so we can learn a lot about the types of usage that free
enables,” Alder said.
San Francisco’s goal for its municipal wireless project is to provide “a sustainable,
multifaceted program to enable all residents and businesses in the city to share in
the benefits of connectivity,” according to Chris Vein, acting director of the
Department of Telecommunications and Information Services for the city.
The city’s “digital inclusion” goals are to increase access to jobs, education,
healthcare and government services, to enable residents to better engage and
participate in their communities and to enable residents to more fully participate
in the global information economy and society.
The city has completed the request for information and comment phase, and the
RFP phase. It is currently in the negotiation phase.
Phoenix is currently analyzing the possibility of providing wireless, according to

Kristine Sigfridson, CIO.
ISA, June 30- July 7, 2006 40

“We are providing free Wi-Fi in all city facilities, libraries, convention centers and
airports,” she said. “The technology is simple for that, and we stay below the
controversy.”
The city of Atlanta announced the release of its RFP during the MuniWireless
conference. The city’s mayor pursued the strategy as a way to strengthen
economic development and education, to improve public safety and to provide
opportunities to low income families in the city.
Atlanta is hoping for a public/private partnership that can provide the benefits of
a network with little or no taxpayer investment.
Other conference participants discussed the debate in Washington. The main

action of the bills in question is federal franchising.
“Cities are opposed to the House bill because it will give them a stiff arm to the
nose and push them out of the process,” said Jim Baller, an attorney with the
Baller Herbst Law Group, which represents municipalities who want to do
networks. All the bills make it more difficult, in one way or another, for local
governments to provide wireless services.
Baller said that governments have been in the public utility business for years and
years with many extending power to rural communities that for-profit companies
would have left dark.
But even as carriers and ISPs and municipalities duke it out over who will provide
service, and for what cost, in either case network equipment makers and those
who sell the components that go into those devices will be the winners
At Motorola, while the sales process or sales team may differ slightly depending
upon whether the prospective customer is a carrier or a government, ultimately
the network will be built and the equipment will be sold, said Bill Rubino, a
product manager for the company’s Mesh Networks Product Group, who
presented information about his company’s products to governments at the
conference.
So wherever those revenues come from they will end up in the top lines of
equipment makers like Motorola, and those who provide the chips for that
equipment.
• Cascade Microtech Opens Two New Offices In Asia
Opening two new sales and service offices in Asia, Cascade Microtech is
expanding its operations to meet the needs of a rapidly growing customer base in
the region. The expansion reflects the global growth of the semiconductor market
and the company's rapid sales growth in the Asian-Pacific region. In order to
better serve existing customers and expand to serve new customers, the
company will now offer direct sales, service and applications support in the new
offices located in Shanghai, People's Republic of China and Hsin Chu City, Taiwan.
ISA, June 30- July 7, 2006 41

"Since 2003, our Singapore office has been extremely successful and we intend to
replicate this business model in China and Taiwan to provide greater overall value
to our customers," said John Pence, vice president and general manager, Cascade
Microtech, Engineering Products Division. "We want to respond quickly to
customer needs and make certain that we assist customers as they bring up
critical new semiconductor processes."
"Cascade Microtech has been working very successfully through distributors in

China and Taiwan for more than a decade," said Willis Damkroger, director of
worldwide sales, Cascade Microtech, Engineering Products Division. "We've
enjoyed a great relationship and gained market share through their hard work
and support. To address our customers' future needs, the new offices allow us to
establish even closer relationships with customers and to offer best-in-class
service, sales, and application engineering support."
Source: Semiconductor Online. July 5 2006
• EU presidency told to focus on innovation and R&D
One of the U.K.'s leading industry lobby groups, the Federation of Small
Businesses (FSB), has called on the incoming Finnish Presidency of the European
Union to step up efforts to boost innovation and research and development in
Europe's economy.
The rotating presidency passed to Finland at the beginning of this month.
The FSB said the EU's level of R&D spending is as dismal as it is alarming and
that action is needed now to kick start higher levels of investment.
It suggested one of the most effective ways to improve the EU's competitiveness
and help fuel growth would be to put small business at the centre of this effort.
The EU set itself the target of spending 3 percent of GDP on R&D by 2010, but
last year it achieved just 1.9 percent. In contrast, spending in Japan last year
topped 3.15 percent.
Tina Sommer, FSB EU Affairs Chairman, said: "Finland should use this period of
political inertia in certain EU countries to ensure that Europe has the best possible
program for promoting innovation, research and development."
She added: "EU decision makers need to recognize how Europe's economy is
evolving and they need to put the money on tomorrow's winners rather than
yesterday's hopes."
The FSB noted that in the U.K. 64 percent of commercial innovations come from
SMEs and across the EU half of all new jobs are already created by less than 5
percent of high-tech small and medium sized enterprises.
The Federation is proposing several steps to achieve higher levels of EU

innovation, the most important being approval of the 7th Framework Program
(FP) on time.
This project is the European Union's main instrument for funding research and
development. The FP is proposed by the European Commission and adopted by
ISA, June 30- July 7, 2006 42

Council and the European Parliament. It is due to be adopted by Council on July
24, but, the Federation warns, could be delayed if there is no agreement.
Late last year, the European Commission announced a series of proposals, 19 in

total, intended to improve the conditions for research and innovation in the 25-
nation European Union.
However, although the proposals are being bracketed together as a major

integrated action the Commission did not include any costs or timetable in its
description of the plan.
"The Council should come to an agreement on FP7 during the extraordinary

