The semiconductor industry is going fabless
So it seems, listening to Chartered Semiconductor VP, Kevin Meyer, who spoke at the ARM Developer Conference yesterday. The pun referred to AMD founder Jerry Sanders “insult” at fabless rivals that design chips in-house but outsource manufacturing to “foundries”. That was then, and now AMD has no more “fabs”.
In his presentation, Meyer stressed the need for semiconductor companies, both on the design side (IP, fabless…) and on the manufacturing side (foundries), to join forces and collaborate in R&D and process development to amortize higher mask/equipment/process development costs.
For the Singapour-based foundry executive, this is the only way to continue innovating inspite of these exponential costs and increasing competitive pressures that shorten product lifecycles. Both factors that are driving a rapid consolidation of the semiconductor industry.
Leaving Intel as the only IDM (Integrated Device Manufacturer) left in the semiconductor market that can afford to invest the billions of dollars needed every year in R&D and to build new fabs.
AMD, Sony and Texas Instruments left that business. On the other hand IBM and foundries like Chartered and Samsung created a common platform that companies like AMD, Infineon, Freescale, ST, NEC or Toshiba would be able to use to produce their respective chips.
It’s interesting that Taiwanese foundries, UMC and TSMC chose to do it alone. Although, TSMC had the Crolles alliance that at some point included Freescale, Philips/NXP and STM.
“Getting IP [intellectual property] to the silicon is going from a few thousands dollars to a few million… The number of units needed to produce to recoup the cost went from 5,000 to 5 million… And time to market is so key to capture revenue opportunity. If you miss by as much as a quarter your market window, you can see 25% of your revenue opportunity evaporate”, Meyer said
The only alternative left for semiconductor companies that can’t afford to build fabs anymore is to collaborate in what Meyer call an “open ecosystem for design innovation” that includes fabless/IP companies, equipment makers, foundries, EDAs… Not so simple.
