Monthly Archives: September 2004

September 29, 2004 – Agere Systems has announced plans to reduce expenses by eliminating 500 employees and ceasing operations at its Orlando, FL, facility by the end of 2005 if a sale cannot be arranged by that time. Agere said that it is aligning its cost structure to match current revenue expectations and to improve profitability.

The eliminated employees will come from across the business, including administrative functions, sales, marketing, and product development.

With these actions, the company will lower both its costs and operating expenses. The company expects to reduce its quarterly research and development and selling, general and administrative expenses to approximately $170 million to $175 million by the 3QFY05, beginning in April. In the quarter ended June 30, the company had reported $195 million in these expenses.

In addition, Agere announced that it would cease operations in its wafer manufacturing facility in Orlando, Fla., by the end of 2005, if a sale of the facility cannot be arranged by that time. In 2002, the company had announced plans to sell this facility as an ongoing operation, but has not yet found a suitable buyer. The facility currently employs approximately 600 people.The company expects cost benefits from the facility closing to begin accruing in FY06.

The company expects to take total restructuring charges and expenses in the range of $340 million to $360 million associated with these actions, with approximately $130 million to $140 million to be recorded in the 4QFY04, ending September 30, and the remainder to be incurred in subsequent quarters.

Agere also reaffirmed that revenues in the September quarter are still expected to be in the range of $420 million to $445 million, which was the guidance provided in July.

“While our actions to reduce the workforce are clearly very difficult for employees, they were absolutely necessary to align our expenses with our revenues,” said John Dickson, president and CEO, Agere Systems. “The issues we faced with three major customers now seem to have broadened into an industry-wide inventory correction, as reflected by a spate of earnings warnings from most companies in our industry. Agere Systems has a strong balance sheet, exceptional relationships with our customers, and we are confident that the improved cost structure, coupled with sharply focused R&D investments will drive profitable growth as we move through 2005.”

China’s first 300mm fab ramps


September 29, 2004

September 29, 2004 – Mainland China’s entry into volume production of 300mm wafers officially began in late September with the formal opening of a $1 billion fab in Beijing by silicon foundry supplier Semiconductor Manufacturing International Corp. (SMIC).

With the initial 0.11-0.10-micron processes now ramping into volume runs for DRAMs in the Beijing factory, the Shanghai-based foundry is preparing to build two other 300mm facilities adjacent to the new Fab 4 plant.

Fab 6C expansion is planned for 2005, and Fab 5 is planned in 2006, with further 300mm expansion depending upon market demand, according to a SMIC spokesperson. With newly opened Fab 4 expected to ramp 300mm production to 4000 wafer starts/month by December, SMIC’s total capacity — counting four 200mm fabs in Shanghai and Tianjin, China — is projected to reach 125,000 200mm equivalent wafers/month at the end of this year.

Four-year-old SMIC completed a $1.8 billion initial public offering in mid-March, and it now expects to invest up to $2 billion in new capacity in 2004. Fab 4 in Beijing began pilot production runs in July, and with the Sept. 25 formal opening ceremony, SMIC officials declared the start of volume production. Initially China’s first 300mm fab will supply high-density DRAMs to memory rivals Infineon Technology AG of Germany and Elpida Memory Inc. of Japan. However, SMIC also is preparing advanced logic processes for foundry customers on 300mm wafers.

SMIC’s Fab 6C will be a dedicated back-end-of-line (BEOL) 300mm production facility, aimed at completing the copper interconnect layers of ICs for integrated device makers seeking to reduce their capital expenditures by outsourcing BEOL steps. Fab 5 is expected to be a fully dedicated front-end-of-line (FEOL) facility, similar to Fab 4, which is slated to reach a 300mm capacity of 18,000 wafers/month by the end of 2005. At the formal opening of Fab 4, officials said the facility is believed to be the world’s first fab with rain and sewage reclamation systems as well as power-saving cooling equipment, making the 300mm plant more competitive and environmentally friendly. — J. Robert Lineback, Senior Technical Editor

September 29, 2004 – Discrete semiconductor manufacturer Vishay Intertechnology Inc., Malvern, PA, has acquired the MIC Technology thin-film interconnect operations of Aeroflex Inc., Plainview, NY, for $8.8 million.

The Pearl River, NY-based business develops single- and multiple-substrate thin-film products, with fiscal 2004 sales of approximately $11 million. Aeroflex CFO Michael Gorin said the transaction would be “essentially breakeven” to the company.

September 29, 2004 – ASML and Nikon have finalized details of their patent settlement, announced in early September, regarding lithography equipment.

Under the terms, ASML will pay $87 million, with an initial payment of $60 million made in 2004 and the remainder paid off in yearly installments through 2007. Also, as part of the deal, Germany’s Carl Zeiss SMT, which provides optical lenses for ASML’s tools, will pay Nikon a total of $58 million, with $40 million up front and the rest paid under similar terms.

The deal will bump up Nikon’s group net profit for fiscal 2005 (ending March 2005) to 28.6 billion yen, up from 19 billion yen forecast in May, although group sales estimates remain unchanged at 700 billion yen. The companies will finalize settlement and cross-license agreements and dismiss all legal proceedings by next month.