Competitiveness Council planned for 24th July. Failure to do this would prevent
the program from starting on time", the FSB said Wednesday (July 5) in a
statement.
The organization is also calling on the administrators to place small businesses at

the centre of FP7 funding.
"The FSB welcomes amendments to FP7 adopted by the European Parliament to

ensure SMEs obtain greater access to funding. The FSB is concerned that these
measures should not be watered down by Council," the statement added.
Another advance, the group said, would be to recognize the pivotal role small
businesses could play in meeting the EU's 3 percent target.
In the U.S., the FSB notes, the average small business has an R&D budget 7-8
times higher than in the European Union. Closing this gap on its own would take
the EU close to its target of achieving its R&D target.
The European Commission's own advisory board has made this point, but this has
not been recognized in the EU's funding programs to date, the FSB warns.
• Visual tool facilitates IP integration
With a visual RTL debugging tool dubbed RTLvision Pro, EDA vendor Concept
Engineering helps design engineers to ease the debugging and integration of IP
blocks into their designs.
Design engineers working on classical ICs, SoCs, or FPGAs use to alleviate the
complexity of their tasks and yield faster results by integrating blocks, Concept
Engineering CEO Gerhard Angst explains. No matter if this IP is bought externally
of stems from former designs – the problem is that even if the IP is already
tested it still can fail in new environments since these new chip design
environments frequently incorporate different constraints and edge conditions
than the one the IP block originally was designed for.
RTLvision Pro helps these designers to quickly understand, integrate and debug IP
blocks, claims Angst, especially if these IP blocks are parametrisable. At the same
time, the software tool can be used as well for analyzing and debugging of own
designs, Angst said.
ISA, June 30- July 7, 2006 43

By offering a hierarchical data analysis, the tool allows design engineers to work
through the "logic cone" and identify critical RTL portions. Thus, engineers can
focus on these design fragments and achieve faster a thorough understanding of
design behavior and misbehavior. With mixed-language support for various
hardware description languages including System Verilog, Verilog, and VHDL, the
software can be applied to complex heterogeneous designs.
The tool helps to reduce the complexity of the debug process via its interactive
logic cone navigation feature which shows just the critical portion of the RTL code
in the respective window while concurrently providing links to the original source
code. Thus, it enables engineers to concentrate on the critical parts of their RTL
project without being disturbed by other parts that are not relevant for their job.
The software also automatically extracts and analyzes clock trees and clock
domains, supports detection and resolution of clock domain problems, and
provides a TCL-based application programming interface (API) for customization,
allowing designers to extend the tools functionality to meet needs of the
respective project, Angst explained.
• Device makers rush into GaN market
Propelled by a new wave of commercial and military applications, a growing

number of device makers are scrambling in what is becoming the next gold rush
in the industry: gallium nitride (GaN).
The wild rush in panning for GaN started last week, when Cree Inc. (Durham,
N.C.) acquired Intrinsic Semiconductor Corp. (Dulles, Va.), a developer of silicon
carbide (SiC) and GaN wafers, for $46 million.
Then, IC-equipment supplier sp3 Diamond Technologies Inc. (Santa Clara, Calif.)
last week announced a $750,000 Phase II contract from the Missile Defense
Agency (MDA) for use in developing GaN-based silicon-on-diamond (SOD)
devices. The project includes two subcontractors: Nitronex Corp. (Raleigh, N.C.)
and TriQuint Semiconductor Inc. (Hillsboro, Ore.)
Another entity, EntreMetrix Inc. (Irvine, Calif.), recently formed a new venture —
Advanced Nitride Devices — which will focus on the manufacturing of GaN and
aluminum nitride (AIN) semiconductor materials and devices.
And on the device side, a growing number of compound semiconductor specialists

and other entities have recently entered or expanded into the GaN front,
including Eudyna Devices, Group4, IMEC, Matsushita, RF Micro Devices, TDI,
Toshiba, TriQuint, among others.
In development for decades, GaN has suddenly emerged from the labs to become
a primary component in higher-end LEDs. GaN is being used to make blue LEDs,
thereby enabling next-generation Blu-Ray DVDs to hit the marketplace.
There is also a sudden interest in developing standalone GaN-based discrete

parts. Targeted to replace conventional gallium-arsenide (GaAs) technology, GaN
claims to possess a large heat capacity and wide bandgap properties, making it
ideal for a range of fast-growing consumer and communications markets. And the
ISA, June 30- July 7, 2006 44

military is quietly pouring millions of dollars in GaN R&D and contracts, it was
noted.
"Gallium nitride is still in the nascent stage," said John Palmour, co-founder and
executive vice president of advanced devices at Cree, a supplier of
semiconductors and devices for the solid-state lighting, power and
communications markets.
"The challenge for gallium nitride has been its reliability," he said in a recent
interview. "And only in the last two years have you been able to go out and buy
[standalone discrete GaN] devices."
Another stumbling block for GaN is the ability to manufacture the technology in
volumes. Today's GaN devices are manufactured on 3-inch substrates and below,
but some vendors are working on 4-inch (and above) GaN-based products as a
means to cut costs.
Still, there's a mad rush to enter or expand into the GaN arena — and for good
reason. The GaN-based device market is expected to grow from $3.3-to-$3.4
billion in 2005 to $3.5-to-$3.6 billion in 2006, according to Strategies Unlimited
Inc. (Mountain View, Calif.). The total market for all types of GaN devices is
expected to hit $7.2 billion by 2009, according to the research firm.
In fact, the number of companies and research centers with GaN activity has
increased from 350 organizations in 2000 to over 500 entities in 2005, according
to the firm.
Lab to fab
White LEDs are responsible for over 50 percent of the total GaN-related markets.
Most companies are using a GaN-on-sapphire or GaN-on-SiC substrate
technologies to develop LEDs.
A growing number of companies are also developing discrete GaN parts for
wireless applications — such as base stations, satellites and related high-end
markets — in an effort to replace GaAs technology. Potential markets for devices
based on GaN include power amplifiers and high-voltage switching devices for
power grids.
"The vast majority of applications for gallium nitride are LEDs," said Robert
Steele, an analyst with Strategies Unlimited. "I could see some high-end
applications [for discrete GaN parts]. But the electronics market is limited for
gallium nitride."
"The military and high power electronics markets both have future needs that will
make use of the advantages offered by wide bandgap materials such as GaN,"
said Asif Anwar, an analyst with Strategy Analytics Inc. (Boston). "On the other
hand, the needs of the commercial telecommunications wireless market have yet
to really place the incumbent technologies, silicon LDMOS and GaAs pHEMT,
under major competitive strain, although GaN will start to penetrate these
markets over the next few years regardless."
Another emerging application for GaN is WiMAX. Last month, RF Micro Devices
Inc. (Greensboro, N.C.) entered the GaN market with a new family of 0.50-
micron, GaN-based high electron mobility transistors (HEMTs).
ISA, June 30- July 7, 2006 45

