Category Archives: Semiconductors

Simtek’s Q1 sales slip

Colorado Springs-based Simtek Corp. (Nasdaq: SMTK) expects to report sequentially lower sales during the year’s first fiscal quarter, for which full earnings results will be announced April 27.

The non-volatile memory chip company announced this week that it expects Q1 2006 product revenue to be about $8 million, 12% less than the record $9.1 million mark reached during last year’s fourth quarter.

Despite the decline, the company’s projected Q1 sales would be 70% more than last year’s first quarter. Simtek — which reported its first quarterly profit in nearly six years during last year’s fourth quarter — nearly tripled its annual revenue during 2006 to $30.6 million, compared with $10.4 million in 2005.

The past year has been eventful for Simtek, which was founded in 1987 and struggled for years to develop a niche market for its unique nvSRAM technology, which allows memory chips to retain stored data when their power is shut off, while also operating at extremely fast speeds.

Last October the company completed a 1-for-10 reverse stock split, paving the way for a Nasdaq stock listing this January 10.

In December Simtek acquired the nvSRAM business of Germany’s Zentrum Mikroelektronik Dresden (ZMD) (which originally licensed the technology from Simtek) for $10 million in cash and stock, and began shifting ZMD’s chip customers to its own nvSRAM chips. In January it raised $11 million in a private share placement, with most of the proceeds used to pay for the ZMD deal.

The company also filed for 10 patents in January, and announced plans to open a design and business-development center in San Diego.

Simtek employs about 45 people in Colorado Springs. Its chips are used in computer servers, GPS navigation systems, robotics, copiers, avionics, radar, “smart” weapons and other products.

Among its competitors is Colorado Springs-based Ramtron Corp. (Nasdaq: RMTR), which uses a different technology, ferroelectric random access memory (FRAM), to produce non-volatile chips.

Springs’ Intel loss is China’s gain

Chip-making giant Intel Corp. (Nasdaq: INTC) still hasn’t confirmed this week’s announcement by China’s government that it has won approval for a new $2.5 billion chip fabrication plant in northwest China. But the story’s now been reported by nearly every major news organization, including China’s official Xinhua “People’s Daily” newspaper, so the chances of the deal being consummated seem increasingly likely.

The news comes less than two months after Intel announced plans to sell its Colorado Springs semiconductor plant, which the company bought in 2000. Up to 1,000 workers may be laid off if a buyer is not found that wants to continue operating the plant. Intel briefly flirted with further expansion in the Springs in 2002, before dropping plans to buy land for a second production plant near the city’s airport.

intel-sign.jpg

Intel in Colorado Springs

Meanwhile, Intel announced a couple of weeks ago that it will spend up to $1.5 billion to re-tool its Rio Rancho fabrication plant, or fab, near Albuquerque, N.M., to produce chips using its next-generation 45-nanometer technology.

What’s it all about? Why is the world’s largest chip-maker apparently getting out of Colorado, while expanding and opening new facilities elsewhere?

Under pressure
Intel, whose sales declined nearly 9% last year, is coming under increasing competitive pressure from arch-rival Advanced Micro Devices Inc. (NYSE: AMD). And with a relatively new CEO — Paul Otellini — at the helm, Intel is re-thinking many of its product and manufacturing strategies. It’s announced plans in recent months to lay off more than 10,000 workers, while diversifying into new markets, such as NAND flash memory chips, and bailing out of communications chips and other areas that have been less successful than it had hoped.

So what do China and New Mexico have that Colorado doesn’t?

In the case of China, the attraction clearly is easier access to the world’s biggest potential consumer market, which boasts several hundred million increasingly affluent middle-class buyers. China also has become the electronics manufacturing capital of the world, consuming some $37 billion worth of chips last year. And despite its lingering reputation as a backwards Third World locale, China’s universities are turning out many thousands of bright, disciplined and relatively low-cost, engineers every year, making it an attractive recruiting spot.

