May 24, 2010
The Economy, Semiconductors, EDA, & Intellectual Property
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Russ Henke - Contributing Editor

by Russ Henke - Contributing Editor
Posted anew every four weeks or so, the EDA WEEKLY delivers to its readers information concerning the latest happenings in the EDA industry, covering vendors, products, finances and new developments. Frequently, feature articles on selected public or private EDA companies are presented. Brought to you by If we miss a story or subject that you feel deserves to be included, or you just want to suggest a future topic, please contact us! Questions? Feedback? Click here. Thank you!

But with mobile technology, an expensive race is on to build smaller chips that consume less power, run faster and cost less than products made at older factories.

For example, GlobalFoundries plans to start making chips this year in Dresden, Germany, at what is arguably the most advanced chip factory ever built. The initial chips coming out of the plant will make their way into smartphones and tabletlike devices rather than mainstream computers.

“The first one out there with these types of products is really the one that wins in the marketplace,” said Jim Ballingall, vice president for marketing at GlobalFoundries. “This is a game changer.”

The company, a new player in the contract chip-making business, was formed last year when Advanced Micro Devices, Intel's main rival in the PC chip market, spun off its manufacturing operations. GlobalFoundries, based in Sunnyvale, CA, has been helped by close to $10 billion in current and promised investments from the government of Abu Dhabi.

The vast resources at GlobalFoundries' disposal have put pressure on companies like Taiwan Semiconductor Manufacturing, United Microelectronics and Samsung Electronics, which also make smartphone chips. The message from GlobalFoundries is clear: as the newcomer in the market, it will spend what it takes to pull business away from these rivals.

At the same time, Apple, Nvidia and Qualcomm are designing their own takes on
ARM-based mobile chips that will be made by the contract foundries. Even without the direct investment of a factory, it can cost these companies about $1 billion to create a smartphone chip from scratch.

Recently, these types of chips have made their way from smartphones like the iPhone to other types of devices because of their low power consumption and cost.

For example, Apple's coming iPad tablet computer will run on an
ARM chip. So, too, will new tiny laptops from Hewlett-Packard and Lenovo. A couple of start-ups have even started to explore the idea of using
ARM chips in computer servers.

“Apple was the first company to make a really aspirational device that wasn't based on Intel chips and Microsoft's Windows,” said Fred Weber, a chip industry veteran. “The iPhone broke some psychological barriers people had about trying new products and helped drive this consumer electronics push.”

Companies like Nvidia and Qualcomm want to get their chips into as many types of consumer electronics as possible, including entertainment systems in cars, and home phones with screens and Web access.

At the Mobile World Congress in Barcelona, Spain, last week, manufacturers displayed a wide range of slick devices based on ARM chips, including a host of tablets and laptops. In addition, HTC released its Desire smartphone, built on a Qualcomm
ARM chip called Snapdragon, which impressed show-goers with its big touch-screen display.

Meanwhile, Intel is about to enter the phone fray, both to expand its market and defend itself against the
ARM chip makers. Its Atom line of chips, used in most netbooks and now coming to smartphones, can cost two to three times as much as the
ARM chips, according to analysts. In addition, the Atom chips consume too much power for many smaller gadgets.

Intel executives argue that consumers will demand more robust mobile computing experiences, requiring chips with more oomph and PC-friendly software, both traditional Intel strengths.

“As these things look more like computers, they will value some of the capabilities we have and want increasing levels of performance,” said Robert B. Crooke, the Intel vice president in charge of the Atom chip. “We're seeing that from our customers in a number of spaces, including digital TVs and hand-held devices.”

Intel also has deep pockets. As of December, the company had more than $9 billion in cash and short-term investments.

Mr. Crooke said that Intel's manufacturing expertise would allow it to produce a new crop of chips every 18 months or so that would be cheaper and use less power. As rivals shift to more cutting-edge chip-making techniques, he said, they are likely to run into problems that Intel solved years ago.

At the same time, competition from other chip makers will pressure them to lower their prices.

“I don't know whether it will make it harder for these guys to invest in the future, but you certainly would think so,” Mr. Crooke said.

Ashlee Vance works out of the New York Times San Francisco bureau, covering the ways in which businesses and workers use technology. His stories focus on the major hardware and software makers, along with exploring the new companies and personalities shaping business computing. Ashlee joined The NYT in 2008 after working for five years as editor of The Register - an irreverent British technology web site. He has also written freelance stories on technology for The Economist. In 2000, Ashlee graduated from Pomona College with a degree in philosophy, the obvious major for any technology reporter.

About ARM Holdings plc:

The Group's principal activity is licensing, marketing, research and development of RISC-based microprocessor and systems. It operates in three divisions: Processor division, Physical Internal Processor division and Systems Designs division. Its Processor encompasses those resources that are centered on microprocessor cores including specific functions such as graphics IP, fabric IP, embedded software and configurable digital signal processing IP. Physical IP concerned with the building blocks necessary for translation of a circuit design into actual silicon. Systems Design is focused on the tools and models used to create and debug software and system-on-chip designs. The Group has
six offices in the United States of America and other offices China, Japan, South Korea, Taiwan, Israel, France, Germany and India. Design offices are based in the United Kingdom, France, Belgium, Germany, the United States of America and India.

On April 29, 2010
CEVA, Inc. (NASDAQ: CEVA) announced its financial results for the first quarter, the period ending March 31, 2010.

Total revenue for the first quarter of 2010 was a record $10.60 million, an increase of 11% year-over-year compared to $9.51 million reported for the first quarter of 2009. Q1 2010 revenue was also above the sequential Q4 2009 level of $10.18 million by 4.1%, an unusual feat.

First quarter of 2010 licensing revenue was $4.7 million, an increase of 4% over $4.5 million reported for the first quarter of 2009. Royalty revenue for the first quarter of 2010 was a record $5 million, an increase of 32% over $3.8 million reported for the first quarter of 2009. Revenue from services for the first quarter of 2010 was $0.9 million, a 26% decrease compared to $1.2 million reported for the first quarter of 2009.

US GAAP net income for the first quarter of 2010 was $2.1 million, an increase of 51% over $1.4 million reported for the same period in 2009. However, Q1 2010 net income sequentially was (as expected) below Q4 2009, when net income was $2.91 million for the traditionally strong fourth quarter.

US GAAP diluted earnings per share for the first quarter of 2010 were $0.09, an increase of 29% compared to $0.07 for the first quarter of 2009, but of course no match for the $0.14 of Q4 2009.

By the by, as guidance last quarter
CEVA expected revenue in the next quarter (January - March 2010) to be in the range of $9.9 million and $10.9 million, and GAAP EPS was forecast to be between $0.07 and $0.09.

During the quarter, the Company concluded five new license agreements. Four of the agreements were for CEVA DSP cores, platforms and software, and one was for CEVA Serial ATA (SATA) technology. Target applications for customer deployment are 2G and 3G handsets and data cards, set-top boxes, digital TVs and SSD drives. Geographically, two of the agreements signed were in Europe and three were in Asia.

Gideon Wertheizer, Chief Executive Officer of CEVA, stated, "We are very pleased with our record first quarter revenue, which reflects the continued adoption of our DSP technologies by key players in the cellular and consumer electronics markets, as well as consistent growth in our royalty revenue. During the quarter, we announced new licenses for our DSPs with two leading players in the WiMAX market who are expanding into the LTE space. Also, we announced that Samsung is now deploying LTE datacard modems and dongles based on our DSP technology. We are encouraged by the pipeline build up,
and believe we are on track with our revenue and profitability growth plans for the Company."

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-- Russ Henke, Contributing Editor.


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