HP says Oracle Violated Contract, Seeks Billions

Story first reported from reuters.com

Oracle Corp violated a clear contract with Hewlett-Packard Co when it decided it would no longer make new versions of its database software compatible with HP's Itanium-based servers, a lawyer for HP said in court.

The two technology companies faced off on Monday for opening statements in a bitter lawsuit over Oracle's decision to end support for Itanium. An Oracle attorney, meanwhile, said Oracle never agreed to give up its business flexibility in the "brief, breezy" contract language cited by HP.

The trial, in which HP seeks up to $4 billion in damages, comes just days after Oracle lost a separate high-stakes case against Google Inc over smartphone technology.

Oracle decided to stop developing software for use with Itanium last year, saying Intel made it clear that the chip was nearing the end of its life and was shifting its focus to its x86 microprocessor.

But HP said it had an agreement with Oracle that support for Itanium would continue, without which the equipment using the chip would become obsolete. HP said that commitment was affirmed when it settled an earlier lawsuit over Oracle's hiring of ousted HP chief executive Mark Hurd.

In court on Monday, HP lawyer Jeffrey Thomas said the Hurd settlement clearly bound Oracle to continue offering its "best products" to HP.

As a sign of the importance of the contract, top executives from both companies -- including Oracle President Safra Catz and then-HP enterprise chief Ann Livermore -- negotiated the deal, Thomas said.

"It is impossible to offer best products going forward without porting new versions of those products," Thomas said.

However, Oracle attorney Dan Wall said the Hurd settlement language was merely designed to settle employment litigation that HP had initiated against Oracle. It was not backed by the kind of painstaking negotiation that takes place over a strategic business partnership, he said.

Itanium is a declining product, Wall said.

"HP is trying to force Oracle to support a technology, Itanium, that Oracle does not believe in," Wall said.

Instead of a jury, Santa Clara Superior Court Judge James Kleinberg will decide the first phase of the trial -- namely, whether there is a contract between HP and Oracle, and its terms.

If Kleinberg decides in HP's favor, then a jury will decide whether Oracle violated the contract, and damages.

In court last month, Kleinberg compared the case to a divorce, saying "this case appears to be the end of a marriage" between the technology giants.

Top officials from both Oracle and HP could take the stand, with HP's Livermore, who is now a board member, set to testify first.

Intel Corp is not a party in the lawsuit, although its CEO, Paul Otellini, might also testify.

The case in the Superior Court of the State of California, County of Santa Clara is Hewlett-Packard Company v. Oracle Corporation, No. 11-CV-203163.

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Former Intel Employee Stealing Top Secret Documents

Story first appeared on CIO

A former Intel employee has pleaded guilty to stealing confidential documents from the company, according to court records.

The employee has pleaded guilty to five counts relating to the illegal download of confidential documents from Intel's servers, according to a plea agreement entered last week between the employee and the U.S. Attorney for the District of Massachusetts.  An Intellectual Property Lawyer in Boston has been following the case.

An employee of Intel's Massachusetts Microprocessor Development Center, working on the design of Itanium processors, is said to have resigned from Intel on May 29, 2008, and took leave from Intel up to June 11, purportedly to use accrued vacation time.

The employee, however joined Intel's rival Advanced Micro Devices on June 2, while still on Intel's payroll, and continuing to have access to Intel's servers. He returned to Intel on June 11 for an exit interview on what was to be his last day at Intel, according to his indictment in 2008.

From June 8 through June 11, the employee downloaded 13 "top secret" Intel design documents from the company's servers in California, according to the indictment. He copied them from his Intel-issued laptop to an external drive to have access to the documents after he returned the laptop to Intel. He is said to have tried to access the servers again around June 13 after he found that he could not access the documents offline because he had not completed the procedure required for viewing the encrypted documents offline.

AMD neither requested the information that had been downloaded and kept from Intel, nor knew that the employee had taken or would take the information, according to the indictment. The employee is said to have downloaded the documents to further his career at AMD or someplace else when the opportunity arose.  A Boston Copyright Lawyer states that this not only falls under Intellectual Property Law but could also be violating Copyright Laws.

In the filing before the U.S. District Court for the District of Massachusetts last week, the U.S. Attorney recommended six years of incarceration to the court, instead of the maximum of 20 years on each count, because among other things the government has no evidence that he used, sold, transferred, or offered the proprietary information, or any direct evidence of specifically how he intended to use the information.

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AMD Chief Fights for Credibility in Intel Showdown

Bloomberg

For Chief Executive Officer Dirk Meyer, Advanced Micro Devices Inc.’s new lineup of chips is more than an effort to win back customers lost to Intel Corp. It’s a bid for credibility.

After four years of production delays, slumping sales and shrinking market share, Meyer says he wants to convince customers and investors that AMD can consistently deliver quality products and challenge its dominant competitor. The first test comes with its new Fusion chips, built with graphics capabilities that AMD says Intel can’t easily match.

Fusion also provides a chance to redeem AMD’s 2006 acquisition of ATI Technologies Inc., a $5.4 billion purchase that threatened to sink the company with debt. By combining its processors with ATI’s graphics chips, AMD aims to get a payback on the deal. Another part of the comeback plan: AMD spun off its factories in 2008, freeing up cash to focus on innovation.

“You gain credibility out of executing successfully over quarters and years,” Meyer, 48, said in an interview at the company’s Sunnyvale, California, headquarters. “We haven’t been doing it for years yet.”

AMD, which was founded a year after Intel, has spent 40 years in the shadow of its rival, the world’s largest chipmaker. AMD has less than 20 percent of the global personal-computer processor market, compared with Intel’s 80 percent, and its revenue last year of $5.4 billion was a seventh of Intel’s.

Fusion Release

AMD began shipments today of its first Fusion product, which puts processors and graphics chips onto one piece of silicon. Computers based on the product will go on sale in early 2011. That will coincide with a new design from Intel, called Sandy Bridge, which also beefs up graphics features.

AMD’s last big hit was a server processor called Opteron that over three years grabbed 20 percentage points of market share from Intel. Opteron, introduced in 2003, also helped AMD squeeze more profit from each chip. In 2005, AMD’s products began to approach Intel’s famously high gross margins, which run as high as 67 percent.

That’s when AMD’s fortunes reversed. Opteron’s successor, Barcelona, was late to the market and needed to be redesigned. That failure was partly because AMD wasn’t ready for the big time, Meyer said.

Meyer is familiar with both companies. He worked at Intel in the 1980s, then spent almost a decade at Digital Equipment Corp., a computer maker acquired by Compaq Computer Corp., which is now part of Hewlett-Packard Co. When Meyer arrived at AMD in 1995, he led the team that designed its flagship processor.

Focus on Execution

Meyer comes from a technical background. He earned a degree in computer engineering from the University of Illinois and got an MBA from Boston University. After rising through the executive ranks at AMD, he replaced Hector Ruiz as CEO in 2008.

So far, AMD has struggled to follow through on its innovations, said Josh Spencer, a portfolio manager at T. Rowe Price Group Inc. in Baltimore.

