GigaOM » STMicroelectronics

Opportunities in LED Solid-State Lighting

Thu, 18 Jun 2009 13:00:31 +0000

While light-emitting diodes, or LEDs, have long played a role in consumer electronics and displays, solid-state lighting (SSL) is now emerging as a potential technology for everyday commercial and residential lighting applications. As incandescent light bulbs are phased out because they use too much energy, and concerns over mercury affect sales of compact fluorescent bulbs, SSL is receiving increasing attention from consumers and governments seeking to reduce energy costs and lower their carbon footprint. Once LED costs come down, SSL will have a major impact on the global lighting market. While LEDs themselves are not made with silicon, silicon chips are an integral component of SSL fixtures. Thus, the sector represents a significant market opportunity for chip makers.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

Who's To Blame for Tech's Woes? You and Me

Stacey Higginbotham — Fri, 31 Oct 2008 04:01:17 +0000

The last time technology investments took a hit, it was easy to look around at the scattered sock puppets and dark fiber, and blame the downturn on the rapid run-up in venture-backed funding for me-too companies and unproven business models. But this time around, what will haunt technology companies isn’t their wholehearted embrace of the web — it’s consumers’ wholehearted embrace of credit. That’s right, this tech downturn could be pinned in part on you and me.

Before you get all huffy about sub-prime lending and greedy bankers, consider this: In the last five years, consumers have taken on massive personal debt, in the form of home equity loans and credit financing, which they’ve used to buy fancier cars, appliances and gadgets. Tech companies have been the recipients of a lot of this spending, either directly — through the increase in sales of high-end gadgets such as cell phones — or indirectly, through the rise in things like luxury automobiles that contain more semiconductors and displays. As a result, when consumers stop spending, tech companies will start hurting.

According to data issed by the Federal Reserve, consumer debt not associated with home equity lending has increased by 23 percent since 2003, when people took $2.1 trillion in credit. As of August, Americans had $2.58 trillion in debt. But prior to last year, home equity lending fueled much of the extravagance. Federal Reserve Chairman Alan Greenspan and Fed economist James Kennedy have estimated that borrowing against home equity lines of credit freed up about $187 billion in cash per year between 2001 and 2005.

There are signs that the flow of credit is coming to an end. Plus, the index of consumer confidence, started in 1967, is at the lowest point in its 41-year history, meaning that even those who aren’t seeking credit aren’t hot to spend their hard-earned cash. Earlier this month, George Scalise, head of the Semiconductor Industry Association, called for federal intervention in the financial markets. “With consumer purchases now driving more than half of semiconductor sales, consumer confidence is essential to the entire supply chain of the global technology sector,” he said in a statement. As consumer spending — whether with cash or credit — slows dramatically over the coming quarters, technology companies that have seen their businesses become more dependent on consumers may have to do some of their own belt-tightening.

Hitwise, a research unit of the credit bureau Experian, released data Tuesday that shows U.S. visits to online retail Web sites have declined for the eighth consecutive week. U.S. visits to the 500 retail web sites declined 3 percent for the week ending Oct. 25, 2008, compared with the previous year. The largest drops in visits were in the online music and computer sectors. That trend’s going to cause problems that end up affecting the entire tech value chain.

Take, for example, a consumer’s decision to hold off on buying a new cell phone or to forgo one with a fancy data plan. It’s already happening. Cell phone makers are worried that consumers will hang onto their handsets longer, prompting firms such as Nokia and Ericsson to issue cautious sales forecasts for the coming year. And about that data plan? Wireless carriers including Verizon and AT&T are thinking about how a downturn could affect consumer spending on their products, with analysts predicting even deeper losses in landlines. So far, cable and broadband seem safe.

Consumer goods maker Sony lowered its earnings, and some analysts think its expectations going into 2009 are still too rosy. Because their chips are big components of many electronic goods, Texas Instruments and STMicroelectronics are also a bit nervous about the coming quarter. Even Intel is planning a mid-quarter update before the current quarter ends to comfort investors. This caution from chipmakers will cause a cut in sales for chip equipment suppliers, as well.

The worry over a drop in consumer spending helps explain why venture firms are looking at enterprise software deals and shutting down some of their Web 2.0 investments. For the tech industry as a whole, this downturn won’t be as bad as the last, but consumer-oriented startups and makers of high-end gadgets such as the Dash Express, Pleo from Ugobe, or Kindle could be headed for trouble. With a recession officially declared, 2009 will be a rough year for consumers. Since the tech industry has shifted more of its business toward serving consumer markets, that means it will be a rough year for technology as well.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

Aluminum: Canary in the Tech Mine

Om Malik — Wed, 08 Oct 2008 23:00:42 +0000

Many of us who live in Silicon Valley pay no heed to decidedly unsexy materials such as aluminum. Of course, they’ve long been integral to our economy — just look at the world’s largest aluminum company, Alcoa. It turned 120 years old on Oct. 1.

