SiliconBeat

Chip industry watchers have been eagerly awaiting news about the progress of Intel’s graphics-oriented chip, dubbed Larrabee, which has been under development for what seems like ages.

Intel executives hope Larrabee will help them compete with the highly popular graphic chips offered by Nvidia and Advanced Micro Devices.

But when Intel gave a little demonstration of its chip last week during the Santa Clara company’s annual San Francisco event for people working on Intel-related products, the reaction among some analysts was less than awestruck.

“The 3D graphics were underwhelming” compared with those offered by Nvidia’s and AMD’s chips, wrote Global Crown Research in a note to its clients.

In its own note, Raymond James called Intel’s unveiling of Larrabee “surprisingly pedestrian” and noted that “the sad demo tells us the project is in trouble.”

Ouch!

After gobbling up several software companies recently, Intel announced in June that it was plunking down $884 million for the Alameda software firm Wind River Systems.

But that hardly satisfied the Santa Clara chip giant’s software appetite.

So over the past few weeks, Intel has picked up two more software businesses - Rapidmind of Waterloo, Ontario and Cilk of Lexington, MA, according to information posted on an Intel blog.

The two latest acquisitions bring Intel skill in the arcane art of parallel programming, which involves writing software for so-called multiple-core chips featuring more than one central processing unit.

As a service to our loyal readers who are weary of the relentless parade of negative news offered up these days by various media outlets, those of us at SiliconBeat periodically wish to provide a bit of cheery relief.

Which brings us to this item about LSI.

The Milpitas chip-maker is in the process of distributing free backpacks and school supplies to about 12,000 underprivileged K-12 students around the world in communities where its employees live and work.

Last year, the company said it contributed more than 9,000 backpacks to primary and secondary schools in Asia, Europe and the United States. The backpacks are filled with notebooks, pens, calculators and dictionaries donated by LSI employees.

“As a U.S.-based company that operates globally, LSI understands that investment in local education is an investment in a better world,” said the company’s CEO, Abhi Talwalkar, in a prepared statement.

Another local semiconductor company that appears to be showing signs of life is Nvidia, the Santa Clara maker of graphics-oriented chips - known as GPUs - that are highly valued by computer gamers and other folks.

This week the company reported it lost $105 million, its fourth such plunge into the red in the past five quarters. But it forecast improved sales for the next quarter and Wall Street seemed pleased, according to analysts whose notes are routinely checked by SiliconBeat.

Craig Berger of FBR Capital markets called Nvidia “an interesting story with many potential revenue growth drivers.”

And Hans Mosesmann of Raymond James had especially nice things to say about Jen-Hsun Huang, Nvidia’s co-founder and CEO, saying he has “done an excellent job over the past year.”

There’s more evidence the chip industry is slowly climbing out of the recessionary muck where it’s been mired for months.

The latest good news comes from research firm IDC, which reported this week that worldwide shipments of personal computer microprocessor rose 10.1 percent from the first quarter of the year to the second.

Microprocessor shipments for the second quarter were up 12.5 percent for Intel, while those for Advanced Micro Devices rose 1.8 percent.

But don’t get too giddy just yet. IDC says the sales increases is mostly due to computer makers restocking their inventory, rather than consumers ramping up demand for PCs. Until more people start buying computers, experts warn, the chip industry will likely remain bogged down for a while.  .

Advanced Micro Devices generally left Wall Street displeased when it reported its 11th consecutive quarterly loss earlier this week. But the Sunnyvale chip maker offered one tantalizing tidbit about its recently spun-off manufacturing arm.

GlobalFoundries, the manufacturing unit that AMD and Abu Dhabi investors set up as a separate business in March, is expected to announce in coming weeks that it has its first customer other than AMD.

Since AMD still receives revenue from GlobalFoundries, having more money flowing into the manufacturing operation should help AMD. Moreover, the ability of GlobalFoundries to attract other customers should reduce AMD’s expenses, said company spokesman Drew Prairie.

“Right now, since we are the only customer, we are shouldering the costs of underutilization charges” associated with GlobalFoundries, he said. “As they add more customers, we will move to a traditional founry model,” where AMD only pays for chips it buys from the manufacturing operation.

We here at SiliconBeat always keep our eyes open for uplifting news, so we felt compelled to pass on this item about microchip-maker Rambus.

The Los Altos firm has been awarded the Pathways Hospice Foundation Frances C. Arrillaga Humanitarian Award for 2009, the first time a company has received that distinction.

The award honors Rambus for its leadership in philanthropic efforts, inspiration to the community and the generous support it has given to Pathways, a non-profit organization that offers home health and hospice care.

This year’s global fall-off in shipments of graphics-oriented microchips is likely to be the worst ever tracked by Jon Peddie Research.

The Tiburon-based consulting firm estimates that graphic-chip shipments will drop 12 percent this year compared with 2008. That’s a nasty change, since shipments have seen double-digit increases every year since 2002, except for 2008 when they rose only about 6 percent.

Still, Peddie predicts a big turnaround next year, when graphic-chip shipments are expected to surge by nearly 22 percent.

“Taking together our data, interviews with suppliers and world economic forecast models, we believe the worst is over and Q3 will show recovery leading all the way through 2010, subject to seasonal adjustments,” it noted in a recent press release.

That should be good news for Advanced Micro Devices and Nvidia, two Silicon Valley companies that specialize in graphic chips.

For those of you tracking the growing numbers of huge deals between the Bay Area’s formidable array of biotech companies and those gargantuan drug firms known as Big Pharma, here’s yet another:

Portola Pharmaceuticals of South San Francisco and New Jersey-based drug powerhouse Merck announced Thursday that they will collaborate on developing Portola’s anticoagulant drug candidate, betrixaban.

The payoff for Portola: a cool $50 million initially, with the possibility of $420 million more if certain milestones are met for getting the drug onto the market. In addition, Portola could earn double-digit royalties on worldwide sales of the drug, assuming the government approves its commercialization..

More bad news for Spansion, the Sunnyvale flash memory chip maker that filed for bankruptcy protection on March 1.

The company disclosed in a federal regulatory filing today that it will be delisted from the Nasdaq stock market on Monday July 20.

The stock exchange had previously notified the company that it was considering the action, prompting a request by Spansion to have the matter reviewed by a hearing panel. But the panel decided Spansion didn’t warrant being listed and trading in the company’s stock was halted on May 7.