“Where they’ve always fallen down in the past has been execution,” said Spencer, whose firm owns AMD shares as part of the more than $400 billion it has under management. With Fusion, “they have a chance to compete with Intel.”

AMD now has more than one engineering team capable of delivering multiple chip designs on time, Meyer said. That’s possible because it no longer has the distraction of running multibillion-dollar chip plants, known as fabs. AMD spun those off into a new venture called Globalfoundries Inc., backed by the government of Abu Dhabi.

‘Deep Hole’

The $8.4 billion transaction in 2008 helped reduce AMD’s debt from $5.5 billion in 2007 to about $2.2 billion now. It also let the company cut capital spending to about 10 percent of what it was three years ago, according to Chief Financial Officer Thomas Seifert.

Profitability will continue to improve. Today, Seifert predicted gross margin, the percentage of sales remaining after deducting production costs, will be between 44 percent and 48 percent in 2011. A year ago, he predicted a 40 percent to 45 percent range for 2010. AMD will be able to achieve a margin of above 50 percent in the long term, he said today during a presentation at the company’s headquarters.

“They were coming out of a deep hole,” T. Rowe’s Spencer said. “I’m impressed by what they’ve done.”

‘Critical Mass’

The moves haven’t reignited investor interest in the stock. The shares have declined 18 percent this year, and they’re trading at a fraction of their $42 price in 2006. Intel shares have climbed 3.7 percent this year.

AMD fell 23 cents to $7.91 at 4 p.m. in New York Stock Exchange composite trading. Intel lost 7 cents to $21.16.

“A company that’s up against some huge odds managed to stay in it,” said Alex Gauna, an analyst at JMP Securities LLC in San Francisco. “The question is: Will they get more interesting? I’m not anticipating they’re going to be a disruptive force.”

Rick Bergman, AMD’s senior vice president of products, disagrees.

“The No. 1 thing we have to do is have a differentiated product,” said Bergman, who joined AMD with Markham, Ontario- based ATI in 2006. In the past, “AMD didn’t have the critical mass, got bogged down in running fabs, and now we’re free from that burden.”

The difference between the new chips, according to Bergman, is that AMD will have state-of-the-art graphics, worthy of the most advanced computer games. Intel’s Sandy Bridge chip is years away from being able to handle that, he said.

“It just can’t do certain things,” Bergman said. “Would you want to buy a notebook and know from day one it has three-or four-year-old graphics technology?”

Single Chip

Intel says its Sandy Bridge chip represents a significant advance in graphics. “The overall performance and graphics capabilities of the Sandy Bridge processor are outstanding and represent a major step forward,” said Tom Beermann, a spokesman for Santa Clara, California-based Intel.

Both Fusion and Sandy Bridge combine two of the key components of a computer onto one chip. That reduces battery drain and speeds up processing by letting computers better share memory. Until now, advanced graphics chips have mainly gone into add-on computer boards. Those products are popular with gamers, who use them to get more realistic visuals.

AMD is counting on more than gamers to help Fusion catch on. New versions of programs for surfing the Web, including Microsoft Corp.’s Internet Explorer, could take advantage of the graphics features as well, the company says.

If AMD is right, computer users will get faster browsing, higher-definition video from programs like Adobe Systems Inc.’s Flash, and home movies that can remove the jerks and swings from handheld cameras.

Before AMD’s vision for Fusion can take hold, the company needs to keep delivering chips on time and find ways to be more nimble than Intel, Meyer said.

“As a small company, we’ve got to always look for ways to answer the question, ‘What’s better, what’s different about AMD?’” he said. “I can’t rely on having home runs.”

Intel Opens Door to Contract Chip Manufacturing

PC World

Intel on Tuesday said the company would begin contract manufacturing of chips, a change from the company's policy of serving only itself through its factories.

The company earlier this week said it would make a line of FPGA (field-programmable gate array) products for Achronix Semiconductor using its upcoming 22-nanometer manufacturing process. Intel will start manufacturing chips for laptops, desktops and servers using the 22-nm products later next year.

"We are ... open to adding other customers beyond Achronix," said Bill Kircos, an Intel spokesman, via e-mail on Tuesday. He declined to say when the company would start signing up other customers.

Intel advances its manufacturing process every two years, and invests billions to upgrade factories. The company last month said it would invest between US$6 billion to $8 billion over multiple years to build a new plant and improve existing manufacturing plants in the U.S. A part of that investment will be applied to making 22-nm chips, which are faster and more power-efficient than chips made using the current 32-nm process.

The company also announced the opening of a $1 billion chip testing and assembly facility in Vietnam last week.

Making FPGAs for Achronix would make up a tiny amount of overall chip manufacturing capacity, Kircos said. Achronix makes specialized integrated circuits and chips for sectors like networking, communication and high-performance computing.

By accepting a small customer like Achronix, Intel is dipping its toes in the contract manufacturing waters, analysts said. Intel's chip development and manufacturing are tightly linked, and it could be years before Intel is ready to compete with large-scale contract manufacturers such as TSMC (Taiwan Semiconductor Manufacturing Co.), UMC (United Microelectronics Corp.) or GlobalFoundries.

"It's more of a test drive than a real commitment," said Dan Hutcheson, senior analyst at VLSI Research, which focuses on the semiconductor and chip manufacturing industries.

Intel has a good reason to look at FPGAs as they are "an incredibly profitable market," worth $4.7 billion, Hutcheson said.

Intel excels at chip manufacturing and has an advantage over rivals such as TSMC with its manufacturing process, Hutcheson said. Intel may believe it is faster than rivals at advancing process technology, he said.

Higher capital investments are also needed to advance manufacturing processes, said Nathan Brookwood, principal analyst at Insight 64. Intel perhaps realizes that contract manufacturing could fill extra capacity, and offsettin the high fixed cost related to making chips.

"Every generation gets more expensive," Brookwood said. "Looking forward, you could see where you might want to have these third-party customers to help offset some of the fixed expenses."

Brookwood said Intel may also be taking a page from rival Advanced Micro Devices, which last year spun-off its manufacturing operations into a separate entity called GlobalFoundries. AMD explicitly said it spun off Globalfoundries as it couldn't justify enough demand to make investments to scale production, Brookwood said.

"They could see the same sort of phenomenon that Advanced Micro Devices saw half a dozen years ago," Brookwood said.

Intel has mostly been serving itself through its factories, and will have to learn about supporting third parties, Brookwood said. Contract manufacturers have lots of experience supporting third parties, and have basic designs for different Arm, MIPS and PowerPC cores to attract fabless customers.

If Intel is looking at the foundry business model, the company may initially make specialized third-party chips for devices like smartphones and TVs, markets the company is going after aggressively, said Shane Rau, research director at IDC.

These chips could help improve sales of Intel's processors, while using up factory capacity, Rau said.

"The need to fill the fab is ever present," Rau said.

FTC Modifies Intel Antitrust Settlement

eWeek

The FTC has modified the agreement it reached with Intel that settled antitrust complaints against the chip maker. The modification removes an interface requirement from Intel's "Oak Trail" Atom platform.

