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Tracking the Big Semiconductor Story of 2012

Tracking the Big Semiconductor Story of 2012
by Ed McKernan on 01-06-2012 at 3:56 pm
Categories: Foundries, Intel Foundry, TSMC

It’s just a matter of time – perhaps just a few months – before the greatest mystery of the semiconductor industry is revealed and the peaceful co-existence of the Fab vs Fabless world is blown apart. An arms race was started by Intel to challenge TSMC and Samsung on who would control not only the high valued processor but soon to be much higher valued NAND Flash and SRAM that define mobility and data center peak performance efficiency. It is not, as many may claim, a battle between x86 and ARM architectures, it is rather an SRAM – NAND dominant memory based platform battle. The shift in our understanding will help explain the mystery as to why Intel is doubling Fab capacity starting in 2012 with the 22nm process even though the PC and server markets are expected to grow in low double digits.

I have written previously about the $10.8B capex build that Intel just completed in 2011. During these past 12 months at every earning call or analyst conference, Intel executives have been cross checked on the wisdom of the massive build out and whether there would be delays, slowdowns, cancellations, pushouts etc… Otellini and company stuck to the strategy and to add a little gasoline to the fire decided to bedevil the analysts with dividend hikes and massive stock buybacks, which will accelerate earnings in 2012 and beyond. This is like FDR telling the war department to get cranking on 50 more aircraft carriers in 1944-45 after having built 83 in the two years prior even though the remaining Japanese carriers numbered in the single digits and the Germans had none to begin with.

It finally occurred to me over the holidays as I was reading the estimates of the Ivy Bridge die size at roughly 25% smaller than the 32nm Sandy Bridge die that Intel had much bigger plans in store for 2012. Ivy Bridge is a shrink of Sandy Bridge with a beefed up graphics controller in order to support DirectX 11 but unlike previous shrinks – there are no additional processor cores. And yet Intel has rushed the conversion of three fabs to 22nm, added a 4[SUP]th[/SUP] fab for 22nm, broke ground on a 14nm development fab that is 60% larger than the previous in order to ramp production immediately and then to top it off decided to build a new 14nm production Fab for late 2013 production ramp. According to Intel, total fab square footage by end of 2013 will be twice what it is today. There are three possible markets, beyond what Intel is building for today that will take advantage of this capacity – and I believe all three will see the light of day in 2012.

The first and obvious one is that Apple will be moving into Intel’s Fabs starting sometime in 2012. Apple’s incredible growth planned for 2012 based on roughly 300M CPUs (Closing in on the number of x86 chips Intel ships) can only be stopped by the words “Lines Down.” The Japanese earthquake and Thailand Floods have exposed the fallacy of the taut just-in-time manufacturing philosophy. No amount of build-ahead stocking can be as effective or economical to Apple as having multiple Fabs building the same product worldwide with guarantees of upside to replace any loss due to “Acts of God” or the imposition of trade barriers that are in the thoughts of many politicians. Furthermore, one can not overlook the trashing of the US dollar that has taken place during the Bush-Obama years that works to the favor of companies who have production facilities in the US (thus Samsung’s new Fab in Texas). Ensconced in Taiwan, TSMC’s business model is at risk to being uncompetitive if the dollar continues to decline. Intel, on the other hand is way ahead of the curve with Fabs in Oregon, Arizona, New Mexico, Ireland and Israel. And when all the dust settles, will probably pickup a certain fab in Dresden at fire sale prices in order to setup a very public cross Atlantic Ocean auction to decide who will be home for the world’s first 450mm wafer. Unless America has a Sputnik Moment, my bet is on the region with the better Bureaucrats.

Tim Cook’s master logicians have implemented the world’s first Virtual Vertical Manufacturing Operation with relatively little money down but first dibs on the latest technologies at Costco prices. They will not have the same leverage with Intel but they will gain access to the process technology that Qualcomm, nVidia, Broadcom and the rest will not have. So Intel can still make 60% Gross Margins while Apple undercuts their rivals in die size, packaging size, power and cost. 22nm is the process that is sending fears through the fabless community (as Morris Chang recently noted) as Intel has reduced standby power by 10X, meaning ARM’s mobile advantage is gone. Though they operate on different game plans, Intel and Apple have a common goal of knocking Samsung out of the game in order to dominate their respective markets and so they will become Allies in this endeavor. Longer term, Apple will need Intel’s process technology in order to smother Amazon’s tablet effort before it gains steam.