With the devices, RF Micro claims that it has achieved a high gain of 16-dB, a
high power density of up to 4W/mm at 28-Volt and 1,000 hour high temperature
reliability results. It is sampling the devices to cellular infrastructure and WiMAX
base station customers.
"For cellular infrastructure and WiMAX base station OEMs dependant on

maximizing power and efficiency, RFMD's GaN transistors provide higher at-
package matching impedance, higher power density and wider bandwidth
performance when compared with silicon LDMOS devices," said Bill Pratt, chief
technical officer and corporate vice president for RF Micro, in a statement.
Meanwhile, for years, Cree has developed and sold LEDs, based on a GaN-on-SiC
technology. In May, Cree announced sample availability of its first discrete GaN
part — a 15-watt packaged GaN HEMT. Cree's so-called CGH35015 device is
optimized for broadband wireless access and WiMAX applications operating
between 3.3- and 3.9-GHz.
Cree has two fabs that are geared for GaN-based device manufacturing. One 3-
inch fab, located in Durham, N.C., is geared for production, while a plant in Santa
Barbara, Calif., is targeted for R&D.
In the advanced, 3-inch fab, the company plans to offer GaN foundry services. It
is also looking at expanding its GaN capabilities to 4-inch substrates, according to
Cree's Palmour.
In fact, lack of suitable substrates has limited the development of GaN. To date,
only 3-inch substrates with high thermal conductivity have been commercially
available.
One company, Technologies and Devices International Inc. (TDI), claims to be

one step ahead of the competition by recently announcing the fabrication of the
first 4-inch substrates for group-III nitride compound semiconductor devices. The
group-III nitride compound semiconductor family includes GaN, AlN, indium
nitride (InN) and their alloys.
"This new product will allow our customers to use existing 4-inch device
manufacturing lines, reduce production cost and speed up commercialization of
GaN devices," said Vladimir Dmitriev, president and CEO of TDI (Silver Springs,
Md.). "We plan to start pilot production of 4-inch AlN-based substrates in a few
months and make the first product shipments in the last quarter of 2006."
Meanwhile, IMEC (Leuven, Belgium), a European research institute, has recently

demonstrated the growth of low-sheet-resistivity, AlGaN/GaN HEMTs on 6-inch
silicon wafers. The transistors were grown in IMEC's new 150-mm metal-organic
chemical vapor-phase epitaxy (MOVPE) system. IMEC will offer access to its
AlGaN/GaN epitaxial wafers in a service mode to laboratories and partner
companies.
Diamonds are forever
While research continues in the arena, GaN-based discrete devices are currently
relegated for niche-oriented, high-end systems. For example, Japan's Toshiba
Corp. (Tokyo) recently rolled out a new GaN-based power field effect transistor
(FET) line.
ISA, June 30- July 7, 2006 46

The new device achieves power output of 174 watts at 6-GHz. This surpasses the
performance of GaAs FETs, which are widely used in base stations for terrestrial
and satellite microwave communications, said Ichizo Kobayashi, senior manager
for the Microwave Solid State and Electronic Systems Department at Toshiba.
"Initially, our plans are to develop an X-band device, in the 9-GHz, 50-watt range
for medical applications, targeted for 3Q '06; a Ku-Band device in the 14-GHz,
50-watt range for satellite communications applications, planned for 3Q '07; and
a 6-GHz, 150-watt, C-Band device for satellite communications, scheduled for 1Q
'08," he said.
In a related application, sp3 Diamond announced a contract from the MDA. The
project will result in the delivery of GaN-on-SOD devices for radar
transmit/receive modules, as well as a process for producing GaN-on-SOD
substrates.
This award follows sp3's work in Phase I of this project, in which it delivered 100-
mm SOD wafers with a GaN top surface, said Dwain Aidala, president and COO of
sp3 Diamond.
The company is working with two partners on the Phase II project. Nitronex, a
developer of GaN-on-silicon technology, is working with sp3 on the fabrication of
GaN materials on a SOD substrate.
Nitronex will build active high power devices as part of this next phase. Recently,
the company closed a $21.8 million round of venture funding and rolled out a
family of RF power transistors for the WiMax market, based on its Sigantic GaN
process technology.
TriQuint is also part of the Phase II project. The RF chip maker will be modeling
this technology for its high frequency MMIC development. "With the push by the
military for tripling device power and adding 50 percent greater efficiencies,
materials such as sp3's GaN-on-SOD have a high probability of being the
substrate solution of the future," stated Tom Cordner, vice president of TriQuint's
Texas operations.
TriQuint and Lockheed Martin Corp. are separately developing GaN devices.
TriQuint has worked with GaN since 1999 under the sponsorship of Lockheed
Martin. Partners also include General Electric Global Research Center, the
University of South Carolina, ATMI, Emcore and Sandia National Laboratories.
A potential rival, startup Group4 Labs LLC, recently announced what the company
claims is a GaN-on-diamond semiconductor wafer product line. The product,
dubbed Xero Wafer, is initially available in the commercial market in 10- x 10-mm
square pieces.
Xero Wafer is geared for solid-state white lighting, military and photonics
applications, said Felix Ejeckam, CEO of Group4 Labs (Menlo Park, Calif.)
GaN-on-diamond claims to have several advantages over competitive

technologies. "The whole idea is to improve the thermal conductivity in the
substrate," Ejeckam said. GaN-on-diamond has a thermal conductivity of about
1,200 watts per meter per Kelvin, compared to 40 for sapphire and 400 for SiC,
according to the Group4.
ISA, June 30- July 7, 2006 47

