Intel keynoter offers pep talk, vision of better days

TechOnline India - July 16, 2009

Anand Chandrasekher, senior vice president and general manager of Intel's Ultra Mobility Group, did his best to offer hope to beleaguered semiconductor equipment executives in a Semicon West keynote address, predicting that the convergence of communications and computing would mean big money for the industry in years to come.

SAN FRANCISCO—In the opening moments of his keynote pep talk at Semicon West here Tuesday (July 14), Anand Chandrasekher, senior vice president and general manager of Intel Corp.'s Ultra Mobility Group, offered the beleaguered semiconductor capital equipment executives in the audience the perspective of history.

In 2001, at the height of the last major semiconductor industry downturn, Intel was just beginning work on what would become its Centrino mobile microprocessor platform, Chandrasekher said. At the time, few would have been able to conceive of the idea of surfing the Internet while sitting in a backyard, watching kids play in a pool, he said.

"In 2001, that was not possible," Chandrasekher said. "Today that's an everyday occurrence."

Chandrasekher's point was simple: while the outlook for the semiconductor industry today is beyond bleak, there are new applications for electronics on the horizon—perhaps unconceivable today—which will drive the consumption of semiconductors and, in turn, investment in semiconductor manufacturing equipment.

Anand Chandrasekher, senior vice president and general manager of Intel Corp.'s Ultra Mobility Group, delivers the opening keynote at Semicon West.

At times early on Chandrasekher seemed like a football coach in a half-time locker room, trying to restore the confidence of a team that was being whipped out on the field. The equipment industry has borne the brunt of this downturn, which took shape in the second half of last year and throttled virtually everyone into the second quarter of 2009. Looking to cut costs anywhere and everywhere, chip manufacturers swiftly put the brakes on capital expenditures, including equipment buys.

SEMI, the chip gear industry trade group which organizes Semicon West, projects that the fab tool market will fall by 52 percent this year and that equipment spending as a percentage of semiconductor sales will be a mere 7 percent. Market research firm Gartner Inc. currently projects that fab tool spending will decline 45.8 percent to $16.6 billion, a level not seen since the early 1990s.

But Chandrasekher said there is still plenty of room for growth in semiconductors and that the industry would rise again. Downturns, he said, are typically the times when breakthrough products are conceived, which go on to help pull the chip industry from downturns and spawn boons in future years. Companies generally make the best bets on new technologies when money is tight and anxiety is high, he said.

"Recessionary periods tend to be the periods when companies look hard at investments," Chandrasekher said.

{pagebreak}Chandrasekher presented a chart showing groundbreaking products that were conceived in recessionary periods, including the cell phone in the mid 1970s, the PC in the early 1980s, the Internet in the early 1990s and the iPod and Centrino in 2002.

Chandrasekher said that this cycle will be no different. He said he believes that innovations that accelerate the convergence of communications and computing will emerge from the current down cycle and drive growth for the chip and equipment industries in future years.

Chandrasekher said there would likely be more than 1 billion mobile connected devices by 2015. He presented slides of data showing rapid changes in the way the Internet grows and is used, including comparisons of the 10 most heavily trafficked websites in the early part of the decade compared with now, showing a pattern of migration over time from search engines to online shopping to social networking. He said the Internet is now comprised of nearly 1 trillion urls—and counting.

"The Internet is awake," Chandrasekher said. "It is a living, breathing environment."

Chandrasekher shows off a notebook computer.
Despite the buzz—and revenue—generated by high-profile smartphones like Apple Inc.'s iPhone, Chandrasekher said the notebook PC is ultimately where most users will experience the majority of mobile connected activity. He presented data from a survey from Forrester Research Inc. showing that the current handheld computing experience is lacking and that users want better connectivity and larger screen sizes.

"Mobile Internet growth is happening, but it's happening on a laptop computer," Chandrasekher said.

He predicted that within the next two years a crossover would occur and notebooks would begin to permanently outsell desktop PCs. (Later in the day market research firm iSuppli Corp. issued a revised forecast predicting that this crossover will occur this year).

Chandrasekher underscored that there is tremendous room for growth of Internet usage worldwide. About 250 million people currently have regular Internet access in China, he said, and in India about 50 million do. Both countries have populations in excess of 1 billion.

"There is still quite a bit of [room for] growth in our industry," he said.


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