Realities of the Semiconductor Industry
World Semiconductor Dynamics: Myth vs Reality
July 15, 2009
Walden C. Rhines CHAIRMAN & CEO
In a Recession, It’s Hard for the Semiconductor Market to Fare Any Better than the Overall Economy
2 WCR Semiconductor Dynamics: Myth vs Reality
Semiconductor Revenue Drops to 2006 Levels SIA/WSTS Semiconductor Revenue
$248.6B
70,000,000
60,000,000
50,000,000
40,000,000
30,000,000
20,000,000
10,000,000
0 0 0 1 2 3 3 4 5 6 6 7 8 9 9 0 1 2 2 3 4 5 5 6 7 8 8 19 49 39 29 19 49 39 29 19 49 39 29 19 49 30 20 10 40 30 20 10 40 30 20 10 40 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Source: SIA/WSTS, May, 2009
3 WCR Semiconductor Dynamics: Myth vs Reality
Q4-Q1 Sequential Unit Volume Decline Was Largest in History SIA/WSTS Total Semiconductor Units
-36.7%
180,000,000 160,000,000
Units # (000)
140,000,000
-31.9%
120,000,000 100,000,000 80,000,000
-56.1 Billion Units
60,000,000 40,000,000
-31.6 Billion Units
20,000,000
Q 19 0 Q 19 1 Q 19 2 Q 19 3 Q 19 4 Q 19 5 Q 19 6 Q 19 7 Q 19 8 Q 19 9 Q 10 0 Q 10 1 Q 10 2 Q 10 3 Q 10 4 Q 10 5 Q 10 6 Q 10 7 Q 10 8 Q 10 9
0
Total Semi Units Source: SIA/WSTS, May, 2009
4 WCR Semiconductor Dynamics: Myth vs Reality
Only Five Years of Negative Semiconductor Unit Growth in History SIA/WSTS Total Semiconductor Units vs ASP 180,000,000 160,000,000
Units # (000)
140,000,000 120,000,000 100,000,000 80,000,000
1985 -1.1% YoY
60,000,000 40,000,000
1992 -0.4% YoY
1996 -2.3% YoY
2001 -20.8% YoY 2008 -3.4% YoY
20,000,000
Q 17 7 Q 37 8 Q 18 0 Q 38 1 Q 18 3 Q 38 4 Q 18 6 Q 38 7 Q 18 9 Q 39 0 Q 19 2 Q 39 3 Q 19 5 Q 39 6 Q 19 8 Q 39 9 Q 10 1 Q 30 2 Q 10 4 Q 30 5 Q 10 7 Q 30 8
0
Total Semi Units Source: SIA/WSTS, May, 2009
5 WCR Semiconductor Dynamics: Myth vs Reality
World Economy vs. IC Chip Industry 6
50
5
4
20 10
3 0 2
-10 -20
1 -30 0
-40
Source: Mentor Graphics, IMF World Economic Outlook Database, 10/2008, VLSI Research & IC Insights
6 WCR Semiconductor Dynamics: Myth vs Reality
IC Industry Growth
30
19 80 19 81 19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07
GDP Growth (Constant Prices)
40
World Economy vs. IC Chip Industry
5
2
40 30
0
4
50
R = 0.0864
2
4
6
20 10
3 0 2
-10 -20
1 -30 -40
19 80 19 81 19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07
0
Source: Mentor Graphics, IMF World Economic Outlook Database, 10/2008, VLSI Research & IC Insights
7 WCR Semiconductor Dynamics: Myth vs Reality
IC Industry Growth
6
GDP Growth (Constant Prices)
y = 4.6271x - 2.9181
60 40 20 0 -20 -40
World Economy vs. IC Chip Industry 6
50
Under Capacity 5
4
20 10
3 0 2
-10
Memory ASP -20 1
Inventory Adjustment
Over Capacity
0
-30 -40
Source: Mentor Graphics, IMF World Economic Outlook Database, 10/2008, VLSI Research & IC Insights
8 WCR Semiconductor Dynamics: Myth vs Reality
IC Industry Growth
30
19 80 19 81 19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07
GDP Growth (Constant Prices)
40
Lack of a Bubble Preceding the 2009 Semiconductor Downturn
15% 13% 12%
20%
10%
10% IC ASP Growth
-7%
0%
2%
-11%
-13%
2%
-35%
-4%
-5% -8% -3%
-10% -20%
47%
Source: IC Insights, McClean Report – 2nd Quarter Webcast
9 WCR Semiconductor Dynamics: Myth vs Reality
f
2% -16%
08
20
00 20
99 19
98 19
96 19
95 19
94 19
93 19
19
85
84 19
19
-50% 982 1
83
0%
07
19%
20
26% -23%
06
13%
-8%
20
12%
05
25%
20
38%
50%
76%
65%
01
Capital Equipment Growth
65%
20
100%
In Q109 Unit Volume Dropped 28%(yr/yr) With Only an 8% ASP Decline 5
40,000,000
4
30,000,000
3
20,000,000
2
10,000,000
1
0
0
Source: SIA/WSTS, May, 2009
IC Chip Units 10 WCR Semiconductor Dynamics: Myth vs Reality
IC Chip ASP
9 10
Q
10
8
7 Q
10 Q
10
6
5 Q
10 Q
10
4
3 Q
10 Q
10
2
1 Q
10 Q
10
0
9 Q
19
8 Q
19 Q
19
7
6 Q
19 Q
19 Q
19
4
3 Q
19 Q
19
2
1 Q
19 Q
19 Q
5
ASP $
50,000,000
0
Units # (000)
SIA/WSTS IC Units vs IC ASP
In a Recession, It’s Hard for the Semiconductor Market to Fare Any Better than the Overall Economy The Semiconductor Recovery Will Be Faster than the Overall Economy
11 WCR Semiconductor Dynamics: Myth vs Reality
Slowing Adoption of New Technology 2005 1.72B Transistors
2004 592M Transistors Itanium 2 (9MB cache)
2002 2000
2008 2Billion transistors Tukwila Quad Core
1999 9.5M+ Transistors Pentium III
1997 7.5m+ Transistors
1995 5.5M+ Transistors
1993
Pentium Pro
3.1M+ Transistors
1989 1,290,000 Transistors
1985 1982 1979 29,000 Transistors
Pentium
486
275,000 Transistors 386
134,000 Transistors 286
8088
12 WCR Semiconductor Dynamics: Myth vs Reality
Pentium II
42M Transistors Pentium 4
220M Transistors Itanium 2
Dual Core Itanium
Frequent Statements About the Slowing of Technology Adoption “The problem is that Moore's Law has collapsed," he says. Coburn asserts that there has been a slowdown in the previously steady move to smaller geometries and larger wafer sizes. Pip Coburn, Coburn Ventures December 15th, 2008 Source: Barron’s “Why it’s going to get a lot worse,” Eric J. Savitz. Dec. 15, 2008 http://online.barrons.com/article/SB122912495865802961.html?mod=gartner
“And, the customers have slowed down or delayed their technology transitions either by leveraging their existing installed base or just by delaying their new product introduction for later.” Eric Meurice, Chairman, President and CEO ASML Holding N.V. Source: Q4 2008 Earnings Call. January 15, 2009 http://seekingalpha.com/article/115001-asml-holding-n-v-q4-2008-earnings-call-transcript?page=-1
13 WCR Semiconductor Dynamics: Myth vs Reality