Despite the flurry of announcements in the U.S., Japan appears to have a slight
lead in GaN. In terms of discrete GaN devices, Japan's Eudyna Devices Inc.
(Yokohama) is believed to be first company to ship products in the market,
according to sources. In 2004, Fujitsu Quantum Devices Ltd. and the electronic
devices division of Sumitomo Electric Industries Ltd. were consolidated into a new
joint venture company, Eudyna Devices.
And last week, Matsushita Electric Industrial Co. Ltd. (Osaka, Japan) announced
the development of a GaN transistor with a vertical structure that reduces overall
chip size. This is said to be the world's first demonstration of GaN vertical
transistor applicable to high power switching devices.
"The GaN vertical transistor features a submicron channel fabricated using novel
self-aligned process. This device configuration effectively reduces the device area
down to one-eighth of the conventional planar device," according to the company.
"The submicron channel with the width of 0.3 micron serves good pinch-off
characteristics that are strongly required for power switching devices," according
to the firm. "Panasonic's proprietary epitaxial growth technology of InAlGaN
quaternary alloy enables low contact resistance by using it as a contact layer. The
InAlGaN effectively reduces the barrier height from the electrode resulting in one-
third lower contact resistance than the conventional one."
• China closer on new IC policy
More than a year after phasing out a controversial tax rebate for ICs, China is still
mulling a replacement plan that will support manufacturing and encourage
innovation at chip companies without running the risk of another challenge by the
U.S. semiconductor industry.
The government will release a plan in the second half of 2006 which will use a
combination of tax credits for R&D, tax exemptions on capital equipment and
cash support for small and large companies to pursue chip design. The
government will establish a fund with about $12 million to $25 million for the first
year, and increase it annually, said Ke Li, an official at the China Semiconductor
Industry Association (CSIA).
China agreed to end its value-added tax on semiconductors in April 2005, after
tensions almost led to a WTO complaint from the U.S., which said the rebate
constituted a discriminatory tax against foreign chip makers. The VAT scheme,
which allowed for a partial tax rebate for companies that manufacture chips in
China, amounted to as much as 14 percent of the original 17 percent levy, which
in 2003 totaled roughly $138 million, according to market researcher iSuppli
Corp.
But the benefit to local companies was debatable, despite the controversy. A
major complaint by local industry was that the VAT rebate was onerous to qualify
for, and tended to benefit large, capital-intensive companies like Semiconductor
Manufacturing International Co., whose officials often touted it as a reason to
make ICs in China.
Like the VAT, the new policy is intended to benefit only the IC industry. Foreign
companies will also be eligible, Li said, and those companies getting cash will not
ISA, June 30- July 7, 2006 48

have to offer equity stakes in their companies, which is sometimes a requirement
of local governments that use a venture capital mechanism for investments.
In light of a recent high-profile fraud scandal at a top university in which a

professor lied about creating a proprietary DSP, Li said the government is working
on a better mechanism for monitoring the money it hands out. "In the past, the
government monitored through application, approval and verification when a
project is finished," he said. "Now we will pay more attention to the entire
process to see where the money goes and if it's following the original plan."
Various groups will check in periodically, he added, including officials at the

Ministry of Information Industry, CSIA and university professors.
Even without a new policy in place, China's IC production value shot up 54

percent year-on-year, up from 30 percent the year before and nearly double the
growth rate of the entire electronics industry here, according to the CSIA.
About 60 percent of China's IC production value comes from IC packaging, not

the more profitable IC design sector. China imports most of its high-value chips
used in PCs and cellphones, such as CPUs, DSPs and other ASSPs. China's IC
consumption totaled $45 billion in 2005, but it produced only $9 billion, according
to The Information Network.
The supply/demand gap will widen from $36 billion to $44 billion in 2006. China's
IC design industry accounts for about $1.5 billion in revenue.
• Analysis: Spansion's flash security play
In a watershed event in the flash business, Spansion Inc. plans to offer a

technology for its NOR memories that is designed to enhance mobile-phone
security, indicating that NOR suppliers are shifting their focus away from density
and cost somewhat and more toward adding greater value to their products.
Spansion recently previewed plans to add a new feature to its NOR memory
offerings for mobile phones that is intended to bring new levels of security to
wireless handsets. This feature will be implemented via a security ASIC, which is
included in Spansion's Multichip Packaging (MCP) offerings. Spansion's MCPs also
incorporate the company's MirrorBit-based code and data storage solutions and
some RAM, either pseudo RAM (pSRAM) or mobile SDRAM.
The security ASIC uses various forms of encryption, authentication and random-
number generation to provide features, including virus recovery capabilities and
secure data-storage and communication protocols for mobile commerce. The
ASIC also includes a device-management feature that can render a phone
inoperative if stolen. This feature also allows phones to be used as mobile
terminals, allowing secure access to enterprise databases.
The company plans to introduce a security software developer's kit in the fourth
quarter, followed by MCP samples in the first half of 2007 and production of MCPs
commencing in the second half of 2007.
Spansion said its hardware-based solution delivers a higher level of security than
traditional software approaches because it employs hardware-protected zones of
ISA, June 30- July 7, 2006 49

memory that are accessible by the user, the service provider and the mobile-
phone manufacturer.
The security ASIC resides in between the host processor and the code and data
memories. The device provides a "pass-through" mode that allows a phone to
conduct normal code and data accesses and executions, while also enabling it to
react appropriately when needed to monitor and facilitate secure transactions.
The fact that the security engine is located inside the memory MCP is noteworthy
for two reasons. First, it allows accesses of secure code and data from the
memory to be confined within the MCP itself. Thus, the electrical signals
associated with the secure transactions are not passing through any Printed
Circuit Board (PCB) interconnects, where they possibly could be intercepted.
The second reason is that secure transactions using the ASIC do not place any
overhead burden on a system's host processor, in contrast to software-based
solutions.
iSuppli views Spansion's announcement as a landmark event because for the first
time, a memory supplier is providing value-based solutions for mobile phones
that go beyond the traditional goal of delivering more memory bits at a lower
cost. Throughout the history of the mobile-phone memory business, the focus has
been squarely on providing the highest density at the lowest cost. However, with
growth in the NOR market having slowed over the past few years, Spansion is
seeking new approaches to drum up revenue.
Spansion's move also exposes the company to the full ecosystem surrounding the
mobile-phone business, affording it the opportunity to address other systemic
issues that could be solved using memory-based approaches. The company's
security ASIC provides a solution that potentially could enable wireless service
and content providers to transform mobile phones into truly ubiquitous mobile
terminals that are adaptable to many tasks. This represents an excellent
opportunity for the wireless industry to improve its average revenue per user.
Spansion's security solution will not relieve the company of the burden of
providing memory solutions at a compelling cost per bit—but it will serve to widen
the company's opportunity base, allowing it to deliver innovative and valuable
solutions to the handset market.
Spansion already is the largest supplier of flash memory to mobile-phone