Intel's legal dispute with the Federal Trade Commission appears to be wrapping up, after the agency announced Nov. 2 that it had modified the initial agreement reached with the giant chip maker in August to settle antitrust allegations.

According to the FTC, the agreement was amended to allow Intel to ship its upcoming "Oak Trail" Atom platform without the required PCI Express interface because Intel began manufacturing it before the two sides reached the settlement Aug. 4. The FTC's modification will allow Intel to ship the Oak Trail chip until June 2013, but all future generations of the chip after that date must come with the PCIe interface.

In December 2009, the FTC filed suit against Intel, alleging that the chip maker abused its market dominance to illegally quash competition from the likes of Advanced Micro Devices, Via Technologies and Nvidia by offering system makers special discounts and rebates in return for limiting their use of products from those other companies, or by threatening retribution.

The FTC also said Intel altered some of its technologies, such as compilers, so that they would hinder the performance of AMD products, and then laid the blame for the poor performance on AMD's technology.

The accusations echoed similar claims made against Intel, not only by rivals like AMD and Nvidia, but also by other regulators, including the European Commission and the N.Y. Attorney General's Office. Intel executives have steadfastly denied that their business practices—while aggressive—violated antitrust laws.

Intel last year settled its long-running legal dispute with AMD, and currently is appealing a $1.45 billion fine levied by the EC. The chip maker reached a settlement with the FTC in August that outlined what Intel could and could not do in regard to its competitive business practices.

One of those provisions was the inclusion of the PCIe interface in the Intel chips for at least six years to ensure that they could not limit the performance of graphics chips, and to let Nvidia, AMD and others more fairly compete against Intel.

The FTC's modification excludes the Oak Trail Atom platform from that requirement. Oak Trail, designed for such form factors as tablet PCs and thin refurbished notebooks, will start appearing in systems in 2011.

The FTC also said that it rejected the arguments from some parties, including Via and chip designer ARM, that the agreement reached with Intel was not punitive enough on the giant chip maker. Via sought some changes in the original agreement, and ARM—which is coming into closer competition with Intel, as Intel is looking to muscle into the mobile handset market that is dominated by ARM-designed processors—asked the FTC to extend the order against Intel beyond the x86 market. The FTC rejected the suggestions from both vendors.

The FTC's suit against Intel refueled debate over the federal government's more aggressive stance in antitrust cases, particularly in the high-tech industry. Regulators not only are looking at Intel, but also other major tech players, including IBM. Some see the government's actions as necessary to level the playing field and to stop actions that they say ultimately are harming consumers. However, others see the regulators at creating an anti-business atmosphere in the United States.

Intel Looks beyond Chips to next big Computing Experience

Computer World

 

Executives at Intel, the world's largest chip maker, are rethinking the way they pick technologies to develop -- and they're looking at ideas beyond the computer chip. It's a big step for a company that has made its fame by focusing on processors. In recent months, Intel has announced that it's buying security software company McAfee for $7.68 billion and Infineon's wireless chip unit for $1.4 billion. With these acquisitions, the company is getting into the security business -- and giving itself a better footing in the mobile computing market.

In an interview with Computerworld, Intel CTO Justin Rattner talked about taking Intel in a new direction, coming up with the idea for Google TV and the future of tablets and netbooks. Excerpts from that interview follow:

It sounds like you're making some major shifts inside Intel. What's going on? The commitment to chips is still there. For most of Intel's history, we were driven by what could be done instead of what should be done. A few developments at Intel caused us to rethink the company.

OK, so what caused this rethinking? It was our work on smart TV; emerging markets and the Classmate, and our work in digital health.... All three are driven by how people relate to the technology. For instance, how do kids feel about technology? What do they like? What do they not like? How do you make it fit? Instead of putting a PC down in front of them and saying, 'Look, it's Windows 7.' We wanted to see what they need.

So are you rethinking the way you decide what technologies are developed? I think very much so. We've seen that it's no longer the best technology that prevails in the marketplace. It's not the camera or the number of pixels or megabytes of memory. It's if I enjoy the device or am I constantly at odds with my device.

But why move beyond chips? The company wants to grow beyond the PC business. As we move out into areas like phones and TV and health, we're not so constrained. We developed a smart TV design. We had a specific experience in mind and then built the silicon for the experience.

Are you saying that Intel came up with the idea for Google TV? Intel designed the Google TV experience and took it to Google. Google said that's not the experience we've been thinking about, but that's the silicon we need. By thinking of the experience, it affects the building of the silicon. We actually know the experience we're trying to create and then we build the right silicon.

So what's the next computing experience that Intel engineers are working on now? Context-aware devices. We're talking about what it means for a device to be context aware and that changes the relationship between user and owner. We want to give these machines the ability to fuse the hard senses (like where you are and are you dancing or riding a bike?) and soft sensor information, like your calendar, your to-do list and your social networks.

How could context-aware devices change the way we live day to day? When I get in the car in the morning, I want a screen to come up and tell me there's construction on Rte. 26 or it's going to rain. Go back in the house for a hat and umbrella. Context is really about life. These devices [today] know very little about our lives.

How will social networking fit into this vision of context-aware devices? Social networking becomes part of this soft sensor notion.... It will be a key source of information for your devices. Who are your friends? What are you doing? We think a lot about it. Your social network will be used by your devices to know you've got an interview with Justin and it can tell your friends and colleagues that you're talking with Justin.

Since we're talking about devices, what do you think about the future of the tablet, the netbook and the notebook? We haven't reached the ultimate evolution of the tablet. It's somewhere between the notebook of today and the iPad.

Austin is at the Center of ARM's Rising Challenge to Intel

Austin American-Statesman

 

On a warm Friday afternoon in early September, many of the workers at ARM Holdings' chip design center on South MoPac Boulevard convened on the roof of the nearest parking garage to celebrate.

They put on their company T-shirts, drank beer or margaritas and hung out under shade canopies while listening to rock music.

They weren't exactly kicking out the jams, but they were celebrating a job well done: the completion of a major new chip project.

ARM had announced the completion of "Eagle" — officially called the Cortex A-15 processor — a few days before. The new design, which probably won't show up in products until 2012, dramatically expands the capabilities of ARM's product line and the kinds of markets it can serve.

The Eagle had landed right in the middle of a computer market dominated by Intel Corp., the biggest and toughest chip company in the world.

Although ARM is based nearly 4,900 miles away in Cambridge, England, Austin is becoming an important focal point for the company. Four years ago, the Austin team designed the Cortex A-8, which these days is being used in smart phones and tablet computers, including Apple Inc.'s popular iPad. The A-15 could extend ARM's reach into energy-efficient computing, wireless base stations and power-efficient Web servers.

"Our team is square in the middle of ARM's strategy," said Ken Reimer, ARM's design center manager in Austin. "For me, there is no better place to do processor design."

ARM, with about 1,700 workers worldwide, is a smallish chip company that punches far above its weight. That's partly because it licenses many of its designs to some of the biggest chipmakers in the world, including Samsung Electronics Co. Ltd., Texas Instruments Inc. and STMicroelectronics NV.

