Hi Tech Taipei

Netbook 2.0 and the implications thereof!

2009-04-27T21:48:00.000-07:00

In The Survival of Wintel we blogged on the question of how the Windows-Intel alliance is currently being threatened by ARM based processors and free (or very cheap) Linux based OSes like Google's Android. Yesterday a Chinese manufacturer Skytone (and not a Taiwanese manufacturer) said they would be the first ones to launch an Android based netbook. Of course, the system would be powered by an ARM processor and would come in at a far lower price point than the current Netbooks, especially those with Microsoft.

Then today the Taipei Times had an interesting article on the next round of netbooks. According to the article:

A new class of cheaper, smaller netbook computers might upset the IT establishment this year and potentially usher in new players in a hotly competitive market.

The biggest change in the new pint-sized laptops is what they won’t have: Intel Corp chips or a Microsoft Corp Windows PC operating system, which dominate netbooks today.

The new netbooks, which use less energy, will run on the low-power ARM processor platform now used in nine out of 10 cellphones rather than Intel’s x86-based Atom chip. The UK-based ARM Holdings Plc licenses the chip technology.

As many as 10 ARM-based netbook models could hit the market this year, ARM says, while declining to identify specific manufacturers. Major PC players and Asian contract manufacturers alike are interested, analysts say.

When reading this I thought well, although this may be the first round of Android based PC's, they are not the first Linux based netbook. Remember the Eee PC 4G that came with a customized version of the Linux operating system?

However let's not kid ourselves! The netbook is a "disruptive technology" and it is challenging the traditional notebook space. There are going to be strategic challenges for both Intel, Microsoft and the traditional PC manufacturing giants here in Taiwan! The netbook technology is not that sophisticated and the biggest challenge will be assembly, distribution and brand recognition. The advantage the bigger branded PC makers have is that they entered the market early and so therefore adapted their cost structures to ensure competitiveness in this new market space, and for them it won't matter what processor and OS they use, they just need to assemble the componenets and make sure the systems run, but they need to be wary of potential competition from lower cost manufacturers in China. Of course, the Chinese manufacturers probably do not have sufficient scale (to manufacture) and sufficient brand presence to bash down the bigger boys now. But five years down the line? We will wait and see.

The challenge posed by ARM processors is a classic example of disruptive technologies and how they can alter the entire market. Over the past few years the brutal prices wars between Intel and AMD have been very visible while ARM has been slowly but surely establishing themselves in the mobile phone space and establishing presence, dominance and brand recognition. Their cost structures are also incredibly low as compared to Intel as they do not own fabs and license out the technology rather than manufacture the product themselves.

The Innovators Dilemma describes how new companies move into spaces the giants initially reject as not being sufficiently profitable compared to their current market space and how the current major players will continue to sustain technologies rather than look back. The Innovators Dilemma also describes how the new players in a largely neglected part of the market are able to take over the market, develop lower cost structures and then push into the higher margin sectors of the industry making it very difficult for existing players to move into the newly established sector because their cost structures have not been designed around the lower margin business. The good thing for Intel though is they did establish the Atom brand and after the launch of the Atom brand netbooks really did take off, but they are still going to have a more difficult battle with ARM than they did with AMD I think.

Netbooks are changing multiple industries and sectors! Do you think this is good for the consumer? I do! Look forward to your comments!

Financial Crisis and Taiwan Tech Industry

2009-04-24T08:35:00.001-07:00

So we all know by now the economy is in the worst shape its been in for a while. It seems the stock market is bouncing back but the news isn't all good. Digitimes reports the "jobless rate scores new high in March" and increased to 5.81% and the Taiwan News reports "Taiwan's export orders fell for a sixth month in March, extending the longest run of contractions since 2001, as global demand for electronics goods tumbled." Taiwan News continues "Orders, an indication of shipments in the next one to three months, declined 24.29 percent from a year earlier, easing from an average of 32.7 percent of the two first months of the year."

However, this has dampened some of the optimism. Digitimes reported "IC design house AAT expects 80% revenue growth in 2Q09." Sounds great right? However, read the report and you will see that it is an 80% sequential growth (quarter on quarter) and that right now year-to-date (YTD) revenues compared to the first three months of last year are down 66.7%. So a clever spin on the numbers can make things look a little more positive than what reality suggests.

EMS Now however reports Terry Guo Tai Ming (Hon Hai founder and head) is optimistic and that he "believes the global economy is not as bad as expected. " EMS Now also says "Hon Hai Precision Industry Co., one of the worlds' leading providers of electronic manufacturing services, is recruiting over 1,000 personnel in Taiwan ." Well at least he is putting his money where his mouth is and helping to cut that unemployment rate.

Another big firm is also hiring. Taiwan Semiconductor Manufacturing Corp. (TSMC) "CEO Rick Tsai has confirmed the semiconductor manufacturing giant will be increasing its R&D employee headcount by 30 per cent and manpower in its design service unit by 15 per cent to drive a quick transition to 32nm in 2010 and sub-32nm by 2011," says the inquirer. Well thats also good to see.