manufacturers with revenue of $393 million in the first quarter, according to
iSuppli. This announcement and the potential for future value-added products will
go a long way in ensuring Spansion will continue to be a key supplier in one of
the largest markets for flash memory.
• Samsung ships GDDR4 memory chips
Samsung Electronics Co. Ltd. has begun mass producing the world's fastest
graphics memory chips, dubbed GDDR4, based on 80-nm process technology.
GDDR4 (series four of graphics double-density-rate memory) is said to process

images 33 percent faster than rival GDDR3 chips on the market.
ISA, June 30- July 7, 2006 50

Samsung's 512-megabit GDDR4 memory will be offered in a 32-bit data bus
configuration.
"With GDDR4-based systems, we're entering a new frontier with life-like

movements and richly textured imagery far better than DVD movies being viewed
today," said Mueez Deen, marketing director for Samsung Semiconductor, based
here, in a statement. "Using 80-nanometer production technology, the memory
has an ultra-high-speed data processing rate of 2.4Gigabits per second (Gbps)."
• Toshiba, Rambus ink licensing deal
Rambus Inc. Wednesday (July 5) said that it has signed a new patent license
agreement with Toshiba Corp.
This agreement grants Toshiba (Tokyo) a license to Rambus (Los Altos, Calif.)
patents for SDRAM and DDR SDRAM memory controllers.
Toshiba currently holds technology licenses for the use of Rambus' XDR memory
solution, DDR2 interface cells and FlexIO processor bus interface. Additionally,
Toshiba has licensed various Rambus serial link interface designs.
• Intel revamps decade-old channel program
Intel has begun revamping its worldwide channel program under one umbrella in
a move that changes the qualification programs and ultimately aims to provide an
overarching indirect go-to-market platform.
The decade-old Intel Channel Partner Program, which had become fragmented,
will be divided into two key tracks: Technology Partner for traditional solution
providers, and Systems Builders. The latter applies to solution providers who sell
Intel-based systems but don't build them.
Under the system-builder track, there will be three classes of partners: Premier,
Associate (formerly known as active) and Registered. Intel has broken out the
benefits that will accrue to members on its partner Web site. The company also is
raising qualifications in an effort to reward those who take advantage of new
benefits offered by the program. Those benefits include new training tools,
advance access to information and a variety of new sales tools, many of which
Intel has already implemented in North America but now will roll out worldwide,
says Shirley Turner, director of North American distribution and channel
marketing.
Following is a breakdown of some key benefits of the three Systems Builders

designations:
• In the past, Premier partners, of which there are about 325, were
designated as such by invitation only by senior Intel sales reps. Under the
new program, they instead will have to meet certain sales qualifications, a
move Turner admits could weed out as many as 70, but could also help
some Associate members to step up.
ISA, June 30- July 7, 2006 51

"We are hoping they will," Turner says.
Premier partners will receive exclusive and advance access to information,

personalized alerts, an invitation to Intel's Solutions Summit, online training,
sample products prior to product launches, and priority support from senior
engineers. These partners will need to register by the end of the year.
• For Associate channel partners, of which there are roughly 10,000, the
sales requirement goes from 10 CPUs per quarter to 50 per year. Partners
must be integrated solution providers, not just passing inventory along to
other partners. Partners can sell servers, desktops and mobile CPUs to
meet their quotas, Turner says.
Associate members will have access to a new Intel Channel Partner Program
(ICPP) logo, allowing them to brand themselves as Intel partners for the first time
-- something they have been requesting.
"This provides a stronger alignment," Turner says. "It gives them more credibility
with their customer base."
Finally, Associate members will gain access to sales center reps, online tools and
the Intel Channel Conference.
• Registered Members -- 35,000 in all -- will gain access to the online Intel
Reseller Center and receive technical and marketing support as well as
alerts.
• IBM Manufactures Mobile TV Chip for Startup
IBM is set to manufacture mobile digital TV chips for fabless semiconductor

startup Abilis Systems that will be used in the mobile phone, portable media
player and PC laptop markets, Abilis announced today.
Geneva, Switzerland-based Abilis, part of the Kudelski Group, claims it is the first
semiconductor fabless company to propose a single-chip mobile TV solution,
integrating both the RF tuner and the demodulator on a 90nm RF CMOS process.
As part of the agreement, Abilis Systems said in the statement that it will also
add its RF clock synthesizer into IBM IP portfolio.
"We have chosen IBM for the high performances of their RF CMOS process and
the quality of the RF design kit which have been key to achieve our technical and
time-to-market objectives," Yves Mathys, Abilis' CEO, said in a statement. "Our
customers can now rely on the manufacturing capabilities of IBM to meet their
needs in terms of quality, volume and continuity of supply."
"Mobile TV is an exciting market and one where innovative fabless companies

developing highly integrated RF design solutions are driving the agenda. IBM is
delighted to have been selected by Abilis as the foundry vendor for their single
chip mobile TV device based on IBM's 90nm RF CMOS process." Adrian O'Connor,
the IBM systems and technology group's European sales director for
ISA, June 30- July 7, 2006 52

semiconductors, added in the statement. "Leading edge third party IP remains a
key part of IBM's foundry offering."
Terms of the agreement were not announced.
• U.K. Authorities Get Tough on RoHS
RoHS enforcer National Weights and Measures Laboratory (NWML) has been
directed to take a tough stance over the new hazardous materials rules from day
one as it starts to police the European directive which came into law on July 1.
According to the enforcement authority, its policy will be to try and “help those
that are aiming to comply, and pursue vigorously those that intend to flout
compliance with the regulations.”
“The NWML has already been working closely with trade associations, quality
systems organizations and individual companies providing advice and support on
the interpretation of the regulations,” the head of NWML’s RoHS department Chris
Smith told Electronics Weekly.
Any non-complaint RoHS-affected product still on the way to Europe cannot be

sold. “There is a particular threat for importers of electrical equipment whose
product has not cleared customs,” said RoHS consultancy Eco3. “They will not be
able to sell this product as it is the date of arrival that is key.”
Most companies are not yet fully-compliant, said Eco3’s Mark Shayler: “Our
experience of training more than 400 businesses and 1,000 individuals across
Britain has shown us that very few companies have really got to grips with what
RoHS will mean to them.”
Source: Electronic Weekly, July 5 2006
• New Instrument Probes Nanostructure Growth for Industry and

