23rd July 2008

Co-creativity through global networks

Am reading an interesting book, “The new age of innovation” by CK Prahalad and MS Krishnan. Prahalad was named “The world’s most influential management thinker” in 2007 by the Times of London. 

The book cites driving co-creativity through global networks as the new global standard for innovation & corporate growth. The 2 basic pillars in this transformation of biz are:   

  1. Value based on unique, personalized experiences of consumers, designated as N=1 (one consumer experience at a time). This is not to be confused with vendors offering customized solutions or multiple options. This is working together with the customer in providing him a solution tailored for him. The focus is on the centrality of the individual.   

  2. This is R=G pillar where R is the resources from multiple vendors and G is the global resources. As no single firm is, and will be, able to satisfy the experiences of 1 consumer at a time, all firms will access resources from a wider pool – the global ecosystem. 

Interesting examples cited not only drive home the point but it also gives pointers on building up for such a transformation.   

 

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21st July 2008

Japan’s cellphone firms target senior citizens

In the land of the technical gizmos’ (especially cellphones) savvy a.k.a –the land of the rising sun, the cellphone firms are targeting the senior citizens. With the maturing of cellphone market for teenagers, companies do need another segment to sell their wares to; and countries with growing senior citizens’ population are an ideal target for the same. 

The combination of real need and marketing savvy could explain the high penetration rate of mobile phones among older Japanese. And success in this market can be replicated in other countries. As I cited in an earlier post (Nov ’06), I’ve found it rather strange why the cellphone vendors had not capitalized on this viable market segment  

 

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20th July 2008

Semiconductor fab tool & electronics materials vendors gravitating towards solar market

Reports that Samsung, the world’s largest buyer of capital equipment, is now putting the brakes on its capital spending, has exacerbated the doom-and-gloom sentiment. Poor memory environment coupled with economic woes have been cited as the main reasons behind semicon equipment vendors’ woes.

A shake-out in the fab tool & electronics materials industries is expected.  While consolidation through acquisitions & mergers loom on the horizon (Applied vying for ASMI, Aquest for Asyst etc.), we also see the semicon fab tool vendors gravitating towards the booming solar industry.  Applied has been diversifying out of chip cap-ex and equipment dominance into a strategy of being a solar player, KLA Tencor also entered the solar market with purchase of ICOS vision systems, a company whose primary business is inspection equipment for semiconductor packaging but which has been successful in the more cost-conscious solar wafer inspection market at key processing steps.

The recent SEMICON West had more than 250 exhibitors that had offerings for both the photovoltaics and the semiconductor markets. But it seemed that nearly every exhibitor had some sort of solar story to tell. From manufacturers of high purity chemicals used for microelectronics selling solar cell surface cleaner to Synopsys providing modeling software for the PV industry, there’s a range of interesting synergies being tapped across the two spaces – recommend you to read Semiconductor International’s write-up on some interesting solar stories from the floor

posted in Semiconductor, Business, Solar | 0 Comments

11th July 2008

If they come, we will build it…..

Gartner Dataquest has cut its semiconductor capital spending forecast by an additional 2.6%, projecting a 22.4% decline for 2008. The company said that the foundry investment pattern could change from, “If we build it, they will come,” to “If they come, we will build it.

Now, that’s something to chew on. With the mantra” If we build it, they will come”, foundries like TSMC moved from pure play foundries towards design support (including not just producing their reference design flows but also developing IPs) and later with the advent of DFM, towards further lowering the gray wall between design & manufacturing by providing access to manufacturing data through unified DFM architecture – all to ensure that their expensive fabs don’t run empty. Whatever the critics may say and apart from treading on the feet of different entities, one of the positive outcomes for the overall industry from this is that this process catalyzed collaboration – forcefully or voluntarily. 

Now moving towards “If they come, we will build it”, we need to see how well that bodes for an industry which is facing growing challenges of shorter time to market as well as shorter product life spans, especially in the consumer area.

A tough balance of bringing capacity more in line with demand – not only for existing but also for the mid term – especially in this period of economic gloom and market down turn.

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10th July 2008

Diminishing semiconductor content ??

According to a recent research in Semiconductor DQ report from Gartner, it is noted that the top 100 OEMs consumed semiconductors worth $209 billion in 2007 or a total 76% of semiconductors sold last year. However their semiconductor consumption did not grow as fast as their revenues. The report highlights 2 ongoing issues faced by the semiconductor industry - significant erosion of semiconductor content and average selling prices (ASPs),
 

While ASP’s have long been an issue especially in the computer and cell phone market, the other aspect of decreasing semiconductor content is a worrying trend for the semicon industry. True, we are seeing some signs of new and innovative uses of semiconductors, such as sensors being implemented in products by firms such as Nintendo & interesting new touchscreen-based products, but then that by itself may not be enough.
 

Reverse trends include:

 

 

  • Talks of Apple selling newer versions of its iPhone s/w through its iTunes stores. Unlike traditional mobile handsets, where users change their handsets quite frequently (hence more semicon content demand), iPhone users may not change their handsets so often and upgrade their phones mostly through relevant s/w upgrades.
  • Recently there was this interesting news article in Biz section of International Herald Tribune (dt. June 23 ’08). It reports that Nokia wants to transform itself into the next generation entertainment company. It has already created (last August) an Internet service and online music store, Ovi, said to compete directly against Apple.
     Nokia predicts that in the next 5 years, phone users will create 25% of entertainment watched on smartphones. – and that Nokia will share that entertainment.
     

Both these examples indicate a growing dominance of s/w content and potentially diminishing h/w demand in the computing and consumer industry – areas which already show a pricing weakness (Gartner made note that the semiconductor content pricing in these areas decreased almost 9% in 2007 compared with 2006).
 

How does this bode for the semicon industry???   

 

posted in Semiconductor, Business, Forecasts | 0 Comments

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