So although the news on unemployment, exports and revenue reporting is not good, the light at the end of the tunnel is increased opportunities at Hon Hai and TSMC. Are we edging out of the crisis? What long term impact will the crisis have in Taiwan's technology industry? Will orders pick up later in the year?

Look forward to your comments and thoughts on these issues.

Sony Looking for Taiwanese JV Partner

2009-04-23T19:55:00.000-07:00

Interesting article on Smarthouse suggesting Sony is looking for a Taiwanese company to create a joint venture to manufacture Vaio notebooks. Sony are apparently in a debt laden hot spot and apparently want to form an equity JV with someone here. They have, according to the article, been talking to BenQ and (obviously) Foxconn (who doesn't talk to Foxconn?). I like what the senior BenQ exec. said:

"Sony does not have any significant share of the notebook market and by majority their Vaio products are niche. They are not purchased by business or enterprise organisations as they are too expensive and while they are well designed they are primarily a consumer home purchase which makes it difficult to return a profit especially in today's notebook market. As a result BenQ chose not to form a relationship with Sony"

I have long shunned Sony notebooks for exactly that reason (or though he articulates it better). They are niche, high-end products that people pay a fair buck for. I have never actually used one so cannot speak to its functionality or features, but I don't see the need to pay so much for something that is not going to do any better or worse than something (quite a bit) cheaper. This brings us back to the question of brands (see discussion emerging on Acer launches mobile phones in Asia) and what the brand brings to the consumer.

I will probably never ever buy a Sony notebook (and I am a Sony-guy). I have a Sony Surround Sound DVD player, Sony Handycam, Sony Voice recorder blah blah blah and no doubt the quality of the notebook is probably very high. But this brings me to another point! Although I like my Sony products they have, over the years, turned me off with their indulgent focus on proprietary technologies (even down to the MPEG format used on the handycam) and this would make me concerned about their computer. What properietary crap would I have to fight my way through to make it work properly? Probably none, but I don't know, I just don't know! (This proprietary rubbish turns me off Apple too btw)

Anywyay, look forward to your comments as always! Things to expand on in the comments maybe: Do you think this would be a lucrative JV for a Taiwanese equity partner?

Acer launches mobile phones in Asia

2009-04-22T17:51:00.000-07:00

AFP reports Acer has launched their first smat phones into the Asian market. AFP writes:

Taiwan-based computer giant Acer on Wednesday launched a series of advanced mobile phones for the Asia-Pacific region, ramping up its expansion into the wireless communication market.

Company executives said Acer was banking on its experience as a leading computer brand to gain a share of the lucrative market for "smartphones" -- feature-packed devices with multi-media functions including web surfing.

The unveiling of the products here will be followed by similar launches in Southeast Asia, Hong Kong, Taiwan, India, Australia and China, they said.

It came two months after the company announced a move into the mobile phone market in February at an industry event in Barcelona.

Best known for its laptops, Acer said its smartphones come equipped with powerful processing and memory capabilities.

"We are facing a very large opportunity here," said Roger Yuen, Asia Pacific vice president for Acer's smart hand-held device business group.

About 200 million smartphones are sold each year and Acer believes the market should grow at 15 percent annually in the next five years.

"Our ambition is to be among the top five smartphone vendors in the world in the next three years," Yuen said.

Applying the brand to Smart Phones is not such a bad idea but I am not sure if their "experience as a leading computer brand" is applicable to the Smart Phone industry. No doubt Acer have cooked up unique smart phone penetration strategies and maybe they are banking on the brand name to provide them with a good image but overall one would imagine the computer-experience and the smart phone-experience maybe a little different and require different strategies. Anyway, technologies are converging and Acer did need to make this move (it was the next logical step after netbooks).

Financial Crisis - TSMC Still Invests

2009-04-21T15:49:00.000-07:00

EE Times reports that despite the economic downturn and the severe effect of the financial crisis on the high tech industry, TSMC is continuing to invest for the future while remaining cautious about the presence.

Amid one of the toughest periods in its illustrious history, Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) remains cautiously optimistic about the IC industry and vowed that it will continue to invest in R&D despite the downturn.

TSMC (Hsinchu, Taiwan) plans to hire more engineers. The world's largest foundry provider also reiterated plans to equip and ramp up its 40-nm fab lines this year. It is readying new and separate 3-D and CMOS image sensor technologies. And it is also planning to move the IC-equipment in its R&D fab for the 22-nm node.

Rick Tsai, president and chief executive of TSMC, reiterated industry reports that the silicon foundry giant is seeing new order activity, but he also warned that there are still challenges ahead in the market.

Among those challenges include the overall economy, product demand and margin pressures. "This recession is bad," Tsai said at TSMC's Technology Symposium here. "This is a difficult time for all of us."