“The slowdown in process technology transitions will mean that the semiconductor industry will be driven more by economics than technology …” “You are not seeing these geometries rise and fall off the way they did before. Rather, they are living on.” Len Jelinek, Director and chief analyst, Semiconductor Manufacturing, for iSuppli Source: EE Times,“ISuppli: Gear costs to derail Moore's Law in 2014," Dylan McGrath, June 16, 2009 http://www.eetimes.com/news/latest/showArticle.jhtml?articleID=217900102
Design Completion Trends Design Completion Share by Linewidth 40%
Percent of Total Design Completions
35% 30%
25% 20%
15% 10%
5% 0% 1993
1994
1995
350nm
1996
250nm
1997
1998
1999
180nm
Source: VLSI Research, Design Completions, September 2008
14 WCR Semiconductor Dynamics: Myth vs Reality
2000
2001
130nm
2002
2003 90nm
2004
2005 65nm
2006
2007
2008 45nm
2009
Silicon Volume of Wafer Starts (in 300mm Wafer Equivalents) Volume of Wafer Starts by Linewidth (300mm wafer equivalents) 40%
Percent of Total Silicon Demand
35% 30%
25% 20%
15% 10%
5% 0% 1994
1995
1996
350nm
1997
250nm
1998
1999
2000
180nm
Source: VLSI Research, Silicon Demand, EDA Tech Forum June, 2009
15 WCR Semiconductor Dynamics: Myth vs Reality
2001
2002
130nm
2003
2004 90nm
2005
2006 65nm
2007
2008 45nm
2009
Reticle Sales Trends Reticle Revenue Share by Linewidth 40%
Percent of Total Reticle Revenue Share
35% 30%
25%
20% 15%
10% 5%
0% 1993
1994
1995
350nm
1996
250nm
1997
1998
1999
180nm
Source: VLSI Research, Reticles, September 2008
16 WCR Semiconductor Dynamics: Myth vs Reality
2000
2001 130nm
2002
2003
2004
90nm
2005
2006 65nm
2007
2008
2009
45nm
IC Fab Capacity by Node * IC Fab Capacity by Node (MSI) January 2004 -to- June 2008 200
IC Fab Capacity (MSI)
150
100
50
0 Jan-04
Jul-04
Jan-05
Jul-05 45nm
Jan-06 65nm
Source: VLSI Research, December 15, 2008
17 WCR Semiconductor Dynamics: Myth vs Reality
Jul-06 90nm
Jan-07 130nm
Jul-07 180nm
Jan-08
Jul-08 * Note: Realized
Capacity Utilization Improvement in March & April Favors 65/45nm Technology 100%
180nm 130nm 90nm 65nm
Capacity by Node - April
45nm
90%
80%
70% >180nm, 27.1%
65nm, 14.7%
50%
180nm, 7.1%
90nm, 19.0%
130nm, 8.6%
150nm, 1.8%
60%
40%
Source: Selantek Capacity Analysis, May 5, 2009
18 WCR Semiconductor Dynamics: Myth vs Reality
09 pr A
09 ar M
Fe b09
Ja n09
ec -0 8 D
ov -0 8 N
ct -0 8 O
8 Se p08
ug -0 A
Ju l-0 8
Ju n08
M
ay -0 8
08 pr A
08 ar M
Fe b08
Ja n08
30%
Utilization %
40/45nm, 4.9%
Slowing Adoption of New Technology Adoption of Leading-Edge Semiconductor Technology Is at the Same Rate as in the Past 2005 1.72B Transistors
2004 592M Transistors Itanium 2 (9MB cache)
2002 2000 1999
2008
9.5M+ Transistors
2Billion transistors Tukwila Quad Core
Pentium III
1997 7.5m+ Transistors
1995 5.5M+ Transistors
1993
Pentium Pro
3.1M+ Transistors
1989 1,290,000 Transistors
1985 1982 1979 29,000 Transistors
Pentium
486
275,000 Transistors 386
134,000 Transistors 286
8088
19 WCR Semiconductor Dynamics: Myth vs Reality
Pentium II
42M Transistors Pentium 4
220M Transistors Itanium 2
Dual Core Itanium
Semiconductor Industry Is Consolidating
20 WCR Semiconductor Dynamics: Myth vs Reality
Do the Big Keep Getting Bigger? Semiconductor Concentration of Revenue 100 90
Market Share (%)
80 70 60 50
#1
40
u o b a has
s e m t sa
h
72 9 1 in s a 08 0 2 n are i
30 20 10
Top Company
Source: Gartner/Dataquest
21 WCR Semiconductor Dynamics: Myth vs Reality
All Others
08 20
06 20
04 20
02 20
00 20
98 19
96 19
94 19
19
92
90 19
88 19
86 19
84 19
82 19
80 19
78 19
76 19
74 19
19
72
0
Do the Big Keep Getting Bigger? Semiconductor Concentration of Revenue 100 90
n i e r ha s s s le e v a 2 h 7 s 9 e 1 i in an p d a m co yh e 5 h t p To 8 than e h T 200
70 60 50 40 30 20 10
Top Company
Source: Gartner/Dataquest
22 WCR Semiconductor Dynamics: Myth vs Reality
Top 5
All Others
08 20
06 20
04 20
02 20
00 20
98 19
96 19
94 19
92 19
90 19
88 19
86 19
84 19
82 19
80 19
19
78
76 19
74 19
72
0
19
Market Share (%)
80
Do the Big Keep Getting Bigger? Semiconductor Concentration of Revenue 100 90
n i e r ha s s s le e v a h 72 s 9 e i 1 n a in p d m a o h 0c ey 1 h t p o n a T h t 8 The 200
Market Share (%)
80 70 60 50 40 30 20 10
Top Company
Source: Gartner/Dataquest
23 WCR Semiconductor Dynamics: Myth vs Reality
Top 5
Top 10
Others
08 20
06 20
04 20
02 20
00 20
98 19
96 19
94 19
92 19
90 19
88 19
86 19
84 19
82 19
80 19
78 19
76 19
74 19
19
72
0
DRAM Consolidation has Stalled this Decade DRAM Concentration of Revenue 100
Market Share (%)
80
60
Every level has less share in 2008 than in 2000 40
20
0 1993
1994
1995
1996
1997
1998
1999
Top Company Source: Semico, 2009
24 WCR Semiconductor Dynamics: Myth vs Reality
2000
Top 3
2001
Top 5
2002
2003
Top 10
2004
2005
Others
2006
2007
2008
DRAM Competitive Penetration Is About the Same as in 1983 DRAM Market Share by Market Position 25
Percent of DRAM
20
15
10
5
0
1
2
3
4
5
6
7
Market Position
Source: 1987 data Dataquest, 1997 & 2008 data Semico
1983
25 WCR Semiconductor Dynamics: Myth vs Reality
1987
1997
2008
8
9
10
Semiconductor Industry Has Been “DECONSOLIDATING” since the 1960’s 100 90 80
Market Share (%)
70 60 50 40 30 20 10 0 Source: Gartner/Dataquest
1965
26 WCR Semiconductor Dynamics: Myth vs Reality
Top 4
Top 8
Others
1972
Between 1965-1972 29 New Companies Entered the Market Semiconductor Concentration of Revenue
100
New Semiconductor Companies
90 80
Market Share (%)
70 60 50 40 30 20 10
American Microsystems
Mostek
National Semiconductor
Signetics Memory Sys.
Electronic Arrays
Advanced Micro Devices
Intersil
Spectronics
Avantek
Four Phase
Integrated Systems Tech.
Litronix
Nortec Electronics Corp.
Integrated Electronics
Intel
Varadyne
Computer Microtechnology
Caltex
Qualidyne
Exar
Advanced Memory Sys.
Micropower
Communications Trans.