Micron’s latest earnings conference call can be described in short as toss the DRAM overboard, it’s Game-On in the battle for NAND Flash Supremacy. The Intel-Micron joint venture looks to leverage Intel’s process lead with Micron’s low overhead business model to win the battle for not only SSDs but also in the die stacked x86CPU+Chipset+NAND configuration that will see uplift in the ultrabook market in 2013. Intel will drive ultrabooks in ever smaller, thinner formfactors while raising their semiconductor content to the exclusion of AMD and nVIdia. If Samsung wants a piece of the action, then they may need to acquire AMD and head down the same road. The market dynamics here offer tremendous upside to Intel and will be the 2[SUP]nd[/SUP] area of Fab capacity utilization.

The third market segment that Intel will attack with its new fab capacity is one that is so logical that I can’t believe it is not being discussed more in the semiconductor techno-sphere. And yet to understand it you have to make a connection to the business opportunity that has been discussed in bits and pieces by Otellini and Data Center VP Kirk Skaugen. Back in the first half of 2012, Skaugen mentioned that Intel’s highest end Xeon processor that sells for over $4000 offered the best ROI to data center customers. The payback they saw in using high end Xeons was in months not years. Furthermore, Intel has raised prices on Xeon and not seen push back, meaning prices will continue to march higher. The ROI is driven by the large Level 3 (L3) caches that allow workloads to stay on chip instead of going to DRAM. So the logical conclusion is that Intel should build even bigger caches and charge more money. However the current Xeons are maxed out on die size.

This is where I see Intel building L4 caches stacked with the Xeon die and offering a new level of performance/watt that can be priced hundreds to thousands of dollars more than the current Xeons. What’s more this new business opportunity allows Intel to ramp 14nm sooner (as they have stated is their goal) with an SRAM product that serves as the process pipe cleaner and is a natural as a much faster yield ramp than any processor Intel builds. The new L4 Cache can eat up lots of wafers, effectively that generate 80-90% gross margins and become a new multi-billion $ business.

In just two short years, as 14nm begins to ramp, Intel will be completely transformed as a company. The x86 vs ARM battle will not be fought as the analysts expect. Dominance in the semiconductor business will have been fought over the superiority of the closely coupled CPU – SRAM – NAND platform of which the latter two will play a greater roll in the value of a platform and end up consuming the most die area and wafers in the Fab. The CPU instruction set and architecture are small potatoes in the overall platform.

Of the three contenders, Intel is the best positioned with process technology and current market standing to move mobiles and servers over to the new memory dominating platforms. Samsung is fighting a two front war with Apple and Intel. TSMC is behind in process technology and SRAM design and does not have a play in NAND – perhaps we will see a partnership form with a leading NAND player.

And so now we can sit back and watch how the biggest semiconductor story of 2012 unfolds as Intel launches its 22nm process.

FULL DISCLOSURE: I am Long AAPL, INTC, ALTR, QCOM

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What Dolpin Technology Uses for SPICE Circuit Simulation of IP

What Dolpin Technology Uses for SPICE Circuit Simulation of IP
by Daniel Payne on 01-06-2012 at 12:32 pm
Categories: Uncategorized
8 Comments

Mo Tamjidi founded two Semiconductor IP companies Virage Logic and Dolphin Technology. After reading a press release about how Dolphin Technology is using FineSIM SPICE from Magma I decided to contact him and learn more about why they are now using that circuit simulator in the design of their memory, standard cells, and IO cells.

Continue reading “What Dolpin Technology Uses for SPICE Circuit Simulation of IP”

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EDA Vendors Providing Secure Remote Support for an IC Design Flow

EDA Vendors Providing Secure Remote Support for an IC Design Flow
by Daniel Payne on 01-05-2012 at 5:38 pm
Categories: EDA, Siemens EDA

In my last corporate EDA job I had customers in Korea that were evaluating a new circuit simulator and getting strange results. When I asked, “Could you send me your test case?” the reply was always, “No, we cannot let any of our IC design data leave the building because of security concerns.”
Continue reading “EDA Vendors Providing Secure Remote Support for an IC Design Flow”

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Is Indian Semiconductor Relevant?

