The two operations last year accounted for 44 percent of Samsung’s revenue and 70 percent of its operating profits. But the display component business has been in a cyclical downturn and lost money in the first quarter and likely the second. The immediate effect of the combination will be to hide the display unit’s difficulties in the more strongly performing chip operation.

But the move also positions Samsung, the world’s largest technology manufacturer by revenue, to address a larger structural issue that executives rarely discuss: that the customers of its component businesses compete with the other divisions of Samsung, which make cellphones, TVs, computers and other consumer electronics gadgets. The strain of that issue recently became visible in relations with the biggest customer of its component divisions, Apple Inc., which in April sued Samsung alleging that its cellphone operation copied designs of Apple’s products.

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The Milpitas, Calif. company sprung from the spinoff of the manufacturing operations of Advanced Micro Devices Inc., and was later combined with Singapore-based Chartered Semiconductor Manufacturing Ltd.

Globalfoundries said Chief Executive Doug Grose, a former AMD executive who spent 25 years at International Business Machines Corp., will step down and become a senior advisor to the company. Chief Operating Officer Chia Song Hwee, Chartered’s former CEO, will step down in August and return to Singapore, the company said.

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Mr. Kleisterlee, 63 years old, has pushed the company to get growth from developing markets, especially China and Latin America, where health care, lighting and consumer products are gaining momentum.

Philips’s emerging-market sales rose 29 percent in the second quarter from a year earlier and make up 34 percent of the company’s total sales. The company aims to boost emerging-market sales from 30 percent to 50 percent by 2015 by focusing on China, which is spending $125 billion to build tens of thousands of hospitals and clinics during the next three years. Philips is also ramping up its staff and research divisions in China.

Elsewhere, Mr. Kleisterlee has pushed the company to shrink its work force and divest laggard businesses, such as its semiconductor unit in 2006.

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Welcome news, considering that back in June, SIA was calling for chip sales to fall 21 percent.

“The new forecast is brighter than our earlier projections, reflecting an improving global economy,” SIA President George Scalise said in a statement. “Unit sales of key demand drivers–including PCs and cell phones, which together account for about 60% of semiconductor demand–have been stronger than previously predicted. We remain cautiously optimistic for the longer term. The current forecast is closely tied to projections of continuing improvement in the worldwide economy.”

Third-quarter chip sales totaled $61.9 billion, down 10.1 percent from the same quarter last year, but up nearly 20 percent from the second quarter of 2009. No doubt about it, the market for chips is improving (see chart below; click to enlarge).

“Global semiconductor sales in the third quarter were above expectations,” SIA President George Scalise said in a statement. “September sales were in line with historical patterns, reflecting increased demand from end-users as they began the build for the holiday season.”

“Amid signs that we are in the early stages of recovery in the global economy,” Scalise added, “semiconductor sales continue to reflect normal seasonal patterns. Sales are running well ahead of the worst-case scenarios projected early in the year, and we are optimistic that total sales for 2009 will be better than our mid-year forecast.”

Sales are running well ahead of the worst-case scenarios? Well, I suppose any reassurance is a good one when your industry is down 10 percent year-over-year.

“After losing share to Intel on a sequential basis during three out of four quarters in 2008, AMD managed to reverse the trend in the first quarter of 2009,” iSuppli analyst Matthew Wilkins said in a statement. “AMD increased its allocation of global microprocessor revenue due to strong performances in each area of its microprocessor portfolio, particularly in its notebook products. This was an impressive feat given the economic downturn and the weakness in the PC and server markets.”

Of course, AMD (AMD) did suffer an econalypse-inspired revenue decline in Q1, as did Intel (INTC). And the factors that caused it are expected to persist. iSuppli figures the 2009 microprocessor market will top out at $28.6 billion, down 15.8 percent from $34 billion in 2008.

Another ugly SIA metric in a parade of them, though optimists will say that slight uptick in March is a sign that the industry has finally found a bottom from which to scramble upward. “The modest sequential rebound in worldwide sales in March suggests that demand has stabilized somewhat, albeit at substantially lower levels than last year,” SIA President George Scalise said in the report. “While all major product sectors showed month-on-month growth, there continues to be limited visibility in end markets. There are some bright spots such as ‘smart phones’ and ‘netbook’ PCs, but there are no clear signs of early firming of demand in other major end markets such as automotive, corporate information technology, and consumer electronics.”