Analysts say TI and Samsung probably paid millions of dollars to be partners in the Eagle project, taking part in detailed discussions about the processor as it was being designed. Not only could they influence the design that evolved, but their engineering teams also got an early look at the technical characteristics of the new processor, so they could plan their own specialized versions of it in the years ahead. (ARM says the licensing fees and other payments it receives from its partners are confidential.)

"On Eagle, we are all over it," said Keith Hawkins, who heads Samsung's newly created processor design team in Austin. "It is a big part of our future."

Samsung is intent on passing Intel to become the world's largest chipmaker, and expanding its production and sales of low-power processors is a big part of its expansion plans.

In Austin, ARM's team has grown to more than 190 people, including chip designers, sales, marketing and support workers, who work with ARM's many partners. Those customer companies turn ARM designs into about 4 billion chips a year, used in everything from smart phones to computer disk drives and industrial control equipment.

Ahead of the power curve

From its earliest days, ARM has focused on chip designs that minimize electrical consumption. Chips that use less power can be used in more products and require fewer engineering steps to keep them running cool.

Whereas many personal computers use chips that consume as much power as a 100-watt light bulb, ARM chips typically use a fraction of a watt. That miserly power usage makes ARM chips a natural for battery-powered mobile devices and for other products for which power savings are crucial.

In Austin, the company has built an engineering team from veterans of other companies, including Texas Instruments, IBM Corp., Advanced Micro Devices Inc. and Freescale Semiconductor Inc.

Newcomers pick up quickly on the company's relentless focus on reducing power consumption. Every thousandth of a watt counts.

They also tune in to the company's collaborative style. New ideas count, but they are frequently challenged and must be proved to be superior.

"Ideas, no matter where they come from, are openly challenged at all levels," said Kerry McGuire, ARM's manager of strategic alliances in Austin. "There is the sense that if you believe in your idea, you will pursue it, and if it is a good idea, it will survive."

ARM focused on power consumption before the rest of the electronics industry realized how important low-power design would become. Now the entire industry is power-aware.

The industry once focused on performance for PCs and servers, but "the entire industry is now driven by mobile devices," said analyst Jim McGregor with technology research firm In-Stat. "Power efficiency is a key factor in all they are working on — even at the server level. It's a dramatic change, and it brings the whole industry around toward ARM."

Squaring up against an industry heavyweight

Intel, formerly an ARM partner, has morphed into a competitor. Intel acquired an Austin-based ARM design effort in 1998 and later sold the business to Marvell Technology Group in 2006.

While it was selling off that business, Intel was stepping up its effort on a new family of low-power Windows-compatible chips called Atom aimed at mobile products. Atom has become a big seller for Intel, especially in the emerging category of smaller, power-efficient subnotebook computers.

While Intel attempts to stretch toward low-power applications, the company dominates the market for processors that go into servers, the workhorse computers that do the heavy lifting involved in running the Internet and much of the world's business and technical computing.

It's a market where ARM had never openly challenged Intel — until now. One of the potential markets for the Eagle chip is seen as low-power Internet servers that do the repetitive work of fetching information for Web users.

To underscore its new interest in the server market, ARM is one of the investors in Smooth-Stone Inc., an Austin startup that aims to create complex server chips from a basic ARM design. Smooth-Stone thinks there is an important market developing among Web companies that want to buy large quantities of low-power servers to handle their sites.

Analyst Joe Byrne sees the coming rivalry between ARM and Intel as a contrast between two companies with different histories and very different business models. Intel, with its enormous revenue and profit, controls everything about its chips — from the engineering design to the manufacturing and the marketing and sales.

But ARM is a much smaller company that gets by with a lot of help from its friends. It had $489 million in revenue last year, compared with Intel's $35 billion.

ARM licenses its basic chip designs to a wide variety of partners that turn them into more specialized commercial products. ARM makes far less profit from the chips it designs, but it works with many customers, each of which takes its own risks on making and selling its end products.

"The fact that they spread their bets is very good for them," Byrne said. "They don't care if TI loses to Qualcomm Inc. because they supply designs to both companies. They have a lot of horses in the race."

ARM's top executives downplay the budding rivalry with Intel. "People want there to be this David-and-Goliath struggle between us and Intel," CEO Warren East told The New York Times recently. "It just isn't that way."

But in Austin, ARM managers know their new chips are starting to tread on Intel's turf.

"In Austin, we have Intel squarely in our view," McGuire said. "We want to defend our place in the mobile market and go after Intel's stronghold in computing and servers."

Oracle, HP, Intel, IBM Foresee a Boom in Tech Spending

USA Today

 

 

Acquisition fever at Oracle, Hewlett-Packard, Intel and IBM probably won't cool down anytime soon; not with corporations, big government and large organizations — the so-called enterprise sector — poised to spend trillions on the next generation of digital systems.

Tech research firm Gartner this week forecast that enterprises worldwide will spend $232 billon on software alone this year, up 4.5% from 2009.

Meanwhile, overall spending for hardware, software and IT services should hit $3.4 trillion this year and $3.5 trillion in 2011.

The tech giants are anticipating that enterprises will build out new, cutting-edge networks tuned to extract valuable insights from the massive caches of data they've amassed.

Growth will come to those organizations that productively use this new intelligence in near-real-time, on PCs, smartphones and mobile devices.

Intel CEO Paul Otellini used a descriptor for this movement at Intel's Developers Forum in San Francisco two weeks ago.

He called it "pervasive computing."

Otellini described a world where enterprises routinely access not just raw data, but valuable business intelligence applied to that data, "anywhere, any time and in any way," says Charles King, principal analyst at Pund-IT.

Oracle, Intel, IBM and HP are in the race to assemble lower-cost, more streamlined hardware and software components that mesh well and can deliver business intelligence in near-real-time.

The tech rivals are striving to "integrate and control the correct pieces" and be the most successful at "providing functionalities that work in concert, so that it's like a symphony," says Mike Workman, CEO of data storage company Pillar Data Systems.

The projected beneficiaries: airlines, utilities, health care companies, retailers or any business in possession of lots of data.

IBM on Monday announced that it is buying business intelligence software and hardware maker Netezza for $1.7 billion.

That follows HP's acquisition of storage company 3Par and tech-security firm ArcSight; Intel's acquisition of anti-virus supplier McAfee and the wireless division of German tech company Infineon; and Oracle's six acquisitions this year, including swallowing up Sun Microsystems.

"IBM's acquisition of Netezza is yet another validation of just how important advanced analytics is in the business world right now," says Barry Zane, chief technical officer of business intelligence software maker ParAccel. "There is no question the industry is hot right now."

More buyouts of smaller tech companies developing cutting-edge storage and security systems and innovative business-intelligence applications seem likely as the tech giants pursue the winning blueprint, says Jack Gold, principal analyst at J. Gold Associates.

"The ability to store all business applications and data centrally and to make it all available to users is a very powerful paradigm shift," Gold says. "It requires cheap and fast networks."

Workman gives database giant Oracle, and its new Exadata line of storage servers, the early lead.

Oracle juiced up Exadata by integrating its flagship database software into Sun's high-end computer servers, he says.

