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Riding the Wave: 2011 Cresting into a 2012 Cutback Move

At the Semico Summit this week Jim Feldhan said “2011 will see revenue growth of 8% however the Semico IPI indicates the second half of 2011 as the beginning of the next market slowdown.” What other evidence supports this hypothesis?

  • Approximately 100 tablet models are being introduced this year, each with a market share goal of more than 1%.  There will be winners and losers.  The result will be excess capacity and inventory in the channel as these models shakeout. In terms of semiconductor ASP's, the supply chain only has to be few percent points out of equilibrium to cause prices to crash.  We’ve seen it in the memory market many times.
  • The smart phone is considered the “promise land”. A market that continues to grow at double-digit rates with increasing semiconductor content is an irresistible market. However, there is a similar threat in the smart phone market.  Overbuilding of smart phones will result in a production pullback in 2012 contributing to excess capacity and inventory leading to falling ASP.

While we would expect a semiconductor downturn to produce negative semiconductor revenue, Semico has identified several factors that will dampen the severity of the downturn.

The Invisible Computers in Our Lives - Microchip

At the recent Semico Summit Ganesh Moorthy, Chief Operating Officer of Microchip Technology, examined how much embedded computing permeates our lives.  But he also pointed out how much more opportunity there is for microcontrollers.  Microchip is a leading vendor of microcontrollers

Mr. Moorthy showed how several applications that have evolved from very simple solutions to solutions that utilize sensors and intelligence.  This has enabled products that are adaptable, have more security, simplified user experience, improved energy efficiency and more.  Among these are developments in automotive, lighting, thermostats and appliances.  There are new applications for microcontrollers providing support management in personal computing, data centers, handsets, asset tracking & management and personal medical equipment.  Embedded computing is found throughout various applications within the smart power grid.

Mr. Moorthy cited several innovation enablers.

Doing Well by Doing - Good STMicroelectronics' View to Shaping the Semiconductor Future

At the recent Semico Summit STMicroelectronics presented its view on shaping the semiconductor future.  Bob Krysiak, Executive VP and GM of the Americas Region, spoke on how ST and the semiconductor industry is “doing well by doing good.”

Mr. Krysiak pointed out the demographic changes that are occurring.  There is increasing world population with most of this growth in non-Western countries.  By 2050 there will be nearly 10 billion people, an increase of 3 billion over today.  In addition we have an aging population.  This puts pressure on many resources.

The theme of his presentation, “doing well by doing good,” presents the internet and connectivity as key elements in addressing these issues.  He noted that the internet and connectivity have become the plumbing of our world and industry.  There are a growing number of online users, many in China.

We will depend more on the internet and connectivity for increases in productivity and security.  Human productivity will depend more on mobility and wireless.  Banking will be transformed by this, but then security becomes more important.  This will lead to growth in brand authentication, protection and trusted platform security.

Sensors Changing the Way We do Business

Freescale’s Senior VP and GM of the RF, Analog & Sensor Group, Tom Dietrich, joined us for another year at the Summit.  Tom is always at the forefront of what is trending in the semiconductor industry and this year was no different as he introduced us to Freescale’s vision of a sensor-based future.

Over the next few years Freescale sees the future changing the world, and Freescale will be leading the change as they focus on four growth markets: Automotive, Networking, Industrial, and Consumer while they leaverage three growth trends: The Net Effect, Health & Safety, and Going Green.

For the consumer market we can see how sensors are changing the way we interact with our electronics just by looking at the iPhone and the top ranking apps.  Games now rely on the touchscreen, some rely on tilting the phone, others respond to shaking.  Add this in with networking and we have Cloud Computing.  For example in Japan, a good way to use sensors in cell phones is to have an earthquake app that can combine data from everyone’s phone to a central hub where the data will be analyzed to predict more accurately when and where the next earthquake will occur.  And considering that seismologists are warning of another magnitude-8 quake, this is a feature of sensors that can save lives.

Paolo Gargini of Intel Speaks at Semico Summit

Paolo Gargini—Intel Fellow, Technology and Manufacturing Group and Director of Technology Strategy for Intel—spoke on May 3 at the Semico Summit 2011.  He highlighted the time gap between when an idea is formed, to when the science, technology and engineering are able to make that idea a reality.  The incubation time for an idea to become real has shortened from several hundred years for satellites, to 12-15 years now for many ideas.