Standard Microsystems
Precision Monolithic
Antex
Monolithic Memories
LSI Systems
Advanced LSI Systems
0 1965
Source: Gartner/Dataquest
Top 4
27 WCR Semiconductor Dynamics: Myth vs Reality
Top 8
Others
1972
Leadership Regularly Changes 1955
1965
1977
1987
1997
2007
Hughes
Texas Instruments
Texas Instruments
NEC
Intel
Intel
Transitron
Fairchild
Motorola
Toshiba
NEC
Samsung
Philco
Motorola
NEC
Hitachi
Motorola
Toshiba
Sylvania
General Instruments
Hitachi
Motorola
Texas Instruments
Texas Instruments
Texas Instruments
GE
Philips
Texas Instruments
Toshiba
STMicroelectronics
GE
RCA
National Semiconductor
Fujitsu
Hitachi
Infineon
RCA
Sprague
Toshiba
Philips
Samsung
Hynix
Westinghouse
Philco
Fairchild
Intel
Fujitsu
Renesas
Motorola
Transitron
Intel
National Semiconductor
Philips
NXP
Clevite
Raytheon
Siemens
Matsushita
STMicroelectronics
NEC
FIX with new Table 1965 1965
Source: Gartner/Dataquest & History of Semiconductor Engineering
28 28 WCR Semiconductor Dynamics: Myth vs Reality
Note: Excludes Foundries (TSMC #6 in 2007, #5 in 2008)
2008 Brings First Fabless Company to Top 10 2007
2008
RANK
Intel
Intel
1
Samsung
Samsung
2
Texas Instruments
Texas Instruments
3
Toshiba
TSMC *
4
STMicroelectronics
Toshiba
5
TSMC *
ST Microelectronics
6
Hynix
Renesas
7
Renesas
Qualcomm
8
Sony
Sony
9
NXP
Hynix
10
NEC *
Infineon
11
Source: IC Insights
*Note: Foundries Excluded on Previous Slides
29 WCR Semiconductor Dynamics: Myth vs Reality
…and New “Fab Lite” Strategies 2007
2008
RANK
Intel
Intel
1
Samsung
Samsung
2
Texas Instruments
Texas Instruments
3
Toshiba
TSMC *
4
STMicroelectronics
Toshiba
5
TSMC *
ST Microelectronics
6
Hynix
Renesas
7
Renesas
Qualcomm
8
Sony
Sony
9
NXP
Hynix
10
NEC
Infineon
11
Source: IC Insights
*Note: Foundries Excluded on Previous Slides
30 WCR Semiconductor Dynamics: Myth vs Reality
Few Stay on Top More Than 3 Decades 1955
1965
1977
1987
1997
2007
Hughes
Texas Instruments
Texas Instruments
NEC
Intel
Intel
Transitron
Fairchild
Motorola
Toshiba
NEC
Samsung
Philco
Motorola
NEC
Hitachi
Motorola
Toshiba
Sylvania
General Instruments
Hitachi
Motorola
Texas Instruments
Texas Instruments
Texas Instruments
GE
Philips
Texas Instruments
Toshiba
STMicroelectronics
GE
RCA
National Semiconductor
Fujitsu
Hitachi
Infineon
RCA
Sprague
Toshiba
Philips
Samsung
Hynix
Westinghouse
Philco
Fairchild
Intel
Fujitsu
Renesas
Motorola
Transitron
Intel
National Semiconductor
Philips
NXP
Clevite
Raytheon
Siemens
Matsushita
STMicroelectronics
NEC
Retired from Top 10 Semiconductor Company List
Source: Gartner/Dataquest
31 WCR Semiconductor Dynamics: Myth vs Reality
Semiconductor Industry Is Consolidating
Semiconductor Industry Has NOT Been Consolidating
32 WCR Semiconductor Dynamics: Myth vs Reality
Many New Enterprises Coming On Line 600
Number of Enterprises
500
479 488 491 463 471
Number of IC Design Enterprises in China 389
400 300 200 200 100 15
20
17
23
27
32
41
56
62
76
98
19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07
0
Source: Price Waterhouse Coopers, China’s Impact on the Semiconductor industry, 2008 Update
33 WCR Semiconductor Dynamics: Myth vs Reality
Venture Capital Continues Rounds of Fabless Semiconductor Funding Fabless Company Venture Rounds by Quarter & Location
60
Others Northw est Florida North Carolina
49
50
46 42 39
40
Canada
40
39 40 37
Massachusetts
37
35
# of Rounds
Texas
42
42
40
Israel
46
45
35
Europe
34
33
32
31
30
27
26
27
32
31
30
27
26
California
26
27 27
24
24
26 24 21 19
20
10
Source: Global Semiconductor Alliance (GSA) & Mentor Graphics Analysis 34 WCR Semiconductor Dynamics: Myth vs Reality
10 9 Q
30 8 Q
10 8 Q
30 7 Q
10 7 Q
30 6 Q
10 6 Q
30 5 Q
10 5 Q
30 4 Q
10 4 Q
30 3 Q
30 2
10 3 Q
Q
Q
10 2
30 1 Q
10 1 Q
30 0 Q
Q
10 0
0
Why Semiconductor Market is Unique 1955
1965
1977
Hughes
Texas Instruments
Texas Instruments
NEC
Intel
Intel
Transitron
Fairchild
Motorola
Toshiba
NEC
Samsung
Philco
Motorola
NEC
Hitachi
Motorola
Toshiba
Sylvania
General Instruments
Hitachi
Motorola
Texas r Instruments
Texas Instruments
Philips
oC S / r Toshiba ss so STMicroelectronics e s l ce ab o F r Hitachi Infineon C/ op o r S ic M Samsung Hynix
m
Texas niu a Instruments m
GE
GE o
n RCA ra
ic Sil
er G n/
/I r o t sis
T
C
Philips
I
em
1987
y or
m S National O M / Semiconductor C Toshiba
1997
Texas ro p Instruments ro
ic m y/
Fujitsu r
M
o em
c
o ess
2007
RCA
Sprague
Westinghouse
Philco
Fairchild
Intel
Fujitsu
Renesas
Motorola
Transitron
Intel
National Semiconductor
Philips
NXP
Clevite
Raytheon
Siemens
Matsushita
STMicroelectronics
NEC
Source: Gartner/Dataquest
Retired from Top 10 Semiconductor Company List 35 WCR Semiconductor Dynamics: Myth vs Reality
Unit Volume Growth and Sustained 35% per Year Cost Reduction Make the Semiconductor Industry Unique 1.00E-04 1.00E-05 1.00E-06
Revenue /Transistor ($)
1.00E-07 1.00E-08 1.00E-09 1.00E-10 1.00E-11 1.00E-12
Semiconductor Learning Learning Curve Curve Semiconductor 1959 –– 2006 2000 … … Adjusted Adjusted for for Inflation Inflation 1954
1.00E-13 1.00E-14 1.00E+00
1.00E+02
1.00E+04
1.00E+06
1.00E+08
1.00E+10
1.00E+12
Cumulative Transistors Shipped Source: Mentor Graphics, SIA, Woodrow Federal Reserve Bank
36 WCR Semiconductor Dynamics: Myth vs Reality
1.00E+14
1.00E+16
1.00E+18
1.00E+20
Drivers for New Semiconductor Applications Unit Volume GrowthÆInnovationÆ35%/Year Cost Reduction Unit Volume Growth Drives Cost Reduction Innovations Increased R&D and VC funding 35%/yr/transistor cost reduction Innovation Cycle Increased volume and revenues New applications and companies emerge
37 WCR Semiconductor Dynamics: Myth vs Reality
Digital Cameras Achieve High Volume
38 WCR Semiconductor Dynamics: Myth vs Reality