IBM's acquisition of Netezza, supplier of technology that competes directly against Exadata, came as no surprise to Workman.

Intel and HP likewise remain in shopping mode as they try to "integrate various systems to arrive at a solution that will kick the other guy's butt," Workman says.

Intel To Buy Security Firm McAfee For $7.68B

The Wall Street Journal

Intel Corp. agreed to buy computer-security software firm McAfee Inc. for $7.68 billion, as the chip maker moves increasingly into the software sector to support its expansion outside of the PC market.

The Silicon Valley giant will pay $48 for each share of McAfee, a 60% premium to Wednesday's closing price. The stock last traded at that level in 1999.

The acquisition is the latest in a string of deals aimed at consolidating formerly disparate parts of the technology sector. Tech giants dominant in particular areas of the industry are using acquisitions to grab footholds in faster-growing markets. Hewlett-Packard Co.'s  recent purchase of Palm Inc. was aimed at moving the world's largest PC maker into the smartphone sector. Meanwhile, Oracle Corp.  purchased Sun Microsystems last year to expand from selling software into providing a complete hardware and software package for corporate IT departments.

Intel's acquisition of McAfee, the company's largest-ever purchase, seeks to help the company expand into two new markets: smartphones, and the myriad electronic devices such as billboards, automated teller machines and others known as "embedded systems," that are increasingly connecting to the Internet, providing more personalized and interactive features.

Shares of McAfee were recently up 58% to $47.18--they were down 28% the past year through Wednesday--while Intel declined 2.5% to $19.10.

"With the rapid expansion of growth across a vast array of Internet-connected devices, more and more of the elements of our lives have moved online," said Intel President and Chief Executive Paul Otellini. "In the past, energy-efficient performance and connectivity have defined computing requirements. Looking forward, security will join those as a third pillar of what people demand from all computing experiences."

McAfee, best known for its widely popular anti-virus software, has marshalled more resources to go after the quickly developing mobile market. It recently announced the purchase of mobile-device security company tenCube, a move that follows its purchase of Trust Digital, another mobile-security-software firm.

Intel, for its part, has been targeting the smartphone space with its Atom chip, which is widely popular in netbooks, but has yet to make waves in a cell phone market dominated by less power-hungry chips built by Qualcomm Inc. and others off of a design from ARM Holdings PLC.

The company has been targeting software firms to bring it into these new markets for some time. Last year Intel purchased software-maker Wind River Systems Inc. for $884 million to help move its Atom chip into embedded devices such as electronic billboards or automatic teller machines. By providing software, Intel makes it easier for customers to adopt its chips instead of those made by rivals.

Intel Chief Financial Officer Stacy Smith said in April that his company would be looking at software acquisitions to help it make more customized server and mobile seo products.

"In everything we do, software becomes more important," Smith told Dow Jones Newswires.

Intel expects the deal to "slightly" cut into earnings the first year after closing because of merger-related charges, and have little impact on the bottom line in the second year. A slight increase after those charges are seen in the first year.

The deal is Intel's second this week. Monday, Intel said it would buy Texas Instruments Inc.'s cable-modem product line for an undisclosed amount.

The acquisitions come as Intel last month reported its best-ever quarterly results in an ongoing rebound in the semiconductor market. For its part, McAfee's second-quarter earnings rose 38%, allaying concerns about its business after a weak first quarter. The company said sales grew sharply in North America, one of its key markets.

"The deal makes a lot of sense strategically over the long-term," said Patrick Wang, a chip analyst at Wedbush Morgan. He said that by integrating McAfee's security products, it's possible that Intel devices will soon be able to conduct real-time scanning for viruses and spyware, speeding up the process of protecting PCs and smartphones.

"From a technology standpoint, I really like it," said Wang.

FTC Extends Antitrust Settlement Talks with Intel

Associated Press

Federal regulators will take at least two more weeks to work out details of a proposed agreement with Intel Corp. to settle charges that the giant chipmaker violated antitrust laws.

The Federal Trade Commission said late Wednesday that it needs more time to consider and negotiate the proposed settlement, which was first announced last month.

The FTC brought antitrust charges against Intel late last year, accusing it of using illegal sales tactics to preserve its dominant share of the market for computer chips. The agency alleges that the company strong-armed computer makers into exclusive deals, manipulated technical data to make its chips look more powerful than those from competitors and blocked rivals from making their chips work with Intel's. That behavior has crippled rivals and kept prices for computer chips artificially high, the FTC says.

The case, which is before an administrative law judge at the agency, has been on hold for a month while the two sides have tried to hammer out an agreement. That suspension had been set to end at midnight on Thursday, but will now run through midnight on Aug. 5.

"Our discussions with the FTC are continuing," Intel said in a statement. "The discussions are confidential so we won't comment on the specifics."

Neither side has disclosed any details of the proposed agreement.

Late last year, Intel settled a long-running legal battle with rival Advanced Micro Devices Inc., which had also brought its concerns to the attention of the FTC and helped lay the groundwork for the federal government's case.

But Intel still faces an antitrust lawsuit brought last year by New York State Attorney General Andrew Cuomo. The company is also appealing fines brought by regulators in Europe and Korea.

Will Apple, Yahoo measure up to Intel, Google?

Mercury News

Apple — the Cupertino maker of Mac computers and "i" devices (iPad, iPhone, iPod) — and Sunnyvale Internet content powerhouse Yahoo are the next big Silicon Valley companies in the quarterly parade of tech earnings reports.

Both Apple and Yahoo will report financial results tomorrow afternoon after the stock markets close.

While most big Silicon Valley tech stocks were higher today, Apple shares were noticably lower, closing at $245.58, down $4.32, or 1.7 percent, after falling as low as $239.60. According to a story on The Wall Street Journal's website, analysts were concerned about Apple's profit margins — as well as reports of strong sales of the new Droid X (more on that below) after nearly a week of negative publicity over the antenna on the iPhone 4. (Apple's newest iPhone, of course, was introduced June 24, so only the first few days of sales will be reflected in the earnings report. CEO Steve Jobs, meanwhile, said Friday that Apple will provide free bumpers or cases to iPhone 4 owners, which Consumer Reports described as a remedy for the antenna problem its testers found.)

As for Yahoo, it's expected to show a strong increase in online ad revenue, according to a post today on Good Morning Silicon Valley.

Apple and Yahoo earningsw will follow reports last week from Santa Clara chip behemoth Intel and Mountain View Internet advertising juggernaut Google last week. Intel, you might recall, reported a record $10.8 billion in sales, saying corporate customers were making information-technology purchases again. Google, meanwhile, had a big jump in profit and sales, but investors were concerned that its hiring pace might be costing too much money.

Intel Ships New Six-core Core I7 Chip, Cuts Chip Prices

PC World

 

Intel on Monday introduced a six-core Core i7 desktop processor targeted at enthusiasts like gamers, while also cutting prices of some desktop and server chips by up to 48 percent.

The company announced the Core i7-970 processor, which will run at 3.2GHz and have 12MB of L3 cache. This is the second six-core desktop chip launched by Intel after the Core i7-980X Extreme Edition, which was launched in March.