Dean Kamen Issues Call to Action to Semiconductor Industry at Semico Summit 2011

Dean Kamen, inventor and founder of DEKA and First, delivered the keynote address at the Semico Summit 2011.  He also received Semico’s Bellwether Award, granted annually to a visionary leader in the technology industry.  Dean has invented the insulin pump, a portable dialysis machine, the iBot mobility system, the Segway people mover, a prosthetic arm for DARPA, and a self-contained water cleaning and purification system, among other things.

The topic of Dean’s presentation was innovation, and how the United States is lagging behind in terms of educating and inspiring our youth to become innovators.  We take invention for granted because we have so much technology around us.  However, in developing countries, they are ready to take risks at much lower investment levels.

In the United States, we have the lowest percentage of kids going into science and technology in the world.  We also have the highest percentage of kids dropping out of high school in the world.  “Innovation should be thought of as a gift from one generation to the next,” Kamen said.

Dean believes we have a culture problem, where it is the tech industry, not lawyers and politicians, that needs to support a long-term serious commitment to science and technology.

New Design Opportunities as Semiconductor Device Type Boundaries Blur

In a May 2, 2011 presentation at the Semico Summit, Mr. Danny Biran, Senior VP of Marketing at Altera, discussed new opportunities as the boundaries between semiconductor logic device types become blurred. According to Mr. Biran, the boundary between FPGAs, ASICS, ASSPS and CPUs (MPUs, MCUs and DSPs has until recently been extremely well defined. 

FPGAs were customer programmable standard products.  Programming was developed for and owned by the customer.  ASICs used a standard cell design methodology.  The design was owned by the customer.  ASSPs were a standard high-volume product developed by the semiconductor vendor for sale to multiple customers.  MPUs, MCUs and DSPs were standard products, but the software needed to implement an application was developed by the customer.  Now, the boundaries between those categories are becoming blurred. Various semiconductor vendors are offering FPGAs with an on-board MPU, ASICs that include an FPGA block or ASSPs with multiple processing cores.  

The Economics of Innovation... Daunting

The convergence of mobility, communication and computing has produced multifunctional end applications that are placing huge demands on semiconductor manufacturers.  These new devices require low power, high performance, and a lot  of advanced manufacturing capacity at a low cost.

At the 2011 Semico Summit, Gregg Bartlett, Senior Vice President of Technology and Research and Development, GLOBALFOUNDRIES talked about the economics of innovation, highlighting the daunting economic and technology challenges to bring products to market.  Just a few of the major costs include the following:

  • $1-2 billion in leading edge process technology development,
  • 3-4 years of development,
  • $40-$50 million in chip design costs,
  • $250 million for design enablement such as libraries and IP,
  • $5-$7 billion for an advanced 300mm fab.

Today’s market is a high stakes game.  Its no wonder that the industry has embraced a collaborative environment at all levels.

Sandeep Vij, President and CEO of MIPS Technologies

At the just concluded Semico Summit 2011 conference, Sandeep Vij, President and CEO of MIPS Technologies made some very interesting observations regarding Consumer electronics applications and their use of memory resources. We all know that the feature sets and functionality of devices aimed at Consumer applications have been increasing over the last 3-4 years.

This is driven by the requirements of users of these devices for OEMs to deliver ever-increasing amounts of functionality like HD quality video, video downloads, touch screens, multiple HD cameras, personal video conferencing and multiple types of integrated sensors. Future requirements will include, but are not limited to, medical sensors, 100’s if not 1000’s of apps run in the devices, 3D-HD video, etc. These new levels of functionality must be fulfilled by placing higher levels of complexity into these silicon solutions to provide the right feature sets consumers desire.

All this takes an increasing amount of resources to deliver the right user experience. MIPS is the second largest CPU IP vendor next to ARM and is one of the first companies to see what these new levels of functionality demand in terms of the compute and system resources that must be placed into the system.

CEO of Xilinx Corporation, Moshe Gavrielov

Semico Research Corp. was privileged to have the CEO of Xilinx Corporation, Moshe Gavrielov, deliver a presentation on developments in the Programmable Logic market at our just concluded Semico Summit 2011 conference. Moshe made some very interesting points that are not necessarily always connected to the programmable logic market:

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