Semiconductor Industry Trying to Survive

Tony Daltorio, The Investment U Research Team

The financial downturn and global recession has hit the semiconductor industry hard.

Orders for microchips were almost non-existent at the end of 2008 as computers and mobile phones languished unsold on retailers’ shelves.

According to the Semiconductor Industry Association, global semiconductor sales fell 2.8 percent last year and are expected to fall a further 21.5 percent to $195.6 billion this year.

Despite the positive reaction in the stock market to the latest sales figures from Intel (INTC),the world’s biggest chipmaker, the numbers were mixed at best. Intel did enjoy a sales revival driven by consumers buying cheaper, smaller netbooks, but revenues fell in Europe and sales in the key business customer area were weak.

Let’s take a closer look at the semiconductor industry for profit opportunities.

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Intel (INTC) and Nokia (NOK) have joined hands to tap the smart phone and MID market. Nokia will use the Atom processor in its smart phones and mobile Internet devices going forward, even as Intel licenses Nokia's 3G HSPA modem technology.

The two companies have used open source software from Linux to develop their respective mobile platforms. The strategic relationship is expected to enable Intel's Moblin (currently in beta stage) and Nokia's Maemo to incorporate several open source applications, such as oFono, ConnMan, Mozilla, X.Org, BlueZ, D-BUS, Tracker, GStreamer and PulseAudio through some co-coordinated effort. The association will also enhance device functionality for both in terms of Internet connectivity, wireless communication, superior graphics and comprehensive multimedia capabilities.

Nokia currently holds about 40% share of the mobile phone market and a 34% market share in smart phones. The partnership should, therefore, be of great strategic

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NehalemIntel (INTC) launched the Nehalem CPU microarchitecture in the fourth quarter of 2008.Nehalem is a significant improvement over the Core 2 microprocessor. The most significant architectural improvement is the elimination of the Northbridge memory controller (the logic chip handling data moving to and from the main memory). The memory controller is instead integrated onto the CPU core, enabling faster data transfer rates and greater energy efficiency.Testing of the chip shows significant performance improvements over existing Intel and AMD (AMD) microarchitectures. Nehalem has been constructed in a manner that would allow quad and octo-core functionality. The processor will also incorporate DDR3 memory and enable the integration of 3D graphics on the same chip.Atom
In 2008, the company also launched the 45nm ...

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div align=”left”The computer industry is on the cusp of a revolution. Just as Asian car makers undermined the profitability of Detroit with their cheap and reliable subcompact vehicles, now the emstrongAsian tech industry is threatening to do the same to Silicon Valley with netbooks, simplified mini-laptops optimised for web browsing/strong/em that will retail for as little as $250-300. Despite disappointing Q1 sales, this structural change in the computing industry will profoundly affect some of the biggest tech names. About 25m will be shipped this year, and growth looks set to explode across the emerging world as local middle-class consumers graduate from cellphones to their first computer./divdiv align=”left”They were originally conceived at MIT as a solution for the computing needs of schools in developing countries and typically have a 7-10 inch LCD screen, a couple of USB ports, Wi-Fi and sometimes a 3G antennae, and run on Intel’s Atom chip or …

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