In the past few weeks Zilog Corp, the veteran Campbell, California semiconductor manufacturer has been advertising its progress in producing a chip for internet set-top boxes. No doubt it is anxious to get more licensees especially in the light of its first quarter results reported yesterday, which showed its profits fading faster than a winter tan. Zilog reported first quarter net income down 60% year-on-year at $4.8m on revenues that fell 13.4% to $70.1m. Zilog, with its Z80 empire a mere memory, is trying to tap into the set-top box market to bring about the kind the success it experienced in the 1980s, but it’s been slow going so far. Zilog licensed MSU Corp’s Internet Service Processor (iSP) and began production of the Z90602 iSP chip in February at its 8 fab in Nampa, Idaho. It is now tweaking the chip for software from both MSU and PlanetWeb Inc – its only ‘outside’ licensee win – which does embedded web browsers and servers. No other licensees have been announced yet. The reason for Zilog’s profit-shed is quite simple: revenues fell as cost of sales increased. R&D fell slightly while selling and general administrative costs were static. The result is considerably reduced operating profits and net income of $0.23 per share, down 61% on last time, but still in line with Wall Street’s estimates, according to First Call. Zilog and MSU together produce the Slipstream internet box reference design, for less than $200. The Slipstream design was originally MSU’s. That British-owned company licensed the chip part of the design to Zilog for production. Nobody was available at Zilog for comment.
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