Feeds

Microprocessors are the new cigarettes

JP Morgan urges chip CEOs to inhale

High performance access to file storage

Chip companies need to start acting their age, according to a sage analyst.

Chris Danely, director of semiconductor research at JP Morgan, thinks the major semiconductor players should behave more like old-line companies in the tobacco, food and oil games. He'd like to see the chip firms manage their cash better and reward shareholders with larger dividends. He'd also like them to slash the hell out of their research and development budgets and stop acting like super fancy innovators when they're really just stodgy manufacturing machines.

"Think more like Phillip Morris and less like Google," Danely said. "I know it is very hard to talk like this."

Danely's line is especially hard to swallow out here in Silicon Valley where besting the competitive turmoil that stems from Moore's Law through innovation is meant to be the goal. But that didn't stop Danely from cramming his pitch right down the gullets of Valleyites during last night's annual "Semiconductor Forecast" event held by the Churchill Club.

Other speakers at the event echoed some of Danely's underlying sentiments. The rather mature chip industry looks much less volatile nowadays as compared to even just 10 years ago when boom and bust cycles were the natural companions of silicon. Now, we find an industry that grows revenue at about 10 per cent per year or twice the US GDP.

"There are tons of industries out there that would love to have 10 per cent growth," Danely said. "Now that we are out of this hyper-growth phase, it is time to run semiconductor businesses more like a normal company."

Danely seemed quite taken with Mark Hurd's approach at HP, celebrating the decision to "cut some unnecessary R&D projects" and to manage cash "very efficiently."

Speaking about the chip industry in this way certainly removes a bit of its luster. But Sangeeth Peruri, another panelist and managing director at big money house J. & W. Seligman & Co., said that the chip industry's maturation and stabilization opens up some new opportunities for investors.

Investors now have the time to take closer looks at companies' fundamentals and management. So, you can buy into a company after careful study, worrying less about whether you're timing the purchase for the right cycle, since the cycles are less dramatic these days.

"You used to get killed if you got the cycles wrong," Peruri said.

A number of the analysts expressed concerns over the US tax rebate handed out this year. They expect the boost to fade in the coming months and wonder how that dwindling cash will combine with still struggling banks and a still grim housing market.

"I think we are going to have a recession," Peruri said. "I don't know when it will hit."

But things aren't all so grim.

High performance access to file storage

More from The Register

next story
Sorry London, Europe's top tech city is Munich
New 'Atlas of ICT Activity' finds innovation isn't happening at Silicon Roundabout
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Did a date calculation bug just cost hard-up Co-op Bank £110m?
And just when Brit banking org needs £400m to stay afloat
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
prev story

Whitepapers

Securing web applications made simple and scalable
In this whitepaper learn how automated security testing can provide a simple and scalable way to protect your web applications.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
HP ArcSight ESM solution helps Finansbank
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.