Chips and Semiconductors

Brokerage	Recommendation	Sentiment
Merrill Lynch
Morgan Stanley
AG Edwards

Advanced Micro Devices (AMD) Sunnyvale, CA, CEO Hector de J. Ruiz www.amd.com

· Founded in 1969 and focuses on Microprocessors, Flash memory and silicon-based solutions

· Went public September 1972

AMD Technology and Products:

· AMD Chips:

· Athlon:

· Athlon launched 3rdQ1999 – 1GHz Athlon launched March of 2000

· Athlon MP chip – Used in a 2-processor server and workstation setup

· Athlon 64 – Out September 22, 2003 – see Hammer below

· Duron:

· Low end processor, around 750mhz

· “Morgan and Appaloosa” will replaced the Duron and K6 sometime in 2001 and 2002

· Hammer: - Now referred to as AMD64

· 64-Bit chip architecture called the “Hammer Family” - 8^th generation X86-64

· Sledgehammer – For 4-8 way servers - Late 2001introduction for servers

· ClawHammer - For 1-2P server, workstation, performance desktops, and mobile electronics

· Opteron Hammer – For large servers – Released late 2002

· Hammer Launched September 2003 after a delay – Having problems shrinking the Athlon 64 to a size where they can manufacture it profitably

· Opteron - For 2-way and 4-way servers

· Used in the supercomputer called Redstorm, from Cray and Sandia National Lab

· Part of the Hammer Line - for servers and workstations

· PC version released September 2003

· Sempron – Successor to Athlon

· Turion – 64 bit laptop chip that will compete with Intel’s Centrino

· AMD Dual Core Processor – Released mid 2005

· AMD focusing on the server market fist with their first dual-core offering

· Why servers and not PC’s – AMD sees more use and software for the server market to take advantage of the power of dual core chips

· Will be able to swap out the chipset on existing servers with the new dual core chips and a quick install of new software

· Consumes 30% less power than Intel’s highest end server chips that they are offering in the fist half of 2005

· Dual Core for PC named Athlon 64 X2

· AMD Flash Memory:

· Developed flash memory and processors for cell phones with LSI Logic

· AMD and LSI Logic will collaborate to develop optimal interfaces between baseband processors and flash memory for the CDMA marketplace, as well as developing multi-chip package (MCP) solutions to house the baseband processor and flash memory product

· Will place the flash memory on top of the processor instead of beside it to reduce the space making cell phone ultimately smaller

· Flash memory remembers data when the phone is turned off

· AMD sees flash memory as the fastest growing product in the semiconductor industry for the next several years

· AMD’s flash memory used in portable electronics, set-top boxes, telecom and networking, automotive, PC’s and peripherals

· Spansion – Venture with Saifon Semiconductor and Fujitsu for Flash memory – 2003

· AMD has 60% stake in the venture

· The largest NOR Flash memory company in the world – 2004

· In 2004 – 90% of phones used NOR chips, by 2008 expected to go down to 50%

· MirrorBit technology – stores 2 bits in each cell

· Bertrand Cambou is the CEO of Spansion

· Has a 27.8% market share for non-volatile memory – May 2004 – Intel has 18.3% market share

· Producing 12 inch flash wafers in their Japanese plant – Plant will be in full production by 2007

· ORNAND – Flash Memory

· Combines Nor (not or) and NAND (not and) in one wafer

· In 2006 will use 65nm tech

· Will go to 45nm in 2008

· 2004 – Feeling the effects of the slowdown in the Flash market at the end of 2004 and January 2005 – Flash segment posted a loss in 3Q2004

· January 2005 – CEO Hector de J. Ruiz called Flash business performance “freaking dismal” – AMD had to revise downward their sales guidance

· Lost lead to Intel in the Flash market in 2004

· AMD Chip Notables:

· 1997 – Launched the AMD-K6 processor

· Stopped its Mustang chip line – in favor of the “SledgeHammer” chip line for 4-8-way servers

· Hyper Transport Technology – makes connections between chips faster – will license the technology most for intellectual property more than cash

· AMD is banned from developing a chips that is similar to Intel Itanium or one that may emulate it - From a 1996 agreement between the two companies

Advanced Micro Devices Acquisitions and Alliances:

· AMD’s first “major” partner for Home PC’s was with Compaq in 1994

· Bought Nexgen in 1996 which designed the NX686, from which AMD further developed into the K6

· Venture with United Technology to build a $300M advanced chip plant in Singapore

· Developing flash memory and new processors for cell phones with LSI Logic

· With Saifon Semiconductor and Fujitsu – new partnership for Flash memory chips – AMD investing $50M in Saifon with a 10% stake

· MirrorBit technology – stores 2 bits in each cell

· New venture with Fujitsu called FASL LLC - AMD owns 60%

· Venture marketed under Spansion – 2003

· The largest NOR Flash memory company in the world - 2004

· Bertrand Cambou is the CEO of Spansion

· Has a 27.8% market share for non-volatile memory – May 2004 – Intel has 18.3% market share

· Acquired the Informational-Appliance unit of National Semiconductor – August 2003

· Unit includes the Geode family of microprocessors which AMD will use in Smart Displays and TV Set-Top boxes

· Supplying Lenovo (Legend) of China with AMD chips for PC’s and servers – announced June 2004

· FASL LLC – a joint venture with Fujitsu in June of 2003

· INVENT (International Venture for Nanolithography) – Consortium of companies including AMD, IBM, Infineon, and Micron with R&D on Nanolithography – Announce July 2005

· Each company contributed $50M in a $580M research project based at Nanotech (An Affiliate of SUNY- Albany)

· Toshiba and ADM announced Toshiba will be using ADM chips in its roughly 20% of its laptops they sell in the US and Europe – Announce May 2007

· Acquired ATI Technologies in 2006 for $5.4B

AMD General Info:

· In 1999 had 825 patents compared to Intel’s 735

· The chips industry has a inherently short product life cycle with a migration to ever-higher performance microprocessors

· Main competitors for Flash are Intel, Samsung, Toshiba, STMicroelectrics, Sharp, Renesas, Silicon Storage

· Manufacturing:

· Has only one factory which is located in Dresden, Germany – Building a second plant in Dresden in 2005

· Chartered Semiconductor Manufacturing will also produce AMD chips in 2005

· AMD Market Share:

· PC Market Share:

· In 3rdQ2000 – PC processor market share – 17% (INTC – 81.9%)

· May 2003 – PC market share 20% - server market share 5%

· 2004 – 15.8%

· AMD says their marketshare peaked in 2001 with 20.8%

· Retail notebook chip market share:

· 18.9% - June 2005 (Intel - 79.4%)

· NOR flash market share – 25% in 2003 – the market leader

· 32-Bit market share – 5.7% - 3Q2004

· Wants to control a 20% market share for 32-bit processors by 2005

· Flash market share – Combined

· No.1 with 21% - Samsung No2 with 16% - 2003

· Has processors in 9 out of the 10 PC makers

· Processors in corporate computers

· AMD had no processors in any of the top makers in the 1990’s

· CEO Hector de J. Ruiz took over from W.J. “Jerry” Sanders III April 2002

· W.J. “Jerry” Sanders III Founded the company in 1969 – he was a former engineering at Fairchild Semiconductor

· Return to Profitability in 2003:

· Plans to be profitable in 2003

· 4Q2003 – First profit since 2001

· December 2002 – Average chip price - $55 (Intel $155)

· Dell is the only US PC maker that does not use AMD chips in their PC’s – 2004

· 50 X 15 Mission: Announced 2004

· Plan to develop under-developed countries

· Expects to connect 50% of the world’s population to the Internet by 2015

· Currently only 10% of the world’s population is connected

· Personal Internet Communicator – Ultra small, low priced PC for basic computing and Intent surfing for China, Brazil, Mexico, India, and Russia

1. Uses Geode Processors and will cost $250 with a monitor

2. Solectron manufacturing the hand sized PC

· “Intel identified the shift to mobility quicker than AMD did” – Sam Bhavnani, Current Analysis – January 2004

· 2005 – H-P is now expected to use more AMD chips than Intel’s in some of their server lines

· Project “X” – Secret venture that started with Compaq (H-P) and AMD developing what is now the Opteron based server chipset – Formed in 2002 and announced partnership in February 2004

· Lawsuit against Intel – Filed June 2005

· New suit against Intel claiming they had a relentless global campaign and provided improper subsides to companies who used their products to help win sales and stifle competition.