Indeed, it has been a humbling time for TSMC. After strong growth in the first three quarters of 2008, TSMC's business fell off the cliff in the fourth quarter of last year.

As a result, the company is expected to report a loss in Q1. It also recently cut about 200 jobs, implemented furloughs and slowed its wafer starts.

Now, there are some positive signs for the company and the overall industry. Inventories are low. Activity in China is picking up. "We are seeing what we call rush orders," Tsai said.

Still, the overall IC market is expected to fall in 2009. "We will see a dip in 2009," he said. "We will see moderate growth in 2010." [...More]

We have argued more times than not in this blog that despite the economic downturn, companies must continue to invest in their future and develop strategic plans that will pull ready them for when the slump is over.

SMIC Posts Big Loss

2009-04-21T05:39:00.000-07:00

It seems the foundry industry is getting very very crowded with the emergence of Global Foundries. The industry will be forced to restructure itself and some of the weaker competitors will face bigger challenges. Of course most people (including us) have focused on the obvious rivalry between GF and TSMC but the other foundries will also be caught in the struggle. Digitimes reports China's largest foundry had the biggest drop in revenues in five years.

Semiconductor Manufacturing International Corporation (SMIC), China's largest silicon wafer foundry, experienced its largest net operating loss over the past five years in 2008. The company posted a loss of US$440 million, compared to an operating loss of US$19 million in 2007.

SMIC saw its revenues slide 12.7% to US$1.35 billion in 2008, which the foundry attributed to capacity adjustment at its Beijing fabs as well as the world economic meltdown. [...more]

Well they are still facing a tough industry environment and with addition of a new competitors, the smaller foundries might also have a big fight on their hands.

Look forward to your comments.

Infortrend and The Tale of Despereaux

2009-04-21T02:15:00.000-07:00

I used to work for Infortrend, so this is great to see. Now I will watch the movie!

Look forward to your comments..

Global Foundries Challenges TSMC

2009-04-21T00:07:00.000-07:00

Well the challenge has arrived. Global Foundries are pushing 28nm technology.

An alliance of technology companies, which includes IBM, Samsung, Chartered, Infineon, STMicroelectronics and the spin-off of AMD's manufacturing operations - GLOBALFOUNDRIES (GF) - has announced the joint development of 28 nanometer semiconductor manufacturing process technology.

The significance of a shrink in the manufacturing process technology (the most recent CPUs are made using a 45nm process) is that it allows either an increase in outright processing performance or a reduction in the size and power required to achieve the same performance.

With GF being the sole manufacturer of AMD processors, this announcement is being viewed by many as a shot across the bows of Intel.

There's no doubt that any progress in semiconductor research from competitors to Intel is significant, but GF is now a supposedly independent semiconductor foundry and, as such, has its sights set on its own competitors, the biggest of which is TSMC (Taiwan Semiconductor Manufacturing Company).

For GF to be a success, it has to appeal to a lot more companies than AMD. The development of a cross-over node at 28nm (full nodes either side are 32nm and 22nm) is being positioned as significant because it may create a differentiator between GF and TSMC. If GF can use that differentiator to take customers away from TSMC, that would represent a significant achievement. [...more]

But TSMC are already expecting to have 28-nm production in Q1 2010 and are already working with customers (see here) to develop 28-nm chips. Maybe the half-node positioning at 28-nm will provide Globalfoundries with some temporary advantage (TSMC at 28-nm will be a full-node process) but they still have to sell it. The struggle will be fun to watch but as one commentor on our blog suggested, GF really have to completely dissascciate themselves from AMD to gain trust in the market. We will wait to see if that happens.

Look forward to your comments as always.

Taiwan's Silicon Valley Shopping Spree

2009-04-16T17:42:00.000-07:00

Been while eh! Been really busy, sorry! Our regular comment provider Anon provided an interesting like to the M and A activity of the Mitac-Synnex group. Apparently they have been on a shopping spree.

Every day dozens of employees of the Mitac-Synnex Group, a Taiwanese conglomerate of more than 40 high-tech companies worldwide with a combined annual turnover in excess of NT$450 billion, fly back and forth between Taiwan and Silicon Valley on the U.S. West Coast. Many of these trans-Pacific commuters are financial officers and IT engineers in charge of hooking up newly acquired companies to the financial and IT systems at the group's Taiwan headquarters.
Within the past two years, the Mitac-Synnex Group has bought up more than 20 companies. Just two months ago group subsidiary Mitac International bought the consumer products division of Silicon Valley-based GPS device maker Magellan Navigation for NT$3.2 billion. With the deal the business group secured a 10-percent share of the U.S. market for handheld GPS devices and car navigation systems. On top of that, Mitac International took over Magellan's R&D teams in Silicon Valley and Russia.
Yue-teh Jang, general partner in renowned Silicon Valley venture capital firm The Vertical Group, likens Silicon Valley to a department store that is going out of business. "It's a good opportunity to go on a shopping spree," Jang declares.