Is Indian Semiconductor Relevant?
by Daniel Nenni on 01-03-2012 at 9:42 pm
Categories: General

A common discussion amongst semiconductor professionals is the ROI of development activity in India. An interesting number I remember hearing at Virage Logic was that the development groups in India had a 30%+ turnover rate. Is that still the case? If so, that is very hard on the ROI.

Here are the 2012 SemiWiki geographical statistics from India as another data point on the relevance of semiconductor in India:

According to LinkedIn there are 14,897 semiconductor professionals in India out of a total of 137,799 on LinkedIn (10%+). All of the big semiconductor companies are there: 1,994 have worked for Intel, 321 for Samsung, 786 AMD, 474 Qualcomm, and 495 Broadcom. EDA companies as well: 167 Mentor Graphics, 557 Cadence, 699 Synopsys. IP companies too: 322 ARM. Data is so much fun to play with.

So you tell me, is India relevant for semiconductor design and manufacturing? Is the Indian Government helping? What does the future hold?

Speaking of Indian Semiconductor (nice Segway) it was interesting to read that one of my favorite EDA companies, Berkeley Design Automation, was announced as the winner of the Indian Semiconductor Association’s TECHNOVATION 2011 award. This award is one of the most prestigious for Electronics and Semiconductors in Asia. The award recognizes the most innovative multinational company with R&D operations in India.

“The ISA Technovation awards of December 2011 have been constituted with an aim to recognize and honor India’s best individual contributors and organizations that drive the semiconductor and ESDM industry forward,” said Mr. PVG Menon, President of ISA. “Berkeley Design Automation won this award as recognition of the company’s breakthrough leadership and technical innovation in nanometer circuit verification.”

BDA competed against 80 other multinational companies with operations in India and came out on top for innovations and advances in nanometer circuit simulation. Believe it or not, BDA was the first EDA company to win this award!

The other news I have from India is the 25[SUP]th[/SUP] International Conference on VLSI Designwill be next week in Hyderabad. Unfortunately/fortunately, next week I will be in Las Vegas for CES with my beautiful wife. You can meet us at the GlobalFoundries party, on the floor of the conference, or the Hilton Resorts Spa.

Magma CEO Rajiv Madhavan is a keynote speaker, that should be interesting. Other keynotes are from Intel, AMD, Zilinx, IMEC, Cadence, and some University people. The most interesting panel looks to be:

“SoC Realization – A Bridge to New Horizons or a Bridge to Nowhere?” System on Chip (SoC) Realization is the emerging market that bridges the gap between an electronic system concept and its implementation in silicon.Professor P.P. Chakrabarti, IIT Kharagpur, will moderate the panel to explore and discuss the meaning of SoC Realization and its impact on the cost and schedule for advanced SoC designs.

  • Atrenta – Mr. Sathyam Pattanam, Senior Director Engineering
  • Broadcom– Subhash Chintamaneni, Senior Manager, DTV Division
  • Cadence– Raju Pudota, Group Director, Flash IP Engineering
  • Freescale– Ganesh Guruswamy, Vice President and Country Manager
  • InfoTech Enterprises– Ram Gollapudi, General Manager, Hi-tech Business Unit
  • Seer Akademi –Srikanth Jadcherla, CEO, Electronics Education Company
  • ST– Rajamohan Varambally, Director Technology R&D
  • Synopsys –Vikas Gautam, Director, Verification and IP products
  • TI–Mahesh Mehendale, TI Fellow and Director, Center of Excellence for VLSI


Atrenta is also a favorite of mine. Offering a superior level of abstraction, they put the realizationin SoC Realization! With a superior level of accuracy, BDAputs the realizationin Silicon Realization!

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Altera’s New Dual ARM® Cortex™-A9 SoC Arria® and Cyclone® V FPGA Families

Altera’s New Dual ARM® Cortex™-A9 SoC Arria® and Cyclone® V FPGA Families
by Daniel Nenni on 01-03-2012 at 7:29 pm
Categories: Arm, FPGA, IP

Altera recently introduced versions of their new Arria® and Cyclone® V FPGA families that incorporates a dual ARM®Cortex™-A9 MPCore hard core. These parts are particularly interesting to NARD as it’s consistent with the NARD concept of offering platforms unified by a common ARM® host core and a variety of controller/coprocessor cores. Continue reading “Altera’s New Dual ARM® Cortex™-A9 SoC Arria® and Cyclone® V FPGA Families”

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Semiconductor IP Dilemma?