Digital Cameras Just Now Entering High Growth Phase S‐Curve Technology Adoption: Digital Still Camera
Cumulative Shipments ('000)
4,000
3,000
2,000
1,000
0 1997
2002
Source: IC Insights & Mentor Graphics
39 WCR Semiconductor Dynamics: Myth vs Reality
2007
2012
2017
Falling Prices Ignited Volume Sales 25
2,000,000
20
1,500,000
15
1,000,000
10
500,000
5
0
0 1991 1992
1993 1994
1995 1996
1997 1998
Source: SIA/WSTS
40 WCR Semiconductor Dynamics: Myth vs Reality
1999 2000
2001 2002
2003 2004
2005 2006
2007 2008
$ Average Selling Price
Units Shipped
Image Sensor Unit Shipments & ASP 2,500,000
Volume Drives Image Sensor Revenue Image Sensor Unit Shipments & ASP 8,000,000
7,000,000
3.00%
6,000,000 2.50% 5,000,000 2.00% 4,000,000 1.50% 3,000,000 1.00% 2,000,000 0.50%
1,000,000
0.00%
0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: SIA/WSTS
41 WCR Semiconductor Dynamics: Myth vs Reality
$ Total Revenue
Percent of Total Semiconductor Revenue %
3.50%
Low Prices Open Up Whole New Markets
Image Sources: Suni Medical Imaging, eHow.com, Nikon, California State University Fullerton, College of Business and Economics -Biometrics Resources, Banner Engineering Corp
42 WCR Semiconductor Dynamics: Myth vs Reality
New Personal Computing Applications Drive Unit Volume Growth and Cost Reduction
43 WCR Semiconductor Dynamics: Myth vs Reality
Desktop Computer Market Growth Is Slowing After 30 Years S‐Curve Technology Adoption: Desktop Computer
Cumulative Shipments ('000)
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0 1981
1986
1991
1996
Source: Semico & Mentor Graphics
44 WCR Semiconductor Dynamics: Myth vs Reality
2001
2006
2011
2016
Microprocessor and Memory Share of IC Market at 16 Year Low 100%
Windows 95 Shipped 90%
Windows 3.1 Shipped 80%
Windows 3.0 Shipped 70% 60%
Windows 2.0 Shipped 50% 40% 30% 20% 10%
Memory
Source: SIA/WSTS
45 WCR Semiconductor Dynamics: Myth vs Reality
Processors
Other
20 08
20 07
20 06
20 05
20 04
20 03
20 02
20 01
20 00
19 99
19 98
19 97
19 96
19 95
19 94
19 93
19 92
19 91
19 90
19 89
19 88
19 87
19 86
0%
DRAM Price Learning Curve Price Per Bits (Millicents)
100 1978 1979 1980 10
Strong Demand Weak Supply 1981 1982
1983
1
1988 1984 1985 1986
1987 1989 1990 1991 1993 1992 1994
0.1
1995 1996 1997
Excess Capacity Price Erosion
1999 1998
0.01
2000
2001 2002
0.001
2003 2004
Excess Capacity Price Erosion
2006 2005
2007 2008
0.0001 1
10
100
1,000
10,000
100,000 1,000,00 10,000,0 100,000, 0 00 000
Cumulative Bit Volume (Bits x 1012) Source: ICE Status 1998 & 2008-09 McClean Report IC Insights
46 WCR Semiconductor Dynamics: Myth vs Reality
Four Generations of DRAM Under $1 $1,000.0
64M
256M 512M
4M
16M 1G
2G
1M
$100.0
128M
$10.0 256K
$1.0
Four Generations Under $1/Unit
19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09
$0.1
Source: SIA/WSTS & Semico
47 WCR Semiconductor Dynamics: Myth vs Reality
DRAM Price/Unit Back to 1986 Levels DRAM ASP 18 16
Price per Unit ($)
14 12 10 8 6 4 2
19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08
0
Source: SIA/WSTS
48 WCR Semiconductor Dynamics: Myth vs Reality
Flash on a Much Steeper Price per Function Trend
Source: IC Knowledge
49 WCR Semiconductor Dynamics: Myth vs Reality
New Generation of Low-Cost Processors “…Many wonder whether beefier chips are necessary: a standard Intel Core 2 Duo processor costs $133 versus $43 for the Atom and $53 for the older Celeron, according to Bernstein Research.” CNET – CES 2009, “First third-generation Netbook: HP Mini 2140,” Jan 5, 2009
“Intel data shows the margin for the Atom, which has 85 percent of the netbook market, is about 11 percentage points below the margin for dual-core processors.” Reuters, “Intel’s Atom: too much of a good thing?” May 7, 2009
50 WCR Semiconductor Dynamics: Myth vs Reality
“…the 45-nm Atom costs about $29, compared with $279 for the company's Penryn Core 2 processor for standard notebook computers. “ Source: EE Times, “Low Atom margins hurt Intel again, says analyst,” Dylan McGrath, April 15, 2009
Netbooks Emerge to Take Advantage of the New Cost Paradigm Netbook Unit Forecast 50,000
Units (000)
40,000
30,000
20,000
10,000
0 2006
2007
2008
2009
2010
Source: Semico
51 WCR Semiconductor Dynamics: Myth vs Reality
2011
The Notebook Market Appears to Have Many Years of Growth Ahead S‐Curve Technology Adoption: Notebook Computer 4,000,000
Cumulative Shipments ('000)
3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0
1988
1993
1998
Source: Semico & Mentor Graphics
52 WCR Semiconductor Dynamics: Myth vs Reality
2003
2008
2013
2018
2023
Application Specific Chips Drive Unit Growth
53 WCR Semiconductor Dynamics: Myth vs Reality
Semiconductor Logic Design Starts* 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 1994
1995
1996
1997
1998
1999
Source: Gartner/Dataquest Market Trends
54 WCR Semiconductor Dynamics: Myth vs Reality
2000
2001
2002
2003
2004
2005
2006
2007
* Without programmable logic
2008
Semiconductor Logic Revenue Per Design Start* Average Revenue per Design Start 14,000,000 12,000,000
$ Dollars
10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 2002
2003
2004
Source: Gartner/Dataquest Market Trends
55 WCR Semiconductor Dynamics: Myth vs Reality
2005
2006
2007
* Without programmable logic
2008
Special Purpose Logic Increasing in Share of Semiconductor Revenue MOS Special Purpose Logic As a Percent of Semiconductor Revenue 25%
20%
15%
10%
5%
0% 2001
2002
2003
Source: IC Insights
WCR Semiconductor Dynamics: Myth vs Reality
2004
2005
2006
2007
2008
ASICs Enable Sub $20 Mobile Handset
