21st May 2013

How will ST’s new two product oriented business segments organization strategy pan out?

Georges Penalver, chief strategy officer for ST, told the analysts community recently that ST is being constructed as two product-oriented business segments organization. The first block encompasses ST’s sensor, power and automotive products and is essentially ST’s successful analog business and its digital automotive business. The second block is ST’s embedded processing business and is the non-automotive digital business including microcontrollers and processors for digital consumer applications.

 

Focusing on the Embedded processing segment and ST’s manufacturing strategy, let’s look into some statements from the earnings call last month:

·       The 1st segment i.e. Sensor, Power & Automotive represented 56% of net revenues and the 2nd segment (Embedded Processing Solutions) 44%

·       Wireless saw a significant decrease due to ST-Ericsson and this will continue. LTE Modem development activity and biz has moved to Ericsson

·       ST will not compete in the application processor market in smartphones

·       Microcontrollers are a key driver in the Embedded Segment; the others are STB (set top boxes), TVs, digital ASICs, Imaging etc.

·       ST will focus on 2 segments in Microcontrollers. The first one is wearable electronics (healthcare, automotive, gaming) where it caters to diverse and small size customers (requirement is for low power microcontrollers, sensors and connectivity). The second one is secure microcontrollers (which is more for smartphone applications (NFC), banking - both contact and contactless) catering to a smaller number of customers but for a likely high volume

·       Digital biz will be in 300mm wafer fab in Crolles

·       Manufacturing distribution in Crolles: 1/3rd each into MCU, CMOS image sensors and dig consumer products

·       ST is betting big on FD-SOI tech. It has second source agreement with GlobalFoundries for selected customers for this techno. Here it is working aggressively on 2 fronts – 1st is communication infrastructure where low power dissipation is important along with strong performance. The other is portable equipment (outside smartphones, tablets)

 

Add to that the fact that the major semiconductor growth (last year and projected this year too) are the mobile consumer devices especially smartphones and tablets as well as the wireless communication sector.

 

Keeping the above in mind, it will be a big challenge for the company to support leading edge technologies in Crolles and that too with an allocation of a third of its capacity for digital consumer products – case of an expensive leading edge digital technology without targeting aggressive margins. So, how ST can keep its IDM model, especially on the leading digital edge with this kind of a product segment organization strategy, economically viable – that’d be interesting to watch.

 

What are your thoughts?

posted in Semiconductor, Business, Foundry, Communciation, Blogroll, Technology, MIDs, chip design, connectivity, Mobile, STM, IDM | 0 Comments

3rd July 2012

Fab Power

Looks like the scaling down road for fabless – foundry model is getting bumpier. First the high cost of setting up new fabs made the earlier IDMs get into the fab lite model – i.e. depend upon the pure play foundries for the basic process capacity and do the specialized process add-ons in-house to get the competitive advantage. The fabless companies too coupled with pure-play foundries and gained prominence. The industry seemed to have found a way out (at least temperoraliy) of the high cost challenges of scaling down coupled with the issues of designing multimillion gates chips with increasing features and decreasing time to market window.

But now the speed breakers on this road are getting frequent and higher. Take the last couple of examples. FD-SOI is one of the new transistor architectures thrown up by ST/ST-Ericsson for scaling down 28nm and below. The process is reported to give a 35% power performance gain and that too by a simpler process transition from the typical CMOS. But ST lacks the capacity and hence is exploring options with GlobalFoundries. The latter is reportedly insisting that it will use ST’s process to make parts for all other parties too, in exchange for this extra capacity – leading to ST/ST-E potentially losing on a big competitive edge of sole access to a proprietary process through its FD-SOI process.

The second recent example is of Qualcomm. The world’s largest fabless company uses TSMC‘s 28nm process to manufacture its Snapdragon S4. And the world’s largest pure play foundry has had yield/capacity issues on this node.

TSMC’s 28nm foundry capacity woes have put a dampener in the presently exclusive run of Qualcomm – the sole (at least presently) provider of integrated multimode 3G/4G LTE baseband chips. And it ripples further down the chain causing distress to LTE smartphone vendors. Shortage is not expected to cease before Q4’12. Qualcomm is now planning a 23 per cent increase in operating expenses this year and looking for alternative (apart from TSMC) suppliers. It’s CEO Paul Jacobs’s recent visit to Samsung, reportedly for discussions that included semiconductor supply as well as his comment of not ruling out owning the means of chip production has led to a lot of water cooler speculation.