Semiconductor IP Dilemma?
by Daniel Nenni on 01-01-2012 at 3:00 pm
Categories: Uncategorized
14 Comments

Just how many hands have touched your SoC design by the time it goes to manufacturing? Clearly the more hands that touch it, the more complex the design is, making it more difficult to meet your product requirements. The commercial semiconductor IP dilemma is that not only are you using the same IP as your competitors, you are exponentially increasing the number of hands that touch your SoC.

The semiconductor IP dilemma was discussed in detail during a 2+ hour conversation, a $70+ sushi lunch with Dr. Jen-Tai Hsu, the Senior Director of the Global Unichip Corp. (GUC) USA R&D Center. Here is a tip: do not take me to lunch at one of those places where the boats of sushi float by because I will sink a fleet of them! Before joining GUC, Jen-Tai spent 12+ years at Intel so he knows IP. He also has an impressive list of patents and a dozen more pending. Four years ago GUC was an IP baron design services provider. Now GUC has a full lP portfolio with custom IP design groups in Taiwan, China, and Silicon Valley. Global Unichip is now a truly flexible ASIC provider!

Semiconductor design and manufacturing outsourcing has expanded our world to $300B+ so I’m a big fan of it. It’s all about design starts and whatever we can do to enable them. That’s why I work closely with the foundries and emerging EDA and IP companies, to keep those design starts coming. Services are also an important design start enablement function but scaling a price centric business in today’s economy is daunting. In fact, I have yet to see it done successfully. eSilicon, Open-Silicon, Alchip, Verisilicon, etc…….. There are more than a hundred semiconductor design services companies competing for the same business, using commercial semiconductor IP, with cost as the primary differentiator. A hundred of hungry dogs eating from one bowl, not a pretty sight!

Based on the overwhelming success of the GUC business model (tight integration with the number one foundry and flexible ASIC strategy) here is what needs to happen moving forward:

The Intel Foundry Group will buy eSilicon. Intel must have a buffer between them and the foundry customer to be successful. They must also have intimate knowledge of the commercial semiconductor design ecosystem which eSilicon certainly has.

Samsung Foundry Group will buy Open-Silicon. Samsung has the same challenges as Intel so if they are truly serious about the foundry business they will also need a customer buffer.

SMIC will buy VeriSilicon, or maybe VeriSilicon will buy SMIC? They are already neighbors so this is an easy one.

TSMC has GUC, UMC has Faraday, and GlobalFoundries has Socle. With advance process nodes it is not possible to have tight integration with multiple partners, just ask Tiger Woods.

As the semiconductor design and manufacturing landscape continues to evolve over the next decade, the question is: Who will be left to compete with TSMC and GUC?


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Micron Races to Its Future

Micron Races to Its Future
by Ed McKernan on 12-31-2011 at 2:01 pm
Categories: Uncategorized
1 Comment

Perhaps no semiconductor company took it on the chin harder the last half of 2011 than Micron. And yet, perhaps no company was racing as hard as Micron to make a radical changeover. Micron is considered a bell weather on the overall health of the semiconductor industry given that DRAM, NAND and NOR Flash are used in some combination in every piece of electronic equipment. But sometimes economics and geopolitics come to the fore and, watch out, the DRAM market tanks. For Micron, the Future is not standard commodity DRAM, it is High Performance Servers and NAND Storage. Both have processor vendors as partners and some interesting innovation on the horizon.

Jim Handy, the storage and semiconductor analyst, wrote an article in Forbes this past week that made me stop for a second and think about the difference we see in DRAM economics vs. the traditional kind taught in college and MBA classes. The traditional one says that markets seek a balance between supply and demand and that price is the arbitrator. If supply overshoots, then a lower price results and demand picks up to restore the balance. In Jim Handy’sarticle, he includes a chart (see to the left – source:Forbes) that shows over the last 20 years DRAM demand has been constant despite gyrations in pricing. Therefore, if prices drop dramatically there is not a significant uptick in demand. Meaning this doesn’t adhere to normal economic theory. Micron, Samsung, Elpida and Hynix would be much better off forming a cartel and agreeing to only build capacity at less than the 50% bit yearly growth rate that has been observed over time.