A week later, however, the Pittsburgh-based company slashed its growth forecast and suspended its stock repurchasing program, battening down the hatches as the global credit crunch continues to hurt demand. As CEO Klaus Kleinfeld said:

Given the sharp decline in metal prices and increasingly soft demand in our key markets, we are stopping all non-critical capital projects, making targeted reductions to match market conditions, and are adjusting our manufacturing capacity to meet demand in rapidly changing upstream and downstream markets. We are halting production at our smelter in Rockdale, Texas, adjusting alumina capacity accordingly, and are continually reviewing under-performing assets throughout our portfolio. And, we are suspending our share buy-back program.

Why does this matter to Silicon Valley? After all, aluminum is used to make things like airplanes and cars. True, but that’s not all. As a quick visit to Alcoa’s web site will reveal, aluminum is also used to make displays, mobile phones, notebook computers and whole slew of tech-related things. Alcoa even sets up a booth at the annual Consumer Electronics Show.

And now the company says demand in North America is going to decline 10 percent this year. Meanwhile, it expects growth in China to only rise 15 percent compared with an earlier forecast for a 22-percent rise.

And guess where major electronics items are made? China, after which they are sold in North America. My feeling is that aluminum is the canary in the coal mine and is foretelling tough times ahead for both the consumer electronics and computer hardware sectors. We’re already seeing a slowdown in the sales of LCDs TVs — the makers of which are big buyers of aluminum.

There is a good chance the tech malaise is going to spread to the likes of Apple, which uses a ton of aluminum to make their products. Aluminum is also a key ingredient in mobile phones, another area where demand for devices is going to slump, especially for the more profitable, high-end devices. Keep an eye on Nokia and listen for its forecasts.

The automobile industry – a major consumer of aluminum – is already in a deep abyss, with monthly sales plummeting. Automakers are big consumers of technology and have put a whole lot of electronics (including chips) — $113 billion in 2008 — from companies that include chip makers like Freescale, Infineon and STMicroelectronics into cars to power everything from the GPS to the powertrain.

Any slowdown there is going to eventually move up the food chain and hurt these chipmakers. Strategy Analytics recently forecast a $1.1 billion decline in sales of automotive chips for engines in the U.S. alone.

Whichever way you look at it, the credit crunch is going to crimp consumer demand, which will in turn lead to a clampdown on ad spending, including on the web.

And you thought aluminum was boring!

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

For Sale: Freescale's Wireless Chip Biz — Cheap

Stacey Higginbotham — Thu, 02 Oct 2008 21:20:45 +0000

Freescale Semiconductor said this afternoon that in an effort to focus its energies on high-growth segments such as automotive and networking chips, it will consider strategic options for its wireless chip business, including its possible sale. Anyone looking at the varied business units of the former in-house chip division of Motorola would have seen this coming. It has too many business lines, most of which didn’t have enough market share to be truly competitive, as we said back in May.

Chairman and CEO Rich Beyer, who joined the firm in February, said in the release:

“In the cellular handset chipset market, it has become evident that this business needs considerably greater scale in order to achieve a position of market leadership and long-term success. We feel the investment required to achieve that scale by Freescale will be better served extending our product portfolios where we are the leader and expanding our application expertise in sensors, analog, power and multimedia processing.”

Freescale’s wireless handset chip line isn’t exactly a plum asset. Its largest customer, Motorola, has been taking on chipsets from new suppliers, including Qualcomm, which recently lost its COO to Motorola, and could expect more deals as a result of that. It’s also a smaller player in the industry and may not have a lot to offer to firms such as Texas Instruments or STMicroelectronics. That means a tier-2 buyer might find the wireless division interesting, but likely not at a great price.

That’s unfortunate, because after the $17.6 billion private equity deal to take it private in 2006 that left Freescale saddled with $9.5 billion in debt, it is one highly leveraged company. And one that reported, by comparison, sales of $5.72 billion last year, down from $6.36 billion in 2006. So…any takers?

image courtesy of Freescale

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

Freescale to Spin Out MRAM Business

Stacey Higginbotham — Mon, 09 Jun 2008 16:00:36 +0000

Today Freescale said it would spin out its MRAM business to a consortium of venture investors under the name EverSpin Technologies. Such a move makes sense for Freescale, which doesn’t have the resources to focus on developing a competitor to Flash memory, but is also somewhat of a shame; MRAM has the potential to be a large moneymaker if it can scale.