So, perhaps we’re not on our way to the depths plumbed back in 2001-2002. And perhaps we are. The SIA doesn’t quite seem to know.

Welcome once more to Weekend Update! I’ll be filling in today for your regular host, Beth Callaghan, who’s on vacation.

And what sane person wouldn’t be, after the slew of Silicon Valley silliness inspired by April Fools Day this past week? Digital pranks were the name of the game as Google (GOOG) and others heaped so many tepid hoaxes upon us that we wanted to call April Fold so as to quickly end this round of gags.

But no bag of tricks was needed for one Web site to April Fool itself into crying wolf about an imminent Google (GOOG) acquisition of Twitter, when a real story around the corner was aboutGoogle turning Turbo Tax tweets into ads.

Meanwhile, one of the biggest jokesters of them all, The Onion, won one of the biggest awards in journalism, a Peabody, meaning that the best sense of humor goes to that panel of judges. And to Stephen Colbert, who was willing to entertain (for a while) Twitter spokesmodel Biz Stone’s biz-model-less thoughts in an interview on “The Colbert Report.” Also on BoomTown this week: Facebook’s former CFO Gideon Yu is out, as was a leaked memo from Mark Zuckerberg about Yu’s departure and the company’s situation.

A sense of humor is certainly an invaluable feather to have in your cap these days. Digital Daily wrote about the most recent doom-and-gloom predictions and events to happen in this econalypse, like analysts’ predictions of YouTube losing $470 million in 2009, the barren IPO-less wasteland VCs are bemoaning and a major global slump in semiconductor sales. Other headlines weren’t quite so dreary: Google’s foray into VC land, the folks at BlackBerry HQ celebrating surprisingly good fourth-quarter results and the world’s worst-kept secret, the anticipated merger between IBM (IBM) and Sun (JAVA).

There was a similar mix of dark clouds and silver linings over at MediaMemo. The National Collegiate Athletics Association forced Twitter and partners AT&T (T) and Federated Media to take down one of its first ad campaigns, “March Tweetness,” crying copyright foul. Also running afoul with big companies in legal waters, free music Web site Seeqpod filed for bankruptcy. And video site Veoh laid off a significant amount of staff and kicked out its old CEO, replacing him with founder Dmitry Shapiro and refocusing the company on its “Video Compass” browser plug-in.

Online video is generally a turbulent space these, but the waiting is the hardest part for Hulu when it comes to the rumored Disney deal in which Disney (DIS) seems to be playing the field. Other gems of the week were URL-shrinking Web service bit.ly’s raising of $2 million and media mogul Rupert Murdoch’s Kindle envy.

In a new Mossblog, Walt Mossberg gives us his first impressions of the BlackBerry App World store in which Research in Motion (RIMM) takes a bold step into what was formerly the sole domain of Apple (AAPL). In Personal Technology, Walt reviews a network hard drive from Western Digital (WDC) that makes the technology gloriously simple for everyone. And in Mossberg Solution, Katherine Boehret takes a look at several laptop trays, designed to protect the–ahem–family jewels and family members in general from laptops’ scorching undersides.

Finally, our exciting Woz-watch, after many weeks, has come to a sad end: Steve Wozniak was voted off “Dancing with the Stars” this week after one misstep too many. Down, but not out, the Apple co-founder swore that the “geeks shall inherit the earth”… just not the dance floor, any time soon. Please.

More next week.

For its fiscal second quarter ended February 28, FSI posted revenue of $8.6 million, which is down 60 percent–60 percent!–from the $21.4 million reported in the year-earlier quarter. That brings total first-half revenues to $20.9 million, down 52 percent from $43.9 million a year ago. For the quarter, the company lost $9.4 million, or 30 cents a share, including $2.8 million in severance costs and a $500,000 increase in its reserve for inventory obsolescence.

