Feb. 25, 2008 – In a move to narrow its focus to homeland security applications, Implant Sciences is putting its semiconductor subsidiary, Core Systems up for sale.

The deal achieves several objectives, according to president/CEO Phillip Thomas, in a statement. Primarily, by carving out what is now seen as a noncore operation — one that had purposefully been consolidated and grown in Sunnyvale, CA and now “presents an attractive acquisition opportunity as a stand-alone business or as an integral component of a strategic buyer” — the company can get back some ROI from

Feb. 24, 2008 – Credence Systems has sold its diagnostics and characterization business to DCG Systems, an independent company led by Israel Niv, former GM of the business from 2003-2005 and founder of Optonics, an emission-based optical diagnostics and failure analysis supplier bought by Credence in late 2002. Sale price is “up to $10M” plus another $2.5M subject to unspecified terms, to be paid within three years.

The deal includes up to $22M in book value of assets, including component inventory, fixed assets, intangibles and various liabilities, and Credence will fund ~$4M in existing warranty/service contracts and provide “reimbursable transaction services” for a limited time. Credence will take a ~22M charge in addition to its anticipated $37-$39M loss for fiscal 1Q08, including $19M in extraordinary charges.

“We are pleased to find a new home for this highly specialized and important business,” said Credence president/CEO Lavi Lev, in a statement. “As Credence focuses on the consumer-based semiconductor ATE markets, one of our priorities was the continued care of our DCG customers, and the qualifications of the new management team. We believe DCG customers will benefit from the focus and experience Israel and his team bring to the business.”

The “newly formed” Fremont, CA-based DCG Systems will provide leading edge semiconductor design diagnostics and failure analysis technologies, including a “Ruby” laser voltage prober, “OptiFIB-IV focused ion beam system, “Meridian-IV” emission system, and “NEXS” suite of EDA link software. “DCG Systems provides the best bridge between the design community and the fab yield and failure analysis teams with its diagnostic systems and software to enhance yield ramp, silicon design debug and IC quality,” stated Niv, adding that the company will “focus fully on the specific needs of our customers as they move to the 45nm technology node and beyond.”

Deb. 18, 2008 – Israeli company Pythagoras Solar, claiming to have a play in the photovoltaic sector, says it has completed a $10M round of Series A funding, led by led by Israel Cleantech Ventures and joined by Pitango Venture Capital and Evergreen Venture Partners. Funds will be used for domestic R&D and global commercialization of its technology and products, which the firm boasts “have the potential to change the economics of solar power.”

Pythagoras was founded in 2006 by former Check Point Software exec Gonen Fink and Tel Aviv U.’s Itay Baruchi, and has been incubated in investment firm Precede Technologies. According to that firm’s Web site it offers “static low concentration photo-voltaic systems.” More cryptically, Pythagoras’ own site describes its work as combining “software models, optic design, semiconductor processes, materials science, and mass manufacturing techniques to build highly durable, cost effective solar energy products.” It has an R&D center in Hakfar Hayarok, Israel and a US office in San Mateo, CA. The company says it will disclose more about its products and technologies by early 2009.

by Bob Haavind, Editorial Director, Solid State Technology

Jan. 31, 2008 – Dr. Morris Chang, legendary founder of Taiwan’s TSMC, the world’s biggest foundry, sees healthy growth ahead in the world economy even if there is a 6-9 month slump in the US, with a steadily expanding role for semiconductors. “Thirty years ago our goal was to make semiconductors ‘pervasive,'” he stated in a talk at the recent International Electron Devices Meeting (IEDM) in Washington, DC. “Now it to make them ubiquitous.”

He pinpointed major shifts in the semiconductor industry landscape, identifying disruptive innovations that led to the new course for the industry. The biggest value now, Chang believes, is in system architecture and circuit level software. In basic ICs the value is in design, in microprocessors it’s in subsystems, and in SoCs (systems-on-chip) it’s in systems.

