Motorola Spins Off Semiconductor Business

[GPTurismo]

Whenever a company spins off a money loosing department of that scale they re doing it for a buyout. End of story. Maybe IBM will chomp down on the little guy and take over all manufacturering of PPC's.

That is if they are through with SCO's bones in the near future ... <eg>

 

[NicoMan]

Originally posted by Rocketman
So part IPO and part stock swap. Motorola shareholders will have "free" shares of SPS (whatever they will eventually call it). Only the IPO portion will capitalize projects and the reason Mot is sumping SPS is because it was hemmoraging cash. One wonders if a spinoff can solve that AND maintain any impressive R&D.

I got the impression SPS was being groomed to be a subletting jobshop with a few value added in-house functions.

Rocketman

Well it is going to depend on what sort of ratio IPO/swap they are going to go for, as well as exchange ratio for the stocks. All in all, you can't escape the valuation process, which means that Moto will HAVE TO make SPS look good on paper.

 

[Lanbrown]

Yamabushi,

What are you talking about? Sun does not have a HQ in Texas; their HQ is in California. Sun uses the fabs at Ti for their chips; they have had a long partnership with them and won't be moving anytime soon. Ti showcases the SPARC processor, learns a few things and might even be able to license Sun technology for their own use. There is no way Sun would go to the PowerPC platform, mainly for two reasons. First, binary compatibility would be gone. This is why Sun retains so many customers and why they are number one in market share. The second is because IBM uses it.

You are forgetting that Ti has some experience and technology that IBM and others can't use and is the best in the industry. There is no reason why Sun would want to leave Ti. All SPARC processors are made in the US in a Ti plant. That shows commitment from Sun.

Running your own fab is very expensive; Apple does not sell enough processors/chipsets to warrant one. A fab needs to be close to full capacity to pay for itself and keep it up to date. If you have a fab(s) that are not fully utilized, the cost cannot be justified to upgrade it. A perfect example is the Motorola semiconductor division. They have just moved to .13 while the rest of the industry is moving to .09.

 

[Phinius]

IBM is also losing money on chip fabrication

Originally posted by Stike
Bye bye Moto... we will never look back.

Hello IBM 🙂

IBM Power chip line is increasingly being squeezed by Intel's Itanium processor and IBM has been losing money at chip making for some time. So the future for IBM's Power chip business is kind of cloudly long term.

 

[MadMan]

Originally posted by GPTurismo
Maybe IBM will chomp down on the little guy and take over all manufacturering of PPC's.

IIRC, Moto's SPS doesn't do most of their own manufacturing any more. They outsource. This could be the reason why they are having a hard time getting the process down and delivering faster, smaller chips.

Most contract fabs are still using the .13 process and will be farther behind the shift to .09 then a company like IBM or TI that has it's own fabs and a good .09 process. I think that even Intel is having problems moving to .09.

FWIW, while I'm EXTREMELY happy that IBM is moving rapidly ahead with the G5, et al, I hope that SPS, using it's soon to be freedom from Moto, will get back in the race and be a good second source for Apple to use/choose from.

😎

MM

 

[DeusOmnis]

Although the new Moto spinoff would be better than just moto by itself, IBM is still a much better choice since IBM is focusing on putting out excellent chips for Apple and IBM has excellent resources throughout the entire company. Also, the spinoff is likely to focus on application processors and it is likely to be a small company.

 

[Mr. MacPhisto]

Re: Motorola Spins Off Semiconductor Business

Originally posted by Macrumors
Motorola has announced that it is spinning off its semiconductor business into a separate publicly traded company.

The move is said to reflect Motorola's "increasing focus on finished communications products, such as wireless networks and cell phones."

Motorola's Semiconductor group is responsible for their version of the PowerPC processor, that has been used in Apple's laptops and desktop machines in recent years.

I think that this is great news for Apple. If new management can get the semiconductor business in order under this spinoff then IBM has got two sources for PPC chips that can be manufactured to suit various needs. Moto's semiconductor business was once the best in the business, keeping Macintosh ahead of the PCs in speed and overall strength of processor until about 2000/2001. They've stalled the past few years, but I think that has a lot to do with Moto's shifting focus. Now the spinoff will be able to get some new $$$ with a public sale and be able to focus solely on chip manufacture. We may see a next generation PPC from Motorola sooner than expected, giving Apple the ability to have very diverse chip offerings and, with luck, lower costs.

 

[NicoMan]

Originally posted by MadMan
Most contract fabs are still using the .13 process and will be farther behind the shift to .09 then a company like IBM or TI that has it's own fabs and a good .09 process. I think that even Intel is having problems moving to .09.

The reason why Intel is having trouble moving to a 0.09 process is that they have chosen a different technology path. IBM and Moto have chosen to rely on Silicon On Insulator (partnership with a company called SOITEC Silicon), when Intel has chosen the Strained Silicon technology (I think that recently they started looking at SOI after encountering loads of problems, but I am not 100% sure). Moto's problem stemmed from the fact that they didn't want to invest in state-of-the-art facilities, hence their poor yields, because chip-making wasn't a priority.
Let's hope that the spin-off SPS will have a very different focus.