Great article. Thanks for the head up. Link below:

Commonwealth Magazine: Taiwan's Silicon Valley Shopping Spree

Intel and the Mobile Phone Market

2009-03-13T17:32:00.000-07:00

In Intel and TSMC Strategic Partnership we observed the signing of a cooperative agreement between Intel and TSMC to enable Intel ans system on chip (SoC) designers to integrated Atom processor technology into their SoC. In an analysis of the agreement between TSMC and Intel Electronics Weekly argue this is to enable Intel to more effectively penetrate the mobile/smartphone processor market and to start challenging ARM in a serious way. The article is a good read. Follow the link below for more.

Electronics Weekly: Analysis: Atom Exposes Intel's Mobile Dilemma

Ex-TSMC Employees Protest Redundancies

2009-03-13T17:17:00.000-07:00

It is always sad in these economic times when people are laid off from work but if what the Taiwan News is reporting, its sad. Sadly employee practices and treatment in Taiwan can be pretty harsh and most of the labor laws (at least from my perspective) favor the employer with very little support for the employee. Anyway, Taiwan Times reports some former TSMC employees were forced to sign letters saying they voluntarily resigned from the company when in fact they were made redundant. Because they "resigned" they lost any benefits accrued to them. Of course there are two sides to every story, but this would be very sad if true.

More than 20 former employees of Taiwan Semiconductor Manufacturing Co. (TSMC) who recently lost their jobs complained to the Hsinchu Science Park Administration yesterday that they had been unfairly treated by the company.

The workers applied to the park administration to mediate their dispute with the company after accusing TSMC at an earlier protest rally of firing them but forcing them to sign a document certifying that they left TSMC, the world's largest contract chip manufacturer, voluntarily. Some 50 policemen were called in to maintain order.

The workers made a number of demands, including that TSMC issue a certificate saying they did not resign voluntarily and that they be compensated based on retirement or preferential severance terms.

They also insisted that TSMC apologize for describing their redundancies as a company policy to "eliminate the less competent ... employees" and demanded they be given preference if TSMC increases its work force in the future.

Responding to claims, a member of TSMC management said the former TSMC employees could contact the company directly if they had any requests.

"The company will demonstrate the greatest sincerity in helping solve their problems," the TSMC official said.

Kao Shih-nan, secretary-general of the Hsinchu Science Park Administration, said his office accepted the former workers' applications and will help arbitrate the dispute between the two sides.

Hopefully TSMC is not putting in bad employment practices. They have a good reputation. I also hope the laid off employees will be able to find gainful employment soon somewhere else.

Taiwan News: Former Taiwan Semiconductor employees protest loss of jobs

ASUS to Reorg Again

2009-03-12T07:22:00.000-07:00

In Clashes at Pegatron and ASUS we shed some light on the internal politics at ASUS and the different power struggles that are starting to effect the company. Power struggles are never good especially in an economic downturn and especially in the face of first ever quarterly losses. Well anyway, hot on the heels of the power struggle news comes a Reuters report suggesting ASUS are planning another major reorg, the second this year. The first cut their departments from 12 to 6 and now rumours sugges they might cut their departments to three and lay off between 5% to 10% of their workforce. According to Reuters:

Netbook PC pioneer Asustek (2357.TW) is planning a reorganisation, its second this year, to further streamline its operations, a company official said on Thursday.

No concrete plans or specific timeframe have been finalised, including the possibility of layoffs, said the official, speaking on condition that his name not be used because he was not authorised to speak to the media on the company's behalf.

"Nothing has been officially announced yet, we're still in the process of planning but the current framework is to further cut our business into fewer departments," he said.

Local media reports on Thursday said the company could cut its number of departments to three from six, and lay off 5-10 percent of its staff.

That reduction would come after Asustek said in January it was halving its number of departments to six following its first-ever quarterly loss in the last three months of 2008. [ID:nTPU001101]

The company pioneered the wildly successful low-cost netbook PC in 2007, but has been gradually losing market share as bigger players such as Acer (2353.TW), Hewlett-Packard (HPQ.N) and Dell (DELL.O) enter the market.

It seems all is not well at the founder of the netbook. A couple of years ago (18-months ago) ASUS were riding high on the launch of their Eee PC but now are being hammered in the market. Why? Who knows? They seem to be a ship without a rudder (strategy) right now and when that happens people reorginze the company! Heck you have to appear to be doing something right!

I really hope ASUS pulls through and pulls through fast. Lets face it they are a good company that have produced good products in the past. They are not afraid to innovate organizationally or product-wise. Spinning off their manufacturing to focus on brand-building wasn't a bad idea, but they should have tried to appease everyone in the process and ensure the transition was smoother than what it has been.

I know ASUS is not finished yet and that they are being severely affected by the current economic climate but being reactionary at this point won't suffice. The Eee PC was a sustainable product and their strategy in this market sector was good. One wonders if they have indeed lost direction and if they have when and why?