As for New Mexico, Intel’s Fab 11X there is one of the company’s largest and most advanced facilities, equipped with state-of-the-art clean-room and automated materials-handling equipment. A few years ago it was the first Intel plant upgraded to handle the latest 12-inch silicon wafers. Intel has been operating in New Mexico since 1980, and now employs more than 5,000 people there.

What Intel has in New Mexico is deep roots, as well as a massive multi-billion-dollar investment in leading-edge production facilities.

Aging facilities, little investment
Its Colorado Springs fab, on the other hand, dates back to the early 1980s, when it was built by Mostek, before being sold to United Technologies, then Rockwell, then Intel. Although the aging facility has been updated several times, it was never designed for today’s latest manufacturing technology.

Colorado Springs made sense for Intel nearly a decade ago when the company was seeking lower-cost U.S. locales outside of Silicon Valley to recruit new talent and build chips, while trying to avoid over-dependence on its operations in New Mexico and Arizona. Since then, however, the company has begun shifting more of its manufacturing investment abroad, first to Ireland and Israel, then to Vietnam, and now China.

Farewell to U.S. chip manufacturing?
Chip making in the U.S. is simply less viable than it used to be, especially with foreign governments willing to offer billions of dollars in tax breaks and other incentives to attract new factories, plus access to barely tapped pools of workers who’ll work for far lower wages than Americans.

A handful of companies, including Texas Instruments, are still building new chip fabs in the U.S. But for the most part, the industry’s future manufacturing expansion will take place overseas. Even much of the chip design still being done here will soon be heading abroad.

The lesson for Colorado — and other U.S. states that wish to remain players in the $260 billion chip industry — is to focus on retaining as much of the marketing, finance, administration, logistics and other support operations as possible. Even more important is to do whatever it takes to foster and nurture the development of new fabless chip companies.

Sure, we should try to hang onto the manufacturing facilities we already have, for as long as we can. But don’t count on them staying forever. For most chip companies, manufacturing has become just another commoditized service to be outsourced. The headquarters is still what counts.

As long as Colorado and other regional U.S. semiconductor centers remain attractive places to live for those who run the industry’s established companies — and the entrepreneurs and financiers who launch new chip ventures — we still have a chance of staying in the game.

Ramtron boosts memory

Colorado Springs-based Ramtron International Corp. (Nasdaq: RMTR) has quadrupled the storage capacity of its ferroelectric random access memory (FRAM) chips to 4 megabits (Mb), and has reached a manufacturing agreement with Texas Instruments (TI) to produce the new devices.

FRAM chips are one of several competing “non-volatile” memory technologies, which can retain stored data when their power supply is turned off. Ramtron has been developing FRAM memory for 20 years. But it only started commercial production of the chips a few years ago, and then at relatively small storage capacities of 1 Mb or less. The latest flash memory chips, in comparison, can store up to 16 Gb, or roughly 4,000 times more data than Ramtron’s new 4 Mb chips.

Ramtron’s 4Mb chip

Ramtron’s new 4 Mb chip

Nonetheless, Ramtron’s chips have found a number of niche markets in recent years — including electric utility meters, auto navigation and entertainment systems, printers and specialized disk drive controllers — where users are willing to pay a premium for fast, durable, power-efficient non-volatile memory. The company says it has now shipped more than 150 million FRAM chips.

Last year, Ramtron’s sales grew 18% to $40.5 million, while gross profit margins increased to more than 50%.

Although Ramtron initially planned to manufacture its own chips, it long ago sold its production facility in the Springs, and has relied on third-party manufacturers, including Japan’s Fujitsu Ltd., to build its chips. This week’s deal adds TI as an additional supplier.

TI and Ramtron have been working together since 2001 to develop a process for making FRAM chips with circuits as small as 130 nanometers. While Ramtron continues to produce stand-alone FRAM memory chips, TI has licensed the technology with plans to eventually embed blocks of FRAM memory within other kinds of logic chips.

Ramtron CEO Bill Staunton says that besides the 4 Mb chips, his company plans to use TI’s manufacturing line to produce samples of “at least one additional product” during 2007.