 

[cubist]

Originally posted by Goblin2099
Guys, they're not doing this to help their semiconductor business. The point of this move is to make their balance sheets look prettier: their semiconductor division is losing so much money that the stuff they actually make a profit on isn't an alluring investment. This way, Motorola-proper can actually look like a decent company while Motorola-processors dies a slow death in the corner with no one watching.

Exactly right. And to go one step further, think about what moto-processors will do: They will kill any product lines where they are not moving a significant number of chips. Where do the vast majority of PowerPCs go? Embedded systems. Apple's business is a big headache for a small number of chips.

 

[fred]

Any guesses as to how long it'll take the Moto Semiconductor spinoff stock to achieve penny stock status ?🙂

On second thought that ain't so funny...it may happen in an awful hurry !

 

[Marble]

How will this affect Apple's current G4 production rate? Is this group just the research group or do they also handle fabrication? What would Apple have to do if Motorola suddenly could not deliver all the G4s that they need for Powerbook production?

 

[X86BSD]

Originally posted by Fender2112
I wonder if the new company will continue the AIM partnership. Maybe IBM will be the buyer.

Thats not true. Sun stopped using BSD a long time ago. It's SYSV based. And is quite a steaming POS imo. But I despise SYSV unix in all forms so that is not shocking. The only redeeming quality of Sun is the HW side. And even then it would have to be an attractive price tag.

 

[wrldwzrd89]

Yay! (Hopefully...)

I hope that the spinoff does FAR better when separated from Motorola than they did when still together. This way, Apple has two competent suppliers of PowerPC chips. If the semiconductor portion fares poorly, though, Apple could be in trouble. My first thought is, "What's Apple's reaction to this news?" Knowing this would make the outlook quite a bit clearer.

Edit: Yay! I'm a member now!

 

[dho]

steve is throwing a party right about now,

he could have annother option for chips very soon

 

[shadowself]

Re: IBM is also losing money on chip fabrication

Originally posted by Phinius
IBM Power chip line is increasingly being squeezed by Intel's Itanium processor and IBM has been losing money at chip making for some time. So the future for IBM's Power chip business is kind of cloudly long term.

IBM may be losing money on its own chip (POWER4 & POWER5) runs. However, IBM is turning the corner on all its fab lines as it is supplying chips for many customers and as of late this past summer solved virtually all of its production problems. Its biggest problem right now is keeping the fab lines fully utilized.

As for the Itanium putting pressure on the POWER chips... since when? The POWER5 is/will be better than any Itanium which comes out in the same time frame. All the top systems being installed over the next 2 years or so are planned on being POWER5 based. I know of none -- absolutely none -- of the top systems which will be Itanium based.

As for the long term of IBM's chip fab business being "cloudy"... that is 100% FUD. IBM is the only company with its own synchrotron light source. IBM has been experimenting with that type of source since before 1985. (They may have been doing it before them. I just spent some time with them in 85/86.) Others (including Intel) have been experiementing too, but for a much shorter time frame. Want to go smaller than 65 nm? Then you MUST get into this type of source. IBM has a huge lead in experience here. Intel and others will undoubtedly catch up, but it will take them A LOT of time. For at least 5-8 years I don't expect to see the competitors where IBM is with very short wavelength systems.

As of today, IBM's chip future is as sound as anyone else's -- even Intel's. In 10 or 15 years who knows? But until then, stating that IBM's chip future is cloudy is ludicrous.

 

[yamabushi]

build a fab

My point was that Apple needs to grow in order to be more competitive and thus become a more viable alternative for more computer users. That means taking risks. One way is to acquire others another is to partner with others in growth ventures. The fab is just one idea but I still don't think the idea is so crazy. There is still demand for new and better chips. TI is building just such a fab. http://www.internetnews.com/infra/article.php/2230971
I just thought Apple could get in on the action. Sun already has many engineers and managers on site at an older TI fab in Texas which is where the Sparc is made. If Apple owned Sun, they would have to go along with whatever Apple execs told them to do. The current Sparc is pretty weak compared to current IBM and Intel chips. Sun desperately needs a new chip soon or they will continue to lose customers despite their famous record of binary compatibility. Sun is also bleeding cash and is ripe for acquistion.

Whatever Apple decides to do - they need to think beyond their current boundaries if they ever want to get back to a comfortable market share.

 

[Phil Of Mac]

Originally posted by yamabushi
IBM is doing a great job, but is it a good idea to rely upon a single supplier? Also, while IBM and Apple are friendly right now, who knows what the future holds? IBM might get annoyed if Apple performs a miracle and gains market share for high end servers, for example.

While many things can happen between Apple and IBM to threaten the partnership, this isn't one of them. IBM is in the business of providing IS solutions to businesses. Their enterprise systems and high end servers are nothing but a means to that end. Apple is in the market of low end servers, and is unlikely to compete with IBM there. That said, if Apple intends to push into enterprise more, I am certain that they have discussed this with IBM as part of their partnership. Perhaps part of the IS solution IBM will offer in the future will be Apple systems? Apple and IBM have, no doubt, discussed this.