MRAM is one of many fledgling attempts to create better non-volatile memory that can retain information even after the power is turned off. Like Flash, MRAM could find a home in portable computing devices such as laptops or MP3 players. Compared to Flash, MRAM is faster and requires less power (hello, longer battery life). Freescale made news in 2006 when it introduced a 4 Mb MRAM chip. That doesn’t hold much, but it was the result of a decade of research into the technology.

The creation of EverSpin follows similar memory spinouts, such as Numonyx, set up by Intel and STMicrosystems to research PRAM, and the less research-oriented Infineon from Qimonda. AMD and Fujitsu spun out their Flash memory operations as Spansion. Memory is a commodity business that requires large economies of scale to become profitable. Freescale does need to focus on a few core businesses, but I hope its stake in EverSpin gives it plenty of upside if MRAM becomes a market success story.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

Freescale Needs to Divide to Conquer

Stacey Higginbotham — Fri, 30 May 2008 22:26:13 +0000

Freescale should get ready for change. I visited the Austin-based chip maker yesterday to talk about wireless and networking chips as well as broad trends in the industry, and walked away realizing that the firm needs to split itself up in order to survive.

The company has some very cool technology — especially around its multicore processors for embedded systems such as printers, storage arrays and routers — and a huge base of users for its Power architecture. But it has too many areas of focus. In the next two years, it’s unlikely that the company will have the same combination of businesses it has today.

Specialization is key in the chip-making industry because it allows a company to allocate its R&D more effectively, optimize manufacturing processes and generally improve profits. Freescale, which makes chips for automobiles, RFID systems, cell phones, base stations, networking equipment and industrial applications, designs both high-volume chips at advanced process nodes and low-volume chips that require a lot of manufacturing tweaks.

It’s likely that Freescale’s private equity owners will divide the company along the lines the firm established late last year: networking and multimedia; microcontrollers; cellular; and RF, sensors and analog. Each of the divisions made more than $1 billion in 2007 and could be combined with similar divisions at other firms such as Infineon, Broadcom, STMicroelectronics or even Intersil. Earlier this year, Freescale got a new CEO (from Intersil) with M&A experience, so change is certainly in the air.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

Hope for the Fuel Cell Phone

Stacey Higginbotham — Wed, 21 May 2008 21:49:34 +0000

Today, scientists working at the French equivalent of the Atomic Energy Commission said they have created a backup hydrogen fuel cell for powering cell phones. According to Agence France-Presse, the device is being developed by Bic, the French company more familiar as a maker of pens and lighters than mini fuel cells, and won’t appear until 2010. The article says the researchers have been working with European wireless chipmaker STMicroelectronics since 2005 on the project.

If the backup charger (to be used after the battery is drained) makes it to the market, it should have plenty of company. Samsung is developing a similar device for cell phones to hit the streets in 2010 as well. Motorola is working with a startup called Angstrom Power to develop a prototype hydrogen-powered phone. MTI Micro plans to start selling its products in 2009, including a backup power system and potentially a fuel cell embedded cell phone. And Medis Fuel Cells already makes disposable fuel-cell chargers for phones.

As consumers grow more and more mobile, these companies’ plans fit with the dream of having a power source that is truly free from the power cord. And as companies look to go greener, the goal is to develop a backup power source for consumer devices that can essentially run on water, and other non-toxic chemicals. Both were big topics this year at the Consumer Electronics Trade Show, but getting fuel cells to market will still need a lot of work. Still it’s good to know so many firms are trying.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

PayCycle Offers Online Payroll for Small Business

Scott Blitstein — Mon, 05 May 2008 16:00:40 +0000

Running your business usually involves tasks that fall into two major categories – the stuff that you want to do and the stuff you have to do. Administrative tasks like invoicing and payroll are likely to fall in the latter category.

While there an abundance of time tracking and invoicing solutions available, choices for online payroll processing have seemingly been sparse. Most businesses use a manual process to trudge through the task or delegate a portion out to their accountant with mixed results. If you are looking to streamline your payroll process, you may want to check out PayCycle as an alternative.

PayCycle is the only 100% online payroll service targeted at small businesses with less than 20 employees. It’s a one stop shop for the entire process, from employee payments to the filing of your payroll taxes.