Incidentally TSMC’s sales hit an all-time high (9.1% annual revenue growth) in April’12 – with much of the strong growth attributed by 28nm demand!

So where does this leave the fabless-foundry model? And how does this affect the IDMs?

One thing for sure is that the model will need to be tweaked in order to stand up to the sub 28nm/20nm challenges. Some pointers:

• Cost advantage of scaling down is diminishing for the foundries. The cost-per-transistor has been about 29% per node leading to cheaper scaled down chips. 28nm and sub has seen that levelling off for the foundries. Intel still has a big (at least a couple of years) lead in the process race. If the fabless companies do not see a steady decline in the cost-per-transistor in their foundries’ scaling, it certainly puts a spoke in their continuing down on the scaling path with this model.

• The prohibitive high cost of setting up a new fab and the related R&D and yield challenges just does not make sense for a fabless company, even Qualcomm, to start one. Owning a pre-planned and negotiated capacity or even production means with an existing foundry – yes but a fab from scratch, no, that doesn’t appear to be a viable option.

• With the increasing yield issues at smaller geometries pitched along with capacity shortage and uncertain market demand, a stronger vertical integration of supply chain may become the order of the day to sustain the fabless model – one which accounted for $64.9 billion in 2011. While expecting to resolve 28nm capacity shortage by Q4, TSMC has raised this year’s capex 42% to USD 8.5 billion to ride the market opportunities.

• Rewinding to one of my earlier blog posts (Jan 2008), I had cited a remark by Infineon’s CEO, Ziebart in an interview to EE Times’ rick Merritt, “The major thing giving semiconductor makers a competitive advantage has evaporated. Today everyone has access to the same process technology at roughly the same time. This access used to be what differentiated the best from the worst semiconductor companies, but now it has evaporated, What’s replacing process technology as a differentiator is systems know how, and it must be specific to a market area”. My comment to that, as also mentioned in the same post, was: Yes, the differentiator has moved from process technology; but it is due to access to the process techno. This access has become cost prohibitive for any single semiconductor company (perhaps leaving aside a couple with really deep pockets) and hence the scramble to find an alternate place in the value chain to survive.
That access to the process techno is now morphing, if not under threat.

• GlobalFoundties’ SVP Mojy Chian mentioned that “New challenges at 20nm and beyond will require deep, IDM-like collaboration to accelerate the time-to-market”. Now, does this mean that foundries will transition towards virtual IDMs?
Rewind to another earlier blog post (Dec 2007): “Over the last couple of years, we have seen IDMs going towards fablite and fabless models, and the emerging dominance of the original pure play foundries. I say “original” as lately these foundries are paving their way into newer territories like climbing up the design support value chain by increasing their IP portfolio, collaborating with EDA vendors for providing yield related data/information to the designers and reference design flows, and others – just short of coming up with their own ASSPs. So will we see the re-emergence of real IDMs albeit in the form of a morphed foundry??
IDMs, foundries, fabless… they are all morphing from their original identities and are reshaping the industry with their redefined (work in progress) grey and diffused boundaries

However, one thing stands tall amidst all this and that is “The “Fab power’ is increasingly getting honed into the semiconductor eco-system lately.” Fab matters

posted in Semiconductor, Process, Business, Foundry, Fabless, Technology, Samsung, Qualcomm, Intel, Ecosystem, chip design | 0 Comments

25th January 2012

Capex disparity…. and the fortifications of the leaders

Add the 2012 planned capex spending of the world’s top two IDMs and you get an almost half of the total ’12 planned semiconductor capital expenditures. Add to it the world’s top pure play foundry’s planned capex and you end up with nearly thrice the amount the group spent in 2009.
This month saw a slew of capex announcements – Intel’s $12.1 to 12.9 billion, Samsung’s 1$2.2 billion and TSMC’s $6 billion; the first two an increase and the last a decrease (18%) from their 2011 capex numbers.

TSMC had already reported their plan to slash their 2012 capex in September last year. The major chunk of their capex this year will be spent on ramping up their 28nm process and their Gigafabs. Incidentally, 28nm accounted for 2% of TSMC’s 2011 revenues while 40nm and 65nm accounted for 27% and 30% each. And remember, they had an oversupply on 65nm capacity while seeing a demand exceeding supply on 28nm. TSMC’s 2012 outlook – a challenging year.