Research
Researchers at Purdue University are using a rare type of electron microscope to

see how structures like carbon nanotubes form at the atomic level, information
that will be crucial for nanotechnology to find practical applications in computing,
electronics and other areas.
The new transmission electron microscope has been modified so that researchers
can watch how atoms come together to form nanostructures as gases flow into a
chamber in the presence of a metal catalyst. This is the same method used to
make nanotubes in research labs and electronic devices in the semiconductor
industry.
"Before we can consistently manufacture nanostructures that have the same

specifications and qualities, we have to learn precisely how atoms interact and
come together to form these structures," said Eric Stach, an associate professor
ISA, June 30- July 7, 2006 53

of materials engineering who operates the microscope at the Birck
Nanotechnology Center.
The $4 million FEI Titan microscope is equipped with an "environmental cell," in

which gases such as acetylene or butane, which contain carbon, are passed over
nanoparticles of metal, such as iron or nickel. The metal particles act as a catalyst
for breaking down the gases and releasing carbon atoms during the reaction,
which takes place in the cell at temperatures sometimes reaching more than
1,000 degrees Celsius, or more than 1,800 degrees Fahrenheit.
"What's unusual about this instrument is the ability to take high-resolution

pictures while you flow gases over a sample," said Stach, noting that fewer than
five such microscopes exist in the world.
Electrons are accelerated under high voltage and manipulated with a series of
"magnetic lenses" that focus electrons through thin sections of materials being
studied. The electrons bounce off the atoms in the material, and this scattering
process can be reconstructed to form an image.
"The transmission electron microscope allows you take pictures of the internal
structure of a material," Stach said.
The instrument, which has 14 main lenses and another 50 smaller lenses, is
housed in a specially shielded facility in the Discovery Park lab to block
electromagnetic interference from sources such as powerlines and radio
transmitters. The 10-foot-tall, 3 1/2-ton microscope sits on its own concrete slab,
separated from the building's foundation to isolate it from vibration.
Pictures are formed with a resolution of 2 angstroms, which is fine enough to

allow imaging of atomic arrangements in the sample.
"Researchers have done these sorts of experiments with other microscopes that
have environmental cells but not with this level of resolution," Stach said.
Carbon nanotubes -- hollow fibers that have promising future applications in

computer chips and electronic devices -- are "grown" using the metal catalyst to
break down a gas. But Stach said the catalytic mechanism is not fully understood,
and that is one area researchers will pursue using this microscope.
During the reaction, carbon forms into nanotubes having various lengths,
diameters and twists, or "chiralities."
"These different nanotubes possess different performance characteristics," Stach

said. "What we really need to understand is how to get the same performance
and the same characteristics by growing the same tubes every time."
Carbon nanotubes, which were discovered in the early 1990s, might enable
industry to create a new class of transistors and more powerful, energy-efficient
computers, as well as ultra-thin "nanowires" for electronic circuits, but their
practical application requires that they be manufactured to specific standards.
"In the lab, a whole bunch of nanotubes are grown, and then you see which one
has good properties," Stach said. "You cannot yet control how to get the exact
nanotube twice, but in order to move from the laboratory into creating something
that can be engineered and made into devices, we have to have an understanding
ISA, June 30- July 7, 2006 54

of the process. How do we get the same nanotube every time? Now we are going
to be able to take pictures that show individual carbon atoms interacting with the
metal catalyst and growing into nanotubes."
Chemical processes to grow materials using a gas require an environment that's

close to normal atmospheric pressure, but electron microscopes operate in a
vacuum to maintain the flow of electrons. The new instrument enables
researchers to run experiments at close to normal pressure levels inside the
environmental cell, while critical microscope components run in a vacuum.
"It's tricky because we are trying to recreate real growth conditions within the
microscope, an instrument that normally operates in a vacuum environment,"
Stach said.
The environmental cell is a cube-shaped chamber, and each side measures about
5 millimeters, or about one-fifth of an inch.
"The idea is to keep it small so that you can have high pressure locally, while
maintaining vacuum conditions everywhere else," Stach said.
Purdue researchers are using the microscope in a joint project with scientists at
IBM Corp.'s Thomas J. Watson Research Center in Yorktown Heights, N.Y., to
study how to make silicon nanowires for future computers.
"In addition to studying nanometer-scale structures made of unconventional

materials, such as carbon, we are also trying to learn how to make smaller
devices and structures from conventional silicon," Stach said.
"On this size scale, a material's properties change. For example, if you take a
piece of gold and make it very small, it's not really quite gold anymore because
the electronic structure changes and it has different properties. These
nanomaterials transmit electricity and light differently than when they are in bulk
form, and these differing properties could be harnessed to create superior
computers and electronics, but only if we learn precisely how they form at the
atomic level and how to fabricate them in a uniform way."
The researchers at Birck also are using the new instrument for work funded by
the National Science Foundation to study the growth of semiconductor materials,
such as silicon, germanium and gallium arsenide.
"It's the same idea as studying the growth process of carbon nanotubes," Stach
said. "We need to know which atoms are going where. What is the effect of
temperature, pressure, source gas and catalysts in creating uniform structures
that are the same every time?"
Researchers also will use the instrument to help Purdue researchers study the
workings of catalysts, which are critical for industry in making everything from
gasoline to plastics. As part of that work, the microscope will be used in projects
involving Purdue's Center for Catalyst Design.
"Ultimately, the goal is to create better catalysts to make products more

efficiently and at lower cost," Stach said.
Researchers at the interdisciplinary center plan to use the instrument for a variety
of other research, including studies to learn more about how metals rust and
ISA, June 30- July 7, 2006 55