A new user wizard allows you to get started quickly and their PayToday Setup means you can even run your first payroll the same day. Once configured, it takes only minutes to do your regular payroll online. Simply enter hours worked and it automatically withholds the appropriate taxes and deductions using the most up to date tax tables. It is also flexible enough to accommodate other voluntary deductions like insurance and retirement plans as well as for HSAs.

Checks can be printed on blank or pre-printed check stock or handwritten using the paystub detail. Free direct deposit is available with a 2 day processing time which is a great option. Employees can even be notified by email of their payment details.

Once your employees are paid, PayCyle also stays on top of the other part of the process. To-do items on your dashboard and email reminders help make sure you file and pay your Federal tax, and depending on your plan and availability, your state taxes as well. It fills out forms automatically and allows the flexibility to file and pay online or print and pay manually.

One thing I learned from talking to the PayCycle folks that I think is tremendously important is that they do no impounding. Some payroll services will actually collect and hold your tax liabilities with each payroll run, impounding that money until it is due – sometimes up to 120 days later. PayCycle gives you the flexibility to manage your own cashflow during that process and ultimate control over when to remit your tax dollars.

PayCycle integrates with QuickBooks and other leading accounting packages keeping double data entry to a minimum. Reporting options are plentiful and they can be batched together in a set for easy printing. Options to export to Excel allow further analysis or transfer to your accountant. Another great feature made possible by the web interface is that employees and contractors can access their paystubs online – particularly useful for self-service reporting and employees working virtually.

They seem to have thought of everything to make managing your payroll as painless and efficient as possible. I found the interface clean and easy to use. Integration with other external time tracking services would be a nice touch but the data entry process is quick and painless. Excellent online help is a click away and direct support is available, even on the weekends.

PayCyle is is a well established company in the online payroll business since 1999. With over 60,000 customers and 3.5 million payrolls processed, this isn’t a fly by night perpetual beta web 2.0 service. Bank of America and others have partnered with them to offer the PayCycle service to their business clients, and their total satisfaction guarantee means that if there is an errror in calculation they will pay any penalties.

Basic plans start at 24.99/mo while their Plus Service runs $42.99/mo for 5 employees with a $1.50 charge for each employee over the first 5.

Learn more about PayCycle or take advantage of their introductory offer and sign up today.

How much time do you spend managing your payroll? Could a service like PayCycle help you work more efficiently?

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

STMicro-NXP Takes on Qualcomm, TI

Stacey Higginbotham — Fri, 11 Apr 2008 21:03:34 +0000

With mobile phones hotter than PCs, it’s no wonder STMicroelectronics has paid $1.55 billion for 80 percent of NXP Semiconductor’s wireless division to create a wireless-focused joint venture. Everyone wants to be in the cell phone market. And for those who can’t, it’s mobile Internet devices all the way!

This deal is all about scale. STMicro is the No. 3 chipmaker for wireless chips and NXP is No. 4. Together, their joint venture will still rank third behind Texas Instruments and Qualcomm, but my guess is they combined their wireless divisions to stay in the running. In the chip world, when the going gets competitive, the competitive get bigger.

The move follows some of the logic proposed earlier this year by a French engineer who suggested NXP, STMicro and Germany’s Infineon merge. But instead of mashing three large chipmakers together, this involves pulling out specific divisions and creating a large player with singular focus — although anyone building wireless chips from 2G to LTE and Ultra-wideband to GPS can hardly be accused of a singular focus. My question is: What do they plan on calling this JV — “Alphabet Soup”?

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

So Long Flash, and Thanks for the Memory

Stacey Higginbotham — Tue, 05 Feb 2008 19:28:08 +0000

Intel and STMicroelectronics have managed to produce a breakthrough in a new type of memory technology that could replace flash. Members of their joint venture Numonyx, which is trying to develop memory chips reliant on phase-change memory (PRAM) to store information, will present a paper today demonstrating how they’ve used it to double the amount of information they can store. It’s good news, but it still means it will cost twice as much to store the same amount of data on PRAM chips compared with the competing flash technology.

Phase-change memory relies on changes in temperature to store data; it competes with NOR flash, which is used to store the programs that run your VCR, set-top box and cell phone. The other type of flash, NAND, is used to store larger amounts of memory, such as the songs on an iPod.

Like all chips, memory follows Moore’s Law, which requires the space between transistors to get smaller. Kind of like doing the limbo, flash memory may not be able to go any lower. By allowing storage capacity to continue to expand while making chips ever smaller (and more cost-effective to produce), PRAM could provide the next breakthrough. However, although the breakthrough from Intel and STMicro puts PRAM at the same cost as NOR flash, it only stores half the data. So another breakthrough is still needed.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.