Crystal IS raises $5 million


September 29, 2004

Sept. 29, 2004 – Crystal IS Inc., a Watervliet, N.Y.-based supplier of single-crystal aluminum nitride substrates for use in high-power lasers and other optoelectronic devices, announced it has raised $5 million in a Series A round of funding.

Arch Venture Partners led the round, which also included JVP, 3i, Harris & Harris Group and Walt Robb. Arch’s Keith Crandell, JVP’s Zeljka Matutinovic and 3i’s Sean Brownlee joined the company’s board of directors.

Crystal IS was founded in 1997 by Glen Slack and Leo Schowalter, both Rensselaer Polytechnic Institute physics professors and former GE scientists. The company is located in RPI’s incubator center and uses Albany NanoTech for some processing capabilities.

CHICAGO, Sept. 29, 2004 – Commercialization and profitability are much more of a reality than many believe. Preliminary results of the 2004 National Small Tech Commercialization Survey, to be presented at NanoCommerce 2004, show that the majority of U.S. companies surveyed are shipping nano-enabled products, are profitable and are projecting rapid revenue growth over the next five years.

NanoCommerce 2004, held Oct. 5-7 in Chicago, features an extensive lineup of speakers featuring Motorola, Wilson Sports, PPG, DuPont, Guidant, McKinsey & Company, Easton Sports, Hewlett-Packard, Nanosys, Cambrios and many others.

A highlight of the event will be a presentation about Nano-Tex by inventor David Soane, CEO Donn Tice and turnaround financier and billionaire Wilbur Ross, who bought Burlington Industries, in part, because it owned Nano-Tex. The event is produced by Small Times Media.

NanoCommerce’s exhibit hall will be a gathering place for nanotechnology executives, with approximately 40 exhibitors, a networking fair, food, the Wildman Harrold Internet cafe and seating and reception areas.

Exhibitors at this year’s event include Hitachi, FEI, Nanotechnologies, Nanofilm, Nanophase Technologies, NanoInk, UK Trade & Investment, The Analytiq Group, Lawrence Berkeley National Laboratory, Arryx and many more. There is limited space still available for those interested in exhibiting.

“Before before the conference, our attendees, exhibitors and sponsors will gain access to our pre-conference networking program, which is only open to conference attendees,” said Steve Crosby, president and publisher at Small Times Media. “The program will allow them to interact via our self-assembled network and set up meetings before they arrive. Think of it as online dating for businesses.”

For questions or to register, contact Kelli Felker, marketing director at Small Times Media at [email protected], or call (734) 528-6263. Discounts are available for companies registering more than one person.

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Sept. 29, 2004 – Angela Belcher, a scientist who uses genetically modified viruses to produce nanowires, self-assembling films and other nanomaterials, received a $500,000 “genius grant” on Tuesday. She will share the title of 2004 MacArthur Fellow with a diverse group that includes a debating coach, a ragtime pianist and a businessman who has helped free hundreds of political prisoners in China.

The 23 recipients of the prestigious John D. and Catherine T. MacArthur Foundation award will receive support for five years to pursue whatever interests them. The fellowship program, now in its 24th year, honors people for their creativity, originality and potential to affect society. Candidates are nominated and selected through a confidential process.

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Belcher, an associate professor of materials science at Massachusetts Institute of Technology (MIT) and co-founder of the nanotechnology startup Cambrios Technologies Corp., said she received a call from the MacArthur Foundation last week informing her of the award.

“Usually it is easy for me to talk, but I couldn’t even talk,” she said. She began to fret during the prolonged silence that they might rescind the award. “I think I finally said, ‘thank you.'”

Belcher mimics processes in nature to create nanoscale electronic and magnetic materials. The technique may allow manufacturers to one day build nanoscale integrated circuits and other electronic components efficiently and cost-effectively.

She said that she has yet to decide how to spend the $500,000, but that her research program is well funded and her 24-person research group already fills her lab facilities to capacity.

She is considering using the money to develop science outreach initiatives in the Boston area for children in elementary and middle schools. As a chemistry professor at the University of Texas in Austin, she worked with high school girls in programs designed to interest them in science careers. She joined MIT in 2002, and has been focused on building up her lab and classes since the move. “I don’t have specifics,” she said. “But I want it to be exciting and to have an impact on society.”

Belcher’s interest in biologically inspired manufacturing techniques dates back to her graduate student days at the University of California, Santa Barbara (UCSB). In the mid-1990s, she discovered that abalone used proteins to form nanoscale tiles of calcium carbonate to build a sturdy shell. She theorized that other biological systems could be conscripted to make molds for perfect nanoscale crystals of technologically useful materials.

“We want to make nanostructures. Biology already makes nanostructures,” she said in a Small Times Magazine profile in 2002. “The machinery in our cells already exists on the nanoscale. It’s already evolved the ability to do that. Let’s harness the potential it already has and apply it toward materials that it hasn’t had the opportunity to work with yet.”