Intel offers standard Core i7 processors for high-end desktops and Core i7 Extreme Edition processors, which are expensive chips targeted at specific users like hardcore gamers who may be looking for extreme performance. The Core i7-970 is an attempt to trickle down six-core chips and fast performance from the Extreme Edition to the main Core i7 lineup, an Intel spokesman said.

The new Core i7-970 should bring a new level of performance to Core i7 lineup. Intel's 980X Extreme Edition processor has captured many benchmark crowns, outperforming even the company's Xeon server chips.

The Core i7-970 is priced at US$885 in units of 1,000. The processor is made using the 32-nanometer manufacturing process, which helps boost system performance compared to chips based on earlier architectures.

The company also cut the price of the lower-end Core i7-870 processor by 48 percent from $582 to $294, according to the company's price list (PDF), which was published on July 18.

The price was cut to put the offering in line with the company's other Core i7 offerings, the spokesman said. Intel also cut a numerous dual- and quad-core Xeon server and workstation chips from its offerings, including the older 5400 series of chips belonging to the X, L and E series. The company also cut the price of the Xeon X3470 processor by 44 percent from $589 to $328.

Intel on Monday also started shipping the new quad-core Core i5-760 desktop processor, which will run at 2.8GHz and includes 4MB of L3 cache. The chip is made using the company's older 45-nanometer manufacturing process.

Freer Budgets help Intel's Decade-Topping Profits

Associated Press

 

The last time Intel Corp. pulled in profit this big, dot-com delirium was in full swing and Internet fever fueled spectacular computer sales.

Now, as the technology industry recovers from a slump caused by the financial meltdown, the world's No. 1 semiconductor company has reported its biggest quarterly net income in a decade on signs of vibrance in the most troubled corner of the computer market.

Intel shares shot up $1.19, or 5.7 percent, to $22.20 in morning trading Wednesday.

Large corporations are now buying more computers that use Intel's most expensive chips, an encouraging sign for the overall economy that emerged from Intel's second-quarter numbers, which were reported Tuesday after the stock market closed. Corporations have been stingy on upgrading their workers' personal computers, a trend Intel is now seeing reverse. Intel gets most of its profit from the sale of chips that go into PCs.

Intel CEO Paul Otellini said companies are starting to replace 4- and 5-year-old PCs now that they have some "breathing room in the economy and their budgets." Intel has unique insight because it owns 80 percent of the worldwide market for microprocessors, the "brains" of PCs and servers.

The numbers offer further evidence that companies are freeing their technology budgets, which should have helped other big technology companies. Intel's main rival, Advanced Micro Devices Inc., reports its quarterly results on Thursday, while IBM Corp. and Microsoft Corp. issue their numbers next week.

Intel's results topped Wall Street's forecasts, and the company raised its guidance.

Intel's net income was $2.89 billion, or 51 cents per share, in the quarter ended June 26. Analysts expected 43 cents per share. The last time Intel's quarterly net income topped $2.5 billion was in 2000 during the dot-com heyday.

In the year-ago period, Intel lost $398 million, or 7 cents per share, when it paid a $1.45 billion fine in Europe over antitrust violations.

Revenue was $10.77 billion in the latest period, above the $10.25 billion expected by analysts surveyed by Thomson Reuters.

Intel's third-quarter forecast was stronger than expected. It said it expects revenue of $11.20 billion to $12 billion. Analysts were projecting $10.92 billion.

Intel's profit forecast also got a lift. Intel now expects gross profit margin - a key measure of a company's ability to control costs - of 64 percent to 68 percent of revenue for the full year. Its previous forecast was for 62 percent to 66 percent.

Technological upgrades to its factories have made Intel's chips more powerful and cheaper to make. That's a major factor in Intel's ability to increase its profit margins.

Its business has improved over the past year and a half largely on robust consumer spending on discounted PCs. Corporate spending on PCs has been a troubled corner of the market. Many companies have resisted upgrading their workers' PCs amid lingering fears about the health of their businesses.

It has been more than a year since Intel CEO Paul Otellini declared that PC sales had "bottomed out" and were starting to recover after their worst stretch in six years.

His analysis was accurate, but the semiconductor business is highly cyclical and now many analysts worry that another slowdown could be around the corner. The fears are being stoked by economic wobbliness in Europe and signs of slowing demand in China.

More than half of Intel's revenue comes from Europe and the Asia-Pacific region. On a conference call with analysts, Otellini said business in China and Europe was slow when the quarter started but "settled down" by the end of the quarter and were "nicely up" in both regions.

Market research firms IDC and Gartner Inc. predict that PC shipments will grow a robust 20 percent this year.

Intel Sees Growth as Devices Multiply

The Wall Street Journal

Company says rising number of tablets, TVs and cars make its one-billion-chip shipment target attainable

 

 

David Perlmutter is executive vice president and co-general manager of Intel Corp.'s architecture group. He is responsible for developing and marketing Intel's platforms for all computing segments including desktops, laptops, netbooks, hand-helds and other consumer electronics.  As co-general manager, Mr. Perlmutter is focused on product development and architecture technology decisions across microprocessors, chipsets, communications and graphics. Prior to this role, Mr. Perlmutter was vice president and general manager of Intel's mobility group. He joined Intel, the world's largest semiconductor maker, in 1980.  At the Computex trade show in Taiwan, Intel unveiled new chips and features based on its Atom processor family—a low-power chip that is widely used in netbooks.

Lorraine Luk spoke with Mr. Perlmutter on the sidelines of the show in Taipei, where the executive elaborated on industry trends and spoke about where Intel is looking to focus on in terms of future products. The following is an edited version of the interview.

WSJ: What product categories to do you see driving growth for Intel in the next few years?

Mr. Perlmutter: The [personal computer] market is still expected to have quite significant growth in the next few years. We expect the market to double in four or five years. Another big growth driver is data centers. With the amount of devices growing and as we push more data to cloud computing, we are moving to serve this growing market.

Last but not least, all these new devices [at Computex], we very much believe that many of them will be based on Intel's Atom processor. People are carrying more than one device in their pockets, in their cars, in their houses so there are growth opportunities to sell way more than we sell today.

WSJ: At the Computex show here in Taiwan, Intel unveiled a product for tablets in early 2011 that is known by the code name Oak Trail. How will the new product contribute to the company's revenue and growth? [Oak Trail is a system on a chip that combines a microprocessor with other specialized circuity. Intel says the new product will offer a 50% reduction in average power consumption.]

Mr. Perlmutter: Next year, the netbook will take a nice portion. We just achieved 40 million units in netbooks last year, which is a nice business already. In TVs, we just started. In 2011, the majority of our business is going to be chips used in PCs and data centers.

WSJ: Intel has said it plans to achieve annual shipment of one billion chips in five years. Are you on track to achieve this? How do you plan on achieving this ambitious goal?

Mr. Perlmutter: We expect to ship more than 350 million units this year. If we double the shipment next year, it will be 700 million, and 700 million does not seem like a big number because the opportunities in TV, tablets, and cars are getting computerized. Each of these markets is a hundred million units a year.