· Claims states Intel used bribes, threats, and other intimating factors on 12 computer manufactures. AMD plans to subpoena some of those 12 manufactures

· Claims Include:

· Intel gave Ingram Micro rebated on Intel chips under an agreement that Ingram Micro would not redistribute chips in China

· Intel threatened Acer and said they would increase the price of chips to them if they used AMD chips

· Used tactics that pressured H-P to pull their products with AMD chips off the market

· Gave and offered IBM million in marketing funds for Intel to be an exclusive supplier for IBM

· Torrenza – common socket for chipsets

Brokerage	Recommendation	Sentiment
Goldman Sachs
Deutsche Securities
Prudential

Agere Systems (AGR) Allentown, PA CEO John T. Dickson www.agere.com

· Spun-off from Lucent in 2001

· Was Lucent’s communication chip unit - makes integrated circuits for communication products and optoelectronics

· Lucent held a 58% stake then spun-off the rest in an IPO March 2001

· Agere - Latin for “to lead”

· Makes semiconductors and communication equipment for Local Area Networks and chips for disk drives

· Strong focus on Digital Signal Processors, Radio Frequency chips for GSM, CDMA, TDMA

Agere Systems Acquisitions, Stake and Divestitures:

· Orinoco – Wireless LAN Line

· Selling or shuttering its optoelectronics unit

· Division used to account for 30% of its revenue now only 10%

· CEO John Dickson – “Optoelectronics it’s a low growth market that’s being commoditized, even when it recovers, its will not sustain attractive margins

· Now just focusing on semiconductors used in communication equipment

· Sold large parts of its optoelectric business to TriQuint Semi for $40M

· Selling it wafer manufacturing plant in Orlando, has been up for sale since 2002 – If not sold by 2005 – will have to shutter the plant

· Acquired TeraBlade for $21M – January 2004 – makes computer networking switches

Agere Systems General Info:

· Protocol Independent chip – stand alone chip that is four times as fast and transmits 40B bits per second thus allowing to reduce the number of chips

· 4Q2003 – First profit since going public

Brokerage	Recommendation	Sentiment
Goldman Sachs
SG Cowen
Lehman Brothers

Agilent (A) Palo Alto, CA CEO William Sullivan www.agilent.com

· IPO in November 1999

· Spun – off from H-P in June 2000

· Makes testing and measuring equipment for wireless and electronic communication systems

· Testing and measuring was the main “core” of H-P from the very beginning

Agilent Divisions:

· Test and Measurement

· 2003 net rev - $2.5B – 41% of their revenue

· Testing solutions for broadband and data networks, fiber networks, transport networks, wireless networks

· Automated Test

· 2003 net rev - $0.8B – 13.2% of revenue

· Test systems for semiconductor manufacturing and electronic manufacturing

· Semiconductor Products

· 2003 net rev - $1.6B – 26.4% of revenue

· Semiconductor components. Assemblies and modules

· Life Science and Chemical Analysis

· 2003 Net rev of $1.2B – 19.8% of revenue

· Microarrays, microfulidics, gas and liquid chromatography, mass spectrometry software

Agilent General Info:

· Optical mouse senor – the end of the mouse pad

· Once had a healthcare unit that dealt with ultrasound and cardiology systems

· Sold its healthcare unit to Phillips Electronics for $1.7B

· Acquired Objective Systems Integrated for $665M - 2001

· Makes software for testing and diagnostics of equipment

· 3G wireless, optical, broadband technology

· Acquired RedSwitch – 2002 – Infinibrand and RapidIO technology

· Has a 37.2% market share in process testing (Teradyne – 24.6%)

· New CEO William Sullivan started March 2005 and replaced Edward “Ned” Barnholt who was Agilent’s first CEO

· Revenue breakdown:

· December 2002 - Asia – 35% of revenue – expects that to increase 5% -10% in five years

· 2004 – More than half of its revenue is generated outside of the US

· Restructuring of 2005:

· Selling its semiconductor chip business – Announced June 2005

· Unit pulled in $2B of its total $7B in revenue in 2004

· Unit makes chips for fiber, mobile phones and data storage companies

· Sold unit to KKR and Silver Lake Partners for $2.66B

· Selling its stake in its lighting business and plans to spin-off two other units in 2006 (Systems on-a-chip unit and memory test unit)

· Sold its 47% stake in Lumileds Lighting to Philips Electronics for $950M

· With the sale of its semiconductor and lighting business, Agilent plans to focus solely on testing equipment

· Expecting to save $450M annually in operating cost and will cut roughly 9400 jobs

· “This is all about focusing on the $40B Measurement Market…as a diversified company, we were trading at a 25% to 35% discount to our peers” – CEO William Sullivan, August 2005

Brokerage	Recommendation	Sentiment
Merrill Lynch
Lehman Brothers
AG Edwards

Altera (ALTR) San Jose, CA CEO John Daane www.altera.com

· Founded in 1983 with their invention of the reprogrammable gate array (logic device)

o Founders were mainly from Fairchild Semiconductor

o Altera’s name derived from and “alterable” chip

o Started as a fables chip designer and outsourced originally to Ricoh, then Sharp and TSMC- receiving jeers from the valley’s chip community

o Went Public March 1988

· PLD Designer/Manufacture – Programmable Logic Devices

o EP300 – World’s first reprogrammable PLD

o High-density integrated circuits you can program on site with their software

o Stratix – High density FPGA’s

o Cyclone – Entry level, Low cost FPGA’s

· System-on-a-programmable-chip (SOPC) designer, CMOS PLD, FPGA

Altera Acquisitions:

· Acquired Intel’s PLD unit in 1994

· Acquired Boulder Creek Engineering – co-developer of the Signal Tap Logic analyzer - 1999

· Acquired Hammercores – IP (Intellectual Property) Provider – known for its DSP cores

Altera General Info:

· Specializes in FPGA’s (Field Programmable Gate Arrays) CPLD’s – Complex Programmable Logic Devices

· Sells more than 500 device and packaging combinations

· In 2000 - Federal Jury found Altera’s Flex 8000 chips infringed on two of Xilinx’s patents

o Line accounts for only 2% of Altera’s 2000 total revenue

· CEO Succession:

o John Daane – from LSI Logic – replaced Rodney Smith in 2000 (Rodney Smith became CEO November 2003)

· Dec 2000 - Estimated sales will be flat due to customers large inventory instead of the projected 12%-15%

· “Cyclone” – low end chip launched early 2003 - $4 to $40 per chip

· Uses Taiwan Semiconductor Manufacturing (TSMC) for manufacturing services

Brokerage	Recommendation	Sentiment
Goldman Sachs
Merrill Lynch
Deutsche Sec.

Analog Devices (ADI) Norwood, MA CEO Jerald G. Fishman www.analog.com

· Makes high performance integrated circuits for analog and digital devices

· Analog or “linear” signals represent real-world phenomena, such as temperature, pressure, sound, speed, and motion which can be measured by analog sensors then converted to digital signature then manipulated into digital signal processing

· Makes Linear, Mixed Signal, and Digital Integrated Circuits (IC’s)

· Electronics ranging from industrial process control, factory automation equipment, security systems, defense electronics, base stations, wireless telephones, computers, security systems, automobiles CAT scanners, digital entertainment

Analog Devices History and Acquisitions:

· Founded in 1965

· From the 1965 to the early 1990’s Analog Devices focused on industrial, instrumentation, and def3ense electronics, then branched into PC , digital consumer products, communication products and automobiles

· Acquired ChipLogic – For $68.3M – January 2001 –Software for voice, broadband access, and network protocol processing

· Acquired Staccato Systems – For $23.8M – Jan 2001 – audio synthesis technology

Analog Devices General Info:

· Largest production group is Standard Linear IC’s (SCIC’s) – data converters and amplifiers

· Data and converters represented 60% of rev – 2003

· 26% of customers in the US – (74% outside the US)

· Competitors include Cirrus Logic, Linear Technology, Maxim Integrated, National Semiconductor, Phillips Semiconductor, ST Microelectrics, an dTexas Instruments

· Expects annual growth of 25%

· 2003, 19% Europe, 18% Japan, 37% Asia ex-Japan

· Analog products represented 78% of revenue in 2003 – DSP products were 22%

· Analog Device market share:

· Controls 45% market share for analog converters and 40% of their revenue

· Controls 40% market share for amplifiers

· Viewed as bellwether for semiconductor business because it reports quarterly results ahead of most of its competitors

· Product portfolio of over 10,000 products with its ten largest customers only representing 12% of their revenue in 2004 with their top 1000 customers cumulatively accounted for only 41% of revenue

· Technology in Digital Cameras, Cell Phone, Cellular base stations, automotive electronics, and Digital TV’s

· TSMC – Manufactures the majority of Analog Devices products

· 2003 – 35% to 40% of their revenue was from industrial market, Communications market represented 35% to 40%, PC – 15% (for power usage and signal processing in flat panel displays), 10% for consumer electronics (DVD players, Digital TV’s, digital cameras and camcorders)

· China:

· Collaborations with Datang Mobile – 2004/2005

· Developing chips for mobile phones that uses new wireless standard approved by Chinese government

· 2005:

· Expecting strong sales in first half of 2005

· “2005 could be one of the best years in our history” – CEO Jerald G. Fishman

· Wants to increase revenue to $5B from 2003’s $2.05B

Brokerage	Recommendation	Sentiment
Goldman Sachs
SG Cowen
Merrill Lynch

Applied Materials (AMAT) Santa Clara, CA CEO Michael R. Splinter http://www.appliedmaterials.com/

· Worlds largest maker of equipment used to manufacture semiconductors and Flat Panel Displays

Applied Material Products:

· Wafer fabrication systems, Chemical Vapor Deposition (CVD), Plasma etching, Physical Vapor Deposition (PVD), Etch, Implant, Thermal Processing, Epitaxy, Metrology and Inspection, Chemical mechanical polishing

Applied Material Acquisitions:

· Acquired Process Diagnostics & Control (PDC) in 1997 – Israeli – makes inspection tools

· Acquired ETEC - Makes photo masks - has 80% market share in photo masks – ETEC produces systems that make patterns in photomasks

· Acquired Consilium – Manufacturing Execution System software (MES) – enables chip makers to easily manage 300mm wafer movement and equipment

· Tried to buy KLA Tencor – Fell through

· Acquired Global Knowledge – Data mining services for semi-manufacturing

Applied Material General: Info

· Extremely cyclical market – when times get tough, chipmakers tend to postpone purchase of large equipment

· Has equipment on display in the Smithsonian

· Supplies essential equipment used by more than 90% of the world’s chip makers

· Equipment and Technology:

· No.1 supplier of 65nm polishing machines

· Black Diamond – Chemical film that’s wrapped around circuitry as insulation – “low-k” dielectrics

· Swift Ion Implanter – New machine that replaces three separate machines into one – makes semiconductor chips faster and allows them to use less power

· Using electrochemical planarization technology for polishing – Novellus abandoned the use due to its complexity

· Notables:

· Fiscal 4^th Quarter 2000 – Their strongest quarter in terms of bookings, revenues, and profitability in the history of their company – All on the heals of speculation of a downturn in the sector and the economy

· CEO James Morgan becoming chairman and new CEO, from Intel, is Michael R. Splinter

· Going through restructuring that will trigger $425M in charges for the next four quarters starting in 2003

· Competitors include Tokyo Electron and Novellus

· Ended its seven year patent dispute with Novellus – September 2004

· Dividends - Will issue dividends to shareholders beginning in June of 2005 and announced $4B in stock repurchase program through March of 2008

· Cash on hand – Jan 2005 - $6.4B

Brokerage	Recommendation	Sentiment
Goldman Sachs
Lehman Brothers
Smith Barney

Applied Micro Circuits (AMCC) San Diego, CA CEO David Richey www.amcc.com

· Originally specialized in military circuitry but now in high speed optic chips

· Develops, manufactures, and markets high bandwidth silicon solutions for optical networks

· Integrated circuits incorporating analog, mixed signal, and digital designs to transmit voice and data over a fiber network

· Sells to Juniper Networks, Cisco, Nortel, Alcatel, Lucent, Nokia, 3Com

· Buying MMC Networks for $4.5B – makes network processors for telecom equipment

· Cisco accounts for 10% of their sales, Nortel – 18% of sales

· October 2002 – over $1B in cash net of debt – almost no debt

· Buying JNI Corp. for $190M – JNI makes fiber channel host bus adapters for storage area networks – August 2003

· Acquiring the PowerPRS unit from IBM - makes switch-fabric product line – October 2003

Brokerage	Recommendation	Sentiment
Merrill Lynch
Deutsche Sec.
BofA Securities

ASM Lithography (ASML) Netherlands CEO Eric Meurice http://www.asml.com/

· Lithography projection system – traces patterns in silicon wafers that later become the circuitry for semiconductors

· Sub micron imaging systems

· Systems cost between $7M to $10M

· Nikon and Cannon – biggest rivals

· Acquired Silicon Valley Group for $1.6B

· Will make them the No.1 provider of lithography equipment – ASML had a 35% worldwide market share, now will have a 43% share

· Makes wafer processing equipment and has a non lithography division

· Has an optical parts subsidiary called Tinsley Labs

· Having to DELAY the acquisition due to some possible US military secrets

· Working with Intel to develop Extreme Ultra Violet Lithography (EUV)

· 2001 – 36% of its revenue form the US

· 2004 – Gross margin ranging from 35% to 38%

· CEO William Maris resigned and replaced by Eric Meurice

· Nikon claims ASM is infringing on their patents and wants to block their machines from entering the US

· ASM Lithography found to infringe on Nikon’s patents

· 3Q2004 – ASM Lithography took a 33M Euro charge sue its infringement

Brokerage	Recommendation	Sentiment
Goldman Sachs
Merrill Lynch
Schwab Soundview

Broadcom (BRCM) Irvine, CA - CEO Alan E. “Lanny” Ross http://www.broadcom.com/

· Makes circuits for broadband digital transmissions of voice, video, and data

Broadcom Acquisitions:

· Bought Innovent Systems - makes integrated circuits and radio transmitters (Broadcom's first step into wireless broadband)

· Bought Altima – makes chips for small to mid sized business networks

· Bought Silicon Spice – chip for communication equipment

· Bought Allayer – optical chips for networks

· Bought Vision Technology – chips for audio and video programs

· Bought Blue Steel Networks (Internet security chips) - makes chips that will help with security for DSL

· Bought Digital Furnace - Has software that makes cable 3 times faster upstream

· Bought Element 14 of England for $641.1M – makes chips for cable modems, wireless cable systems and VDSL, ADSL

· Acquired SiByte for $2B

· Has one product – Mercurian Network Processor – used in LANS and goes inside routers to speed up connections

· One more processor to compliment Broadcom in an end to end solution for its customers

· Acquiring Vision Technology of Israel for $677M

· Makes chips that allows the customization and personalization of TV and video recording and playback – gives set top boxes more functions at a better price

· Will become Broadcom Israel

· Motorola, MSFT, and Scientific Atlanta use their chips

· CEO Henry Nicholas “ This accelerates our lead in next-generation set top boxes”

· Bought Server Works for $1.03B – makes input/output chips used in servers that use Intel processors

· Acquiring Mobilink for $190M – GPPS chipmakers

· Has acquired 22 companies sent since in went public in 1991 – from 1991-2002

· Acquired 13 companies in the year 2000 alone

· Acquiring Zyray Wireless for $97.7M – July 2004

· Makes mobile communication chipsets

· Acquiring Zeevo for $32M – March 2005 – Makes chips for Bluetooth wireless chipsets

Broadcom General Info:

· In lawsuit with Intel over proprietary information and technology – Both hate each other – INTC bitter over employees leaving for Broadcom. INTC says they took with them proprietary info

· Dispute over, August 2003 – new cross licensing agreement until 2008 with no royalties being paid by either side

· Filed lawsuit against Qualcomm over 10 patents infringement complaints – May 2005

· New system-on-a-chip solution for home networking

· BCM 3352 – world’s 1^st single chip data over cable service interface specification – for cable telephony

· 3COM and late 1990/2000

· Broadcom took a 2% stake in 3Com

· 3Com accounts for 15% of BRCM’s sales – Their chips are in 3Com’s network cards – 2000

· March 2001 – lost contract from 3Com – one of their three largest clients

· Makes GSM and GPRS chips – used in Blue Tooth and 802.11b networks

· Outsourcing all chip manufacturing

· WiFi chips 802.11g – built and combined all Wi-Fi functions onto a single chip

· CEO Henry Nicholas III abruptly resigned January 2003 – Alan E. Ross is new CEO

· Mr. Nichols still has 33% voting control of Broadcom and owns 29.2M shares

· Scott McGregor will be the new CEO January 3 2005

· July 2005 – Facing a $110M securities class-action settlement – Broadcom claims no wrong-doing

· Qualcomm Litigation:

· May 2007 – Court found Qualcomm “willfully infringed on three patents related to EV-DO

· Qualcomm needs to pay Broadcom $19.6M in damages and will not allow Qualcomm to use the technology in any of their semiconductors

· The patents are related to video compression, push-to-talk functions and certain voice and data access on networks

· Injunction could prevent Qualcomm from selling its chips but will likely not effect Qualcomm because all of its chips are sold outside of the US and US court ruling will not have any effect

Brokerage	Recommendation	Sentiment
SG Cowen
Pacific Growth Eq.
Piper Jaffrey

Cirrus Logic (CRUS) Fremont, CA CEO David French http://www.cirrus.com/

· Premier supplier of advanced integrated circuits that combine mixed-signal processing, precision analog techniques, embedded processors, and application-specific algorithms into system-on-a-chip solutions for existing and emerging growth markets

· Develops and markets products that address the needs of the Local Area Network (LAN), Wide Area Network (WAN), and Internet environments. Key customers include Western Digital, Seagate, Fujitsu, Hewlett-Packard, Dell, Compaq, IBM, Cisco Systems, Bay Networks, Motorola, and Sony

· Magnetic Storage Operations Unit

· Internet Solutions Unit

· Bought Shareware and LuxSonor Semiconductor

Brokerage	Recommendation	Sentiment
SG Cowen
UBS
JP Morgan

Cypress Semiconductor (CY) San Jose, CA CEO T.J. Rodgers http://www.cypress.com/

Cypress Semiconductor Products Include:

· Digital and mixed-signal integrated circuits

· Static RAM producer

· Makes ships used in communication equipment

· Solar power chips

· Three Units: Memory (SRAM), Non-Memory, and SunPower

Cypress Semiconductor Acquisitions and Stakes:

· Acquired Alation Systems in June 2000 – makes analog, DSP, and RF technology in the wireless field

· Acquired In-System Design for $45M – designs communication chips for PC’s and small devices

· Acquiring FillFactory of Belgium for $100M – June 2004

· Makes CMOS (Complementary Metal Oxide Semiconductors) Image Sensors

· Used in digital cameras and imaging

· Will double the orders to cell phone manufactures from Cypress

Cypress Semiconductor General Info:

· SunPower:

· Five inch chips which contain photovoltaic cells that produce three watts of power per hour

· Chips are used in solar panels and Cypress claims they are more efficient an converts 14% to 16% of the sun’s energy in electricity – Their top line chips can produce up to 21.5% of energy conversion

· Unit was acquired in 2002 and Cypress has invest over $110M in the unit

· Orders:

o 2005 – Has over $100M in orders for their Sunchips and over $200M in 2006

· Large contract with Solon of Germany and supplying them with their chips for five years under a $300M deal

· Will most likely take the SunPower Unit public and retain a large stake

· “Ultimately [SunPower] will be a cash cow for Cypress” – Ted Parmigiani – Lehman Brothers – May 2005

Brokerage	Recommendation	Sentiment
Merrill Lynch
Lehman Brothers
Deutsche Sec.

