Investor's Business Daily, April 10th, 2007
Intel, IBM and the other big boys aren't the only chip companies trying to put the squeeze on power usage.
Altera ALTR, which makes programmable chips used in a wide variety of devices, has joined the energy-saving push with the Cyclone III. The new chip uses half the power of its predecessor, the low-cost Cyclone II.
The less electricity required to run a chip, the less heat it generates. Heat has become a bigger issue as chips get smaller and more powerful. Less heat makes the devices more reliable, cutting the costs of errors.
The Cyclone III is an example of a type of chip called a field programmable gate array, or FPGA. They're used in cell phones, PCs, printers and satellites.
Device makers value programmable chips because they can change the chip's functions in their factories -- right up to the moment they put the chip in the device.
Altera rolled out the Cyclone III on March 19. Danny Biran, the company's vice president of marketing, says it's getting a good reception from customers.
In a recent interview, Biran talked about the Cyclone III and the need for the chip industry to keep pushing power use down.
IBD: What is the Cyclone III and how does it differ from your previous FPGAs?
Biran: We have two main lines of FPGAs, the high-end Stratix and the low-cost Cyclone.
The Cyclone III is the newest member in that low-cost group. It's the first 65-nanometer (chip feature size), low-power, low-cost FPGA in the industry. Its power consumption is less than half a watt.
IBD: What kinds of devices are using the Cyclone III?
Biran: One is displays. Large-display TVs typically use low-cost FPGAs. The reason is they very often introduce new capabilities, such as image enhancement. Programmability is important to them.
The unique thing about Cyclone III is the low power and low cost. That's unprecedented. It allows us and the programmable logic industry to penetrate areas that we haven't been able to penetrate before.
IBD: Altera has made a couple of major executive changes recently. For example, Chief Operating Officer Denis Berlan recently retired. The company says it doesn't plan to replace him. Who will perform the functions he did?
Biran: If you look at what Denis used to have, it was R&D (research and development) and operations. We now have two people, one who runs R&D (Senior Vice President of Research and Development Misha Burich) and one who runs operations (Vice President for Worldwide Operations and Engineering William Hata). Both reported to Denis.
IBD: Who will they report to now?
Biran: To our chief executive, John Daane.
IBD: On Jan. 15, Altera named a new chief financial officer, Timothy Morse. What does he bring to the position?
Biran: He's been with GE for 16 years. So he knows how one of the world's most respected companies is run. And he has a lot of international experience.
John Daane thought it would be good to bring in a fresh pair of eyes, someone who was not in the semiconductor industry. And Morse really knows finance.
IBD: In February, Altera introduced a kit to help companies develop auto infotainment products. Why that product, and why that market?
Biran: First of all, automotive is a very small market for programmable logic today. But in the next few years it's probably going to be one of the fastest growing. It's not for what is called "under the hood" uses. They won't use it in engine control. But it is valuable in infotainment.
IBD: In February, the Securities and Exchange Commission terminated its investigation of Altera's stock-options practices. (The company made adjustments to past earnings statements totaling $47.6 million for stock options granted between 1996 and 2001, but wasn't charged by the SEC). It must feel good to have that out of the way.
Biran: I can definitely say that. We had something (internal investigation) that Altera initiated at that time. The problem is now behind us. It's business as usual.
IBD: What's the hottest market for your FPGAs?
Biran: In terms of the size of the markets, communications is the biggest one.
It was 42% of 2006 revenue. Where we see a lot of adoption is wireless infrastructure, things like cell phone base stations.
The big base stations use our Stratix products. One thing we emphasize in Cyclone III is (that) it's for smaller base stations.
Communication is not as big a part of our business as in the past, as a percentage of our business. But it's still the biggest one.
Copyright 2007 Investor's Business Daily, Inc.