Originally posted by Fender2112
I wonder if the new company will continue the AIM partnership. Maybe IBM will be the buyer.

In reality, there is no AIM alliance, and there hasn't been since 1998, when IBM and Motorola pulled their respective teams from Somerset, the joint IBM-Motorola design facility. I find it possible but not probable that SPS will consider a similar arrangement to Somerset.

 

[Sol]

Motorola's exit strategy

A lot of people here seem to be hoping that Motorola will suddenly become competitive with IBM and Apple will have two excellent PPC CPUs to choose from. While such a scenario would be ideal for Apple I do not think that there is a big enough market for Macs to make such competition profitable. If Apple wants to take on Intel & Microsoft it will have to do so with the best PPC and that for now is the G5.

With IBM chips now used in Apple's PowerMacs Motorola has seen the writing on the wall and is preparing for the inevitable. It is only a matter of time before IBM supplies all the CPUs for Macs.

 

[kherdin]

Re: build a fab

Originally posted by yamabushi
The current Sparc is pretty weak compared to current IBM and Intel chips.

It is true that an individual SPARC chip gets slaughtered by chips from the other top-players right now. However, you are forgetting what SPARC stands for. Scalable Processor ARChitecture.

How well do the other chips scale? Other than custom-made supercomputers, are 100+ processor machines being sold using competing technologies from Intel, IBM, AMD, Motorola? I don't think so.

 

[daveL]

Originally posted by yamabushi
IBM is doing a great job, but is it a good idea to rely upon a single supplier? Also, while IBM and Apple are friendly right now, who knows what the future holds? IBM might get annoyed if Apple performs a miracle and gains market share for high end servers, for example. Also, relying on a single chip fab means being at the mercy of the production limits for that fab, as well as sharing with other customers.

Maybe Apple should ask IBM to help build their own fab. The investment required would be huge but a shared use fab with IBM might work. Plus, the new fab could include all of the cutting edge tech such as a .065 micron process, silicon on insulator chips, double gates, etc. A PowerPC 980 chip could easily run at 10 Ghz with production in early 2007. IBM has already been testing chips similar to these with very promising results.

Sun might also want to partner, especially if the fab is built in Texas near their HQ. Either build new Sparc chips at the fab or convince Sun to switch to PowerPC.

For that matter, perhaps Apple should acquire Sun via a leveraged buyout. Solaris shares it's BSD origins with OSX so providing support for legacy Solaris Apps could be possible. Apple would gain a large pool of talented employees and greatly expand their market share.

OK. A bit OT, but I can't stand to see this flawed info dispersed.

Sun's HQ is in Santa Clara, CA and has always been in that area. Sun has no major presence in Texas, other than your normal sales offices. Perhaps you are thinking of Texas Instruments, the company that has been making the SPARC processors for Sun since they first came out more than a decade ago?

In addition, Solaris is *not* based on BSD. Solaris is Unix System V release 4, which is the AT&T flavor of Unix, and has been since the early '90s.

Finally, Apple isn't stupid enough, or big enough, to want to buy Sun.

 

[KEL9000]

This news probably means MOT tried to sell the semiconductor business and couldn't get a buyer. The new company will probably be less likely to support chips for consumer PC's as Apple's market share is not high enough to dictate otherwise. Apple has chosen the correct supplier, IBM is in this for the long haul (why else would they build a new fab facility, and a roadmap for new chips), and have far more resources than MOT ever did.

 

[Dont Hurt Me]

i think this will be the end of g4's in macs soon, my guess is everything will be moving to the g5 next year and ibook gets the newerg 3 with altivec. Just more reason for apple to implement the G5. i wouldnt make a big deal about chip suppliers there still is intel/AMD but IBM is going to be the guy to beat.

 

[DakotaGuy]

Originally posted by NicoMan
I would say the opposite. It was clear that Motorola's priorities lied elsewhere. If they spinoff their chip manufacturing unit, that new unit will have a very different focus. Their job WILL BE to sell chips. Hence the (possibly) interesting new developments.

I would totally agree with this. The spin off company will have to survive on one thing...selling chips. I think people all want Moto to go broke on here, but PowerPC competition would be good for Apple. If this spin off company wants to go after IBM for Apple's market you might see some new things coming down the pipeline, which is good news for everyone.

 

[Phil Of Mac]

Originally posted by Dont Hurt Me
i think this will be the end of g4's in macs soon, my guess is everything will be moving to the g5 next year and ibook gets the newerg 3 with altivec.

Until you can provide evidence that such a G3 exists I'll wait for the G5.

 

[Dont Hurt Me]

just dont expect a g5 ibook anytime soon. the g5 is the chip and apple needs to get it in xserve, powerbooks and imac. this time next year we will be talking about more g5 macs im sure. its a awsome chip, it was cheaper then the g4 by a few bucks so i dont see apple doing anything but moving this way. to me moto announcing this is almost like mac saying g5's everywhere.