The alternative to the cartel, that won’t happen, is to move to other greener pastures. NAND Flash has the high growth rate of Smartphones, Tablets and now ultrabook PCs behind them and in the near term should provide some shelter but Micron will need to forge partnerships with processor vendors to develop higher performance links between the CPU and Memory in order to create value at the expense of trailing edge DRAM. DRAM growth in the Apple ecosystem is not happening in Smartphones and Tablets: it’s one chip (the lowest density) and done.

The most interesting initiative that Micron has on the table is the joint venture with IBM to develop what they call the Hybrid Memory Cube. Essentially it is a 3D structure of stacked memory chips connected in parallel to a memory controller or processor that is at the base of the substrate using Through Hole Silicon Vias (TSVs). The technology offers space savings but the most important aspect is increasing the bandwidth between processors and memory. Micron claims that bandwidth on today’s prototype is 128GB/s or a 10X improvement over DDR3.

Over the past ten years as the Data Center build out has increased, operating power and cooling has grown generation to generation to the concern of many. The culprits are the processor and DRAM. Ten years ago it was mostly from the processor. Now it is evenly split between the two as the DRAM footprint has grown and the processor to memory performance gap has widened. Some of the footprint growth is due to VMWare and virtualization.

Intel has been able to capitalize on the growing DRAM power trend by recommending that data centers use the highest performing, highest price processor, which happens to have the largest on chip cache. These large caches allow more of the workload to stay on chip and be performed at a lower power budget (fewer clock cycles) than going off-chip to DRAM. If Micron were able to close the performance gap significantly then some of the value of the server would migrate away from the processor to DRAM. However, the processor vendors will likely take the step of packaging it all together and offering it as a combined solution and thus retain control of the server platform pricing. This is where Intel, AMD, nVidia and IBM are surely headed. Whoever gets there first has an obvious advantage.

The 3D Hybrid Memory Cube is due to be in production second half of 2013. Micron’s biggest challenge will be to build a business model around it with processor and data center partners that allow it to escape the dreadful economics of standard DRAM and capture the value add of a much higher performance/watt metric that Intel has put in place with its Xeon server processors. I can see Intel expanding its current relationship with Micron, which is based on a joint manufacturing agreement on NAND to include 3D DRAM, in order to maximize its control and pricing of the servers targeting data centers.

Full Disclosure: I am long AAPL, INTC and ALTR


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America Heads Into a Generational Turn

America Heads Into a Generational Turn
by Ed McKernan on 12-30-2011 at 7:24 pm
Categories: Uncategorized
3 Comments

America has received a gift whose consequence and magnitude is just now unfolding before our eyes. Taken to its limits, it may in the course of the next decade finally free us from many of our foreign entanglements while lifting the economic burdens from the working majority that has seen their wages stagnate for the past 40 years. I am writing of course about the natural gas boom that has taken hold across a large part of the country, but more specifically in an area I am most familiar with – northern Pennsylvania. For the first Christmas in several years I have returned to my hometown of Williamsport and discovered a blue-collar turnaround that resembles in some ways the emerging semiconductor industry of the 1970s. It’s a bottoms up led opportunity that is embraced by many and out of the sight of the governing class.

Williamsport proper is a town of 30,000 that sits at the center of the natural gas drilling and is the largest city within Lycoming County, which has a population of only 116,000 even though it is larger than Rhode Island. The city plays host to the Little League World Series every August somehow figuring out how to house the thousands of visitors who make their way – mostly by car from the larger airports that are anywhere from 100 to 200 miles away. Geographically Williamsport is unique in that it is a city that is 200 miles equally distant from New York, Baltimore, Philadelphia, Pittsburgh, Buffalo and Washington DC and thus was attractive as a locale for industry trying to reach markets with large populations.

A generation ago (call it 40 years), the economic decline of middle America, represented by communities in Pennsylvania, Ohio, Michigan, Illinois was set in motion by the forfeiture of energy independence to OPEC. In 1973, oil prices quadrupled. In 1979, there followed a further tripling. The natural inclination of high school graduates like myself was to go off to a different part of the country where opportunities were greater. For me, the logical choice was high tech.