Reuters: Taiwan's Asustek plans further reorganisation-source

The Dream is Gone: No Gvt. Backed Merger for Taiwanese Memory Industry

2009-03-11T17:55:00.000-07:00

The dream is gone! Sounds like a Pink Floyd song! Oh dear, the floundering industry here in Taiwan seemed to be putting their hopes on a government led initiative to consolidate the industry here in Taiwan. In Taiwan Government to Invest in DRAM Industry we gave some insight into what the government plans to do with the industry but today, Bloomberg has more:

Taiwan’s economic affairs minister ruled out a state-led merger of its computer-memory chipmakers, signaling the government is scaling back its plans to reorganize the $23.6 billion industry.
“It’s too complicated and difficult to have an outright merger,” Economic Affairs Minister Yiin Chii-ming told reporters in Taipei yesterday. Newly formed Taiwan Memory Co. “will focus on obtaining technologies and then look for existing plants in Taiwan for manufacturing needs.”
Yiin joins John Hsuan, appointed by the state to oversee the creation of Taiwan Memory, in raising doubts this week about the scale of the island’s plans to revive its unprofitable semiconductor industry. Since last year, the economic affairs ministry has said Taiwan may push for consolidation, fueling speculation that the six domestic chipmakers would merge in a so-called “Big Bang.”

So then, what is Taiwan Memory all about. Well according to Bloomberg:

Hsuan, an honorary vice chairman at United Microelectronics Corp., was named last week by Taiwan’s government to create a domestic chipmaker that could challenge global industry leader Samsung Electronics Co.
The island’s six computer-memory chipmakers, saddled with about $11 billion of debt, should consolidate with Taiwan Memory because having more than one producer “makes no economic sense,” according to Morgan Stanley analysts Frank Wang and Jerry Su. The company should also merge with or invest in Elpida Memory Inc. to access the Japanese chipmaker’s technology and collaborate with Boise, Idaho-based Micron Technology Inc., they wrote in a March 10 report.
Instead of pursuing mergers and building its own multi- billion-dollar semiconductor factories, Taiwan Memory may acquire manufacturing plants from the domestic chipmakers, Minister Yiin said yesterday.

Mmm. Interesting. There have been rumours flying around about industry consolidation for sometime but now it seems Taiwan Memory will be added as a competitor and the industry will become even more fragmented. Is this good for Taiwan's memory industry? I have absolutely no idea. On the one hand they will buy assets from struggling companies to help them alleviate their debt but then the existence of these companies will be jeopordized especially, if as speculated, Taiwan Memory imports Elpida's technology. Some of the six memory companies in Taiwan will collapse I fear. However, with the development of Taiwan memory, at least there will be some place for the expertise to go. These deals are becoming more interesting and I will keep you up to date (and do my best to avoid speculation!).

But for now: "I cannot put my finger on it now. The child is grown, the dream is gone. I have become comfortably numb." So says Pink Floyd!

Oh yes, as always, I look forward to your comments!

Bloomberg: Taiwan Rules Out Chip Mergers in Industry Reorganization Plan

Taiwan Government to Invest in DRAM Industry

2009-03-10T22:23:00.000-07:00

Thats right, the government is committing close to one billion US dollars to bailing out the industry. The bailout (sounds like a US financial blog with that word doesn't it) is to consolidate the industry. The International Herald Tribune has an interesting article on the bailout:

Taiwan will inject as much as 30 billion Taiwan dollars, or $867 million, into Taiwan Memory, the new computer memory chip company that it is setting up to bail out its struggling memory chip sector.
"The less money the government invests, the better," said John Hsuan, an industry veteran named last week by the economics ministry to oversee establishment of the new maker of dynamic random access memory, or DRAM, chips. He said that he expected "no more" than 30 billion dollars from a national development fund to be invested in it.

The article continues

Taiwan announced the formation of Taiwan Memory last week and said the government would hold less than half of the company. The company would try to pull together the island's struggling chip makers, including Powerchip and Nanya Tech, and would also bring in technology from Elpida Memory of Japan or U.S.-based Micron Technology.

Actually this kind of stepping in by the government does not surprise me. The government have long been the silent overlords of the technology sector in Taiwan with the initiation of ITRI, ESRO, the Science Parks and so much more. To their credit, once things get going they step aside and let the entrepreneurs take charge. Even here we see the alliance is a little unwilling. The government doesn't want a majority stake in the company and I am pretty sure once the ship is sailing they will slowly disengage. I don't think the government is looking to nationalize the industry, they are just trying to strengthen it and make it more competitive, which isn't a bad thing.

