1. Evaluate the disclosures in the notes that accompany the financial statements of these six firms. Which are the most informative? The least informative? Why?
2. Using the information in the case, or any other information, estimate the length of time over which each of these six firms depreciate their semiconductor production machinery and equipment.
The semiconductor fabrication industry uses some of the world’s most expensive machinery. A semiconductor fabrication plant includes several hundred pieces of equipment that each cost more than $ 1 million, some cost $ 50 million. A 2009 state-of- the- art foundry cost from $ 3 to 4$ billion.1 Because of technological innovations, a typical facility is obsolete in 18 months to three years.
From the invention of the first practical vacuum tube in 1904 until the 1950s, vacuum tubes was the key element in electronics such as radios, televisions, computers, and other electronic devices. Vacuum tubes provide a switching function (turning an electrical current on or off) and other functions such as signal amplification. Vacuum tubes are bulky, they leak and break, and they have short operating lives. As a result, early computers, with thousands of vacuum tubes, were large and prone to failure. In December 1947, three Bell Laboratory scientists, John Bardeen, Walter Brattain, and William Shockley, invented a small solid- state (germanium) amplifying device for which they won the 1956 Nobel Prize in Physics. Solid-state technology was soon used to produce other discrete electronic devices, such as diodes, resistors, and capacitors, which led to the birth of the microelectronics industry. Electronic products soon contained relatively small circuit boards filled with these discrete electronic circuits, rather than vacuum tubes. Discrete solid-state devices were a major improvement over vacuum tubes. However, the sheer number of discrete devices in electronic equipment placed an upper limit on what could be built. In 1959, Jack Kilby, a new Texas Instruments employee, developed the first integrated circuit (IC), a single piece of germanium with five separate electronic components (transistors, diodes, and capacitors). The five separate devices still needed to be connected by wires soldered to each device. That problem was soon overcome by Robert Noyce of Fairchild Semiconductor, who integrated the “wiring” into the germanium, which led to the semiconductor revolution.