For the past two years I have following the economic revival across the country that is based on the new drilling technique called horizontal fracking that applies to oil fields in North Dakota and gas fields in the Marcellus Formation, which stretches from upper state New York down through Pennsylvania and into Ohio and West Virginia. In a matter of just a handful of years, the estimates of retrievable natural gas have exploded to several hundred years. In addition, the cost to drill has dropped dramatically – at a rate that would look like a Moore’s Law Curve.

The first order impact of the natural gas drilling is that gas is now 75% cheaper than oil on an equivalent energy basis. The drop in price is so dramatic that many northeasterners who are still heating with oil are shelling out $2,000 to make the conversion of homes to gas from oil and estimating a two-year payback. The second order effect is much more interesting. Story after story abounds of various industries (e.g. chemical and steel) springing back to life because of cheaper natural gas (see story here).

Williamsport has experienced boom times before. In the 1870s and 1880s it was the lumber capital of the world. The rolling hills of the Appalachian Mountains that surround the city provided the lumber that was cut then transported by the Susquehanna River down to the lower cities and eventually to the Chesapeake. At one time the city had more millionaires per population than any in the world (The High School Mascot is named “The Millionaires”). The river, which facilitated the transport of lumber, had a tendency to flood after days of heavy rains. And so in 1889 it came to an end when one such flood wiped out the lumbering infrastructure.

As I drove into town this week, I saw hotel after hotel springing up along the highway that runs along the river (that is now protected by a 36 foot high dike). The hotels are 30-40% occupied by the hundreds out of town workers brought in by Texas oil and gas companies to supplement the local hiring. A Starbucks and Panera Bread Restaurant have moved in. Just beyond the downtown are the many smaller homes built in the early 1900s to 1930s. Some are in need of repair and serve as reminders of what high energy prices during the past 40 years can do to a family budget All in all though the resurgence is noticeable and in 2010 Williamsport was ranked as the 7[SUP]th[/SUP] fastest growing city in the US.

If one were to compare it to the semiconductor industry, my guess is that the fracking technology is at the place semiconductors were in the early 1970s. The technology has been in development for many years but just became economical in the last 3-4. The widespread use of it and the focus in remote areas such as the mountains and small towns that surround Williamsport mean that it will be hard to stop as the vested interests outweigh environment roadblocks.

In the early 1970s, the semiconductor industry was just starting to blossom. In quick succession, the DRAM, EPROM and Microprocessor were born. ASICs, PLDs, FPGAs and Flash followed in the 1980s and 1990s. Robert Noyce and Gordon Moore could hardly have imagined in the early 1970s that semiconductors would be a $300B business today.

The message that I take away from my experience in the semiconductor industry and the hometown revival of Williamsport is that great industries are a bottoms up activity that are little noticed until they become significant. During these past four years a top down mandate to develop solar and wind power has failed to make more than a minor dent and then only with great subsidies and political intervention. In this same time period, gas has had a greater drop in price and is now even more economical that coal for generating electricity.

I will make an out of the box prediction that I have been thinking about for some time. The 2012 presidential election will be decided in Pennsylvania. In 2000 it was Florida and in 2004 it was Ohio. This election will come down to the one state that has the electoral heft to swing the election and also has The Major Theme to be debated over by a great majority of the people of this country. Are we to base our future on solar and wind that are proving to be uneconomical for at least another 10 years or do we remove the roadblocks to natural gas development that leads to significant job growth and energy independence. The significance of this theme is that I believe it will lead to a reshaping of the American Economy and the Political make up that is to follow. Just as the South turned Red with Reagan in 1980 and both coasts turned blue with Clinton in 1992, now what has derisively been labeled the Rust Belt for 40 years may turn Red with America’s Generational Turn.


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Happy Holidays From SemiWiki

Happy Holidays From SemiWiki
by Daniel Nenni on 12-25-2011 at 4:38 pm
Categories: General


It has been an amazing year for us so we wanted to thank you all for being a part of the Semiconductor Wiki Project!

The SemiWiki Bloggers are off this week and will return the first week of January. During this time there will be a major SemiWiki software update. There will be performance upgrades and lots of new features to enhance the SemiWiki experience.

Safe travels and have a Happy New Year!

-SemiWiki Staff