“…Spice Mobile which has launched a “people’s phone” priced under $20 …Globally 20% of overall mobile market is represented by sub $40 phones and this segment…we may soon get to buy phones for as low as $10 .” Digital Inspiration “Spice Mobile does a Nano, unveils ‘People’s Phone’ at Rs.800” February 14, 2008
57 WCR Semiconductor Dynamics: Myth vs Reality
31+ Million Additional New Subscribers in India 4th Quarter 2008
India Subscribers in Millions 600 500 400 300 200 100 0 2002
Source: Telecom Regulator Authority of India March 2009
58 WCR Semiconductor Dynamics: Myth vs Reality
2003
2004
2005
2006
2007
2008
2009f
Wireless Subscribers Approaching Maturity But Replacement Cycles Still Strong S‐Curve Technology Adoption: Mobile Phone
Cellular Subscribers ('000)
8,000,000
6,000,000
4,000,000
2,000,000
0 1994
1999
Source: Mentor Graphics
59 WCR Semiconductor Dynamics: Myth vs Reality
2004
2009
2014
New Cell Phone Subscribers in China & India Will Be 2X Larger Than Total US Subscribers in 3 Years Numbers in Millions
2007E Subscriber Base
2011F Subscriber Base
2011F Penetration
New Subscribers
2007-2011 CAGR
Asia/Middle East/Other
870
1,315
85%
445
11%
China
550
885
65%
335
13%
India
220
525
44%
305
24%
Africa
250
490
52%
240
18%
Latin/South America
295
515
87%
220
15%
North America
275
335
94%
60
5%
Russia
80
120
86%
40
11%
Japan
100
120
94%
20
5%
Western Europe
430
450
98%
20
1%
Eastern Europe
140
155
91%
15
3%
3,210
4,910
71%
1,700
11%
Total
Asia is, by far, the most attractive market for new cell phone sales India will grow the fastest but still will have the lowest penetration rate
Source: IC Insights, Emerging Markets 2008
60 WCR Semiconductor Dynamics: Myth vs Reality
High End Cell Phones Gaining Market Share 417 Million Units
1.1 Billion Units
Mobile Phone Market Share by Category 100
10.2%
24.2% CAGR
17.2%
80.4%
9.1% CAGR
61.0%
9.4%
21.7% CAGR
21.8%
90
Market Share (%)
80 70 60 50 40 30 20 10
Basic Cell Phones
Mid-Range Cell Phones
Source: Semico Research
61 WCR Semiconductor Dynamics: Myth vs Reality
08 20
07 20
06 20
05 20
04 20
03 20
02 20
20
20
00
01
0
High-End/Smart Cell Phones
New Markets Drive Semiconductor Unit Market-Driven Eras of Electronic Innovation Volume Growth and Cost Reduction
Packaged IC
Microprocessor
SoC, VLSI, DSP
Multiprocessing Giga bit, non-volatile memory
Military & Aerospace
Desktop Computer
Communications
Converged Appliances
System of Systems
Auto, aerospace, medical,
Consumer / Computer Communications
1970
1980
1990
62 WCR Semiconductor Dynamics: Myth vs Reality
2000
2010
2020
Rising Design Costs Limit New Applications
63 WCR Semiconductor Dynamics: Myth vs Reality
Transistors Produced per Electronic Engineer Nearly 4-Orders of Magnitude since 1985 Transistors/Engineer
Total Electronic Engineers
10,000,000,000,000 1,000,000,000,000 100,000,000,000
Q uantity
10,000,000,000 1,000,000,000 100,000,000 10,000,000 1,000,000 100,000 10,000 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: Technology Research Group – EDA Database, 1986, EDA TAM, 1989 & Gartner/Dataquest 2005 Seat Count Report, Gary Smith EDA, 2008 Seat Count Analysis VLSI Research, 2008 - Transistors Produced Analysis
64 WCR Semiconductor Dynamics: Myth vs Reality
EDA Revenue Is Flat 2% of IC Revenue EDA License & Maintenance/IC Revenue (% Percent) 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 1996
1997
1998
1999
2000
2001
Source: Mentor Graphics, EDAC MSS & SIA WSTS
65 WCR Semiconductor Dynamics: Myth vs Reality
2002
2003
2004
2005
2006
2007
2008
1.00E-04
1.00E-04
1.00E-05
1.00E-05
1.00E-06
1.00E-06
1.00E-07
1.00E-07
1.00E-08
1.00E-08
1.00E-09 1.00E+13
1.00E+14
Source: SIA, VLSI Research, Federal Reserve
1.00E+15
1.00E+16
1.00E+17
1.00E+18
1.00E+19
IC Revenue/Transistor ($)
EDA Cost/Transistor ($)
EDA Cost per Transistor vs Total IC Revenue per Transistor
1.00E-09 1.00E+20
Note: EDA Cost Consists of EDA License and Maintenance revenue adjusted for Inflation… 1985 - 2007
66 WCR Semiconductor Dynamics: Myth vs Reality
SOC Design Costs Forecasted to Exceed $100 Million Within 3 Years 120
100
Impact of Design Technology on SOC Consumer Portable Implementation Cost
$ US Millions
80
60
40
20
0 2007e
2008f
2009f
Hardware Costs
2010f
1
Software Costs
2011f
2012f
2
Notes: 1 2
Source: 2007 ITRS Roadmap
67 WCR Semiconductor Dynamics: Myth vs Reality
Total Hardware Engineering Costs + EDA Tool Costs Total Software Engineering Costs + Electronic Software Design Tool Costs
Software Developers Outnumber Hardware Designers 2-to-1 Hardware
(in 000’s)
Software
400 350
312
348.3
337.8
325.8
300 250 200
159.5
158.5
157.6
156.6
150 100 50 0 2006
2007
Source: VDC - Embedded Systems Market Statistics 2007
68 WCR Semiconductor Dynamics: Myth vs Reality
2008
2009
System Design Has Shifted to the Semiconductor Suppliers
Apps
Apps
Apps
Apps
Apps
Much of what was part of the endsystem is now incorporated within a System-On-Chip
Service Abstraction Middleware OS
CPU MEM
SW SW Driver SW Driver SW Driver Driver
HW HW
HW HW
Buses
69 WCR Semiconductor Dynamics: Myth vs Reality
Rising Design Costs Limit New Applications Semiconductor Companies Are Assuming More of the System and Embedded Software Engineering Design Responsibility
70 WCR Semiconductor Dynamics: Myth vs Reality
Realities of the Semiconductor Industry The semiconductor recovery will be faster than the overall economy
New technology adoption at same rate as in the past No evidence of overall consolidation (yet) in the semiconductor industry
Despite decreasing hardware design cost/transistor, design costs will increase due to the increasing role of embedded software