Intel and Samsung have a lot at stake in the mobile internet devices (MID) market. Intel is betting high on its ultrabooks while Samsung owes much of its lucrative foundry biz to Apple. In addition, it is aggressively ramping up for its in-house application processor to ride on the surging MIDs wave.

These two have an advantage of their in-house designs to test and ramp up on leading edge processes while the pure play foundries like TSMC rely much on their customers’ designs for this.

One thing that is getting increasingly visible – the chasm between the leaders and the ROP (Rest of Pack) is steadily increasing. While this beckons consolidation, it also serves as an innovation catalyst for the smaller but niche companies and strategies emerging in and filling this gap.

posted in Semiconductor, Business, Foundry, MIDs, Intel | 0 Comments

25th October 2011

Could TSMC be your next chip design cloud owner?

In a 2009 technical report, ”The Clouds: A Berkeley view of cloud computing”, the authors cite “Cloud Computing is likely to have the same impact on software that foundries have had on the hardware industry”. The underlying logic being the high cost of semiconductor fabrication line leading to the rise of semiconductor fabs and these in turn “enabling” fabless semiconductor design companies whose value is in innovative chip design.

A week back, I moderated a panel discussion on cloud computing in the IC design world, especially on accelerating time to market. While issues on security – a challenge which is stacked right on top of the “barriers to entry”, were defended and discussed quite animatedly, Surprisingly, it was the “cloud ownership” aspect which evoked only some tepid responses.

Now from where I stand, I see cloud ownership as a vital component of chip design security in the cloud. After all, if I were to place my company’s most precious assets –i.e. my chip design database – on a cloud, I will definitely like to know as to who owns the cloud. And this is on top of my regular apprehensions about my data security, back up and related aspects.

Let me clarify - I am not talking here about the infra structure provider e.g. Amazon and the likes. Rather it is the cloud framework/database owner. The framework here includes components of the existing physical eco-system integrated together – design database, EDA tools, user interface etc. – without which cloud computing will just service individual IC design tasks i.e. storage and processing power requirements; something which on its own is not exactly fully leveraging this powerful biz paradigm shift aka cloud computing.

So again – who will own the chip design cloud? Will it be the foundries (also cited as “natural design aggregators”), the EDA vendors, the fabless design companies or yet another entity? The reply gleaned from most of the stormy discussions elsewhere in the nimbus zone gravitates towards foundry.

Which brings me back to the where I started this post – Riding on cloud computing, foundries may turn out to influence the hardware industry in more ways than one. And who else is better equipped to lead the way here than TSMC??

posted in Semiconductor, EDA, Business, Foundry, Fabless | 0 Comments

25th April 2011

India’s latest fab push

Setting up fabs has been a point/initiative that keeps popping in and out in the Indian semicon landscape; and has been happening ever since India’s main fab (SCL) in Mohali had a major fire in late ‘80s!
(incidentally STMicro and IME/S’pore owe a lot to that as the SCL employees moved to these and other pastures following the fire!)

As mentioned in the article, a couple of years back the fab initiative again got some major push courtesy SemIndia as well as Hindustan Semiconductor Manufacturing Corp/Infineon combo but never took off.

While there are several proponents for building semicon fabs in India, personally I am not too gung-ho about the same J, mainly because

·        India does not have the apt environment and infrastructure needed for a fab (these fabs can help a lot on the local employment scene, though)

·        Fabs are too costly to be handled by small players. I do not see the big ones entering here in India w/o being incentivized by sizeable subsidies/tax breaks from the govt.  Intel was an interested player (though I think for backend fab) but the govt. and the tech bellwether could not come to anything mutually beneficial.
·        Even if the fab comes, the technology produced is another question. Are we talking about the low end technos (how will that develop “localized content and value-addition to the Indian made electronic products”?) or the high end ones (which IDM/foundry will opt for this?)
·        With fabs increasingly being seen as only a big players’ game (or of a consortium of big players) and IDMs going fab-lite, there is not much fiscal sense in pushing for a domestic fab in India. Even strategically (long term), it is a too high cost game for new players. However, should it be for some analog process (which generically trails behind the digital ones), it may make sense – will TI be interested (it already has a big R&D set-up in India)
 

 ·       I personally see hardware morphing into a diminishing role in the electronic products – software (embedded as well as application) is growing into a differentiating niche. India can leverage its strengths in embedded design, software development and large domestic market to attract the big global players further and climb up further in the value-chain. It has already been doing so (moving from routine tasks outsourced from the global HQs to local offices to chip development and now slowly on to system development)

