Now Hear This!

Why does Big Blue look green? Why are processor companies cutting jobs? Why is Motorola’s CEO laughing? Plus: What happens when you mix a New York accent with a Texas drawl? All this and more…

Who’s Up?
Sales are creeping up at foundries UMC and TSMC, meaning inventory is burnt off and orders are cautiously on the rise. This was expected, but it’s always nice to see expectations materialize in positive territory.

SMIC will plunk down $2 billion for capital equipment. This is a lot for Shanghai-based SMIC, whose strategy is to stay a couple process nodes behind TSMC and UMC, buy refurbished equipment from the market leaders, then use that equipment to compete against them for the bulk of designs using a lower cost model. The profits may be greater per chip at the leading edge, but the volume is still running a couple nodes behind—at 0.18 or 0.25 microns right now. 

Intel invested $31 million worldwide in startups, continuing to grow one of the company’s truly successful side businesses. The added benefit of doing this kind of investing is Intel gets to see many of the leading-edge technologies in the research or development phase, and if the technology looks really promising it can up its investment and either bring the company in-house or spin it off as a separate company.

IBM is investing $1 billion to help improve data center efficiency. This is good for the environment, but it’s more of a pre-emptive move than concern about global warming. IBM equipment fills most of the large data centers in the world, and those data centers are coming under intense government scrutiny for incredibly high power consumption from the servers and the air conditioning necessary to cool them. For Big Blue, the color green may be more about continued sales and reduced legal fees than anything else. 

Sematech moved its headquarters to Albany, N.Y., to be next to the nanotech complex that began as a collaboration between IBM and the state of New York. This does make sense for Sematech, but the real question is whether center of gravity for the electronics industry in the Northeast will shift west from Massachusetts. Horace Greeley did say, “Go west young man,” but he didn’t say how far.

Who’s Down?
AMD is cutting 430 jobs. Analysts are asking whether it’s enough. The real question is for what? To break even? Definitely not. To streamline operations? Maybe. To satisfy investors? Unlikely.

Making matters worse for AMD, Intel continues its relentless march toward releasing new processors. Intel rolled out its fourth-generation Centrino processor based on the Core 2 Duo architecture. It wasn’t that long ago that Intel was playing catch-up to AMD. That’s clearly not the case anymore, which despite analyst predictions appears to point to a drawn-out price war between the two companies and lower profits on both sides.

Transmeta dug down deeper into its bag of shrinking options in an all-out attempt to stem a string of losses, proposing staffing cuts of 15 to 20 percent. Considering the company only has 65 employees, there’s not much left to cut. The company has long since abandoned plans to compete head-on with Intel and instead focused on IP licensing, which provided at least a glimmer of hope. But with these kinds of numbers, even that glimmer is fading.

BenQ, the giant Taiwanese consumer electronics company whose bubble burst loudly last year, received even more bad news. The CEO and four top execs were indicted for insider trading in Taiwan—before the company announced the insolvency of its German unit. BenQ denies the charges.

And last but not least, Carl Icahn lost his bid to gain a seat on Motorola’s board. This fight may not be over yet, but this is still a setback for the famed corporate raider. Motorola CEO Ed Zander can finally lay off the Maalox. Headline: Barbarian stopped at the gate.