Processor maker Advanced Micro Devices may have stolen headlines in 2003 as it moved to 64 bit on both the server and desktop, but that doesn't mean the technology is ready for prime time, or that it can use 64 bit to usurp Intel's formidable lead.

That's according to Brian Matas, vice president at IC Insights, who offered his view of the processor market and other IC product markets at the analyst organization's annual McClean Report presentation.

"The microprocessor business is a business that is in transition," Matas said. Using history as a guide, Matas believes that the software to exploit 64-bit computing will not be available for several years.

"In 1984 Motorola introduced a 32-bit processor. Eight years later, Apple released a Mac operating system that supported 32-bit code," Matas said. "Intel developed their-32 bit processor in 1985 and Windows 95, the 32-bit operating system came out in 1995."

In spite of that 8 to 10 year lag time, Matas believes that AMD's near term challenge will be to create a 64-bit processor for the mobile market.

"Notebooks are the fastest growing segment of PCs," he said. "It will be very helpful to AMD if they can develop a 64-bit processor for the notebook. The mobile market is Intel's strength right now."

AMD also needs to quickly migrate from .13-micron to 90 nanometer, according to Matas, in order to raise yields.

"They have a 6 to 9 month window to do that," he said. "They don't want to get more behind than that."

Of course, IBM had already established itself at 64 bits with its most recent PowerPC processor, used in the Apple G5, which has been called one of the fastest computers available, said Matas. While it may not have the highest clock speed, it is very efficient at running applications, particular multimedia applications, he said.

IBM also won success last year pushing Intel out of Microsoft's XBox game machine as the company decided to go with IBM's PowerPC instead.

"For IBM that was a pretty good score," said Matas. "We will see IBM's name popping up a lot. They will be a strong competitor in the microprocessor market in the next few years."

Microprocessor leader Intel has said that 64-bit processors are not yet needed on the desktop and has offered its Itanium processor on the enterprise side as its answer to 64-bit computing. For the first half of this year Intel's driving technology will be hyper threading, which lets it execute two tasks simultaneously.

Processors make up a small piece of the IC pie, however, as other products showed impressive growth rates in 2003.

Revenues from flash memory saw 49 percent growth year-over-year, followed closely by 47 percent for communications/special purpose logic.

In fastest growth for number of units sold, data conversion products led the pack at 59 percent growth year-over-year. Digital signal processors achieved 53 percent growth in unit sales.

IC Insights is projecting that 32-bit microcontrollers and flash memory will fare best in 5-year compound annual growth rates at 23 percent. Communications/special purpose logic will grow at a 21 percent rate, digital signal processors at a 19 percent rate and DRAM at a 17 percent rate.

While DRAM continues to dominate the memory market, holding 51 percent in 2003, flash memory continues its slow gain, reaching 36 percent of the market in 2003. By 2008, DRAM will reach $36.9 billion in sales compared with flash, which will reach $32.3 billion that year.  Today's spread is considerably wider. DRAM in 2003 reached $16.6 billion in sales while flash saw $11.6 million.

But although DRAM continues its market dominance in memory, companies are using flash as the process leader for memory, scaling that down to the next node first.  For example, Samsung is currently at 90 nm for flash but won't be there for DRAM until Q3, said Matas.

"Flash memory is almost a full year ahead of DRAM when it comes to process technology," he said.

Emerging from a tough 5 years, DSPs are expected to pick up momentum and do very well over the next 5 years, according to Matas.

"Over the last 5 years they took a spill. ASPs dropped quickly, which was good for consumers. With the SARS outbreak and the build up to Iraq, there was a negative feeling over the whole DSP segment," said Matas. "We now expect DSPs to grow really well over the next 5 years."

By: DocMemory
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