NatSemi CEO looks to China
And working out with Microsoft
Interview ExtremeTech's Jim Louderback had a chance recently to sit down with Brian Halla, CEO of National Semiconductor to get an idea of how National is approaching the future. Since this interview was conducted, things have gotten dicey for the Silicon Valley chip company. The company announced that it was shedding its system-on-a-chip Geode business, and then late last week investor-activist Ralph Whitman announced that he wants two seats on the board.
Where is chip technology going?
All the fab stuff is going to China. Intel and AMD will try to maintain the process control roadmap for CMOS, but it's erroneous to think that this won't go to China too.
Since .5 Micron, the process technology roadmap has been dictated by the chip manufacturing equipment guys. The last major piece of equipment built in the US was when IBM microelectronics built a copper sputter.
Now it's Applied Materials, Nikon and Canon who determine what everyone's .13 micron process looks like. A big reason why Taiwan Semiconductor (TSMC) and other Taiwanese and Chinese foundry companies have been successful is because there's so much commonality that everyone uses. It's easy to move from one to the other's fab.
The largest consumer of semiconductor equipment today is TSMC. Who is ASML (another major semiconductor equipment vendor) going to take its orders from? TSMC, that's who.
Now what do we know about Taiwan? It's virtually already unified with China. Over half of the fabs have moved to mainland China. TSMC will be moving to Mainland China. They are who AMAT and ASML listen to. TSMC will be in Bejing, and that means that the process roadmap for our industry will also be dictated out of Bejing.
So China's becoming a huge force in chip development?
Every company needs a China strategy before its too late. Here are the three things they have to figure out:
- How do I take advantage of the explosive consumption that will happen in China. It's already a replacement market.
- How can I take advantage of the manufacturing opportunity in China?
- How do we deal with the China Brain Drain? They graduated more double E's (Electrical Engineers) than everywhere else in the world combined.
We're looking at China as a big opportunity.
So what will keep National competitive in a China dominated market?
We are an analog company. Analog engineers are raised not born. All these guys train under gurus, the training goes on for 5 or 10 years. And all the best gurus are at National, Texas Instruments and companies like that.
Why is analog so important?
In any cell-phone today, 3/4s of it is analog. Take the Sony Ericsson T66. It's done in four chips plus a power amplifier.. Three of those four are analog chips. Even with SPOT, analog has become a disproportionately large part of the circuits.
So if digital chips are going to China, what can Intel do?
Intel wouldn't know how to build an analog circuit. They could always buy someone. But Intel is so focused on Pentiums, they don't have time for anything else. Plus an acquisition probably wouldn't work out. Analog companies and engineers like to be the hood ornament not the tail pipe.
How is it being a CEO these days?
It is a bit of a stigma. My mom even called and said, "Are you embarrassed to be a CEO."
all put in the same bucket and we're all tarred with the same brush. It's nuts. They're going to kill stock options, so finally the east coast companies can get even. This is not about the old economy vs. the new economy. It's about the US losing its position to countries that are still hungry. Microsoft gets it, and that's why we're happy to have nine programs with them.
Nine Programs? What are they?
Well I have this paper here that lists all of them.
(As Brian reaches into his bag, his PR person tells him that some of them are still secret).
OK, what can I talk about? One of them is ultrawideband at .13 micron using just 350,000 gates. Ultrawideband doesn't need RF, you already have the speed and you just crank out pulses.
Another thing we're doing is smart displays with Microsoft. Smart displays are like a webpad grown up and a webpad shrunk down. If you use a PC in your home, it works great, but you need to run Windows Media Center. Version 1.5 of smart displays uses 802.11b, but there is some trouble with video.
Editor's Note: Even with National shedding the Geode business, the company still plans on working with Microsoft on Smart Displays, along with the other partnerships. Version 1.5, due in June but demonstrated this week at CeBit, will let you simultaneously use the smart display and your PC. In addition, another box due this spring will turn an old monitor into a "smart display" too.
But those smart displays are too expensive. What's going to bring the price down? We have to be able to get the glass for less than 100 bucks. That's happening now. $495 is the target price for this product. Our version of the reference platform is all our silicon and we just continue to forward integrate. Also, nothing gets the price down like getting the volume up.
What else? We're just scratching the surface with SPOT, soon we'll end up with a low cost FM radio that can go into everything and anything. Extrapolate from ultrawideband at 10ghz, where anything beyond .13 micron we get for free, we could easily have half a dozen 10 gig radios where we could pass around data just among ourselves.
Why did Microsoft come to National?
National is pointed in the same direction as Microsoft. Look at Geode for example. When we first showed the web pad in 1998, Bill Gates made three trips down to silicon valley to see it. (Editor's note: shortly after this interview, National ended the Geode project.)
What's your outlook for 2003?
I see us on an upswing again. I predicted that the recovery would be in full steam June 21st 2003 at 2:15 in the afternoon. Every quarter Craig Barrett gets away with predicting that the recovery is two quarters away, and I wanted to be specific.
But we actually did some thinking about this, we went back into history plotted and plotted out the business cycles. We looked at it, and it's just a sine wave, an envelope of minimum and maximum, with the width of the wave showing the time in boom vs. the time in recession.
We came up with an equation and plugged in the real numbers in. Some of the peaks were off by 2%, some by 5%, But then the guy who did it used a neural net to smooth it out, and it looked incredibly accurate. Then we cranked out the formula, and plotted the medium of the sinusoidal wave heading back up. It ended up being the end of the second quarter. So I picked June 21st because it's my anniversary. I figured if I picked June 21st, i'll always remember my anniversary.
When I announced it, the reaction was funny. Half of the people took me as dead serious, the other half said it was obviously tongue in cheek. But it's not that far off from what others are thinking.
When we get back in full swing, we see the same amplitude as we had during the dot com boom, during 2004. The peak is further outGet back in full swing, same amplitude of dot com boom in 2004, on the way up. The peak is further out, but I'm not going to tell you where it is.
Today we're seeing a volume pickup, but you never know. The lead times are so much smaller. The customers don't have to give us any visibility, because the semiconductor industry has excess capacity.
But the industry needs these periods, because all of a sudden you can get very complex technology for free. The price comes down, and brand new ideas incubate. That's because you can get what was previously high performance at a high cost, and now it's high performance at a low cost.
Where will National be in five years?
In five to ten years we expect sight and sound an information to be integrated together into a single chip. We'll be a major player in UltraWideband too. Beyond that we'll see radios that dynamically reconfigure themselves to look for the lowest cost, highest performance connection to the internet backbone depending on what you need and where you are.
We'll continue to work with Samsung on the display technologies. We'll continue to be drawn into the consumer market. Consumer electronics is such a big show. There's a huge blurring of the line between consumer and commercial. Is that laptop a commercial product or a consumer one?
Will you do an "Intel Inside" campaign?
We did this AOL Phillips set-top box, and one of our aggressive young marketers said, "if we give you a discount, can we get a 'National Inside' on the box." I put an end to that ? we're not doing a Nascar, we're doing a set-top box.
Do you see a killer app on the way?
Check this out (Brian pulls out what looks like a large yellow Tylenol caplet). This is a camera that does an endoscopy. It records 2 frames a second from launch pad to splashdown, and it completely replaces existing technology. Inside here is an imaging device, a radio, and a white LED driver. It shoots pictures for 24 hours. The pill costs $450, same price as flexible one, but much, much more comfortable. At National, the more we can suck everything onto one chip, the more we can do, more cheaply.
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