Unit growth and innovation will drive the 35% per year per transistor cost reduction needed to enable the next wave of applications 71 WCR Semiconductor Dynamics: Myth vs Reality
72 72 WCR Semiconductor February, 2009 Dynamics: Myth vs Reality
July 15, 2009
Walden C. Rhines CHAIRMAN & CEO
In a Recession, It’s Hard for the Semiconductor Market to Fare Any Better than the Overall Economy
2 WCR Semiconductor Dynamics: Myth vs Reality
Semiconductor Revenue Drops to 2006 Levels SIA/WSTS Semiconductor Revenue
$248.6B
70,000,000
60,000,000
50,000,000
40,000,000
30,000,000
20,000,000
10,000,000
0 0 0 1 2 3 3 4 5 6 6 7 8 9 9 0 1 2 2 3 4 5 5 6 7 8 8 19 49 39 29 19 49 39 29 19 49 39 29 19 49 30 20 10 40 30 20 10 40 30 20 10 40 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Source: SIA/WSTS, May, 2009
3 WCR Semiconductor Dynamics: Myth vs Reality
Q4-Q1 Sequential Unit Volume Decline Was Largest in History SIA/WSTS Total Semiconductor Units
-36.7%
180,000,000 160,000,000
Units # (000)
140,000,000
-31.9%
120,000,000 100,000,000 80,000,000
-56.1 Billion Units
60,000,000 40,000,000
-31.6 Billion Units
20,000,000
Q 19 0 Q 19 1 Q 19 2 Q 19 3 Q 19 4 Q 19 5 Q 19 6 Q 19 7 Q 19 8 Q 19 9 Q 10 0 Q 10 1 Q 10 2 Q 10 3 Q 10 4 Q 10 5 Q 10 6 Q 10 7 Q 10 8 Q 10 9
0
Total Semi Units Source: SIA/WSTS, May, 2009
4 WCR Semiconductor Dynamics: Myth vs Reality
Only Five Years of Negative Semiconductor Unit Growth in History SIA/WSTS Total Semiconductor Units vs ASP 180,000,000 160,000,000
Units # (000)
140,000,000 120,000,000 100,000,000 80,000,000
1985 -1.1% YoY
60,000,000 40,000,000
1992 -0.4% YoY
1996 -2.3% YoY
2001 -20.8% YoY 2008 -3.4% YoY
20,000,000
Q 17 7 Q 37 8 Q 18 0 Q 38 1 Q 18 3 Q 38 4 Q 18 6 Q 38 7 Q 18 9 Q 39 0 Q 19 2 Q 39 3 Q 19 5 Q 39 6 Q 19 8 Q 39 9 Q 10 1 Q 30 2 Q 10 4 Q 30 5 Q 10 7 Q 30 8
0
Total Semi Units Source: SIA/WSTS, May, 2009
5 WCR Semiconductor Dynamics: Myth vs Reality
World Economy vs. IC Chip Industry 6
50
5
4
20 10
3 0 2
-10 -20
1 -30 0
-40
Source: Mentor Graphics, IMF World Economic Outlook Database, 10/2008, VLSI Research & IC Insights
6 WCR Semiconductor Dynamics: Myth vs Reality
IC Industry Growth
30
19 80 19 81 19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07
GDP Growth (Constant Prices)
40
World Economy vs. IC Chip Industry
5
2
40 30
0
4
50
R = 0.0864
2
4
6
20 10
3 0 2
-10 -20
1 -30 -40
19 80 19 81 19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07
0
Source: Mentor Graphics, IMF World Economic Outlook Database, 10/2008, VLSI Research & IC Insights
7 WCR Semiconductor Dynamics: Myth vs Reality
IC Industry Growth
6
GDP Growth (Constant Prices)
y = 4.6271x - 2.9181
60 40 20 0 -20 -40
World Economy vs. IC Chip Industry 6
50
Under Capacity 5
4
20 10
3 0 2
-10
Memory ASP -20 1
Inventory Adjustment
Over Capacity
0
-30 -40
Source: Mentor Graphics, IMF World Economic Outlook Database, 10/2008, VLSI Research & IC Insights
8 WCR Semiconductor Dynamics: Myth vs Reality
IC Industry Growth
30
19 80 19 81 19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07
GDP Growth (Constant Prices)
40
Lack of a Bubble Preceding the 2009 Semiconductor Downturn
15% 13% 12%
20%
10%
10% IC ASP Growth
-7%
0%
2%
-11%
-13%
2%
-35%
-4%
-5% -8% -3%
-10% -20%
47%
Source: IC Insights, McClean Report – 2nd Quarter Webcast
9 WCR Semiconductor Dynamics: Myth vs Reality
f
2% -16%
08
20
00 20
99 19
98 19
96 19
95 19
94 19
93 19
19
85
84 19
19
-50% 982 1
83
0%
07
19%
20
26% -23%
06
13%
-8%
20
12%
05
25%
20
38%
50%
76%
65%
01
Capital Equipment Growth
65%
20
100%
In Q109 Unit Volume Dropped 28%(yr/yr) With Only an 8% ASP Decline 5
40,000,000
4
30,000,000
3
20,000,000
2
10,000,000
1
0
0
Source: SIA/WSTS, May, 2009
IC Chip Units 10 WCR Semiconductor Dynamics: Myth vs Reality
IC Chip ASP
9 10
Q
10
8
7 Q
10 Q
10
6
5 Q
10 Q
10
4
3 Q
10 Q
10
2
1 Q
10 Q
10
0
9 Q
19
8 Q
19 Q
19
7
6 Q
19 Q
19 Q
19
4
3 Q
19 Q
19
2
1 Q
19 Q
19 Q
5
ASP $
50,000,000
0
Units # (000)
SIA/WSTS IC Units vs IC ASP
In a Recession, It’s Hard for the Semiconductor Market to Fare Any Better than the Overall Economy The Semiconductor Recovery Will Be Faster than the Overall Economy
11 WCR Semiconductor Dynamics: Myth vs Reality
Slowing Adoption of New Technology 2005 1.72B Transistors
2004 592M Transistors Itanium 2 (9MB cache)
2002 2000
2008 2Billion transistors Tukwila Quad Core
1999 9.5M+ Transistors Pentium III
1997 7.5m+ Transistors
1995 5.5M+ Transistors
1993
Pentium Pro
3.1M+ Transistors
1989 1,290,000 Transistors
1985 1982 1979 29,000 Transistors
Pentium
486
275,000 Transistors 386
134,000 Transistors 286
8088
12 WCR Semiconductor Dynamics: Myth vs Reality
Pentium II
42M Transistors Pentium 4
220M Transistors Itanium 2
Dual Core Itanium
Frequent Statements About the Slowing of Technology Adoption “The problem is that Moore's Law has collapsed," he says. Coburn asserts that there has been a slowdown in the previously steady move to smaller geometries and larger wafer sizes. Pip Coburn, Coburn Ventures December 15th, 2008 Source: Barron’s “Why it’s going to get a lot worse,” Eric J. Savitz. Dec. 15, 2008 http://online.barrons.com/article/SB122912495865802961.html?mod=gartner
“And, the customers have slowed down or delayed their technology transitions either by leveraging their existing installed base or just by delaying their new product introduction for later.” Eric Meurice, Chairman, President and CEO ASML Holding N.V. Source: Q4 2008 Earnings Call. January 15, 2009 http://seekingalpha.com/article/115001-asml-holding-n-v-q4-2008-earnings-call-transcript?page=-1
13 WCR Semiconductor Dynamics: Myth vs Reality