oxidize at the atomic level, information that has potentially major economic value
for industry, he said.
"Now that the microscope is up and running, we expect greater interest for more
joint research projects through Birck and Discovery Park with other industrial and
corporate partners," Stach said. "This microscope is going to be very busy."
Source: Ascribe, July 5 2006
• Chip Giant Comes with New R&D Center
US-based chip giant AMD is about to establish its second research and
development center for mobile processors and solutions in Shanghai next month,
as it tries to break the dominance of its rival Intel in China.
Vanoy Wong, vice-president of sales with AMD China, said that his company is
likely to set up the center in Shanghai's Zhangjiang, a semiconductor hub, in
August. The center will mainly focus on the development of mobile platforms with
partners.
The US microprocessor firm already has an engineering center in Beijing, which is

mainly engaged in desktop computers.
But Wong would not disclose further details about the center. "This year will be a
year of mobility for us," said Wong in an interview.
Last year AMD achieved significant breakthroughs in the world's second-largest

computer market, which was formerly dominated by Intel.
As many as 80 percent of Lenovo's consumer desktop computers sold last year

used AMD chips and the ratio for HP was 60 percent. Almost all major computer
makers in China bought some processors from AMD.
The technological innovations in 64-bit computing and dual- core processors

enabled AMD to lead the market in terms of technology. And the demand from
computer makers for an alternative supplier amid intense competition made
companies like Lenovo and HP endorse AMD products.
Following success on the desktop market, AMD has this year turned its attention
to the more profitable and faster growing notebook market.
However, Intel has an overwhelming dominance in the mobile processor market

due to successful marketing of its Centrino processor, which has a wireless
Internet connection function, saves power consumption and has almost become a
standard in the notebook market.
The notebook processor market is an important one for AMD. According to US

market intelligence firm International Data Corp, China's computer market is
expected to grow at an annual average of 11.7 percent from 2005 to 2010, but
the growth of notebook computers is 38 percent for the period.
AMD's Wong predicted the growth could be around 50 percent and shipment is
ISA, June 30- July 7, 2006 56

likely to hit 5 million units. One weapon that the US firm will use is its traditional
strategy: technology.
AMD has just released its latest Turion 64 x2 chips for thin and light notebooks in
China. The product has two cores in one processor and supports 64-bit
computing. The first feature allows a processor to run at twice the speed of a
single-core processor and the 64-bit technology supports more complicated
computing tasks.
Intel is expected to launch a similar product next month. Chris Cloran, vice-
president of AMD's mobile division, said the launch of its new processors will give
the industry another choice on notebook processors.
A total of 12 notebook models were launched in China, including those from HP

and Tsinghua Tongfang, the third-largest Chinese computer maker.
Cloran said more than 80 models are still in the pipeline and will be released onto
the market soon.
However, its allies Lenovo and Dell, two of the top three computer makers in the
world along with HP, were absent from AMD's first batch of partners.
Source: tmc.Net, July 5 2006
• Intel invests $600 million in Clearwire
Just one week after selling its handheld chip unit, Intel Corp. on Wednesday (July
5) said that it would invest $600 million in Clearwire Corp., a high-speed wireless
broadband services provider based on WiMAX technology.
At the same time, Motorola Inc. acquired Clearwire's NextNet Wireless subsidiary,
a provider of OFDM-based, non-line-of-sight wireless broadband infrastructure
equipment. NextNet's wireless access products are currently deployed by carriers
on five continents.
As part of the transactions, Clearwire (Kirkland, Wash.) has obtained a total of

$900 million in a private financing round. This includes the $600 million from
Intel's venture capital arm, Intel Capital. The $600 million investment from Intel
Capital is the largest in the organization's history.
The moves are aimed to accelerate the development and deployment of WiMAX in
the marketplace. Clearwire, founded by communications guru Craig McCaw, is a
provider of wireless, high-speed Internet services, based on WiMAX. Clearwire
has launched wireless high-speed Internet service in 27 metro markets, covering
more than 200 cities and towns.
"Collaborating with Intel and Motorola significantly advances our vision for fixed,
portable and mobile wireless broadband services," said McCaw, founder,
chairman, and co-CEO of Clearwire, in a statement. "Wireless broadband
networks will enable the creation and delivery of differentiated services and
applications that enhance the way people communicate and experience the
Internet."
ISA, June 30- July 7, 2006 57

Following closing of the transactions, Motorola will supply wireless broadband
equipment for Clearwire's existing and future networks. To speed up the
proliferation of mobile WiMAX in PC clients, Intel will work to enable the inclusion
of WiMAX chipsets in next generation mobile computing platforms. All three
parties will contribute research and development resources to evolve NextNet
Wireless' pre-WiMAX technologies.
"The size of this investment from Intel Capital underscores our commitment to
supporting wireless broadband using WiMAX networks in the United States," said
Intel Capital President Arvind Sodhani, in a statement. "Our collaboration with
Clearwire and Motorola builds on the foundation of previous WiMAX network
deployment investments made by Intel Capital throughout the world to bring the
benefits of mobile high-speed and content-rich Internet access to wireless
broadband users."
Intel and Clearwire are no strangers to each other. In 2004, the companies said
they would jointly develop and deploy wireless broadband capabilities using
WiMAX networks. The agreement also involved a significant investment in
Clearwire from Intel (Santa Clara, Calif.).
Strangely, though, Intel recently agreed to sell its handheld communications and
application processor units to Marvell Technology, a storage, communications and
chip developer, for $600 million.
• Texas Instruments shows India not a chip of old block
You will probably watch the next cricket World Cup to be held in the Caribbeans
live on the next-generation mobile phones. Or, you may watch it on the new
digital television. You may end up discussing cricket scores with a close friend on
your latest mobile gizmo.
But you may not be aware that these products used in your day-to-day life have
a ‘Made in India’ component.
For instance, Texas Instruments (TI) recently launched ‘Hollywood’, a chip that
enables mobile phone users to watch live TV programmes. A major chunk of the
chip development happened at TI’s India centre.
TI also played a major role in developing a single-chip technology (combining