 Domestic fabs can spawn the right eco-system to catalyse India into a big player but right now the odds are too much stacked against it – and am not sure if the projected gains are sufficient to warrant this path….

posted in Semiconductor, Business, Foundry | 0 Comments

13th April 2011

IC Insight’s revised capex forecast

IC Insights revised its capex forecast last week in which they indicate that semiconductor industry capital spending is projected to grow to $60.4 billion in 2011, up 17 percent from $51.8 billion in 2010,

I had done some number chewing from the earlier (Jan) report in a previous blog. So was curious to look at the changes. Looks like a couple of big ones in this revised one from the previous (Jan ‘11) forecasts - and they are for ST and Sandisk.

ST’s is 100% (from Jan’s 750M$ to April’s 1500M$) and Sandisk’s is 77.7% (from Jan’s 900M$ to April’s 1600M$). TSMC’s % change from previous is 23.8% increase.

Sandisk had already reiterated its 2011 capex budget of $1.4-$1.6 bn in Feb’11 and IC Insights’ new table reflects that (where did the earlier figure of 900M$ come from??). ST had also announced its capex plans ($1.1 -$1.5b) in as early as late Jan ‘11 (reflected in IC Insights’ latest table)

posted in Semiconductor, Business, Foundry, Forecasts | 0 Comments

23rd January 2011

Analyzing some figures from “5 IC makers join $3B capex club”

Analyzing some figures from “5 IC makers join $3B capex club”…..

Taking just the top 4 spenders and UMC -

Samsung made a quantum jump in total capital spending from $3.5B in ’09 to $9.6B in’10 – a 173% increase, It was the top spender in chip capex in ’10 (interestingly it’s ’10 capital spending was not too less than the combined cap spending of the next two entries in the list - Intel and TSMC). It’s ’11 forecast of $9.2B is a 4% dip from its ’10 spending – making it figure at the bottom of the 2011 major spenders ranked by forecasted spending change from the previous year. The absolute forecasted amount for ’11 is, though, still slightly higher than Intel’s $9B. However Samsung is known to outspend its target every year and analysts still predict a %-10% industry capex outlook.

The company is also cutting down on its DRAM spending. While overall semiconductor spending budget change is forecasted as 0% this year, the foundry spending is up (double of ’10) – still at record levels. Another interesting point to note is that in ’10 (a year in which % change in its capital spending from the previous year was a good 173%), Samsung’s capex/sales ratio (~38% with 9.6B capex and $25B sale, as estimated in mid ’10) was not too far off from its long term average of 32%.

Coming to Intel - Intel’s capex spending in ’10 was much less than Samsung for the same year ($5.2B vs. Samsung’s $9.6B) but is forecasted to be a massive one (73%) this year. However as pointed our earlier, the ’11 forecasted absolute amount will be slightly less than Samsung’s. This comes after a year which Intel called a record year and its best year. Major reasons cited for the industry bellwether’s increased capex in ’11 are - 22nm transition and expected increase in demand. Intel is approaching 22nm transition in ’11 and it also sees tremendous growth opportunities this year, especially with Atom based SoCs in smartphones, tablets, smart devices etc. as well as PC& server segments. Plus, it should not be forgotten that Intel is growing from 3 high volume leading edge fabs to 4.

Next the world’s top pure-play foundry – TSMC made major investment in’10 - a 120% ‘09/’10 % change amounting to $5.9B – slightly higher than Intel and much less than Samsung. However, the table indicates only a marginal forecasted ‘11/’10 % change – 7%, absolute sum of $6.3B. Note, though, that this is the highest absolute sum forecasted amongst all foundries.

Besides capacity, TSMC has always focused on being the technology leader amongst all the foundries. Recent news items point to TSMC’s high R&D spending in ’10 (the company’s R&D spending rose by 44% to reach $945M – moving it into the top 10 in R&D spending - and making it the first pure-play foundry to move into the top 10 semiconductor R&D spending club. TSMC hopes to catch a bigger share of the 28nm market this year.

Coming to GlobalFoundries – The y-o-y % changes are quantum (490% - ‘09/’10 and 96% - ‘11/’10) but then look at the starting point in ’09 - $466m which is quite low compared to TSMC and less than UMC’s too for that year – it had a lot of catching up to do. The foundry is in the process of expanding its current facilities (leading edge facility in Dresden/Germany), building the new manufacturing facility in NY and financing another production facility that will be located in Abu Dhabi.