“The slowdown in process technology transitions will mean that the semiconductor industry will be driven more by economics than technology …” “You are not seeing these geometries rise and fall off the way they did before. Rather, they are living on.” Len Jelinek, Director and chief analyst, Semiconductor Manufacturing, for iSuppli Source: EE Times,“ISuppli: Gear costs to derail Moore's Law in 2014," Dylan McGrath, June 16, 2009 http://www.eetimes.com/news/latest/showArticle.jhtml?articleID=217900102
Design Completion Trends Design Completion Share by Linewidth 40%
Percent of Total Design Completions
35% 30%
25% 20%
15% 10%
5% 0% 1993
1994
1995
350nm
1996
250nm
1997
1998
1999
180nm
Source: VLSI Research, Design Completions, September 2008
14 WCR Semiconductor Dynamics: Myth vs Reality
2000
2001
130nm
2002
2003 90nm
2004
2005 65nm
2006
2007
2008 45nm
2009
Silicon Volume of Wafer Starts (in 300mm Wafer Equivalents) Volume of Wafer Starts by Linewidth (300mm wafer equivalents) 40%
Percent of Total Silicon Demand
35% 30%
25% 20%
15% 10%
5% 0% 1994
1995
1996
350nm
1997
250nm
1998
1999
2000
180nm
Source: VLSI Research, Silicon Demand, EDA Tech Forum June, 2009
15 WCR Semiconductor Dynamics: Myth vs Reality
2001
2002
130nm
2003
2004 90nm
2005
2006 65nm
2007
2008 45nm
2009
Reticle Sales Trends Reticle Revenue Share by Linewidth 40%
Percent of Total Reticle Revenue Share
35% 30%
25%
20% 15%
10% 5%
0% 1993
1994
1995
350nm
1996
250nm
1997
1998
1999
180nm
Source: VLSI Research, Reticles, September 2008
16 WCR Semiconductor Dynamics: Myth vs Reality
2000
2001 130nm
2002
2003
2004
90nm
2005
2006 65nm
2007
2008
2009
45nm
IC Fab Capacity by Node * IC Fab Capacity by Node (MSI) January 2004 -to- June 2008 200
IC Fab Capacity (MSI)
150
100
50
0 Jan-04
Jul-04
Jan-05
Jul-05 45nm
Jan-06 65nm
Source: VLSI Research, December 15, 2008
17 WCR Semiconductor Dynamics: Myth vs Reality
Jul-06 90nm
Jan-07 130nm
Jul-07 180nm
Jan-08
Jul-08 * Note: Realized
Capacity Utilization Improvement in March & April Favors 65/45nm Technology 100%
180nm 130nm 90nm 65nm
Capacity by Node - April
45nm
90%
80%
70% >180nm, 27.1%
65nm, 14.7%
50%
180nm, 7.1%
90nm, 19.0%
130nm, 8.6%
150nm, 1.8%
60%
40%
Source: Selantek Capacity Analysis, May 5, 2009
18 WCR Semiconductor Dynamics: Myth vs Reality
09 pr A
09 ar M
Fe b09
Ja n09
ec -0 8 D
ov -0 8 N
ct -0 8 O
8 Se p08
ug -0 A
Ju l-0 8
Ju n08
M
ay -0 8
08 pr A
08 ar M
Fe b08
Ja n08
30%
Utilization %
40/45nm, 4.9%
Slowing Adoption of New Technology Adoption of Leading-Edge Semiconductor Technology Is at the Same Rate as in the Past 2005 1.72B Transistors
2004 592M Transistors Itanium 2 (9MB cache)
2002 2000 1999
2008
9.5M+ Transistors
2Billion transistors Tukwila Quad Core
Pentium III
1997 7.5m+ Transistors
1995 5.5M+ Transistors
1993
Pentium Pro
3.1M+ Transistors
1989 1,290,000 Transistors
1985 1982 1979 29,000 Transistors
Pentium
486
275,000 Transistors 386
134,000 Transistors 286
8088
19 WCR Semiconductor Dynamics: Myth vs Reality
Pentium II
42M Transistors Pentium 4
220M Transistors Itanium 2
Dual Core Itanium
Semiconductor Industry Is Consolidating
20 WCR Semiconductor Dynamics: Myth vs Reality
Do the Big Keep Getting Bigger? Semiconductor Concentration of Revenue 100 90
Market Share (%)
80 70 60 50
#1
40
u o b a has
s e m t sa
h
72 9 1 in s a 08 0 2 n are i
30 20 10
Top Company
Source: Gartner/Dataquest
21 WCR Semiconductor Dynamics: Myth vs Reality
All Others
08 20
06 20
04 20
02 20
00 20
98 19
96 19
94 19
19
92
90 19
88 19
86 19
84 19
82 19
80 19
78 19
76 19
74 19
19
72
0
Do the Big Keep Getting Bigger? Semiconductor Concentration of Revenue 100 90
n i e r ha s s s le e v a 2 h 7 s 9 e 1 i in an p d a m co yh e 5 h t p To 8 than e h T 200
70 60 50 40 30 20 10
Top Company
Source: Gartner/Dataquest
22 WCR Semiconductor Dynamics: Myth vs Reality
Top 5
All Others
08 20
06 20
04 20
02 20
00 20
98 19
96 19
94 19
92 19
90 19
88 19
86 19
84 19
82 19
80 19
19
78
76 19
74 19
72
0
19
Market Share (%)
80
Do the Big Keep Getting Bigger? Semiconductor Concentration of Revenue 100 90
n i e r ha s s s le e v a h 72 s 9 e i 1 n a in p d m a o h 0c ey 1 h t p o n a T h t 8 The 200
Market Share (%)
80 70 60 50 40 30 20 10
Top Company
Source: Gartner/Dataquest
23 WCR Semiconductor Dynamics: Myth vs Reality
Top 5
Top 10
Others
08 20
06 20
04 20
02 20
00 20
98 19
96 19
94 19
92 19
90 19
88 19
86 19
84 19
82 19
80 19
78 19
76 19
74 19
19
72
0
DRAM Consolidation has Stalled this Decade DRAM Concentration of Revenue 100
Market Share (%)
80
60
Every level has less share in 2008 than in 2000 40
20
0 1993
1994
1995
1996
1997
1998
1999
Top Company Source: Semico, 2009
24 WCR Semiconductor Dynamics: Myth vs Reality
2000
Top 3
2001
Top 5
2002
2003
Top 10
2004
2005
Others
2006
2007
2008
DRAM Competitive Penetration Is About the Same as in 1983 DRAM Market Share by Market Position 25
Percent of DRAM
20
15
10
5
0
1
2
3
4
5
6
7
Market Position
Source: 1987 data Dataquest, 1997 & 2008 data Semico
1983
25 WCR Semiconductor Dynamics: Myth vs Reality
1987
1997
2008
8
9
10
Semiconductor Industry Has Been “DECONSOLIDATING” since the 1960’s 100 90 80
Market Share (%)
70 60 50 40 30 20 10 0 Source: Gartner/Dataquest
1965
26 WCR Semiconductor Dynamics: Myth vs Reality
Top 4
Top 8
Others
1972
Between 1965-1972 29 New Companies Entered the Market Semiconductor Concentration of Revenue
100
New Semiconductor Companies
90 80
Market Share (%)
70 60 50 40 30 20 10
American Microsystems
Mostek
National Semiconductor
Signetics Memory Sys.
Electronic Arrays
Advanced Micro Devices
Intersil
Spectronics
Avantek
Four Phase
Integrated Systems Tech.
Litronix
Nortec Electronics Corp.
Integrated Electronics
Intel
Varadyne
Computer Microtechnology
Caltex
Qualidyne
Exar
Advanced Memory Sys.
Micropower
Communications Trans.