DuPont Photomask (DPMI) Round Rock, TX CEO Peter Kirlin http://www.photomask.com/

· Designs photo masks for AMD, Hyundai, IBM, Philips, Atmel, Samsung, LSI Logic, Fujitsu, Lucent, HWP, Micron Technology, Texas Instruments, Motorola

· DuPont has a 33% stake in DuPont Photomask

· Sales fell 73% in 4thQ2000

· Toppan Printing acquiring a stake of DuPont Photmask for $650M – October 2004

Brokerage	Recommendation	Sentiment
Lehman Brothers
CSFB
Smith Barney

Fairchild Semiconductor (FCS) South Portland ME. CEO Mark Thompson http://www.fairchildsemi.com/

· High performance power products for the computing, communications, consumer, industrial and automotive segments

· Fairchild’s “Power Franchise” - portfolio of components that optimize system power through minimization, conversion, management and distribution functions.

· Bought the power device unit form Samsung

· CEO Mark Thompson became the new CEO in May 2005 replacing the outgoing CEO Kirk Pond

Brokerage

Recommendation

Sentiment

Genus (GGNS) Sunnyvale, CA CEO William Elder http://www.genus.com/

· Specializes in equipment for chemical vapor thin film deposition in which layers of conductive and non-conductive materials are deposited onto the surface of semi-conductors to control electrical current

· Atomic Layer Deposition - Allows smaller chips - now can stack layers on top of each other

· Samsung huge client

· ASM only competition

Brokerage	Recommendation	Sentiment
Morgan Stanley
AG Edwards
CIBC World Mrkt

Helix Technologies (HELX) Mansfield, MA. CEO Robert Lepofsky http://www.ctihelix.com/

· Sells cryogenic vacuum pumps to semi conductors – chiefly AMAT

Brokerage	Recommendation	Sentiment
Lehman Brothers
SG Cowen
Wachovia

Integrated Device Tech (IDTI) Santa Clara CEO Jerry Taylor http://www.idt.com/

· Makers of specialized memory chips and equipment used by Internet and cell providers

· Five divisions:

· Communications Memories

· Networking Products – Ethernet and ATM switches

· Embedded RISC Microprocessors – MIPS

· SRAM Products

· Logic & Clock Management Products

· CEO Greg Lane replaced Jerry Taylor

· Integrated Device Technology started out in memory but now has focused on switch chips in networks

· Buying Integrated Circuit Systems for $1.7B – Integrated circuits make timing chips

Brokerage	Recommendation	Sentiment
JP Morgan
AG Edwards
SG Cowen

Intel (INTC) Santa Clara CEO Paul Otellini http://www.intel.com/

Units:

Network Communications Group – 7 optical networking chips, wireless WAN

Communications Products Group – Subsidiary Dialogic – runs Picasso Communications

Wireless Communications and Computing Group

Architecture Group – processors, Celeron, Xeon (Servers), and Pentium

New Business Group – Intel online services

Technology and Manufacturing

Intel Capital – Venture funding arm

Intel Technology:

· Intel Chips, Names and Code Names:

· Banias – Chip with completely new architecture for mobile computers

· Castine – now IXP 2800 – new network processor chip

· INTC has a 95% market share in servers that use 1 or 2 chips – only 5% of the market share in servers with 8 or more

· Centrino – A suite (bundle) of processors with a focus on less energy consumption for notebooks and WiFi ability

· Chips for smart cards, laptops and wireless applications – Launched early 2003

· Centrino is not a chip but a bundle consisting of a Pentium M processor with WiFi radio chip as well

· Early versions do not support 802.11a or g – only b

· Sonoma – Next version of Centrino with improved graphics

· Napa will be after Sonoma in 2006 – Napa will contain Yonah (two processor on one chip)

· Dothan – Pentium M (Mobile) chips for laptops

· Foster – 32 bit chip

· Grantsdale – for base stations and wireless networking, and media center

· Uses PCI express bus

· Itanium – Originally called Merced and originally developed with H-P (Collaboration ended at the end of 2004)

· (64bit) Microprocessor - development started in 1994

· Successor to the Itanium called “McKinley” – will be out 2002

· Next generation called Tanglewood and will be out 2006 – built with six processors

· Itanium is two years late and probably just going to be used for testing

· First went on sale in 2001

· Aimed at servers and workstations

· McKinley now to be released mid-2003

· Memory is right on the chip

· Itanium II

· Itanium II has been in development for 8 years – 64 bit for workstations and servers

· Dual Core Itanium will be out in 2005

· Intel hired all the H-P employees who worked on Itanium

· Sorftware is seen as a hurdle for the chip, many older business programs that were designed for x86 chips cant run at top speed with Itanium

· Montecito out July 2006

· Draws an average of 100 watts of power and has 1.7B transitors

· La Grande – Security feature used to wall off portions of a computer from attack

· Has security features in Prescott chip

· Prescott – 90nm circuitry Pentium IV

· Released January 2004 – 32 bit – may eventually be upgraded to 64 bit

· 4 GHz chip delayed until 2005 – problems addressing power consumption

· Next generation will be called Nolona

· Smithfield – Dual-core chipset expected out mid 2005 – “Digital Home” platform based on Smithfield dual-core chip

· Tejas – 64 bit chip due out early 2005

· Project scrapped due to technical difficulty with power consumption – May 2004 – Also shuttered “Jayhawk”

· Timna - Low-end chip –– pulled plug Oct. 2000, too many problems and wants to focus on higher end chips – will continue Celeron

· Vanderpool – single processor that runs different kinds of operating software at the same time – called virtualization – Expected out in 2007

· Woodcrest - server chip expetecd to reduce power consumption by 35%

· Yonaqh – Dual core laptop chip

· Intel Pentium Line:

· Pentium 4

· Released December 2000

· Uses Rambus memory technology

· “Hyper Threading” – Carries out more than one string of calculations at once – can boost speed by 25% - called “HT”

· Will have a 64B Pentium out late February 2005

· Pentium M – For notebooks – Increase battery life

· Has slower clock speed than other Pentium chips but better utilizes the chips existing clock speed to producer faster computations

· Turns off parts of its internal circuitry that is not being used ant the time and thus less power consumption

· Now called Centrino

· Roughly 34% of notebooks sold in 2005 will have Pentium M’s

· In 2004 - Only 13.8% of laptops sold had Pentium M’s

· Intel Devices and Gadgets

· Digital Music Player

· Chat Pad – For instant messages and email

· Web Tablet – wireless screen the size of a book to surf the Internet

· Intel Flash Memory and Mobile Phone Tech:

· StrongArm processor and flash memory for cell phones

· Being used in Microsoft’s hand held computers

· 3-in-1 chip design – has flash, logic, and analog chips incorporated to reduce the size of the chip – for cell phone designs

· “Manitoba” - Working on combining all circuitry needed for a phone into one single chip

· Single chip that includes microprocessor, flash memory and base-band capability for cell phones

· No.1 supplier of Flash memory - 2002

· November 2003 – Dropped to No.4 in Flash chips

· XScale – microprocessor for cell phone

· Intel only makes NOR (Nor or) and does not make NAND (Not and) which is used in cameras in 2004

· Question that faces Intel, will NAND take over NOR for cell phones and its use of other functions such as camera and other media applications

· In 2004 – 90% of phones use NOR chips, by 2008

· Intel Ovonics:

· From Stanford Ovshinsky

· Ovonic memory uses a layer of chalcogenide (an alloy) on silicon chips

· Can read, write and store data almost forever and a trillion plus times – Flash memory can’t – Flash wears out over time – Flash also needs to be erased before it can write again so its much slower

· May replace Flash memory in three to five years

· Intel Circuitry:

· Used 300nm and in 2002 and in 2003 will have 90nm circuitry

· Will be using 100 nanometer technology in 2003 and 70 nanometer technology after that

· Can create transistors at 50nm in strained silicon technique in 2002

· 65nm circuitry expected to go into production in 2005

· SRAM – Static Random-Access Memory – 65 nanometer memory – will be released 2005

· Intel WiMax: – Wireless access with a range of 31 miles for portable devices

· Chipset expects to be out in 2006 for laptops

· Teamed up with Sprint to test in the US in mid-2005

· Will deploy WiMax in Japan in late 2005 and South Korea in 2006

· “WiMax is going to have an even greater impact than WiFi on our business” – Craig Barrett – May 2005

· Radio Free Intel :

· Circuitry for wireless communication - 2003

· “Software Defined Radio” – new platform that analyses the incoming signals in an area such as WiFi in a coffee shop to CDMA signals then enables then to communicate with each other. Enables easy switching between standards

· Wants to put one “ radio” in each chip and make them integrated – currently separate components

· Applications – Video conferencing from a wristwatch, cell phone shrunk to a key chain

· Currently considered to be the new holy-grail – consumer applications 5 to 10 years off

· Competition from AMD, TI, MOT, Analog Devices, General Dynamics, SandBridge

· Dual Core:

· Intel and the future for chip development – All bets on designing “cores” – multiple chips, dual cores

· By 2006 wants 70% of the desktops chipsets to be dual core, 83% of servers Dual core and 70% laptops dual core

· Intel claims performance will increase tenfold from 2004 to 2008 instead of the typical doubling

· Intel projected to release the first dual-core chip to the consumer and second after AMD with releasing dual-core to server market

· Making two kinds of dual core chips for desktop PC’s – Called Pentium D and Extreme Edition

· Dempsey and Paxville – Two dual core chips expected out in 1Q2006 for servers

· Shipped first dual-core chips in April of 2005

· Core2Duo – replaces Pentuim line for high end computers

· Intel Projects Future Chip Development and Vision:

· Working on transmitting high definition TV signals over the Internet 2 protocol