The expansion focus in Dresden facility will be on adding new capacity to support additional growth opportunities for 45/40/28nm technologies as well as initial 22nm development. Target is to scale output to up to 80 thousand wafers/month over the next two years. The company has also been expanding its Fab 7 in Singapore to reach 50 thousand wafers/month across technologies ranging from 65nm to 40nm. GF’s 300mm output will be around 90 thousand wafers/month when all the new expanded facilities become fully operational.

Things are not looking too well for UMC – it started with a slightly higher capex than GF in ’09, spent half of GF’s (‘10/’09 % change) amount in capital in ’10 and is forecasted to keep the same capital spending in ’11. It could not catch up with TSMC especially on the technology front and now looks to be losing out to GF too. On a brighter note, UMC is reported to put CMOS –MEMS devices into volume production in 2011.

All these point to an intensification of competition on the foundry market as well as a rapid expansion of the contract manufacturers. The question is – will the industry see a foundry capacity glut in late 2011??

posted in Semiconductor, Business, Foundry, Forecasts | 0 Comments

29th October 2010

TSMC continues record-breaking performance in Q3

The company reported its best quarterly net profit and sales ever - net profit rose 54% year-on-year to US$1.52 billion.

Process Technologies as Percentage of TSMC’s Revenue in Q3 2010

150nm+ 28%
130nm/110nm 14%
90nm/80nm 12%
65nm/55nm 29%
40nm 0.33% 17%

In spite of the slow growth rate predicted of the global chip industry next year - CEO, Morris Chang forecasts a mere 5% revenue growth for the global chip industry in 2011, much less than his 30% forecast for this year - the foundry industry bellwether will up its capital spending in 2011 as compared to this year. New capacity for cutting edge 28-nanometer production technology is twice as expensive as 65nm technology; and TSMC will mass-produce chips using 28nm technology in the fourth quarter of this year

posted in Semiconductor, Process, Foundry, Forecasts | 0 Comments

3rd June 2010

GlobalFoundries invests $3b to expand capacity

News is aplenty of heavy capital investments being done. TI, in April, said that it would double the capacity of its 300mm analog fabs (as I said in my earlier blog - after off-loading its wireless products, it has to expand capacity for analog significantly in order to maintain growth momentum). Then the pure-play foundry world leader, TSMC, approved a capex expansion of $1.65 billion for 2010, followed by the Korean giant, Samsung Electronics announcing that it is investing a whopping $22.6b in capex and R&D. And now joining the other major chip companies seeking to ramp manufacturing production to exploit the recovery in global demand, we have the Abu Dhabi government backed GlobalFoundries planning to spend $3b on expansion.  The previous plan was for it to spend $2.5b on capex in 2010.  Abu Dhabi has pledged to spend about $10 billion to build up GlobalFoundries as a world-class competitor in the foundry business

All this sounds good for the industry which had seen some trough points in the last year and a half.  However, the timescales in semiconductor production for planned expenditures to translate into additional capacity is long enough for the industry to move into price decline because of over capacity.

posted in Semiconductor, Business, Foundry | 0 Comments

25th May 2010

UMC seeks funds

Once the number 2 pure-play foundry in the world, UMC now lags behind TSMC, Samsung and GlobalFoundries in process technology.

The Taiwanese foundry is open to involvement from any strategic partner through private placement of 10% of its total shares or about $400 million for capacity expansion.. TI, ASML and GlobalFoundries are among the potential investors for the placement. GlobalFoundries has a major fab under construction in NY and is eager to add capacity; which can be achieved if it taps UMC. In fact, earlier in the year, it was rumored that ATIC approached UMC with a view to take a stake in it and secure additional production capacity.  A strategic partnership between the two would allow them to better compete with market leader TSMC.
 

Only the big can survive in this foundry biz. Consolidation will happen. The question is when and who will be the last few standing.

posted in Semiconductor, Business, Foundry | 0 Comments

10th May 2010

What’s happening on the 450mm wafer front?

Speaking at the International Electronic s Forum 2010 early this month, TSMC’s CTO, Jack Sun, said that he believed a move to 450mm wafers is important for cost reduction and that is going to happen; he reckons middle of this decade. 