PrimeStar strikes NREL deal

Longmont’s PrimeStar Solar, Inc. continues making progress towards its goal of starting commercial production of low-cost cadmium telluride (CdTe) photovoltaic (PV) modules, which generate electricity from sunlight.

Last week, PrimeStar announced an $870,000 deal to transition CdTe technology developed at Golden’s National Renewable Energy Laboratory (NREL) into commercial production. The company also announced it has leased a 16,000 square-foot facility near NREL in Golden to develop a pilot plant. NREL is operated for the U.S. Energy Department by Midwest Research Institute and Battelle.

CdTe is one of several new technologies trying to challenge mainstream PV cells, which are built on expensive polycrystalline silicon wafers. CdTe and other alternative approaches typically convert sunlight less efficiently, but offer the potential for lower cost and complexity, since their thin-film cells can be built atop conventional glass or even plastic. NREL’s CdTe cells have been shown to convert up to 16.5% of solar energy into electricity, well above the 10% efficiency of most other thin-film approaches (though less than the 20% efficiency of industry leader SunPower Corp.’s silicon-based PV cells).

PrimeStar’s NREL connection pre-dates the latest deal. In December, the company recruited Ken Zweibel, a noted thin-film PV researcher and 27-year NREL veteran, as its president and chairman. Founded last year, the privately held company thus far has raised $6 million in seed funds.

Yet PrimeStar has plenty of company. Investors poured $242 million into solar energy projects during the first three quarters of 2006 according to Venture Power, an industry newsletter.

Others developing CdTe solar cells include First Solar, AVA Technologies and Solar Fields. Different thin-film technology approaches are being pursued by Japan’s Honda and Germany’s Wurth Solar, as well as startups Nanosolar, Miasole, and Heliovolt.

Isonics saves its listing

Golden-based Isonics Corp. (ISOND) is back in the good graces of Nasdaq, but it’s not out of the woods yet.

The company received notice from the stock exchange’s hearings department last week that it once again meets the market price requirements to continue its Nasdaq listing, after its shares closed above $1 for 10 consecutive days. This morning ISOND shares were trading at $1.75, well above the required minimum, but far from their $20-plus trading range of two years ago. Last July the company’s shares hit a low of 37 cents.

Isonics — which provides homeland security products, including explosive-detection devices, and a variety of semiconductor products and services — boosted its share price last month with a 1-for-4 reverse stock split. It also announced plans to sell its loss-making life sciences division, which provides isotopes to the health care industry for cancer imaging and treatment.

Two weeks ago, Isonics Chairman, CEO and co-founder James Alexander resigned, while two other company officials with board seats were replaced with independent directors. Former Lockheed Martin executive Christopher Toffales, who owns 10% of Isonics, replaced Alexander as chairman.

The company lost $16.6 million on sales of $23.7 million during its last fiscal year, ending in April 2006.

AMAT solar bid paying off

Applied Materials (AMAT) is beginning to see some return on last July’s $464 million purchase of Longmont-based Applied Films, which develops thin-film deposition equipment used to make photovoltaic cells, which convert solar energy into electricity.

The Santa Clara, CA-based company announced today that Moser Baer India Ltd. has selected it to develop and install a new production line in New Delhi, India for thin-film solar modules. The company claims this will be the solar industry’s first “Generation 8.5” factory, capable of producing huge solar panels on glass sheets the size of a queen bed (7.2 x 8.5 feet).

The contract marks AMAT’s first deal to deliver a full solar panel production line, including chemical vapor deposition (CVD), physical vapor deposition (PVD) and laser scribing equipment, as well as factory software, automation and other supporting technologies. The Moser Baer facility should initially be able to manufacture enough solar panels each year to produce 40 megawatts of electricity, although company officials say they aim to expand its output by 2009 to 200 megawats per year.

The worldwide solar equipment market is expected to grow from about $1 billion in 2006 to more than $3 billion in 2010, by which time AMAT CEO Mike Splinter expects his company’s new solar business to be producing $500 million in annual revenue.

The purchase of Applied Films, which had more than 700 employees when acquired, is a key part of AMAT’s strategy to diversify beyond its core business of conventional semiconductor production equipment.