· Extreme Ultra Violet Lithography (EUV) - Working with ASML

· Media Processors – MXP Line – Re-programmable printer/copier chips

· Silicon Modulator – operates at 16hz – 50 times faster than current standards – uses phase shifting and breaks most of the barriers in silicon photonics

· Liquid crystal on silicon – chips for high definition TV – Shuttered project October 2004

· Liquid Crystal on Silicon Panels (LCOS) – An alternative to Texas Instrument’s DLP Large Screen TV chips

· With Clearwire –Portable wireless technology for WiMax (802.16e)

· Clearwire is a new venture from Craig McCaw (Nextlink and XO founder)

· Developed the first continuous laser using silicon using the Raman Effect – Announced February 2005

· Won’t replace the common diode laser in DVD players but may be used in communications and surgery applications

· Released new CMOS chips with all WiFi capabilities including the new 802.11n standard – June 2005

Intel Acquisitions and Ventures:

· Acquisitions:

· Bought Ziatech for $240M - designs and sells circuits boards used in communication gear, switches, and routers - Nortel, Lu, some of its customers

· Bought Picasso communications

· Bought Level One communication for $2.2B in 1999

· Bought Xircom for $748M – makes cards and other devices for data communication – mobile wireless network services and wireless access for laptops and handheld organizers

· Acquired VxTel for $550M - makes chips that deliver voice and data services on internal optical networks – INTC wanted and entry into these voice chips

· Acquired Light Logic, Cognet, and nSerial – all fiber optic firms

· Building a new plant in Germany and making a new company called Communicant Semiconductor Technologies – will have a 25% stake – will produce wireless and networking products in that plant

· Selling Landesk

· Investing $450M in Micron Tech September 2003 – Second time that Intel has made an investment in Micron and now gives them a 5.3% stake in the company

· Has set up milestone payments and penalties with Microns development of 300mm wafer by 2005

· Venture with Nanosys to use nanotechnology in future chip development

· Venture with Nokia and Symbian in designing new handset templates with PDA functionality – 2004

· Venture with Micron Technology to develop a new company focused on NAND flash memory to compete with Asian rivals – Announced November 2005

· Apple will be a large client with the flash chips powering their Ipod’s

· Intel investing $1.2B into the deal while Micron will invest $995M

· Venture called IM Flash Technology and Micron will own 51%

Intel General Info:

· Intel CEO Succession:

· Robert Noyce - CEO from 1968 to 1975, then proceeded to Chairman then Vice Chairman

· Gordon Moore - CEO from 1975 to 1987, then proceeded to Chairman then Director

· Was EVP before CEO

· Andrew Grove – CEO from 1987 to 1998, then became chairman

· Stopped DRAM manufacturing which turned out to be a great move

· Was EVP, then COO before becoming CEO

· Craig R. Barrett – Became CEO 1998

· Was EVP, then COO before becoming CEO

· Paul Otellini is the next in line, he has held both EVP and COO position

· He became CEO May 18 2005 and first CEO without a science or engineering degree

· Intel likes the idea of “Two in a box on grooming CEO’s – They encourage overlapping duties fro the heir apparents

· Intel Capital - Invested in over 450 companies

· July 1, 2000, $4.6B in appreciation, and $7.5B in value

· At height of Internet bubble – Worth over $10B

· At the end of March 31, 2003 - $870M

· Invested $100M in Elpida Memory of Japan – High end DRAM maker

· Intel Capital – Buying a stake in Japan Communications making them their 4^th largest share holder

· Japan Communications makes and deploys WiFi in Japan

· Asia – Started a $200M venture fund to invest in Chinese companies – Announced in 2005

· Intel Litigations:

· Sued Broadcom over alleged patent infringements

· Patent dispute over - August 2003 – New licensing agreement until 2008 with no royalties being paid

· Intel and Market Share:

· Has a 13.4% of the total chip share in the world

· In 2000 had 81.7% of the microprocessor market (AMD 17%)

· 2004 – 90% for microprocessors

· X86 servers – Intel 87%, AMD 4.3% - 2004

· In Japan in 2004 – Microchip market share of 90% - was 70% in 2002 (AMD 8% in 2004, was 18% in 2002)

· Retail notebook chip market share:

· 79.4% - June 2005 (AMD 18.9%)

· Intel Profit Margins:

· 2001 - margins around - 58%

· 2002 - margin was 51%

· 2003 – gross margin expected to be 51% - revised upward to 54% - July 2003

· 2003 chip margins – notebooks 75%, desktops 65%

· 1Q2004 – 60%

· 2004 – 58%

· 2005 – Expecting 59% for full year 2005

· 2Q2005 – 56.4%

· Intel’s Seasonality:

· 1^st Quarter sales typically slightly lower than 4^th quarter

· Intel typically has a seasonal slowdown in the second quarter which usually accounts for a 2% to 4% sequential decline in the quarter

· September 2000, had to restate 3^rd quarter revenue. Revenue would be up 3%-5% from 2^nd quarter rather than the stated 9%-10% - blamed slowing of sales in Europe – Sent stock down 22% on September 22^nd

· “We are the only outfit that publishes every wart and pimple of our product line” – CEO Craig Barrett

· 2001 was a wash for Intel

· “Intel Inside” – Started in 1991 – offers a set amount of supplemental advertising dollars based on how may chips a computer maker buys. In return customers run Intel’s chime or logo on their ad

· Invented the x86 server business

· What do they make per chip?

· PC Desktop chips – Intel makes around $135 a piece, Laptop – around $200 a piece – August 2003

· Average retail chip price - $155 (AMD $55) - December 2002

· Has seven new chips for optical networks

· Consolidated their Networking Chips unit with Communications Product unit

· Microprocessor unit accounts for 80% of profit and sales

· Between 1987 and 1997 Intel traded at 15 times next years estimates

· Intel is said to be late to the party with baseband chips for cellphones - 2003

· Wrote off $600M related to its wireless chip business – November 2003

· COO, Paul Otellini on 64-bit technology “You can be fairly confident that when there is software from an application and operating-system standpoint that will take advantage of it, Intel will be there. To add enough memory to a PC to exploit 64-bit computing would cost people $2000 to $3000 in memory”

· Intel Japan – Japanese Antitrust officials raided three Intel offices in Japan and grounds that they may have used their power to pressure some buyers into using their chips instead of AMD’s – April 2004

· AMD has made so many numerous complaints in Europe that were found to be baseless that its rumored that European investigators will no longer open an investigations into the matter

· AMD has also made various complaints in the US with the FTC but they found all complaints baseless

· In Japan in 2004 – Intel had a microchip market share of 90% - was 70% in 2002

· AMD saw its market share rapidly decline – AMD had an 8% market share in 2004, a 11% market share in 2003, and a 18% in 2002

· March 2005 – Japanese Fair Trade Officials ruled on Anti-Trust concern. Claimed Intel was using rebates to entice Japanese PC makers to use their chips and had riders in the contract stating they must use 90% to 100% of Intel chips in their computers

· New 300nm wafer will “help with profit margin throughout the year (2004)” – Andy Bryant – April 2004

· Intel is now de-emphasizing clock speed

· Has six 12 inch chip factories – Two in Phoenix with the others in Ireland, Oregon, New Mexico, and Israel

· Completely shuttered the development of LCOS chip technology for High-Def TV’s – Announced October 2004

· 2004:

· Encountered product and development problems (Prescott) and dealt with a higher than average inventory surplus (Had to write down inventory) – AMD made strong inroads in Servers and PC

· Intel recaptured the lead in Flash memory from AMD

· 2005 – Earnings expected to be flat with a 5% to 6% rise in revenue

· Capital spending expected to come in at $4.9B to $5.3B (Was $3.8B in 2004)

· Expecting to see strong demand for notebook chipsets especially in Europe

· Reorganizing into five business units - Previously had two – Intel Architecture (85% of sales in 2004) and Intel Communication

· Mobility Group – Run by Sean Maloney and Dadi Perlmutter

· Portable and hand-held devices including cell phones and Flash memory

· Digital Enterprise – Run by Abhi Talwalker

· Chips for business and desktops, servers and communication devices

· Digital Home – Run by Don McDonald

· PC and Home PC chips

· Digital Helath – Run by Louis Burns

· Chips for health care products

· Channel Products – Run by Bill Siu

· Product distribution and Assemblies

· Investing roughly $400M in India for new chip manufacturing and design – Announced June 2005

· Marks Intel first entrance into manufacturing in India

· China – Working with Shanghai Media Group for multimedia content in China

· Europe – Four of Intel’s European offices were raided in July 2005 in connection with AMD’s complaint of Intel stifling the competition

· Chip production running at capacity in first half of 2005

· “We think this is a bullish sign for the rest of the year and into 2006” – John Lau – Jefferies & Co. - July 2005

· South Korea – South Korean official started an “inqury” in August 2005 into its business practices in their country

· Intel verse AMD in 2005 – AMD acknowledged to have an advantaged over Intel for 2005

· “When gross margins for Intel bottom, you have to get back in” – Apjit Walia – RBC Capital on when to buy Intel Stock – March 2005

· Apple will begin using Intel chips inside its PC computer line – Announced June 2005

• Previously only used the Power PC chip made with IBM and Motorola (Freescale)
• Mini Mac will be first to get Intel chips in June 2006 then Apple’s higher end line will get then in 2007
• Intel and Apple will collaborate on new products for the consumer and home with an effort to lower prices on their offerings
• The Power PC chip gave off too much heat and could not be miniaturized enough to further Apple’s ongoing development in innovation and upgrades

· The G5 made by IBM gave off too much heat to be used in laptops and could not go beyond 3ghz

· Apple chip purchases only represented 5% of IBM’s chip sales

• Apple will now receive advertising subsidies from Intel
• All new PC’s will have “Rosetta,” a program that allows Power PC programs to run on Intel’s x86 design
• Two companies have been working on the details since 2000 and OSX development

· Lawsuit against Intel from AMD – Filed June 2005

· New suit against Intel claiming they had a relentless global campaign and provided improper subsides to companies who used their products to help win sales and stifle competition.