The three biggest capex spenders -TSMC, Samsung and Intel want 450mm. But none have contributed substantial funding – an estimated $25bn - $30bn R&D investment by suppliers. 300mm was funded by the equipment suppliers. The same may not be expected this time as the fact whether the suppliers have recouped their investments is still uncertain. Plus they have their other expensive baggage – transition to new process nodes, TSVs, materials etc. 

Now come to the equipment makers. To improve their competetiveness and therefore increase their chances to be selected by the tier 1 semiconductor companies in their future 450-mm operations, the European semiconductor equipment and materials makers support the move to 450mm. However, large non-European semiconductor equipment manufacturers, including Applied, Novellus, Lam, TEL and others, have publicly slammed the idea of the 450-mm wafer transition  

Prior to 2002 (before 300mm wafers actually took off), semiconductor and equipment revenues were more or less aligned. However, post 2002, semiconductor revenues have continued to diverge from equipment revenues, and the ratio of equipment to semiconductor revenues is at an all time low - a divergence attributed largely to the impact of 300mm wafers. 

So the question remains: Who funds the 450 mm, if at all??    

 

posted in Semiconductor, Foundry | 0 Comments

20th October 2009

Fab allocation back on the agenda

As mentioned by Malcolm Penn of Future Horizons in the IEF 2009, “The ‘A’ word is back on the agenda”,
 

But it is not all smooth sailing for the foundry biz. The semiconductor industry’s capex has hit alarmingly low levels. The normal ratio of capex to sales over the industry’s history is 20%. Last year it was 12% and this year it will be 4%. The industry’s overall capacity is now 14% less than it was in Q3.’08. With the economy and market’s forecasted recovery, foundries will be hard pressed next year to meet the demands.
 

And that is where the “C” word comes in – Collaboration and Consolidation.
 

There has also been a lot of talk on consolidation in the foundry biz – as in other areas of the semiconductor industry. There are some pending mergers - between Hua Hong NEC and Grace Semiconductor; Tower Semiconductor’s 2008 purchase of Jazz Semiconductor, proposed acquisition of HeJian Technologies by UMC and the recent purchase of Chartered by GlobalFoundries.
 

Possible future mergers are: SMIC acquiring Cension Semiconductor Manufacturing International and Wuhan Xinxin Semiconductor Manufacturing - two companies which SMIC is managing. And then there are small foundries like Silterra, Altis and Landshunt which are struggling and open to speculation regarding a merger with another manufacturer.”
In all likelihood, as cited by iSuppli, there may be 3 major pure-play foundries left standing after the consolidation – TSMC, UMC and GlobalFoundries.

.

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3rd March 2009

Intel teams up with TSMC for Atom

Intel will port unspecified Atom processor cores to TSMC’s technology platform, including processes, IP, libraries and design flows under the terms of an agreement between the two companies announced yesterday.
 

The deal will expand the TAM for Atom. It allows TSMC & Intel to go after newer market segments together - namely the embedded, CE, netbooks and handheld market.

Some interesting highlights on this deal:

  • It is indeed a rare event for Intel to allow its processor to be manufactured by another company.
  • Intel has no plans to license or transfer its high-k process to TSMC. It is doubtful the TSMC Atom devices will include high-k and metal gates. Hence it’s unlikely that the core from TSMC will have the same performance level as that from Intel.
  • With PC shipments failing, Intel needs to aggressively penetrate into other markets.
  • Intel goes head-on with leading embedded core provider, ARM. While ARM is trying to move to larger devices (from handsets etc.) for its cores, Intel is moving in the opposite direction (PC to smaller devices)
  • We may see two strong foundry-IP camps emerging: ARM-IBM alliance and Intel-TSMC for the much sought after mid size converging devices in the embedded space.
  • Point to be noted is that while there are 2 different market segments for the processor – higher end processors for PCs and the lower (& cheaper ones) for MIDs, Intel will need to do a real balancing act here so as not to have its profits from the upper segment being eaten away substantially by the lesser profits of the lower end processors.

 

posted in Business, Foundry, IP, Industry Events | 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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14th March 2008

Chasing wafer fab projects in Singapore

I recently read this article in a book, Heart Works, which is a compilation of snippets by various high profilers on how the Economic Development Board (EDB), Singapore steered the country into the 21st century.

The article, authored by Mr. Lim Swee Say who held several senior appointments in EDB, recalls how they chased the wafer fab projects in Singapore in around 1994. In a great show of synergy, several players pitched in - banking community for funding, specialist manpower, training and knowledge upgrading schemes were made available to graduates and universities were roped in, National Science and Technology Board (now A*STAR) helped to build capabilities in wafer fab process and IC design technology and JTC Corporation pitched in with developing & servicing the fabs along with the service utility entities.