International Herald Tribune: Taiwan set to inject $867 million for DRAMs

Globalfoundries Getting in on the Game

2009-03-10T18:38:00.000-07:00

Competition in the pure play foundry industry is about to heat up. ars technica has an interesting blog article on AMD's spinoff company Globalfoundries who seem to be on thr prowl for TSMC and UMC customers. ars technica writes:

It's launched, online, and the now-independent Globalfoundries is searching for its non-AMD customers. CEO Doug Grose is reportedly visiting Taiwan to seek relationships with companies that may be currently contracting with TSMC or UMC for their semiconductor foundry needs. If true, this would raise questions regarding the future of AMD's relationship with TSMC. That company currently fabricates Radeon processors for Advanced Micro Devices, and while Globalfoundries and AMD are now separate entities, they are separate entities that remain joined at the hip. Globalfoundries will probably take over fabbing ATI Radeon processors at some point, but is not yet believed to have the bulk silicon production in place to do so.

So what are your thoughts? Will Globalfoundries actions in Taiwan threaten the relationship between AMD and TSMC? Will Globalfoundries be able to compete effectively? Are TSMC and UMC in a world of trouble? I will be interested to read your comments. In the meantime, I look forward to see how the pure-play foundry industry landscape changes. (Remember last week TSMC and Intel signed an agreement). The future is always exciting, especially in this industry

ars technica: Globalfoundries on the prowl for non-AMD customers

Clashes at Pegatron and ASUS

2009-03-07T23:06:00.000-08:00

I was just pointed to an excellent article on TweakTown.com describing the internal power struggles at ASUS and Pegatron. The article makes for interesting reading and provide powerful insight into the internal mechanism of Taiwan business. We quote the first paragraph below. If it tweaks your interest please follow the link below:

Asus' first ever quarterly loss during the first year of its separation of Brand and OEM businesses indicates a major stumble for Johnny Shih, Chairman of Asustek. Tung Tsu Hsien, who used to be the vice chairman of Asustek and who now holds the position of chairman of Pegatron (the breakaway OEM division of Asustek), still remembers the feeling of achievement after building up the Asus brand, however, he was forced to leave the branded business and handle the OEM business a year ago. The break between former master and apprentice is apparent. Asus' internal clashes are on the stage for everyone to see during this cold winter.

Very interesting article: ASUS internal clashes could create a new brand?

The Survival of Wintel

2009-03-02T15:39:00.001-08:00

An interesting piece appeared on the PC Mag website the other day debating the future of the Intel-Microsoft PC duopoly. Intel and Microsoft have both dominated their sectors of the PC industry for almost as long as the PC industry has been around. Both have been ruthless in taking out competition and both have been capable of putting acceptable-to-great products in the consumer market. They are bothed backed by massive marketing machines and gain significant brand recognition benefits, but the landscape is changing with a shift into mobile internet devices and the question is, how significant is the Wintel duopoly in the MID realm?

The rise of ARM based processors in MID and other chip designers like Nvidia getting into the game poses definite challenges to Intel. For Microsoft, emerging mobile phone operating systems like Android are posing another challenge. I suspect both Intel and Microsoft won't give up without a fight and they are tough competitors who have been there and done it before.

The article is interesting. Follow the article link: Can WinTel Survive?

Intel and TSMC Strategic Partnership

2009-03-02T00:15:00.000-08:00

Intel and TSMC have struck a deal to co-manufacture Atom system-on-chips. According to PC Mag:

Intel and foundry Taiwan Semiconductor Manufacturing Co. have struck a deal to allow customers to design their own Atom system-on-a-chip processors and manufacture them at TSMC.
Intel is not outsourcing the Atom processor, as this reporter speculated on Friday. Customers who wish to buy standalone Atom chips will buy them from Intel, and Intel has not altered its Atom roadmap or production.
Intel, however, has also made the Atom a cornerstone of a system-on-a-chip strategy, such as the "Moorestown" and "Lincroft" for the mobile Internet device market. Now, an Intel customer will be able to use TSMC's process flow, tools, and intellectual property (both from TSMC and its partners) to create their own Atom-based system-on-a-chip products, which will be sold under the Intel brand.
"It's enabling Atom on TSMC,"said Anand Chandrasekher, general manager of Intel's Ultra Mobility division, during a conference call Monday morning. "It will allow TSMC to go after new market segments and allow Intel and TSMC to go after new market segments together."

This deal will inevitably be more beneficial for TSMC but it will also enable Intel to penetrate other market segments more easily and one would guess enable system-on-chip designers to leverage some of the advantages of the Intel Atom processor for their own designs. Its an interesting partnership to say the least.

PC Mag: Intel, TSMC Strike Atom Design, Foundry Deal

New Computers, Hard Disk Crashes and a Birthday

2009-03-01T08:06:00.000-08:00

This morning I woke up deciding to do some backups of videos and pictures of a recent vacation I had stored on my Dell Latitude E6400. Of course when I turned the computer on there was this strange cracking sound and the message saying there was no bootable drive. Sh*t! HDD crashes just cause a whole world of trouble and a lot of work and personal data is lost. I am usually pretty good about backing up but this time I just didn't have a chance and so I didn't back things up for a while. I am hoping some of the data can be recovered.