Borrowing a technique in drug discovery, she exposed millions of proteins on bacteria-infecting viruses to semiconductor materials to see if any would adhere. If one did, she removed the virus from the surface and inserted it into bacteria to replicate, and them re-exposed that generation to the material. She repeated the process under increasingly stringent conditions to strengthen the binding trait.

In 2002, Belcher and her UCSB professor and mentor Evelyn Hu founded Semzyme Inc., renamed Cambrios this year. The company intends to use Belcher’s strategies to make and assemble nanocomponents for the electronics industry.

Hu said that the MacArthur prize recognizes Belcher’s visionary capabilities and commitment to bettering society. “Angie has a special view of a way to change the world by thinking across disciplines and boundaries that is truly extraordinary,” Hu said.

“She has continuously looked into the future. She’s very much in the excitement of the present but always looked at the broader aspect.”

Belcher, 37, has received numerous honors, including Small Times’ 2002 innovator and researcher finalist awards; Beckman, DuPont and Army Young Investigator awards, and a Presidential Early Career Award. But none of those awards carried the cash or no-strings-attached character of the MacArthur award. “The money is great, obviously,” Belcher said. “I feel like I’ve gotten a pat on the back, and a ‘now, what can you do?'”

September 28, 2004 – The French industrial gases group Air Liquide has said that its 50-50 joint venture with British group BOC had signed gas supply contracts with STMicroelectronics for three semiconductor plants in Singapore, according to Agence France-Presse.

Under the contract, the Soxal joint venture will supply nitrogen, hydrogen, and speciality gases used to make computer chips at STMicro’s Technopark in the Singapore area, Air Liquide said.

No financial details of the contract were disclosed.

Soxal employs 530 people and had full-year sales of 300 million Singapore dollars (144.66 million euros, US$177.37 million).

September 28, 2004 – More chipmakers are coming forward to downgrade their estimates for 3Q04 performance, claming inventory buildup has become an industrywide problem.

Cypress Semiconductor Corp., San Jose, CA, has lowered its 3Q revenue estimates for the second time in a month, after “little business improvement” in September. Projected revenues of $219-$221 million would be 16%-17% lower than 2Q sales, instead of 5%-10% lower indicated by a recent estimate. Earnings expectations also were cut to 3-5 cents/share.

Royal Philips Electronics said 3Q04 chip sales would be flat compared with the previous quarter, compared with previous projections of 3%-4% growth, although sales will be 27% higher than a year ago. The book-to-bill ratio will be below 1.0. Philips also indicated its capex would be about $750 million this year, and $615 million in 2005.

Applied Micro Circuits Corp., San Diego, CA, said that revenues for its September quarter would be $61-$62 million, about 9% lower than the June quarter’s $67.4 million. COO Tom Tullie cited two causes: lower-than-expected orders from key customers adjusting their own inventories, and softness in Asia, particularly reduced demand in China’s end markets.

Cirrus Logic Inc., Austin, TX, lowered its fiscal 2Q05 revenue estimates by 16%-25% from previous forecasts to $51-$52 million, which would be up slightly sequentially but down about 12% from a year ago. Lower demand for consumer ICs due to an industry-wide inventory correction was cited as a main cause, while the company said demand for analog ICs remained relatively strong during the quarter.

AMIS Holdings, parent company of AMI Semiconductor, Pocatello, ID, reiterated its guidance for 3Q04 earnings at $0.18/share, with gross and operating margins both up 50 basis points. Revenues are expected to be down 2%-4% sequentially, however, due to “improved product mix” and low bookings in the communications and computing markets.

Agere Systems, Allentown, PA, reiterated its revenue expectations for 4Q at $420-$445 million, and said 4Q04 revenues would drop by 5% due to inventory adjustments and seasonal declines. “The issues we faced with three major customers now seem to have broadened into an industry-wide inventory correction,” noted John Dickson, president and CEO. The company also said it will close its wafer fab in Orlando, FL, by the end of next year, and plans to lower its R&D and SG&A expenses by about 9% to $170-$175 million, in an effort to realign costs with revenue expectations and improve profitability. Agere has been unable to find a buyer for the Orlando fab since announced its intention to sell it in 2002. Restructuring charges will total $340-$360 million, with about 40% of that amount recorded in 4Q04.

Sept. 28, 2004 – Nanotechnologist Angela Belcher is among 23 winners nationwide to receive a $500,000 no-strings-attached “genius” grant today from the John D. and Catherine T. MacArthur Foundation.  The annual awards recognize highly creative people in all fields whose work the foundation considers potentially world-changing.

Belcher, an associate professor of materials science and engineering at Massachusetts Institute of Technology, is devising ways to use genetically modified viruses to produce nanomaterials. By mimicking processes in nature, she has coaxed snippets of proteins on viruses to make uniform semiconductor nanostructures. Such materials could one day be incorporated into nanoelectronics or nanoscale machines.

Belcher has received numerous honors, including Small Times’ 2002 innovator and researcher finalist awards; Beckman, DuPont and Army Young Investigator awards, and a Presidential Early Career Award. The MacArthur Fellowship will allow her to use $500,000 over five years to pursue any area of interest she pleases.