Their first wafer fab project was for Hitachi and an amusing anecdote is about how midway through digging up and preparing the land for the fab, they hit on a rubbish dump which had to be cleared away.

The news would have read “Singapore’s most modern fab sited on a rubbish dump”!

posted in Foundry, Trivia | 1 Comment

7th February 2008

SMIC’s virtual fab strategy

SMIC’s CEO, Dr. Richard Chang announced late last month of the starting of a new IC production project in Shenzhen. Unlike its predecessors, in this project SMIC will register an independent legal entity, the Semiconductor Manufacturing International (Shenzhen) Corporation Ltd., which will set up an IC technology research and development center, an 8-inch wafer production line and a 12-inch fab.” SMIC will use the 300mm facility for 45nm bulk CMOS fabrication in relation to the recent process licensing deal it has struck with IBM.  

SMIC has been successful in gaining significant financial support and services from Chinese regional governments in establishing semiconductor manufacturing facilities in specific regions in the last 18 months. A number of such facilities have been termed as “virtual fabs” - Under this approach, a municipality owns the facility and SMIC manages it, garnering fees and a share of the profit for its troubles. (Though it may receive some government funding for the fabs announced last month, SMIC apparently will own them.)

Now while pure play foundries like TSMC, UMC and Chartered have reduced their capital spending plans keeping in mind a probable recession, SMIC plans to buck the trend and boost its capacity by 31% by year end – prompting fears of a capacity glut which may kick off a price war.

SMIC’s virtual fab strategy has drawn its share of critics who claim that it does not give a level playing field from the financial point of view. However, it’s to be noted that government investment in semicon industry is not new. The point is whether this has given SMIC the initial boost to catch up with the top players. Also with the Shenzhen deal with SMIC owned fabs, SMIC may be re evaluating its virtual fab strategy. 

With China’s semiconductor market, driven by computing & consumer electronics demand predicted by IDC to top  $28 B in 2008 & coupled with the fact that SMIC has distanced itself from it’s initial focus on DRAMs, this expansion may not be such a bad idea for SMIC.

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21st January 2008

Chip makers must shift from fabs to systems

In the interview to EETimes’ Rick Merritt, Infineon’s CEO, Ziebart mentioned that semiconductor companies need to shift their focus from building fabs to building systems, and they must engage with customers at deep technical levels if they are to survive the current wave of consolidation.

“The major thing giving semiconductor makers a competitive advantage has evaporated. Today everyone has access to the same process technology at roughly the same time. This access used to be what differentiated the best from the worst semiconductor companies, but now it has evaporated, What’s replacing process technology as a differentiator is systems know how, and it must be specific to a market area”, he said.

This has initiated several comments on the blogosphere. Let me add my two penny’ worth to that:

In the past, the process technology was the competitive edge. Later the escalating costs (& risks) involved with building new fabs & developing new processes left one with little option but to pool in resources and consolidate (to compete with the rising prominence of  original pure-play foundries); giving rise to alliance like Crolles and later the Common Platform Alliance. IDMs shared their resources for the basic process and individually derived some spin-offs for differentiation & niche. This competitive edge was further complemented and later more or less replaced with strong IP portfolio which has grown over the years from a block to platform to “platform plus services”.

Moving to system level is a natural progression in this path.

Yes, the differentiator has moved from process technology; but it is due to access to the process techno. This access has become cost prohibitive for any single semiconductor company (perhaps leaving aside a couple with really deep pockets) and hence the scramble to find an alternate place in the value chain to survive.

A point to be noted here is to follow how the foundries have also evolved over this period –  from pure play to design support to building an IP portfolio to……. “systems know how”???

posted in Semiconductor, Process, Business, Foundry | 0 Comments

15th January 2008

Used semicon equipment market - expected strong growth this year

Amidst the bleak forecasts for the semicon industry for 2008 including the projected decline by 10% in capital spending, a sector expected to post strong growth this year is the used semiconductor equipment market. According to a report from Semiconductor Partners in conjunction with Semicon Research, Used semiconductor equipment market is expected to reach $8 billion in 2009


 “As leading edge digital memory and logic manufacturers build 300mm fabs for process technologies of 65nm or less, this will obsolete their 200mm fabs at 130nm or 90nm and some of their 300mm fabs at 90nm,” noted Morry Marshall, Partner – Strategic Technologies at Semiconductor Partners. “Analog and mixed signal manufacturers will have a need for these fabs to meet for expansion to satisfy the growing analog, mixed signal and RF markets.  This creates an opportunity for companies that finance, resell or refurbish used equipment.”