memory, power management and network processes) for mobile phone makers in
emerging markets. The result – mobile phones priced below Rs 1,000 or $20
became a reality!
Similarly, Motorola’s Moto Razr V3, a product that redefined the mobile handset,
has an Indian element in it. The baseband processor on which the software runs
came out of Freescale’s India Design Centre (IDC).
Also, the first 32-bit microcontroller with USB-On-The-Go and Flash Memory on a
single chip solution for applications enabling remote data collection was
developed at Freescale IDC.
Freescale, formerly Motorola’s semiconductor products sector, began its R&D

operations in 1998. “Our centre focusses on software development for the next-
generation mobile platform solutions and technologies such as embedded
ISA, June 30- July 7, 2006 58

software, solutions for multimedia, connectivity and digital video broadcasting,”
says Ganesh Guruswamy, country manager and director, Freescale
Semiconductor India.
Another firm Cadence India is a microcosm of its global operations. Its R&D
centre at Noida, established in 1987, is the largest outside North America.
“We are involved in new technology development, a growing patent portfolio and
co-development of new design methodologies,” points out Rahul Arya, marketing
director, India and Saarc, Cadence Design Systems.
The Dutch conglomerate Royal Philips Electronics is working on chips for digital
televisions. It has invested $60 million in its Bangalore centre to build the world’s
thinnest chip.
The Bangalore-based Beceem Communications, a start-up, has developed the

world’s first chipsets for mobile WiMax platforms. (WiMax is wireless technology
that provides wireless broadband connectivity over long distances up to 50 km.)
India has finally arrived on the global stage of chip design. Companies, whether
MNCs or start-ups, are working on next generation chips. About 130 chip firms
presently operate out of India, employing over 10,000 engineers. As many as 18
of the top 25 chip companies have set up centres in India.
India Semiconductor Association president Poornima Shenoy notes that Indian

chip design industry is not limited to low-end designs: “They are involved in end-
to-end design activities ranging from chip architecture development, design
verification and layout, all the way to design tape out. The design houses are
working on 90/130 nm (nano metre) design rules with some players working on
the 65 nm experimental lines. It clearly demonstrates the confidence of the global
players in the potential of the talent pool available in the country.”
MNCs such as AMD, IBM, Cisco, Broadcom, Philips and Freescale are showering
their dollars in India to ramp up their presence.
According to S N Padmanabhan, senior vice-president (semiconductor practice),

MindTree Consulting, if the trend of moving high-end design to India continues,
the nation will emerge as a major semiconductor power in the next 10 years.
He adds: “It will cater to the need of the west and the east. Semiconductor
manufacturing will start shifting towards India. It will also emerge as a dominant
hub for intellectual property that gets incorporated in high-end design. The
‘elephant’ will overtake the ‘tigers’.”
Source: Business Standard, July 6 2006
Compiled by:
ISA Research Team,
Dr Vidya Mulky – Research Consultant
research@isaonline.org
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individual business. Readers and users are entirely and individually
responsible for taking appropriate action with regard to the setting up of such
services and for the consequences of such actions.
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June 30-July 7, 2006

• Korea seeks to bolster economic status

Tami Overby, president of the American Chamber of Commerce in Korea, echoed

Improving labor relations

South Korea's past economic problems were partially attributed to uneasy

ISA, June 30- July 7, 2006 1

Source: EETimes, June 28 2006

• EDA returned to double-digit growth in Q1, EDAC says

Does 10 percent growth mean that EDA is back to form as a high-growth

ISA, June 30- July 7, 2006 2

EDA's largest tool category, computer-aided engineering, generated revenue of

Reporting companies employed 23,128 professionals in the first quarter, up 4

Source: EETimes, June 29 2006

• Ness, Pulsic set up India development center

Global IT solutions provider Ness Technologies Inc. has established an extended

The center's establishment is a part of a three-year, multi-million dollar contract

Source: EETimes, June 29 2006

• Qualcomm looking for Indian startups

Qualcomm, which outsources services to several Indian software and hardware

ISA, June 30- July 7, 2006 3

Source: EETimes, June 29 2006

• Polysilicon shortages seen curbing semi growth

A polysilicon shortage could cause semiconductor market growth to fall short of

One polysilicon supplier is responding by expanding production. Wacker Chemie

If the solar industry absorbs more polysilicon, the percentage of polysilicon it

ISA, June 30- July 7, 2006 4

Leading polycrystalline or polysilicon vendors — Hemlock, MEMC, Mitsubishi

An investment banking firm recently increased its forecast for solar-cell

Source: EETimes, June 29 2006

• Synplicity's Synplify Premier Software Wins the Semiconductor

ISA, June 30- July 7, 2006 5

Source: BusinessWire, June 29 2006

• Come, Produce, Sell, Export: Interview with Thiru Dayanidhi Maran

The issue of FDI in certain sectors is a subject of heated debate. What is

What is your sales pitch to prospective investors?

ISA, June 30- July 7, 2006 6

People have questioned the viability of setting up semiconductor

Talking of handset makers and hardware companies, how do they react

ISA, June 30- July 7, 2006 7

Beyond wrangles, for telecom services players the lack of spectrum is

Telcos want spectrum, BPOs want low-cost bandwidth. How are we

It’s a numbers game. The international long-distance plan that I am working on

ISA, June 30- July 7, 2006 8

Source: Outlook India.com, June 29 2006

• Taipei tops hotspot survey

Source: EETimes, June 29 2006

• University builds microscope for ultra-fast chips

A research team of the Braunschweig university has developed a microscope for

ISA, June 30- July 7, 2006 9

Source: EETimes, June 30 2006

• Mobile Phone Industry Looks to 4G

"The vision of the initiative is to provide a platform for innovation by moving

"The initial objective of the initiative is the commercial launch of a new

Source: Electronic News, June 30 2006

• Micronas Chairman steps down

Franz Betschon, Chairman of the Board of Directors of Micronas Semiconductor

The chairmanship will pass to present Vice Cheirman Thomas Lustenberger.

ISA, June 30- July 7, 2006 10

Source: EETimes, June 30 2006

• Spartan recall could cost Xilinx $30 million, analyst says

Source: EETimes, June 30 2006