The 10 Biggest Chip Stories Of 2008

The first half of the year was characterized by anxiety over troubling economic indicators. The second half saw everyone's deepest fears realized as the reality of an economic crisis of global proportions set in. The semiconductor industry was not spared, as bellwether Intel downgraded its fourth quarter sales guidance and several companies announced layoffs and other cost-cutting measures.





The news got bleaker as 2008 wound down -- current analysis pegs the year's chip revenues shrinking against 2007 sales, and some market watchers predict they'll sink by another 10 percent or more in 2009.





The silver lining: Developers of new categories like netbooks are set to deliver improved performance at recession-friendly prices and cost-saving technologies like virtualization and energy-efficient silicon have never had more appeal.

If, at the start of 2008, we had to name a chip maker that was least likely to survive the year, quite a few people would have picked Advanced Micro Devices. The company flailed its way through 2007, adding to an epic string of quarterly losses and botching the release of its first quad-core processors due to a silicon glitch.

Perhaps that's why AMD accelerated its restructuring plans with an urgency the company hadn't seemed to possess in years. First up was the change at the top, as CEO Hector Ruiz stepped down to make way for Dirk Meyer. Then, the really big move -- the splitting of AMD into two, with the chip maker spinning off its manufacturing assets to form the Foundry Company with Abu Dhabi investors.





The company isn't entirely out of the woods. AMD's share price is still scraping bottom and as a result its original 44.4 percent stake in the Foundry Company has been reduced to 34.2 percent. Still, a smarter, lighter AMD may just be around for quite some time -- if the shrinking economy doesn't kill the company's comeback before it hits full stride.

Chip makers have been pushing energy efficiency for years. But it took it took a summer of soaring fuel prices and an autumn of economic collapse to really send the message home to consumers and businesses that Green IT isn't tree-hugging blather, it's a big-time cost-saver.

Want proof? Just look at IBM's national ads for its energy-efficient BladeCenters -- which air during NFL broadcasts, no less -- depicting cartoon rainforests growing out of server racks.

If the conspicuous consumers of America's most bloated sporting spectacles are open to Green IT's bottom-line value, we're going to say that environmentally friendly technology has finally arrived. Vegans? Not so much.

In a normal year -- one not involving the global economy collapsing like a house of cards, that is -- this would easily be the top story on all the year-end lists. As it stands, the November introduction of major new product lines by Intel and AMD was somewhat overshadowed by affairs on Wall Street.

Which is a shame, because Intel's new Nehalem microarchitecture on its Core i7 desktop chips and AMD's transition to the 45nm fabrication process with its new Shanghai line of server chips and upcoming Phenom II desktop chips bring the two top x86 microprocessor makers into more direct competition with like products than we've seen in years.

With AMD pricing its new products very aggressively, the benchmarking competition between its 45nm chips and Intel's is due to get very interesting indeed.

How is it that a software story that was hatched in 2005, played out in 2006 and got legs in 2007 is a top 10 chip story in 2008? It helps when a federal judge releases a slew of internal Microsoft e-mails that implicate Intel in the laughably misleading marketing campaign for Windows Vista ahead of the operating system's release in early 2007. That's what happened in the past year, as a class-action lawsuit against the software giant over its Vista Capable campaign really got rolling.

Did Microsoft and Intel conspire to fool customers into thinking old Intel systems were "capable" of running Microsoft's graphics-rich new OS? Thanks to Judge Marsha Pechman, we've got plenty of evidence to pore through.

Intel began the year pushing the promise of MIDs and UMPCs at CES, but by April the chip giant had shifted its primary position towards slightly larger form factors -- the "netbook" and "nettop." To that end, Intel released its ultra-low voltage Atom processor (pictured) a competitor straight out of the gate for both RISC-based chips and low-power x86 devices from companies like VIA Technologies. On the heels of Asus' success with its Eee PC netbook, Intel started going after the new category with Atom.

The upshot -- now the chip giant, along with OEMs like Asus, Acer, HP and Dell, has a brand new category that's growing wildly in defiance of overall market trends.

We've come a long way since the first graphic user interfaces were introduced on PCs. Rich visual computing is a bona fide mainstream phenomenon and trickling down to smaller, cheaper devices every day.

But if 2007 was the year of novel twists on the GUI as per Apple's iPhone and Nintendo's Wii, then 2008 was the year GPU computing stopped being strictly "visual." That's because Nvidia, and to a lesser extent AMD, have worked hard to develop ecosystems around the development of general purpose-GPU (GP-GPU) computing.





The basic idea is that graphics processors, pigeonholed for years as eye candy gimmickry, have been underutilized as highly efficient engines for certain types of non-visual parallel computing operations that are commonly performed less efficiently by central processors. So how's all this playing in the wild? Nvidia in May reported it had shipped more than 70 million GPUs featuring its proprietary CUDA architecture for GP-GPU computing, already had more than 60,000 CUDA SDK downloads and was seeing 350.000 CUDA-enabled driver downloads every week.

AMD's late 2006 acquisition of graphics chip maker ATI Technologies has had its hiccups -- think billions in financial impairment charges -- but the merger finally started to pay off big-time in the early summer. That's when AMD's Graphics Product Group released its Radeon R700 graphics processers, which jacked up the preceding R600 generation's from 320 to a whopping 800 stream processing units. That extension of the unified shader architecture, combined with AMD's industry leading 55nm process technology, produced the industry's first consumer GPUs to achieve one teraFLOP scale.

In August, AMD released its ATI Radeon HD 4870X2 graphics card (pictured) with two Radeon R770 GPUs totalling 2.4 teraFLOPs -- and for the first time in years, wrestled away the high-end graphics performance crown from market leader Nvidia.

Nvidia was tipped by several prognosticators to surpass AMD as Intel's chief rival in 2008. That didn't come to pass, due in part to AMD's nimble corporate restructuring and its Graphics Product Group's stunning triumph with its R700 family of products.

But Nvidia wasn't simply caught flat-footed in the first half of the year -- the discrete graphics market leader also endured a packaging glitch on its mobile GPUs which was the main reason Nvidia suffered its first quarterly loss in five years.





The good news for CEO Jen-Hsun Huang and the green gang is that Nvidia wrapped up a disappointing year with a strong showing. The company smartly went sideways in the face of AMD's high-end leadership, winning a place for its smaller, more nimble motherboard GPUs in October's new line of MacBooks from Apple. And as the year closed out, Nvidia packaged those elegant little visual engines with Intel's Atom processor on a platform called Ion (pictured) that could set the netbook-nettop market on its ear in 2009.

What can you say about the microprocessor market leader's performance in 2008? It was dj' vu all over again as CEO Paul Otellini and the relentless team from Santa Clara replicated a strong showing in 2007 by executing their vaunted tick-tock strategy of bringing co-founder and visionary Gordon Moore's incredibly shrinking chips to market yet again. Thus Intel had the only 45nm chips on the market until AMD's mid-November release of its Shanghai products, and thanks to the TLB errata on AMD's Barcelona and Phenom chips, Intel had the quad-core market all to itself for more than a quarter longer than it had any right to expect.







During this period, the chip giant also released its ultra-low voltage Atom processors, stepped up its solid state presence and pledged to maneuver its x86 architecture into computing products ranging from smart phones to embedded systems to graphics processors. The bottom line -- Intel's performance has become so consistent we're in danger of taking it for granted.