Silicon Insider: Happy Days Are Here Again

— Autumn's here. The kids went back to school, caught the first bug and are now downstairs sniffling and watching Princess Mononoke. And gridlock is again growing on the freeways of Silicon Valley.

Time to make some predictions…

I've had the unusual opportunity over the last two weeks to hang around at the very heart of high tech: the semiconductor industry, the chemical wellspring from which the entire digital world flows. If you want to know the future, this is where you have to be, in the hallways of Intel, AMD and Motorola, and deeper yet, in the offices of semiconductor equipment manufacturers, such as Applied Materials.

These are keepers of Moore's Law, and that Law remains, for good or bad, the metronome of modern life. When the Law clicks over to the next generation of chips, as it is doing right now, you can anticipate an explosion of new products and industries across the face of tech, and sometimes across society as well. And when chip sales slump you can assume the rest of the economy will soon be in trouble as well.

So, what are the chip guys saying these days?

A few weeks ago I found myself on stage interviewing one of the semiconductor industry's greatest legends, Jerry Sanders, founder and chairman of Advanced Micro Devices. One can make the somewhat cynical argument that AMD is the world's most important company, if only because its very presence forces Intel to be honest (and thus has probably saved the world billions of dollars), and Intel in turn forces Microsoft to actually move its technology forward (which it would never do otherwise). That, in turn, makes the world a better place.

Sanders himself is an extraordinary larger-than-life figure: the kid from Chicago who goes to Hollywood to become a movie star and instead becomes a supersalesman, the most outrageous character in a company, Fairchild, filled with outrageous characters. He founds AMD on a shoestring, challenges Intel, the most successful company on the planet, watches his company almost die nine times, and ends up beating his adversary to at least a technical draw.

Meanwhile, Jerry lives in Bel Air, hangs with his old Hollywood crowd and commutes up to the Valley when needed. More than even Jobs or Ellison, Sanders is the Silicon Valley's greatest showman, and beneath the flamboyant veneer, one of high tech's best minds.

What Jerry is saying these days is that the next boom is right on front step. All of the economic factors — tax cuts, low interest rates, healthy capital markets — are in place. Meanwhile, in the chip world, the big semiconductors bit the bullet, spending most of their retaining earnings over the last two years on upgrading their operations and increasing capacity for the next generation of chips. They are ready to rock 'n' roll.

A New Boom Ahead

Leading the charge, says Sanders — not without a little self-promotion for AMD — will be the new 64-bit microprocessors. These processors will be so powerful, and yet so cost competitive, that in short order they will ignite revolutionary changes first in the industrial markets and then in consumer products.

For the latter, these new chips, combined with broadband, will make possible on-demand movies, a new generation of interactive games, powerful modeling programs and all of the other applications eagerly anticipated with the emerging second-generation Internet.

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