IDMs have re-aligned their fab strategies and are going towards fabless or fablite. Plus the ASP declines have catalysed foundries towards the 300mm wafer path, thus giving a boost to the 200mm used equipment market; in particular  from foundries in Asia. While on foundries in Asia, Chartered has been on the speculation radar

  • Toshiba has recently extended its 2 year collaboration with IBM on 32nm and below to include 32nm bulk CMOS process techno. Chartered with its ties to IBM (Common Platform Alliance) looks set to leverage on this and take away biz with Japanese foundry customers from TSMC and UMC
  • Rumors on SMIC being acquired have been afloat since last year. In April ’07, it was rumored to be taken over by venture capital companies. The latest one this year is that Chartered may acquire SMIC.

With the increasing prominence of the foundries in the semicon space and being pitted against the formidable Taiwanese foundries, the others are poised to increase their share of the pie.

 

 

posted in Semiconductor, Business, Foundry, Forecasts | 0 Comments

26th December 2007

SoC yield management – an emerging issue that could reshape the industry?

Read this interesting commentary by EDN’s Ron Wilson on Verigy’s acquisition of Inovys. While relating the ATE vendor’s acquisition as more towards acquiring Inovys’ failure localizing software, Ron has brought about an interesting emerging industry aspect

With “Time to entitled yield” becoming a critical metric especially for 65nm and below, it is doubtful if the existing distributed manufacturing model used between fabless companies and their foundry partners will suffice.  A closer loop is required which will cross the existing collaboration and contractual working relationships.And this leads to Ron’s observation – will we gradually see re-integration of design, test and failure analysis functions into real IDMs? 

Over the last couple of years, we have seen IDMs going towards fablite and fabless models, and the emerging dominance of the original pure play foundries. I say “original” as lately these foundries are paving their way into newer territories like climbing up the design support value chain by increasing their IP portfolio, collaborating with EDA vendors for providing yield related data/information to the designers and reference design flows,  and others – just short of coming up with their own ASSPs. 

So will we see the re-emergence of real IDMs albeit in the form of a morphed foundry??

posted in Business, Foundry, Fabless | 0 Comments

6th December 2007

Fab lite diet for analogs?

Over the last few years, we have been seeing IDMs outsourcing their digital production needs to the foundries. Now looks like, a similar path may be taken by the big analog IDMs too – or at least “their interest level in outsourcing has dramatically increased”, as per Thomas Hartung, VP of Sales & marketing for X-Fab.

Read a couple of interesting articles which highlight this potential move; here are few points from them which I’d like to share:

For years, analog IDMs have manufactured the bulk of their products in-house, shipping only a small percentage to foundries, for a number of reasons.

-    Many analog products do not require leading-edge fabs or processes. -    Most analog ICs have relatively small die sizes and wafer volumes are hence low as compared to their digital counterparts ; this does not work well with outside foundries-    Analog products generally have longer life cycles and can be made cheaply in older fabs for several years.

-    The real money makers in analog sell in modest volumes year after year; something that works for an internal fab but not at an expensive foundry.

-    And analog vendors insist fabs still give them a competitive edge as they work on the edges of highly optimized, internally developed processes

This doesn’t mean foundries have no role in the analog IC world. Foundries can effectively support fabless vendors of ICs that have considerable digital content but only modest analog content and that don’t push the envelope of analog performance. On the other hand, the specialized foundries are trying to get these analog IDMs look more towards outsourcing their production needs to them. Hans-Jurgen Straub, CEO, X-Fab Group, says that analog IDMs should focus on product innovation rather than on process innovation. Besides pushing its own analog & mixed signal processes, Germany’s X-Fab has also been acquiring fabs from various IDMs.(a US fab from TI in 1999, a UK fab from Zarlink semiconductor in 2002,  last year acquisition of Malaysia’s 1st Silicon and then ZMD AG’s wafer processing subsidiary early this year).

So, it is to be seen whether the analog IDMs will beat the same path as digital IDMs or continue in the old fashioned way  

posted in Business, Foundry, Fabless, Analog | 0 Comments

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