The irony is that today is my wife's birthday. We were thinking of buying a new computer and up until today I was pretty impressed with my Dell and thinking of buying one for her as a birthday present. But, when a four month old computer has a HDD crash for no apparent reason I would be mad to buy another one? So Dell lost a sale especially since there was no support available. So we went and bought a new Acer Aspire 4935G. The computer isn't bad so far. Our last computer was an Acer Tablet that we ran into the ground over five years. We have always been happy with Acer and the support and performance offered. We were almost tempted into buying a Lenovo but the addition US$300 price tag didn't seem to make it a worthwhile process. So we will be running this new Acer and see how it goes. If it screws up I will let you know.

Oh yes, today is Hi Tech Taipei's first birthday. So Happy Birthday Hi Tech Taipei. Our first post on the 500 GHz processor has become our Raison d'être. So in one year we have had close to 250 posts, sometimes we have taken a break, other times we have been very active but we are still here alive and kicking.

Anyway, to all of you who have read my blog and participated by commenting, thanks. I appreciate your participation and please continue. As for the rest of you or anyone else, I look forward to your participation in the future.

So happy birthday and may our Aspire live long, longer than my Dell.

K. T. Li: The Godfather

2009-02-26T17:08:00.000-08:00

I completely missed this. Taiwan Journal had a piece on K. T. Li, a person many regard as the godfather of Taiwan's hi tech industry. He was there at the beginning and helped to import many technologies to Taiwan. He was instrumental in getting the neccessary funding for TSMC and for helping to start the company. Without him the technology landscape here would be very different.

Please follow the link to read the article: Nation commemorates 'godfather of technology', its worth taking the time. And if this arouses your interest, you can try to find a copy of K.T Li and the Taiwan Experience, an excellent biography of K. T. Li (although the English is a little rough). If you are in Taiwan, I know the Taiwan University library has a copy that you may borrow.

TAITRA on Taiwan and Branding

2009-02-26T16:55:00.000-08:00

Ok, so maybe its a little bit of "blowing our own horn" propoganda, but hey, somebody has to do it right? In a press release TAITRA speaks about their efforts to brand Taiwan products:

Taiwan’s information and communications technology (ICT) companies play a key role in the global supply chain for electronics products. Taiwanese companies account for about three-quarters of the world’s production of PCs and half of the world’s liquid-crystal displays (LCDs). In addition, Taiwan makes about a quarter of the world’s semiconductors and about a fifth of the world’s mobile phones.
Taiwan has a population of 23 million and a land area of only 36,260 square kilometers, less than half of a percent of the 9.6 million square kilometers of land in China. Yet the well-educated, industrious people of Taiwan have helped to carve out a huge niche in the global ICT industry.

The press release continues:

To promote the Taiwan’s industry, the government has made the development of branding the key task for raising the competitiveness of Taiwan’s economy. There are two ultimate goals of the Branding Taiwan programme. The first is integrating resources to assist the establishment of brands and create a favourable environment for development. The second is to aid Taiwan enterprises in brand development and increase the value of Taiwan’s international brands.

Actually, it may be a little bit of self promotion but what TAITRA is doing is great. Previously on this blog we have bemoaned the lack of ability in branding in Taiwan and TAITRA have seen the weakness and have stepped in to help. If they can acquire and pass on the relevant expertise and transmit effective and meaningful branding capabilities to more and more tech companies, the sky will be their limit.

You may scoff and scorn at this suggestion but this is a very typical Taiwanese method: importing expertise and knowledge. It should be recalled that one of the fathers of the tech industry here (K.T. Li) developed an advisory council that comprised soley of foreigners including the then head of Texas Instruments. The sole purpose was to understand how to import/transfer technologies to Taiwan.

If TAITRA can successfully import and transfer the neccessary branding skills and knowledge to companies here, Taiwan will become an even more potent force in the global technology landscape.

All I can say is go Taiwan (now that sounds a bit biased doesn't it?)

Hon Hai and Foxconn Invest

2009-02-25T00:46:00.001-08:00

Hon Hai and Foxconn have been busy with some foreign investment strategies. The first is what seems to be a US$60 million cooperative venture in Turkey with HP. According to CNN Money:

Taiwan's Hon Hai Precision Industry Co. (2317.TW) plans to invest up to US$60 million to build a personal computer manufacturing facility in Turkey together with Hewlett-Packard Co. (HPQ).
"H-P is our strategic partner and there is evidence of growth in the market for PCs" in Turkey, said Hon Hai spokesman Edmund Ding on Wednesday.

An article in Vietnam Investment Review suggests Foxconn will build a handset factory in North Vietnam. The article says.