· Claims states Intel used bribes, threats, and other intimating factors on 12 computer manufactures. AMD plans to subpoena some of those 12 manufactures

· Claims Include:

· Intel gave Ingram Micro rebated on Intel chips under an agreement that Ingram Micro would not redistribute chips in China

· Intel threatened Acer and said they would increase the price of chips to them if they used AMD chips

· Used tactics that pressured H-P to pull their products with AMD chips off the market

· Gave and offered IBM million in marketing funds for Intel to be an exclusive supplier for IBM

· Europe – Four of Intel’s European offices were raided in July 2005 in connection with AMD’s complaint of Intel stifling the competition to search for evidence

Brokerage	Recommendation	Sentiment
Merrill Lynch
Deutsche Sec.
Schwab Soundview

Jabil Circuit Inc. (JBIL) (JBL) St. Petersburg, FL. CEO William Moren www.jabil.com

· Designs and manufactures electronic circuit boards for OEM’s (Original Equipment Manufactures)

· Acquiring five circuit board manufacturing plants from Marconi in Texas, UK, Italy, and Germany

· Wants to diversify their customer base – looking to get into automotive and medical instrumentation sectors

· Looking for a “gradual improvement in business in 2002 and “much improved “ environment in 200

· March 2002 – making its first server – for H-P

· Buying nine manufacturing plants from Philips Electronics for $231.1M

Brokerage	Recommendation	Sentiment
Goldman Sachs
Prudential
SG Cowen

KLA-Tencor (KLAC) San Jose, CA CEO Ken Shrolder http://www.tencor.com/

· Formed in 1997 through merger of KLA Instruments and Tencor Instruments

· Makes measurement devices used to improve production in semiconductor factories

Brokerage	Recommendation	Sentiment
Merrill Lynch
Lehman Brothers
Wells Fargo Sec.

Kulicke and Soffa Industries (KLIC) Willow Grove, PA CEO C. Kulicke http://www.kns.com/

· Makes packaging material for semiconductor equipment

Brokerage

Recommendation

Sentiment

Kyocera (KYO) Japan/San Diego http://www.kyocera.co.jp/

· Makes ceramic pieces for semiconductors

· Wireless communications and fiber optic equipment

Brokerage	Recommendation	Sentiment
JP Morgan
SG Cowen
CSFB

Lam Research Corp (LRCX) Fremont, CA CEO James Bagley www.lamrc.com

· Semiconductor processing equipment

Brokerage	Recommendation	Sentiment
SG Cowen
JP Morgan
Schwab Soundview

Lattice Semiconductors (LSCC) Hillsboro, OR CEO Cyrus Tsui www.latticesemi.com

· Makes Programmable Logic Devices

· Fired CEO Cyrus Tsui August 2005 due to probes into executive compensation

· New CEO is Stephen Skaggs

Brokerage

Recommendation

Sentiment

Linear Technology Milpitas, CA CEO Robert Swanson www.linear-tech.com

· Operational, instrumentation, audio amplifiers

· Voltage regulators, power management devices

· References, comparators and converters

· Switched-capacity modulators, sample hold devices

· Focus on analog chips

Brokerage	Recommendation	Sentiment
Smith Barney
Morgan Stanley
Lehman Brothers

LSI Logic (LSI) Milpitas, CA CEO Wilfred Corrigan http://www.lsilogic.com/

LSI Logic products include:

· ASIC semiconductors

· Integrated circuits and Storage Area Network Systems

· Chips used in communication equipment, networking, and data storage

· Makes processors for DVD’s, set-top-boxes and LAN’s

LSI Logic Acquisitions, Stakes and Divestitures:

· Acquired C-Cube Microsystems for $763M – makes video and audio chips

· Selling chip plants in Japan and Colorado Springs

· Spinning off its storage unit

LSI Logic General Info:

· Makes processors for DVD’s, set-top-boxes and LAN’s

· Developing flash memory and new processors for cell phones with LSI Logic

· Will place the flash memory on top of the processor instead of beside it to reduce the space making cell phone ultimately smaller

· Flash memory remembers data when the phone is turned off

· LSI Officers:

· Vice President and CFO both quit in November of 2000

· CEO Wilfred Corrigan resigning in 2005

o New CEO will be Abhi Talwaker

o Abhi Talwaker was Vice President at Intel

o Wilfred Corrigan will become Non-Executive Chairman

· New open standard chip – Alternative to Texas Instruments proprietary processors

· IBM and Broadcom will license the chips and use them in ASIC’s (Application Specific Integrated Circuits)

· Sony and Mototral are some of LSI Logic’s largest customers

· Rapid chip – Process that shortens the design cycle

· Starts with a standard or partially completed chip then the top four layers of materials are customized

· Six months shorter and only 20% of the up font costs and has 80% of the performance of a custom chip

Brokerage	Recommendation	Sentiment
Goldman Sachs
Merrill Lynch
Prudential

Marvell Technologies (MRVL) Hamilton, Bermuda CEO Shat Sutardja www.marvelltechnology.com

· Fabless chip maker – Taiwan Semiconductor Manufacture makes there chips

· Designs mixed signal and digital signal chips

· Clients are Toshiba, Seagate, Samsung, and Fujitsu – accounted for 99% of their 1999 total sales

· Buying Galileo of Israel for $2.7B – makes chips used in networking switches and controllers

Micron Electronics (MUEI) Nampa, Idaho CEO Joel Kolher http://www.micronpc.com/

· Memory chips

· Owns 63% of Micron Technology

· Was the number 3 direct supplier of PC’s in the 1990’s

· Was the 10^th largest PC maker in the US

· 1 in 10 PC business users know that Micron even makes PC’s

· Direct marketing and inventory just like Dell

· ½ of sales goes to midsize business between 250 and 1200 employees

· Selling its PC Business – had $1B in sales in 2000

· Buyout Specialist Gores Technology paying $70M for the PC Business

· Now Called MicronPC

· Filed infringement suit on Rambus and its technology

· Now concentrating on web hosting services

· Host Pro – web operations

Brokerage	Recommendation	Sentiment
UBS
Smith Barney
CSFB

Micron Technology Inc. (MU) Boise ID. CEO Stephen Applebum http://www.micron.com/

· Worlds 2^nd largest memory chip maker

· Makes DRAM

· Spin-off in 1995 from Micron Electronics (MUEI)

· Funded by potato magnet, J.R. Simplot

· Buying Toshiba’s memory chip plant

· Acquiring No.3 Hynix – will now be No.1 surpassing Samsung

· Talks now Terminated

· Shifting to DDR technology – expecting to be 40% of its output in 4Q2002

· Developing DDR2 memory

· Intel investing $450M in Micron Tech September 2003 – Second time that Intel has made an investment in Micron and now gives them a 5.3% stake in Micron

· Has set up milestone payments and penalties with Microns development of 300mm wafer by 2005

· Moving into Flash memory to help smooth out the cyclical environment of DRAM

· Being investigated by Justice Department for DRAM price fixing – Investigation started June 2002

· January 2004 – Seeking amnesty from prosecution in exchange for their help

· Building its first factory in China with construction beginning mid 2005

· INVENT (International Venture for Nanolithography) – Consortium of companies including AMD, IBM, Infineon, and Micron with R&D on Nanolithography – Announced July 2005

· Each company contributed $50M in a $580M research project based at Nanotech (An Affiliate of SUNY- Albany)

· Capital spending expected in 2005 - $1.5B – was $1.3B in 2004

· No.5 in NAND flash memory in 2006

· Working with Intel on flash production and starting a jointly owned company with $1.2B in cash and funding from each company

· Acquiring Lexar Media in a stock swap valued at $680M – Lexar focus is on Soncumer storage cartridges such a s flash cards

· Venture with Intel to develop a new company focused on NAND flash memory to compete with Asian rivals – Announced November 2005

· Apple will be a large client with the flash chips powering their Ipod’s

· Intel investing $1.2B into the deal while Micron will invest $995M

· Venture called IM Flash Technology and Micron will own 51%

·

Brokerage	Recommendation	Sentiment
Merrill Lynch
Smith Barney
Deutsche Sec.

National Semiconductor (NSM) Santa Clara, CA CEO Brain Halla http://www.national.com/

· Chips for Flat panel displays, digital music players and game systems

National Semiconductor Acquisitions, Stakes, and Divestitures:

· Acquired Cyrix Corp - Sold to Via Technology

· Sold its share of Fairchild Semiconductor

· Up For Sale – Selling two lines of chips for cell phones and information appliances

· Selling Geode Microprocessor

· Trying to sell its Information Appliance Unit – If unable to sell the unit will shutter the unit

· Sold Geode to AMD – August 2003

· Unit accounted for 5% of total revenue

· Sold Imaging business to Eastman Kodak – September 2004

· Sold PC Super I/O unit to WinBound Electronics of Taiwan - Unit accounted for roughly4% of National Semiconductor’s total revenue – March 2005

National Semiconductor General Info:

· Lost bid with Compaq to supply Compaq with PC chips in the 1990’s to AMD – Huge blow to the company at the time

· Bowed out of the microprocessor race with AMD and INTC in May of 1999

· Analog chips 71% of sales but there are 6X more analog chips in info-appliance than in a PC – Early 2000’s

· “Geode” – multi-function chip that can be used in over 150 devices including set-top boxes

· Geode Webpad – writing instrument

· Sold technology to AMD in 2003

· New focus on higher margin analog technologies

· Sold its PC Super I/O business in March of 2005

Brokerage	Recommendation	Sentiment
Piper Jaffray
Lehman Brothers
RBC Capital Mkts

Newport Corp. (NEWP) Irvine, CA CEO Robert Deuster http://www.newport.com/

· Focus on Fiber Optics, Photronics, Semiconductor Equipment Manufacturing, Video Metrology

· Manufactures and designs measuring devices and research equipment

· Supplies components, assembly systems, and testing devices to chip makers

· In October of 1999 acquired the west coast commercial optics operations for Corning Inc.