WSJ: ARM Holdings of the U.K. says it's late for Intel to launch tailor-made chips for tablets. What are you doing to ensure you're staying competitive in terms of power consumption and efficiency of chips?

Mr. Perlmutter: I believe we are matching competitive products today on power consumption and it is going to get better. We're delivering not 10% in terms of performance but more than two times, or three times or even four times. Our gaming performance is stellar. So we have a lot of capabilities. How can people say we're late to the tablet market? Tablets are being created now and we can't say who's going to be successful and who may not.

WSJ: How would you characterize Intel's lead in manufacturing technology compared with other chip makers such as Taiwan Semiconductor Manufacturing Co.?

Mr. Perlmutter: We are at least a year or if not more ahead of [TSMC]. We are shipping chips today produced on 32-nanometer technology. No one ships 32-nanometer. And I think other people will ship, maybe next year. It's another important factor which people don't pay attention to. It's getting harder and harder to control power in these modern processing technologies.

WSJ: What are some of the opportunities for Intel in emerging markets?

Mr. Perlmutter: The opportunities in emerging markets are huge. China is already the second-largest [PC] market after the U.S.. Brazil is either already No. 3 or close to be No. 3 soon. I believe that within a few years China will surpass the U.S. in size. We see India, Indonesia and the Middle East growing by a double-digit [percentage] for PCs and other devices across the board. I think it's just the very beginning of opportunities to sell more and more computing devices and people in emerging markets want good technology.

Intel answers Microsoft's Linux 'noise' with MeeGo show

The Register

 

Microsoft and Intel are fighting for the affections of hardware makers as the PC industry tries to answer Apple's iPad.

The world's biggest software company used the annual Computex show in Taiwan to release a preview of Windows Embedded Compact 7 — the latest rebranded version of Windows CE, which has been promised on tablets from Asus, LG, and MSI.

Windows Embedded Compact 7 is Flash-friendly — unlike Apple's tablet. It will offer email, calendar, contacts synchronization with Exchange, Microsoft Office and Adobe PDF viewers, and synchronization with Windows 7 machines. The OS will be released to manufacturing during the fourth quarter.

Microsoft released Windows Embedded Compact 7 preview with a tough message for Linux: Windows will win the heart of PC makers.

According to the Wall Street Journal, Steve Guggenheimer, corporate vice president of Microsoft's OEM division, pointed out that although Linux had an early lead on netbooks, Windows has now become the dominant operating system for these machines.

"There are always lots of noises at the beginning of a new category," he said. Guggenheimer packed his message with boilerplate about the hidden costs of a "free" operating system. This was a reference to Google's Linux-based Android, but the message was equally applicable to MeeGo, which merged Linux efforts from Intel and Nokia this year and hit version 1.0 last week.

Elsewhere at Computex, Intel fought back by showing MeeGo running on a low-power, Atom processor-based device.

David Perlmutter, the vice president and co-general manager of Intel Architecture Group, offered hardware makers a chip roadmap designed to show Intel's commitment. OEMs have every right to be wary of committing to a mobile Linux OS given that past efforts haven't always panned out.

Perlmutter announced mobile dual-core Atom processors codenamed Oak Trail, due in early 2011. Oak Trail will be optimized for tablets and netbooks, consume 50 per cent less power, and provide full HD-video playback, according to Intel. It will also work with Windows, Google's planned Chrome browser-based operating system, and — significantly — MeeGo.

Early signs were encouraging for MeeGo, at least on the software side. Linux company Linpus announced plans to for a MeeGo-based version of its Linux Lite optimized for Atom processors and featuring improved power management, while PC and server Linux outfits Mandriva, Red Flag, and Turbolinux announced plans for distros based on MeeGo for devices.

Enterprise server staple Novell is also slimming down with the SuSE MeeGo based on MeeGo 1.0 for netbooks and devices. Novell expects SuSE MeeGo to be pre-installed in a variety of devices during the next year.

Hardware makers were less visible in the front line of early supporters, although two important names did wade in. Acer, committed to Google's Chrome and already delivering Windows and Linux netbooks, plans MeeGo-based netbooks in 2010. Asus, while planning a Chrome device of its own, will ship MeeGo machines in 2011, and it will offer an ASUS App Store running on Intel's AppUp Centre.

Clearly aware that MeeGo has piqued the interest of developers and software partners, Intel said its work now lies in getting hardware in the hands of users. Peter Biddle, director of Intel's AppUp products and services told ZDnet Asia: "We need more consumers!"

Intel Reports Blockbuster Earnings

The Street

Intel has reported blockbuster first quarter earnings and has provided second-quarter guidance that exceeds analysts expectations...and is crowing about it, to boot. "This will set the bar high for many tech companies," RealMoney contributor Timothy Collins said in his  Outside the Box  blog.

"The investments we're making in leading edge technology are delivering the most compelling product line-up in our history," Intel's CEO Paul Otellini said Tuesday. "These leadership products combined with growing worldwide demand and continued outstanding execution resulted in Intel's best first quarter ever. Looking forward, we're optimistic about our business as Intel products are designed into a variety of new and exciting segments."

Intel expects revenue of $10.2 billion, plus or minus $400 million, for the second quarter, above the Wall Street consensus estimate of $9.69 billion. The company plans to spend about $6.4 billion in research and development for the current fiscal year.

Also, for the full-year, Intel provides gross margin percentage guidance, a key financial metric, of 64%, plus or minus a couple of percentage points, compared with the company's prior expectation of 61%, plus or minus 3 percentage points.

For the quarter, Intel reported net income of $2.4 billion, up 288% from the previous year, or earnings of 43 cents a share, up 32 cents. The company reported revenue of $10.3 billion, up 44%. Wall Street analysts had expected earnings of 38 cents a share on revenue of $9.83 billion.

Intel said that during the quarter its PC client group revenue was flat, with record mobile microprocessor revenue; its data center group revenue was down 8%; its other Intel architecture group revenue was down 9%; and the company's average selling price (ASP) for microprocessors was slightly up.

Intel stock ended Tuesday's trading session up 1% at $22.80, and has gained more than 3.8% in after-market trading. 

Nokia, Intel Launch New Mobile Operating System

PC World

Nokia and Intel will merge two of their mobile operating systems into Meego, a Linux-based, open operating system for everything from advanced smartphones to netbooks, connected TVs and tablet computers, the companies said at a joint press conference on Monday.

The new operating system will combine the best features from each operating system, including the Moblin core and the UI (user interface) toolkit from Maemo. Intel developed Moblin, and Nokia developed Maemo. The first version of MeeGo will ship during the second quarter.

The first devices based on the operating system are expected to arrive during the second half of 2010, according to Renée James, senior vice president and general manager at Intel's Software and Services Group.

The operating system will support both Intel's Atom and ARM architectures. The MeeGo source code, along with the build system and developer tools will be released in the coming weeks, according to a FAQ on the MeeGo website.

The MeeGo code will be hosted by the Linux Foundation, and anyone who wants to develop an application for MeeGo will use the Qt framework. The use of Qt will let users develop an application once and then run it on multiple platforms, according to Kai Öistämö, executive vice president for devices at Nokia.

