Collaboration, Specialization, and Differentiation are Common Threads in Day One of Semico Summit 2008

Semico Research Corporation, a leading semiconductor market research and consulting firm, opened its 11th annual Semico Summit today with presentations from major corporate players. The common theme running throughout the presentations − from such industry heavyweights as IBM, NEC, ARM, and ARC International − is that the future holds strong promise for collaboration, specialization, and differentiation to improve competitiveness, drive a shorter time to market, and deliver the customer experience expected by the younger consumers coming out of college today. The Web 2.0 experience and phenomena such as YouTube, Facebook, Flickr and Twitter, are driving much of the innovation in semiconductors today, particularly in mobile media.

Jim Feldhan, Semico President, kicked off the first day of the Semico Summit with a presentation on the state of the semiconductor market, expounding on this year’s conference theme -- “Technology for the Masses.” Research by Semico indicates that several factors will bolster the semiconductor market. “The Microsoft Vista operating system is building momentum. We see strong demand for dual and quad core processors, and hybrid disk drives will stimulate the laptop and notebook markets,” stated Feldhan. “In addition, anything that’s ‘green’ is good. Consumers favor green initiatives, more electronics and features in the automotive marketplace, which drives product differentiation. ” Semico predicts negative revenue growth in the DRAM market due to price pressures and a booming market for NAND with stable prices. Overall, Semico forecasts a 9% revenue growth and 11% unit growth for the total semiconductor market in 2008.

Collaboration is Key to Future Success
Dr. John E. Kelly, IBM Senior VP and 2008 recipient of the Semico Bellwether Award, spoke of a fundamental technology transition from integrated circuit technology to core nanotechnology, over the next ten to twelve years. As the industry moves toward 45nm, 32nm and 22nm technology, R&D costs, the risk involved in chip design and manufacturing costs increase exponentially. Concurrently, margins and ASPs continue to decline. According to Dr. Kelly, few corporations can continue to operate under this type of business model in the long term. The need for greater collaboration exists among semiconductor manufacturers at all phases of the R&D process to mitigate risk and share development costs.

Specialization and End-User Experience
The consumer electronics (CE) panel, comprised of David Peteson (Zoran VP of Marketing), John Watson (Element CXI Founder and President), Bart Ladd (NEC Electronics America General Manager), and Fares Mubarak (Actel Senior VP), indicated the need for semiconductor manufacturers to focus more on the end-user experience in relation to product development. Media-rich consumer products, mobile computing and the multimedia-enabled networks are drivers in the consumer electronics marketplace. Panelists agreed that specialization that focuses on a company’s core competencies is the key to success in the CE market.

NEC’s Bart Ladd spoke of the MCU as an enabler to the “green” technology that is sweeping the appliance market. Studying end-user preferences and market demand, NEC’s research indicates that 12% of all consumers are willing to pay more for eco-friendly appliances.

Carl Schlachte, ARC International CEO, spoke about the complexity of semiconductors for the consumer electronics market. Specialization, focusing on core competencies, partnering with complementary companies, and focusing on the end-user experience are driving product development at ARC. Today, the time from design to final production of a new, complex SoCs average about 18 months; however, the market wants it in nine months. Partnering with the right companies brings these divergent expectations in close alignment. Consumer expectations are that media-rich mobile computing should be delivered anywhere at any time, and the end-user does not want to be bothered with the technology behind the magic.

Differentiation and Intellectual Property
The afternoon IP panel included Simon Segars (ARM Executive Vice President and General Manager), Ted Vucurevich (Cadence Design Systems Senior Vice President), and Jack Harding (eSilicon Chairman, President, and CEO). Focusing on chip design and bringing new products to market, this panel discussed trends in outsourcing and third-party IP market trends in the semiconductor industry. Understanding end-user requirements and conducting verification early in the design process are extremely important. Developing new IP is worthwhile when it creates a unique market opportunity or product differentiation.

As the final speaker of the day, John Bourgoin, MIPS Technologies CEO, spoke of the increased cost of development, particularly as it relates to new IP. Today, a complex SoC on a 65nm node is 63% higher than on a 90nm node. The cost of developing one complex System on a Chip (SoC) is $40 million. In addition, the industry has seen a dramatic increase in re-spins starting with the 90nm nodes. A single re-spin may add 6 to 12 months to the development process. In his presentation, Bourgoin indicated that good IP reduces development costs, improves time to market and is becoming a fundamental necessity in providing true product differentiation.

About Semico
Since 1994, Semico Research Corporation has been providing strategic marketing, trend analysis, and custom consulting services for the semiconductor and electronics industries. Semico’s published market and technical reports include demand studies by product type (DRAM, NAND, NOR, Micro Logic, and ASICs), end-use markets, and manufacturing. Globally, technology manufacturers, vendors, service providers, professionals and market specialists utilize Semico’s experienced staff and in-depth research to support critical business, product and technology decisions. Semico is a strategic partner with leading technology companies, with access to an extensive worldwide network, technology databases and expert personnel. For more information about Semico, visit http://www.semico.com.

Contact Information:
Jim Feldhan, President
Semico Research Corporation
jimf@semico.com
602-997-0337