· Bought Unique Equipment of Arizona

· Automating minute processes done inefficiently by hand, makes tools that can align fibers 1/10 the size of a human hair with precise points on laser diodes no lager than a grain of sand, and uses lasers to held the tiny devices together

Brokerage	Recommendation	Sentiment
Goldman Sachs
CSFB
UBS

Novellus (NVLS) San Jose, CA CEO Richard Hill www.novellus.com

· Wafer Fabrication

· Acquired Gasonics International of $347M – semi conductors

· Focuses on service side and not on tech breakthroughs

· Ended its patent seven year patent dispute with Applied Materials– September 2004

· Received $8M from AMAT regarding the patent dispute and another $8.1M with a reversal of the dispute – October 2004

Brokerage	Recommendation	Sentiment
Deutsche Sec.
JP Morgan
UBS

Photronics (PLAB) Jupiter, FL CEO Constantine Macrilostas http://www.photronics.com/

· Leading provider of photo masks used in integrated circuits

Brokerage	Recommendation	Sentiment
Goldman Sachs
Merrill Lynch
Lehman Brothers

PMC-Sierra (PMCS) Burnaby, Canada, BC CEO Robert Bailey http://www.pmc-sierra.com/

· Also see Networks section

· Designs chips used to accelerate telecom transmission

· Bought ExtremePackets Devices and AA Netcom

Brokerage	Recommendation	Sentiment
Merrill Lynch
Lehman Brothers
UBS

Q Logic (QLGC) Aliso Viejo, CA CEO H. Desan www.qlogic.com

· Makes SCSI Products

Brokerage

Recommendation

Sentiment

Rambus (RMBS) Mountain View, CA CEO Harold Hughes www.rambus.com

· High speed memory bandwidth

· Doesn’t make chips itself – depends on licensing fees from memory chip makers that use Rambus architecture that makes memory run faster – RDRAM

· Gets 3% to 5% of the sale of memory chips that use their DDR-SDRAM architecture

· Royalties account for 77% of their revenue

· Sued Hitachi for using their architecture and won patent infringement suit

· Micron suing them on their patents about the architecture

· New deal with NEC – will be using their designs

· Intel’s Pentium 4 is using Rambus technology

· Infineon Trial

· February 2003 – Won an appeals court case filled from Infineon claiming that Rambus hid patent applications from a chip industry group (Joint Electron Device Engineering Council – JEDEC) as they set standards for high-speed memory

· Now cleared and allowed to proceed with patent infringement claims against Infineon Technologies – April 2003

· Rambus still has other suits against them

· May 2004 – Infineon suit still in pre-trial

· March 2005 –Federal judge (Richmond, VA) through out and dismissed Rambus case because the judge claimed Rambus destroyed evidence – Rambus has appealed the ruling

· Judge issued a written ruling but never proceeded with a written ruling

· March 2005 – Infineon and Rambus settle their differences in a settlement to the case

· Infineon will make quarterly royalty payment to Rambus for $5.85M fro two years starting November 2005, then up to $100M after the two years have expired

· Infineon settled with quarterly payment instead of paying royalties on a per chip basis

· EU court rejected one of Rambus’ three chip patents in Europe – February 2004

· Geoff Tate who was CEO has now become Chairman – Harold Hughes is the new CEO

· In patent disputes with Hynix, Infineon, Micron and Siemens that revolve around DRAM

· January 2005 – Court gave Rambus a positive ruling against Hynix claims

· January 2005 – Files suits against Hynix, Nanya Technology, and Inotera Memories over DDR2, GDDR2, and GDDR3

· March 2005 – Samsung negotiating a settlement

· June 2005 – Rambus is terminating their cross-licensing agreement with Samsung over SDRAM and DDRM

· June 2005 – Samsung suing Rambus in Richmond, VA in the same court that Rambus lost their suit to Infineon

· 2005 – New Rambus architecture called XDR

· Suing Micron, Infineon and Hynix – May 2004

· Claims that the three colluded to cut production and raise the prices of chips they produced that used Rambus technology

· IBM’s new “Cell” design uses architecture from Rambus

Silicon Valley Group

· US maker of lithography tools

· Tinsley Laboratories – unit that makes mirrors for the next generation chip making technology called extreme ultraviolet lithography or EUV – the current technology will reach its limit in 2005

· Current is 180 nanometers – EUV 10 nanometers

· Being acquired by ASM Lithography Holdings for $1.6B

Speedfam Intl (SFAM) Chandler, AZ CEO James Farley www.speedfam.com

· Surface preparation for chips

Brokerage	Recommendation	Sentiment
Prudential
Bear Stearns
Smith Barney

STMicroelectronics (STM) Geneva, Switzerland CEO Pasquale Pistorio www.us.st.com

· World’s six largest semiconductor manufacturer

· Was Europe’s largest in 2003

· Now Europe’s second largest after Infineon - 2004

· Formed in 1987 with the merger of SGS Microelettronica of Italy and Thomson Semiconductor of France

· Changed name in 1998 from SGS-Thomson Microelectronic to STMicroelectronic

· Develops, designs, manufactures and markets a broad range of semiconductor Integrated Circuits (ICs) and discrete devices

· Most chips it produces power consumer devices like camera, etc.

STMicroelectronics General Info:

· Units include: Telecom, Peripherals, Automotive, Consumer and Micro controllers, Discrete and Standard ICs Group, Memory Products

· Has 3000 types of products with more than 1500 clients and supplier of MPEG-2 Decoders and Digital Set-Top Box ICs

· Discrete Power Devices – Handles greater power levels at higher voltage than ICs – used as power switches and power amplifiers

· EPROM and EPROM flash memory

· With Phillips and Taiwan Semiconductor Manufacturing Co.

· Feb 2002 - Developing chips at .09 microns – one generation ahead of the most advanced technology today

· CEO Pasquale Pistorio retiring in 2005, successor – Carlo Borotti

· 2003 – Nokia represented 18% of their revenue and their largest customer

· With Hynix Semi – Constructing a $2B memory plant in Wuxi, China – Construction begins early 2005

· STM will have a 33% stake

· Each company investing $500M and will produce DRAM, NAND

· STM accounted for 19% of the output of semiconductors from Singapore in 2004

· Selling its memory chips business in 2005?

· Possibly selling its unit that makes chips for digital camera and is “considering all possible options for the unit”

· Nokia is their biggest customer in 2005

· 2005:

· Will take $100M to $130M in restructuring charges due to layoffs and plant closures

· Having problems dealing with the weak dollar in 2005 and dealing with their competitors

· Closing production on its six-inch wafers and focusing on eight wagers – Shift production from Europe to Singapore

· 2Q2005 – Net income down 82% with poor results in its Flash Memory operation

· Gross margins in 2Q2005 were 33% - their target was 40%

· Memory chip unit has been unprofitable and currently restructuring the unit

Brokerage	Recommendation	Sentiment
JP Morgan
Prudential
Deutsche Sec.

Teradyne (TER) Boston MA. CEO George Chamillard www.teradyne.com

· Testing equipment for chips

· Bought GenRad for $177M – focuses on circuit board testing

· Looking to buy companies in tech technology in Flash, Optical, and broadband

· Quarterly break-even point of $460M in revenue

· 24.6% share in process testing (Agilent 37.2% market share in process tests)

Brokerage	Recommendation	Sentiment
Bear Stearns
SG Cowen
AG Edwards

Texas Instruments (TXN) Dallas TX CEO Richard Templeton www.ti.com

· Texas Instruments invented the Integrated Circuit (Headed by Jack Kilby)

· “Monolithic integrated circuit” - the microchip

Texas Instruments Business:

· Semiconductors:

· Represented 85% of revenue in 2003

· DSP chips

· Educational & Productivity Solutions

· Sensors & Controls

· Sensors for radio frequency ID, transportation, appliance, heating and air conditioning, and electronics

· DLP Products:

Texas Instrument Chips and Technology:

· Makes chips for Big Screen TV’s, and cell phones

· Digital Signal Processors (DSP)

· Chip for cell phones

· Their chips are in about ½ of all the world’s phones

· Supplied 50% of DSP chips in 2001 through 2003

· Started out supplying Nokia in the 1990’s for DSP chips

· Partnerships with Nokia, Ericsson, NEC, Matsushita, Fujitsu, Palm, MSFT, H-P

· “Hollywood” – TI’s chip for mobile phones and can send TV signals and media content to cell phones – Announced 2004

· Digital Light Processing (DLP)

· Chips for LCD style TV’s – Launched in 2002

· DLP’s brought in $340M in revenue in 2003

· Uses two million mirrors to project images for TV screens

· Makes “blacker” blacks and sharper images

· “This year (2004) we need to get as many DLP cinemas out there as possible, Deliver one Million TV’s, ramp up the supply chain, and get the reputation that were already the front runner” – Dale Zimmerman – TI’s GM of TV group