So far, Nokia is the only company that has said it will ship phones with MeeGo. However, more hardware partners and operators will announce support and product plans for MeeGo in the coming weeks, James said.

The arrival of MeeGo will not change Nokia's plans for Symbian. That operating system will still be used on cheaper smartphones, according to Öistämö.

Intel, Micron Unveil New 25nm NAND Flash Chip

eWeek

The new 25nm, 2bit/cell chip can hold 8GB of digital capacity, more than 10 times the capacity of a standard compact dic [700MB]. The chip measures a mere 167mm2 -- small enough to fit through the hole in the middle of a compact disc.

Intel and Micron Technology reset the NAND flash capacity bar a little higher and the chip size threshold a little lower Feb. 1 with the introduction of the world's first 25-nanometer solid-state processor.

The new 25nm, 2bit/cell chip can hold 8GB of digital capacity, more than 10 times the capacity of a standard compact disc [700MB]. The chip measures a mere 167mm2 -- small enough to fit through the hole in the middle of a compact disc.

"This is not only the smallest NAND lithography in the world, it is the smallest silicon manufacturing technology in the world," Intel Marketing Director Troy Winslow told eWEEK on a conference call.

"This is now the largest capacity multi-level cell device on the market, at 8GB. We were the first on 34nm, now we're the first on 25nm."

The smaller size allows multiple 8GB chips to be packaged more economically to increase storage capacity. The new 25nm 8GB device reduces chip count by 50 percent compared to previous process generations, allowing for smaller, yet higher-density, designs and greater cost efficiencies, Winslow said.

For example, a 256GB solid-state drive now can be enabled with only 32 of these devices, versus 64 previously, Winslow said. A 32GB smartphone needs only four, and a 16GB flash card requires only two, he said.

NAND flash memory, used in consumer devices such as smartphones, digital cameras, and personal music and media players, stores data and retains the information even when the power is turned off. NAND flash also is gaining market share for use as components in high-performance solid-state drives for servers and storage arrays.

IM Flash Technologies, Intel and Micron's NAND flash joint venture, continues to cram more capacity onto tinier pieces of silicon about every six to eight months. IMFT debuted its 34nm, 3Bit/cell NAND flash chip last August.

The 25nm/8GB device is sampling now and is expected to enter mass production in Q2 2010, Winslow said.

In What Direction Will Intel Point The U.S. ?

The Wall Street Journal

Intel's earnings growth last year helped power gains in the stock market and signaled recovery in the broader economy. The company's predictive power is worth keeping in mind should its fourth-quarter earnings report on Thursday disappoint.


The semiconductor company is expected to post earnings of 30 cents a share, up from four cents a share in the fourth quarter of 2008, according to analysts polled by Thomson Reuters. Intel's revenue is forecast to hit $10.2 billion, up 23%.

The chip maker has benefited from a stronger recovery in demand for servers and used PCs than initially expected. Consumer electronics were a bright spot of the holiday sales season, likely helping bolster Intel's fourth-quarter results.

The company's shares, which closed Wednesday at $20.96, up 35 cents, or 1.7%, have surged 67% since March, outpacing the Dow Jones Industrial Average's 63% gain during the same period. Even so, some say Intel has further to rise.

"The stock, in our opinion, hasn't reflected the earnings potential the company is likely to enjoy for the next year or two," says Doug Freedman, a senior analyst at Broadpoint AmTech, with a $29 price target on Intel. "Spending on electronics and used desktops looks far more resilient than expected."

Yet other semiconductor analysts, such as those at Bank of America Merrill Lynch, caution the optimism isn't justified. In a research note Wednesday, they cited weaker demand in Asia as one reason for "a potential disappointment" in Intel's fourth-quarter sales.

"We are hard-pressed to be positive ahead of Intel's results," they cautioned, given that expectations "have ratcheted steadily higher in recent weeks."

Meanwhile, another closely watched gauge, the company's gross margins, were projected by Intel in September to swell to 62.2% from 57.6% in the third quarter, on the high end of the company's historical range. Analysts say they are unlikely to hold up at such lofty levels next year.

"The old rule of thumb is to buy at 50% and sell at 60%," says Stacy Rasgon, a senior analyst with Sanford Bernstein. "People will be watching for that signal."

They also will be watching for how investors react, as a selloff on Intel's earnings could raise broader concerns about the vigor of the used notebooks market's rally.

New Chips From Intel Show Lead Over AMD

AP

Intel Corp. rolled out new computer chips Thursday that highlight the company's lead over Advanced Micro Devices Inc. in its ability to shrink the circuitry inside its processors.

Intel's new Core chips, unveiled at the International Consumer Electronics Show in Las Vegas, are the company's first to feature tiny parts whose average width is 32 nanometers, or 32 billionths of a meter.

The transistors - little on/off switches that regulate the flow of electric current - are so small on those chips that 60 million could fit onto the head of the pin. That's twice the number that could fit into the same space in the previous generation of chips.

While the changes might be invisible to the naked eye, consumers experience the effects in the form of better performance and lower computer prices. Chip makers benefit from the ability to add more features and cut costs.

AMD's 32-nanometer chips won't appear in personal computers until 2011. It has argued that circuitry size isn't as important as performance and graphics.

The race between Intel and AMD is significant because essentially all modern personal computers are built with microprocessors, the "brains" of PCs, made by either Intel or AMD.

In recent years, AMD has made its focus the graphical performance of its chips, which the company says is important as computers render more gaming images and high-definition video. To that end, AMD paid $5.6 billion in 2006 to buy ATI Technologies to become a player in high-end graphics, a market Intel has struggled to break into despite repeated attempts.

Last month, Intel, based in Santa Clara, Calif., scrapped plans for a new graphics chip that would have directly challenged AMD's ATI division and another graphics heavyweight, Nvidia Corp. Intel blamed delays in its silicon and software development.

Meanwhile, Intel has been branching out from its core business into ancillary markets such as "netbooks" - stripped-down laptops used primarily for surfing the Internet - and now mobile phones, another market it previously tried to crack. Mobile phones use chips that generally do less than Intel's processors, but also suck up less power.

On Thursday, Intel CEO Paul Otellini showed off a new smartphone from LG Electronics Inc. that was built on Intel chips and is expected to go on sale in the second half of this year. It is the first phone with a processor from the same family of chips that Intel sells for netbooks.

With a 4.8-inch screen, LG's GW990 phone is bigger than standard smartphones. Apple Inc.'s iPhone has a 3.5-inch screen and Motorola Inc.'s Droid has a 3.7-inch screen - essentially the upper limit for smart phones in the U.S. LG hasn't said where the phone will be marketed.

The additional processing power can be used for things like videoconferencing and playing high-definition video on desktops.

"I can see a five-inch screen really becoming popular," Otellini said in an interview.

Intel's earlier stab at mobile phones ended in 2006 with the sale of its communications chip division to Marvell Technology Group Ltd. for $600 million. At the time, Intel's finances were suffering because of competition from AMD and it was shedding underperforming business units so it could focus on its core business: selling chips for personal computers and servers.