With initial investment of $200 million, Foxconn’s new factory, which will be able to produce nearly 90 million units per year, will become the second foreign-invested facility in Vietnam to produce mobile phone handsets, after Korea’s Samsung.
The new facility will be built on the 485 hectare Binh Xuyen 2 Industrial Park, the developer of which is Fuchuan, a Foxconn subsidiary. Binh Xuyen 2 is designed to accommodate Foxconn and its suppliers to locate manufacturing facilities in Vinh Phuc province, about 50 kilometres north-west of Hanoi.

More Foxconn news is that according to Trading Markets, Foxconn intends to employ an addition 10,000 people in their Wuhan, China plant.

Taiwan-based electronics maker Foxconn Technology Group (Foxconn) is likely to recruit as many as 10,000 employees for its Wuhan plant this year in accordance with its production expansion plan, disclosed a person in the know recently.

In the current economic climate pounding the electronics sector and driving down sales, with rumored massive layoffs at Foxconn's Shenzhen plant and with Foxconn apparently laying off people in other parts of the world, it makes for interesting and surprising reading. It should be said though that Foxconn's strategic view of Vietnam has been a long term vision and they were intending to invest their for sometime, as apparently have many other Taiwanese companies.

The investment in Turkey is another interesting choice. My sister lives their and the PC enviornment in Turkey seems fairly primitive and unsophisticated and their probably is huge demand. Of course this will also help them gain more direct access into Middle Eastern and Mediterranean markets and in the long term penetrate central Asia although their 2008 investment in Russia may be able to penetrate those markets better.

CNN Money: Hon Hai Precision, H-P To Build US$60 Million PC Manufacturing Plant In Turkey
Vietnam Investment Review: Foxconn making good on its ambitious promises
Trading Markets: Foxconn Said to Recruit 10,000 Employees for Wuhan Plant

25% of 2008 Intel Revenue from Taiwan

2009-02-24T05:38:00.000-08:00

Digitimes reports Taiwan was responsible for 26% of Intel 2008 revenue.

While Intel's sales were flat in 2008, Taiwan was one of the few geographic regions where sales increased. According to the chipmaker's recently released annual report, revenues from Taiwan increased about 15% in 2008 to US$9.9 billion, while the company's overall sales of US$37.6 billion were down a slight 2%. Leading the way in terms of sales growth in 2008 for all geographic regions was the Americas (outside of the US), where sales were up 16.5%. Japan was the only other sales region that saw growth in 2008, at a slight 1.5%.
Taiwan accounted for more than 26% of Intel's sales in 2008, up from 22% in 2007.

Amazing! Honestly, still shows there is some traction in Taiwan's tech sector when everyone is busy writing them off.

Digitimes: Taiwan accounts for more than 25% of Intel revenues in 2008

Fabtech Editorial on Taiwan DRAM Industry

2009-02-23T17:22:00.000-08:00

Fabtech has an excellent editorial on the consolidation of the DRAM industry in Taiwan. Citing lack of any IP as a competitive weakness, and outlining how the government here intends to consoldiate the industry while strengthening the IP, the editorial ends saying "some way down the road more consolidation will be required to bulk up against Samsung. IMHO, either Micron or Elpida should get all the Taiwan DRAM companies, that way creating a low-cost, IP protected powerhouse that would keep Samsung in check."

Febtech: Taiwan’s DRAM manufacturers split in the middle

Morris Chang Predicts Three Year Recovery

2009-02-23T04:41:00.000-08:00

Interview in the Wall Street Journal, Morris Chang anticipates the semiconductor industry will take three years to recover to 2008 sales levels. The pounding the semiconductor industry has taken over the past few months due to the financial crisis has forced semiconductor sales to drop dramatically. According to the WSJ:

The global semiconductor industry has yet to hit bottom and likely won't recover fully from the current downturn for another three years, according to one of the industry's senior figures, Taiwan Semiconductor Manufacturing Co. Chairman Morris Chang.
In an interview Friday, Mr. Chang said the industry, which has been hard hit by the global economic slowdown, was "pretty close" to the bottom. But he said that a return to the sales volumes that the industry had before the current slump would be extremely slow. "You get a precipitous drop and a very slow rise," he said.
"I think it will be 2012 before the total revenue of the semiconductor industry gets back to the '08 level," said Mr. Chang, who founded Taiwan Semiconductor in 1987.

The WSJ continues:

Mr. Chang also said he expects industry consolidation to pick up. He predicted a continued decline for companies that make both consumer products and semiconductors. Of the companies that still do both, he said that only Samsung Electronics Co. and Intel Corp. are in a strong position. He said others would likely divest themselves of their semiconductor operations, leaving production to companies like TSMC, which manufactures semiconductors on a contract basis for other companies.

Mr. Chang has worked in this industry for a long time and his thoughts do carry some weight. It will be interesting to see how this all pans out over time, especially the consolidation of the foundry industry. What will be more interesting will be to see how the new foundry company being spun off will survive. The foundry business is a tough business to play and one can only imagine the perils of entering the industry at this point in the economic cycle.

Wall Street Journal: Executive Sees Chip Industry Recovery in Three Years