· Texas Instruments has a 100% market share with DLP chips and over 500 patents– 2004

· DLP chips were in 28.1% of high definition TV sets sold in September of 2004

· First partner was with Samsung

· Competition:

· A Competing format will be from Intel with Liquid Crystal on Silicon Panels (LCoS) - (Phillips Electronics shuttered their LCoS chip initiative in October 2004)

· Intel announced they are shuttering the design of LCoS development – November 2004

· DLP competitors include Keyotee, Miradia and Reflectivity

· OMAP – open multi media-application platform

· Working with Nokia on developing a new single chip for phones which combines radio frequency circuits with digital circuits which would consume less energy – Expected to be out 2006

Texas Instruments Acquisitions and Initiatives:

· Bought Burr-Brown for $7.6B - Maker of analog chips used in DVD's and camcorders - Also has technology to go from analog to digital

· Made Texas Instruments No.2 in world behind analog devices

· Now No. 3 supplier of amplified chips - behind National Semi, and Analog Devices

· With Vonage – designing software and chipsets for Internet based voice communication (VoIP) – January 2004

· Sold their Sensor & controls business to Bain capital for $3B – Announced January 2006

§ TI will keep the radio frequency unit from the Sensor and Control Business

Texas Instruments General Info:

· Past Texas Instruments Initiatives:

· Moved out of the disk drive business

· In the 1990’s they worked on technology for oil and gas explorations, educational toys, and radar and missile systems

· Past CEO’s CEO Jerry Junkins died from a heart attack in 1996

· Thomas Engibous gave the reins to Richard Templeton

· Thomas Engibous had TI focus heavily on DLP chips and technology

· Chip break down:

· Wireless chip account for 20% of their revenue

· Baseband Chips

· Leading supplier of “baseband” chip sets for mobile phones

· Expects baseband chips and surrounding electronics to account for 65% of the phone in the future as compared to 30% today

· Baseband chips based on ARM Holdings chip design

· Building a new chip manufacturing plant in Richardson Texas expected to break ground in 2005 – will produce cell and broadband chips

· TI Ventures is a $160 million venture capital fund established in 1996 by Texas Instruments Incorporated and Granite Ventures (formerly H&Q Venture Associates)

· Indicator of Texas Instrument revenue growth – Look at TI’s book-to-bill ratio – Shows orders to production shipments

· 2005:

· First half of 2005 TI seeing sluggish demand for their TV Chips but strong demand in cell phone chips and their 3G offerings

· WCDMA Chips – No.1 supplier in first half of 2005 beating out Qualcomm

· First half 2005 – Seeing profit margins of around 47% - Goal of 50% for full year 2005

Brokerage	Recommendation	Sentiment
Goldman Sachs
Lehman Brothers
Merrill Lynch

Vitesse Semiconductor (VTSS) CEO Louis Tomasetta www.vitesse.com

· Integrated circuits, network processors (programmable chips tweaked to process intranet data packs)

· Lucent is its biggest customer

· Nortel another prominent customer

· Makes chips used in computer storage devices and in communication equipment

· “As long as Vitesse customers are struggling, they are figuring out how to cut costs and not thinking strategically”

· October 2002 – expected to lose money in the next nine quarters

· Has $453M in debt due March 2005

· October 2002 – Has $291.5M in cash

· Acquiring Cicada Semiconductor for $66M - makes integrated circuits and high speed switches – December 2003

Brokerage	Recommendation	Sentiment
Smith Barney
Wachovia
Schwab Soundview

Xilinx (XLNX) San Jose, CA CEO Willem Roelants http://www.xilinx.com/

· Makes ASIC chips (application specific integrated circuits) programmable chips

· Programmable logic devices

· Largest FPGA maker (Field Programmable Gate Arrays)

· Finds defects in metal inter-connections and superior for isolating and finding flaws in production processes

· Reprogrammable

· Spartan II chips

· Rival Altera

· Federal Jury found Altera’s Flex 8000 chips infringed on two of Xilinx’s patents

· Line accounts for only 2% of Altera’s 2000 total revenue

· Makes ships used in communication equipment

· As of March 2000, has 7 months of inventory in its channel

· With IBM – manufacturing technology for 90nm circuitry – Claims to be superior to Intel’s “Prescot”

· Spartan III chips – Has 1M gates (switching elements)

· Toshiba is building their new 90 nm chips for 2004/2005 in place of IBM or United Microelectronics

Chips and Semiconductors General Info

Amex Semiconductor Index (XSH)

Philadelphia Stock Exchange Index (SOXX)

Growth and Stats:

• 2000 - The Semiconductor Industry Association didn’t expect chip sales to meet its earlier forecast for 22% growth during the year (2001) because of bloated inventories and sluggish demand.

· Chip sales in 2000 grew 37% to $204B, highest growth since 1995

• The chip industry has grown at an average annual rate of 17% for the past three decades – pre 2001
• Worlds chip makers by total sales in 2001 – Intel – 16.1%, Toshiba – 4.4%, STMicro – 4.1%, Samsung 4.1%, Texas Instruments 4.1%, NEC 3.5%, MOT – 3.1%, Hitachi 3.0%
• Analog chips – expected to grow 19% in 2003 – was only 3% in 2002
• 2004 – Chip growth for full year 2004 expected to be 23%
• 2005 – Chip sales expected to be flat – Semiconductor Industry Association

· 2005 will see price reductions for DRAM

Lithography:

• “Stop improving lithography…and the entire ecosystem of electronics is threatened”
• Photolithography – draws lines of circuitry
• 65mnm chips expected out in 2006 or 2007
• 45nm – To get to 45nm the thinking is chip manufactures will need to use Immersion Technology which use a film of water in between lenses for more precision

· ASML expected to sell Immersion Tools beginning in 2006

• 22nm – Will need to use Extreme Ultraviolet Lithography – EUV

· Technology not expected out till 2010

· Uses light instead of lenses

Standards and Technology:

• Infiniband Standard – Increases the speed of data moving from the processor to the computer network
• Indium Phosphide – may in the future replace silicon

• Inphi Corp – has designed one chip using this compound
• Vitesse – Converting a plant to handle Indium Phosphide

Memory:

• DDR – Double Data Rate Memory - 2 times as fast as SDRAM
• Memory chips in 2002 – No.1 Samsung, No.2 Micron, No.3 Hynix, No.4 Infineon, No.5 Toshiba
• Hynix generates about 4% of South Korea’s export revenue
• October 2002 – The Market shifted toward mass production of DDR chips from SDRAM
• Samsung – World’s largest chip maker

Chips Mixed Bag:

Chip used in communication equipment - Broadcom, PMC Sierra, LSI, Cypress, Vitesse, and Xilinx just some of the companies

Semiconductor makers tend to focus on comparisons for sequential quarters rather than year-over year comparisons

Taiwan Semiconductor Manufacturing Corp. – World’s largest contract chipmaker – Bell Weather

“Profitless prosperity” – Ram memory and disk drives

“The semiconductor industry has matured and is more tied to the economy, they will rise and fall with broad business rather than tech trends”

ASIC’s – Due to smaller and smaller circuitry, you need larger more expensive teams to build ASIC chips, and with the smaller size, the cost of the mask is also rising – People expect this to give way to the decline of ASIC and to the further rise of PLD’s (Programmable logic Devices)

Infineon – World’s 6^th largest and Germany’s 2^nd largest chip manufacturer

Chip Foundry’s – No.1 Taiwan Semiconductor Manufacturing, No.2 United Microelectronics (Taiwan), No.3 Chartered Semiconductor Manufacturing (Singapore)

· Semiconductor Manufacturing International (SMIC) - China

· SMIC bought Motorola’s chip plant in Tianjin

Via Technology – 2^nd biggest seller of computer chipsets after Intel

WiFi chipmakers – Agere, Intersil, Maxim, RF Micro

China imports 80% of its chips – 2003

Semiconductor Equipment and Material Info – Semiconductor research group

DRAM:

• Three quarters of DRAM chips produced goes into PC’s – DRAM chip prices usually increases in July with back to school sales
• Average selling price for DRAM in 2005 is expected to decline 31% - iSupli Research
• “We think 2005 will be the peak for capital spending” - Chang Won Chung – Daewoo Securities – January 2005

When’s the best time to buy and sell chip stocks?

• Look at the monthly report on capacity utilization form the Federal Reserve

• When chip companies are ramping up their production capacity – its time to place a bet on an uptick
• When capacity stalls or declines – take some chips off the table

Why does capacity linger longer today than it the past – Tech sales are being driven by replacement demand rather than new cutting edge product development in early 2000’s

65mn chips expected out in 2006 or 2007

45nm – To get to 45nm the thinking is chip manufactures will need to use Immersion Technology which use a film of water in between lenses for more precision

• ASML expected to sell Immersion Tools beginning in 2006

22nm – Will need to use Extreme Ultraviolet Lithography – EUV

• Technology not expected out till 2010
• Uses light instead of lenses

Terms:

Multithreading – Circuitry and software that lets a chip carry out several instructions at the same time

Multiprocessing – Design techniques that place the equivalent of several brains, or microprocessors cores, on a single chip

Specialization – Creating special chunks of circuitry on a chip that are tuned to do one task, such as graphics

Virtualization – A technology that isolates a computer hardware form its software, so it can run multiple operating systems at once

Compartmentalization – Walling off portion of chips or computers so they cannot be attacked by computer hackers