In a statement, CEO Don Mitchell gives the explanation you’d expect: “The global economic downturn is continuing to adversely impact credit availability, consumer confidence and technology spending,” which in turn has caused “low factory utilization levels” at most semiconductor manufacturing companies, resulting in reduced or delayed capital spending.

And despite some optimism on the Street, Mitchell does not see any early recovery. “Even though it is reported that several device producers have recently started to experience improved utilization levels, we anticipate that this situation will persist until at least early calendar 2010,” he says.

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But not everyone is convinced.

Auriga USA analyst Daniel Berenbaum this morning asserted in a research note that “the recent rush to call the bottom in semiconductor stocks is based largely on supply-side data that effectively ignores continued deterioration in demand.” Berenbaum thinks the SOX, the widely tracked semiconductor stock index, will eventually return to its November lows in the 170 range. The index closed today at 220.91.

Even Berenbaum concedes that data points from the supply chain are “incrementally positive,” with business in the semiconductor manufacturing chain improving sequentially in both February and March. But he contends that “this increased activity is being driven almost entirely by inventory restocking from low absolute levels, and not a pick-up in demand. ” He notes that there have been shortages in a few categories, in particular power management chips and LCD drivers, but adds that “even here, visibility seems to extend a few weeks at most.” Berenbaum notes that utilization at wafer fabs has picked up, but that one-third of foundry capacity remains idled.

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“While it’s horrible that people are out of jobs, I think it’s good for the nation long term; I think it’s good for this industry, the semiconductor industry; I think it’s good for the valley.”

– National Semi CEO Brian Halla, March 8, 2009

To see just how badly the continuing erosion of consumer confidence is affecting the chip industry, one need only look at the pitiable state of National Semiconductor (NSM). After announcing third-quarter revenues that were down
31 percent from the previous quarter and 36 percent from the same period a year earlier, the company said today it would sack more than a quarter of its workforce. In the months ahead, National Semi will close two facilities and eliminate 1,725 jobs.

A brutal cut–so brutal, in fact, that you’d think it might compromise the company’s ability to properly service its market. Yet with current quarter sales expected to fall five to ten percent sequentially, CEO Brian Halla says it’s a necessity. “The worldwide recession has impacted National’s business as demand has fallen considerably,” said Halla. “The actions we announced today will help us remain competitive.”

And don’t forget, they’re good for the nation and for the industry… long term. For those affected by them, not so much.

“While it’s horrible that people are out of jobs, I think it’s good for the nation long term; I think it’s good for this industry, the semiconductor industry; I think it’s good for the valley.”

– National Semi CEO Brian Halla, March 8, 2009

To see just how badly the continuing erosion of consumer confidence is affecting the chip industry, one need only look at the pitiable state of National Semiconductor (NSM). After announcing third-quarter revenues that were down
31 percent from the previous quarter and 36 percent from the same period a year earlier, the company said today it would sack more than a quarter of its workforce. In the months ahead, National Semi will close two facilities and eliminate 1,725 jobs.

A brutal cut–so brutal, in fact, that you’d think it might compromise the company’s ability to properly service its market. Yet with current quarter sales expected to fall five to ten percent sequentially, CEO Brian Halla says it’s a necessity. “The worldwide recession has impacted National’s business as demand has fallen considerably,” said Halla. “The actions we announced today will help us remain competitive.”

And don’t forget, they’re good for the nation and for the industry… long term. For those affected by them, not so much.

Carl did two things to make Danely’s valuable list even better. One, he provided his own commentary on Danely’s thoughts. And two, he decided that what investors really need is a Baskin-Robbins length list of 31 rules. In Part 1 of this post, I offer up Danely’s list along with Carl’s commentary. And in Part 2, I tack on Carl’s additional rules. The result is a lot to read, but some extremely useful insights.

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But Barclays Capital analyst Tim Luke today asserted that Intel might not be hurt quite as badly as some other chipmakers.

Luke wrote in a research note that while PC and microprocessor demand during the second half 2009 is likely to be “muted,” he says that “channel and Asia checks” find “broadly in line” Q1 trends. He sees support for the stock from some restocking of inventory in Q2, troughing revenues and margins, a strong competitive position, robust cash generation and a 4.5 percent dividend.

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