A couple of bulletins have been published last week concerning the semiconductor industry, and unlike the recent startup and venture capital news, these are actually on the positive side. The Semiconductor Industry Association (SIA) reported that chip sales for the first have of this year are up a healthy 5.4 percent over the same period last year. The SIA attributes the sales growth mostly to strong sales of portable computers and mobile phones, both of which experienced double-digit unit growth. With emerging markets having significant growth in both of these areas, it is not surprising that the Asian-Pacific region had the highest year-over-year growth at close to thirteen percent, with Europe coming in second at around five percent, and finally the Americas and Japan coming in at close to 3 percent.

While the SIA findings are inspiring, any growth is good growth, the IC Insight findings for the same period are even more interesting. There has been quite a bit of movement in the Top 20 list of the semiconductor sales leaders: The biggest position gainers were Qualcomm, NEC, Panasonic, and Broadcom. The biggest looser hands-down was Qimonda. With a 47 percent sales decline year-over-year for the first half of the year, Qimonda dropped a staggering 12 positions and consequently out of the top 20. The list becomes even more interesting when sorted by growth rate. Of the top six spots, three are occupied by fabless companies, and the top spot is occupied by a foundry where a lot of the fabless guys build their chips, namely TSMC. All of the companies ranked in the top six had impressive growth rates of over 20%. It should be noted that several of these companies are exposed to the fast growing mobile market; however, this by itself is not nearly enough, as TI who is usually also a strong player in this market did not experience any growth over the same period - very surprising. There has also been a lot of talk regarding AMD and the asset-light strategy that the company intends to pursue. Freescale has adopted a similar strategy over the last few years, however the company’s 3 percent growth rate shows that going asset-light by itself is not enough, or at least that it might take some time for the results to show. One thing is for sure thought, with the fabless companies doing so well, and with even more companies considering going fabless or asset-light, the foundries must be licking their chops.

Last year we wrote about ionic wind engine research that was conducted at Purdue University and allowed the team to increase the heat-transfer coefficient of a regular fan by 250 percent, thus significantly improving the cooling solution. Since then chips have definitely not become any cooler. The power envelope for individual cores might have decreased due to the re-emergence of simpler architectures with shallower pipelines, but with chip companies squeezing ever more cores into smaller packages, the heat problem is not going away any time soon. To compound the problem, keep in mind that for all these cores to perform useful work, they need to constantly be supplied with data, which leads to more I/O circuitry. The I/O circuitry in turn often times consists of many analog blocks that generally don’t scale very well with voltage, leading to more heat.

But rest assured, where there are interesting problems to be sovled, smart minds somewhere are working on doing just that. As happens to be the case, once again researchers at Purdue University have developed a technology that through the use of microjets enables them to deposit liquid into tiny channels on the chip surface resulting in a high-performance cooling solution. Conventional chips generate about 100 watts per square centimeter and can be air cooled via heat sinks and fans. Liquid cooling solutions are generally limited to about 200 watts per square centimeter. The Purdue team claims that their new cooling technology will allow chips with a power density of up to 1,000 watts per square centimeter. The key for achieving this type of cooling is a non-conductive liquid called hydrofluorocarbon. This fluid is pumped into the tiny channels on the chip surface via microjets through holes in the metal plate that sits on top of the channels. As the liquid circulates through the channels, it heats up until it momentarily becomes a vapor, which significantly enhances the cooling process. The micorjets ensure that the fluid is evenly distributed along the channels. This avoids the previous pitfall of fluids traversing chips from one side to the other, heating up along the way and thus losing their cooling ability.

Of course, the question has to be asked whether it will be possible to commercialize this technology. In specific niches, such as super-computing, where cost usually takes a backseat to performance, this cooling solution might indeed be acceptable. However, unless the technology can be made affordable enough so that major chip vendors can incorporate it into their products without alienating their consumers, it will likely fall by the wayside. I don’t have any chip packaging background and as such estimating the costs of this approach in its present form are beyond me, however, something tells me that they are not insignificant.

We reported earlier this year that 2008 was anything but a stellar start in terms of venture capital for semiconductor startups. It does not take a genius to see that the semiconductor market has been on shaky ground as of late, excluding a couple companies here and there. Nevertheless, running across two articles that highlight the negative and are published on the same day, while addressing the opposite sides of the semiconductor spectrum, is rather depressing.

The first article, titled Why Chip Stocks are Down and written by Steve Tobak, focuses on established semiconductor companies and examines why they have significantly underperformed the market over the last few years even though chip sales have experienced double-digit growth over the same period. According to Steve, some of the lackluster performance can be explained by the recent memory chip glut. Additionally, the dot-com bust which inflated the stock prices of more than one semiconductor company still rears its ugly head to some degree. And while an in-depth analysis of the entire sector is sort of lacking in the article, one observation regarding companies that bucked the trend is quite enlightening: “Proprietary products in hot markets resist negative sector trends, while commodities suffer the most.” This observation is exemplified by companies such as Qualcomm and Marvel who have done rather well for themselves. Interestingly, nVidia did quite well over the same time period too, while Intel stayed about flat - One would think that the fortunes of these two companies would be in lock-step, but this turns out not to be the case at least as far as stock valuation is concerned.

The second article is a commentary by Chris Fisher titled What Price Entrepreneurship? Essentially, the article questions whether starting or joining a semiconductor startup makes sense from an individual’s financial point of view. Chris estimates that a semiconductor startup needs to raise in-between $60 and $120 million these days. Money alone of course does not guarantee that the company will be successful – Montalvo comes to mind as a recent example. Now, if getting this much money was not difficult enough, Chris points out that public markets recently have valued semiconductor companies on the low side at about three times revenues. Add to this the dismal performance of semiconductor IPOs as of late, a lack of interest by established companies in acquiring new ones, and one has to wonder if time spent on a semiconductor startup is time well spent. Of course, if money is your most important objective, then Web 2.0 and related startups which usually require significantly less startup capital might be a better option at this point. Although from my experience, many semiconductor aficionados will very much cringe at the idea of writing code all day or having to sit through code reviews.