PURCHASING HOTLINE

Technology news and analysis for purchasing/supply chain management professionals

By -- Purchasing, 2/22/2001

Intel has taken an axe to its processor prices ranging from low-end Celeron microprocessors to the Pentium 4. The chipmaker chopped microprocessor tags 5%-42% depending on the type and speed of the MPU. The 1-GHz Pentium II was reduced 42% from $465 to $268 and the 933-MHz version dropped 31% from $348 to $241. The Celeron 766-MHz chip fell 34% from $155 to $112, and the Pentium 4 1.4-GHz chip was reduced $574 to $440.

Expect few semiconductor companies to offer a wide range of DRAM . The number of DRAM makers has shrunk from 28 in 1996 to 14. Because there are multiple kinds of DRAM , chip companies are specializing in building certain densities and configurations, according to market researcher Semico Research.

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Advanced Micro Devices (AMD) has introduced its new 850-MHz Duron processor. Compaq systems featuring the Duron processors were sold at the Consumer Electronics trade show in January. The 850-MHz, 800-MHz and 750-MHz AMD Duron processors are priced at $149, $112 and $88, respectively, each in 1,000-unit quantities.

Look for AMD to open a third microprocessor fabrication facility by 2004, but will likely share the space with another chipmaker to cut costs. The new facility will make processors using 300-millimeter diameter wafers to allow companies to produce more chips.

Hewlett-Packard is following the trend of offering low-cost PCs. The company rolled out its 7000 series in January. The HP Pavilion 7840 will sell for $799 with an Intel Celeron 766-MHz processor, 64MB of memory, and a 30GB hard drive. The HP Pavilion 7850 will have a $1,049 price tag and is powered by an Intel Pentium III 933-MHz processor, 128MB of memory, and a 40-gigabyte hard drive.

Is the cell phone boom over? Analysts came out of the woodwork to declare the end of the cell phone sales boom in January when cell phone maker Nokia Group reported below-forecast sales. Analysts say Nokia's 2000 sales figures suggest that consumers were not scrapping older phones and buying new Internet-enabled models.

Alliance Semiconductor reports no slowdowns in the SRAM market. In a recent report, Alliance President and CEO N. Damodar Reddy says the majority of the slowdown in its orders has been within its legacy DRAM products and not SRAM . Reddy believes Alliance is protected from inventory issues because of its practice of outsourcing manufacturing.

NEC says it plans to spin off a unit that makes high-speed chips for advanced networking devices and take it public within two years. Under the plan, NEC will make the unit a subsidiary in October and capitalize it at $102.7 million.

New data from Jupiter Research suggests companies will increase their spending on B2B e-marketplaces from $2.6 billion in 2000 to $137.2 billion by 2005. North American spending will grow from $2.1 billion to $80.9 billion. Currently, North American companies account for 81% of total spending, but by 2005, that figure will drop to only 60% of the total, Jupiter says.

Motorola expects growth in the semiconductor industry to drop as much as 15% in 2001, down from 36% growth in 2000. The company says the slowdown will pressure its sales and margins in the first half of 2001. In the second half, Motorola expects improvements with semiconductor sales and margins increasing sequentially.

Mitel has set up a new company to produce chips designed to boost the capacity and slash the cost of fiber optic networks. Mitel in December sold its office phone system and company name for $233 million to company co-founder Terry Matthews. The new company is named Optenia.

Dataquest and IDC released preliminary PC shipment data for the fourth quarter of 2000 and the full year. IDC reported only 0.3% year-over-year growth in the fourth quarter. U.S. PC shipments were down 3.6% from the third quarter. Analysts say this is the worst it's been in the history of the industry. Dataquest put U.S. shipment growth at 6.4% and 10.1% worldwide.

Expect Samsung to cut semiconductor investments by $940 million this year. Samsung's move comes as companies in the $30 billion DRAM chip market suffer product prices that have fallen close to or below cost, amid slumping demand from personal computer makers.

A new industry study predicts that the optical networking sector will continue to grow at a heated pace, despite the current climate of uncertainty. According to Dell' Oro Group, the demand for faster Internet networks will cause the worldwide optical transport market to double by 2005 to $57.3 billion from $23.5 billion in 2000.

Solectron is still active on the acquisition front. The contract manufacturer will buy Centennial Technologies for $108 million. Solectron will acquire all of Centennial's design, manufacturing and marketing capabilities, which include memory module and memory card solutions based on SRAM and flash technologies for OEMs and end users.

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Manufacturers could be 70% more profitable by connecting with trading partners via the Internet, according to a new study. A recent Deloitte Research survey of 850 manufacturing executives in 35 countries also found that only 10% have established "Digital Loyalty Networks"-the integration of supply chain processes with effective customer relationship management in real time.

IBM will begin selling a powerful laptop computer with an electronic note pad that stores handwritten notes. The TransNote computer has an electronic slate on the right that stores handwriting and transfers it to the computer. The computer will be available in late February for about $3,000.

The two biggest flash memory manufacturers have signed agreements with two major OEMs. AMD has inked a three-year agreement to supply a significant portion of Lucent's flash memory device requirements. The devices will be used in Lucent's wireless, optical, and data networking products, systems and solutions. Intel has signed a three-year deal with Cisco Systems to supply flash for Cisco's routers, desktop switches and cable modems.