While Moore’s Law has been a tough taskmaster for the industry, and steady shrinks have expanded total markets for chips, it has also led to what Chang sees as a shift in the business model for the industry. From 1952 until recently, the industry was built around semiconductor companies that served a variety of systems companies, in sectors such as defense, autos, telecom, and consumer electronics. Back in 1985 it took about $200 million to build a new fab — an amount that was not easy to raise. At that time there were less than 50 fabless companies, Chang pointed out, and they could not get reliable fab service because chipmakers that leased them space would take it back when business picked up. Then the foundry concept began to emerge, and by 1995 there were 340 fabless companies bringing in about $6B, though still a fairly small part of the industry. Meanwhile, chipmakers had to continue to invest ever-larger sums to build bigger fabs, and they needed their markets to grow sufficiently to justify new fabs.

By 2000 there were 750 fabless companies bringing in $17B — but by 2006 this had grown to 1400 companies with $50B in revenue, about 20% of the industry total. The foundries had grown to become major manufacturers, with about 30% of their total revenue from making chips for the integrated device manufacturers (IDMs) as well as fabless companies.

In the early days foundries offered standard processes, but to make more advanced chips, they had to start customizing processing to achieve the specifications for individual process designs. This means that foundries must now collaborate with designers in achieving continuous improvement in fab processing. “Now designers and fab people must work in partnership under the same roof,” Chang said. To achieve this, foundries need to put more effort, offering intellectual property (IP) that can make chipmaking more design-friendly.

EDA, SoCs, competitive threats

Following his talk, Chang chatted with reporters, explaining his views on the world economy, changes sweeping the semiconductor industry, and what would be needed for chipmakers to succeed in the future.

He suggested that foundries have become the biggest power users of EDA tools as they work cooperatively with chip designers. While individual process technologies are needed for each fab customer, he said, these are often based on generic technology with some variations in order to be economically realistic.

In SoCs, Chang feels that embedded memory is a key to success, but it is still necessary to have additional memory off-chip. He thinks there is a long way to go in developing successful SoC methods, and he sees 8%-10% growth a year over the next 10 years.

To be successful, he explained, foundries need to provide differentiable services, particularly as there is a shrinking number of IDMs so that more chips must be made by the foundries.

When asked if he saw China as a threat to Taiwan’s dominance in foundry work, Chang replied that he never thought that the Chinese would become big competitors. “Foundry work is a tough business,” Chang said, and he believes that TSMC has an unassailable lead not just because of its IP, but also because it retains a large number of highly skilled people. The entry barriers are so high, he believes, that semiconductor manufacturing, and particularly foundries, have almost become a closed industry.

After getting his BS and MS degrees in mechanical engineering at MIT, Chang earned a PhD in electrical engineering from Stanford. He spent 25 years at Texas Instruments, and was president and COO of General Instruments before founding TSMC in Taiwan in 1987. — B.H.

Jan. 28, 2008 – KLA-Tencor says it has “agreed in principle” to pay $65M to settle a shareholder lawsuit stemming from its longtime backdating of employee stock options — if approved it would be the second-biggest shareholder payout stemming from the backdating scandal, notes the Associated Press. The Louisiana Municipal Police Employees’ Retirement System was stated as one of the co-lead plaintiffs.

Back in 2006, KLAC was the poster child when much of the US business sector, and particularly tech/Silicon Valley, was swept up in a stock-option backdating scandal — it ultimately led to ~$400M in restatements spanning nearly a decade, condemnation of former CEO Ken Schroeder, and retirement of founder/chairman Ken Levy.

Mercury Interactive holds the dubious top spot for backdating settlements with a whopping $117.5M, which was absorbed by new parent company Hewlett-Packard, the AP notes.

The scandal first unfolded in early 2006 when Merrill Lynch and The Wall Street Journal shed doubt on the timing of stock option distribution at companies listed in the Philadelphia Semiconductor Index. For example, those reports calculated a 1:20 million chance that 10 stock option grants to Levy from 1994-2001 which preceded KLAC stock rallies could have been just coincidence, noted the San Jose Mercury News.