Standard Microsystems
Precision Monolithic
Antex
Monolithic Memories
LSI Systems
Advanced LSI Systems
0 1965
Source: Gartner/Dataquest
Top 4
27 WCR Semiconductor Dynamics: Myth vs Reality
Top 8
Others
1972
Leadership Regularly Changes 1955
1965
1977
1987
1997
2007
Hughes
Texas Instruments
Texas Instruments
NEC
Intel
Intel
Transitron
Fairchild
Motorola
Toshiba
NEC
Samsung
Philco
Motorola
NEC
Hitachi
Motorola
Toshiba
Sylvania
General Instruments
Hitachi
Motorola
Texas Instruments
Texas Instruments
Texas Instruments
GE
Philips
Texas Instruments
Toshiba
STMicroelectronics
GE
RCA
National Semiconductor
Fujitsu
Hitachi
Infineon
RCA
Sprague
Toshiba
Philips
Samsung
Hynix
Westinghouse
Philco
Fairchild
Intel
Fujitsu
Renesas
Motorola
Transitron
Intel
National Semiconductor
Philips
NXP
Clevite
Raytheon
Siemens
Matsushita
STMicroelectronics
NEC
FIX with new Table 1965 1965
Source: Gartner/Dataquest & History of Semiconductor Engineering
28 28 WCR Semiconductor Dynamics: Myth vs Reality
Note: Excludes Foundries (TSMC #6 in 2007, #5 in 2008)
2008 Brings First Fabless Company to Top 10 2007
2008
RANK
Intel
Intel
1
Samsung
Samsung
2
Texas Instruments
Texas Instruments
3
Toshiba
TSMC *
4
STMicroelectronics
Toshiba
5
TSMC *
ST Microelectronics
6
Hynix
Renesas
7
Renesas
Qualcomm
8
Sony
Sony
9
NXP
Hynix
10
NEC *
Infineon
11
Source: IC Insights
*Note: Foundries Excluded on Previous Slides
29 WCR Semiconductor Dynamics: Myth vs Reality
…and New “Fab Lite” Strategies 2007
2008
RANK
Intel
Intel
1
Samsung
Samsung
2
Texas Instruments
Texas Instruments
3
Toshiba
TSMC *
4
STMicroelectronics
Toshiba
5
TSMC *
ST Microelectronics
6
Hynix
Renesas
7
Renesas
Qualcomm
8
Sony
Sony
9
NXP
Hynix
10
NEC
Infineon
11
Source: IC Insights
*Note: Foundries Excluded on Previous Slides
30 WCR Semiconductor Dynamics: Myth vs Reality
Few Stay on Top More Than 3 Decades 1955
1965
1977
1987
1997
2007
Hughes
Texas Instruments
Texas Instruments
NEC
Intel
Intel
Transitron
Fairchild
Motorola
Toshiba
NEC
Samsung
Philco
Motorola
NEC
Hitachi
Motorola
Toshiba
Sylvania
General Instruments
Hitachi
Motorola
Texas Instruments
Texas Instruments
Texas Instruments
GE
Philips
Texas Instruments
Toshiba
STMicroelectronics
GE
RCA
National Semiconductor
Fujitsu
Hitachi
Infineon
RCA
Sprague
Toshiba
Philips
Samsung
Hynix
Westinghouse
Philco
Fairchild
Intel
Fujitsu
Renesas
Motorola
Transitron
Intel
National Semiconductor
Philips
NXP
Clevite
Raytheon
Siemens
Matsushita
STMicroelectronics
NEC
Retired from Top 10 Semiconductor Company List
Source: Gartner/Dataquest
31 WCR Semiconductor Dynamics: Myth vs Reality
Semiconductor Industry Is Consolidating
Semiconductor Industry Has NOT Been Consolidating
32 WCR Semiconductor Dynamics: Myth vs Reality
Many New Enterprises Coming On Line 600
Number of Enterprises
500
479 488 491 463 471
Number of IC Design Enterprises in China 389
400 300 200 200 100 15
20
17
23
27
32
41
56
62
76
98
19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07
0
Source: Price Waterhouse Coopers, China’s Impact on the Semiconductor industry, 2008 Update
33 WCR Semiconductor Dynamics: Myth vs Reality
Venture Capital Continues Rounds of Fabless Semiconductor Funding Fabless Company Venture Rounds by Quarter & Location
60
Others Northw est Florida North Carolina
49
50
46 42 39
40
Canada
40
39 40 37
Massachusetts
37
35
# of Rounds
Texas
42
42
40
Israel
46
45
35
Europe
34
33
32
31
30
27
26
27
32
31
30
27
26
California
26
27 27
24
24
26 24 21 19
20
10
Source: Global Semiconductor Alliance (GSA) & Mentor Graphics Analysis 34 WCR Semiconductor Dynamics: Myth vs Reality
10 9 Q
30 8 Q
10 8 Q
30 7 Q
10 7 Q
30 6 Q
10 6 Q
30 5 Q
10 5 Q
30 4 Q
10 4 Q
30 3 Q
30 2
10 3 Q
Q
Q
10 2
30 1 Q
10 1 Q
30 0 Q
Q
10 0
0
Why Semiconductor Market is Unique 1955
1965
1977
Hughes
Texas Instruments
Texas Instruments
NEC
Intel
Intel
Transitron
Fairchild
Motorola
Toshiba
NEC
Samsung
Philco
Motorola
NEC
Hitachi
Motorola
Toshiba
Sylvania
General Instruments
Hitachi
Motorola
Texas r Instruments
Texas Instruments
Philips
oC S / r Toshiba ss so STMicroelectronics e s l ce ab o F r Hitachi Infineon C/ op o r S ic M Samsung Hynix
m
Texas niu a Instruments m
GE
GE o
n RCA ra
ic Sil
er G n/
/I r o t sis
T
C
Philips
I
em
1987
y or
m S National O M / Semiconductor C Toshiba
1997
Texas ro p Instruments ro
ic m y/
Fujitsu r
M
o em
c
o ess
2007
RCA
Sprague
Westinghouse
Philco
Fairchild
Intel
Fujitsu
Renesas
Motorola
Transitron
Intel
National Semiconductor
Philips
NXP
Clevite
Raytheon
Siemens
Matsushita
STMicroelectronics
NEC
Source: Gartner/Dataquest
Retired from Top 10 Semiconductor Company List 35 WCR Semiconductor Dynamics: Myth vs Reality
Unit Volume Growth and Sustained 35% per Year Cost Reduction Make the Semiconductor Industry Unique 1.00E-04 1.00E-05 1.00E-06
Revenue /Transistor ($)
1.00E-07 1.00E-08 1.00E-09 1.00E-10 1.00E-11 1.00E-12
Semiconductor Learning Learning Curve Curve Semiconductor 1959 –– 2006 2000 … … Adjusted Adjusted for for Inflation Inflation 1954
1.00E-13 1.00E-14 1.00E+00
1.00E+02
1.00E+04
1.00E+06
1.00E+08
1.00E+10
1.00E+12
Cumulative Transistors Shipped Source: Mentor Graphics, SIA, Woodrow Federal Reserve Bank
36 WCR Semiconductor Dynamics: Myth vs Reality
1.00E+14
1.00E+16
1.00E+18
1.00E+20
Drivers for New Semiconductor Applications Unit Volume GrowthÆInnovationÆ35%/Year Cost Reduction Unit Volume Growth Drives Cost Reduction Innovations Increased R&D and VC funding 35%/yr/transistor cost reduction Innovation Cycle Increased volume and revenues New applications and companies emerge
37 WCR Semiconductor Dynamics: Myth vs Reality
Digital Cameras Achieve High Volume
38 WCR Semiconductor Dynamics: Myth vs Reality
Digital Cameras Just Now Entering High Growth Phase S‐Curve Technology Adoption: Digital Still Camera
Cumulative Shipments ('000)
4,000
3,000
2,000
1,000
0 1997
2002
Source: IC Insights & Mentor Graphics
39 WCR Semiconductor Dynamics: Myth vs Reality
2007
2012
2017
Falling Prices Ignited Volume Sales 25
2,000,000
20
1,500,000
15
1,000,000
10
500,000
5
0
0 1991 1992
1993 1994
1995 1996
1997 1998
Source: SIA/WSTS
40 WCR Semiconductor Dynamics: Myth vs Reality
1999 2000
2001 2002
2003 2004
2005 2006
2007 2008
$ Average Selling Price
Units Shipped
Image Sensor Unit Shipments & ASP 2,500,000
Volume Drives Image Sensor Revenue Image Sensor Unit Shipments & ASP 8,000,000
7,000,000
3.00%
6,000,000 2.50% 5,000,000 2.00% 4,000,000 1.50% 3,000,000 1.00% 2,000,000 0.50%
1,000,000
0.00%
0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: SIA/WSTS
41 WCR Semiconductor Dynamics: Myth vs Reality
$ Total Revenue
Percent of Total Semiconductor Revenue %
3.50%
Low Prices Open Up Whole New Markets
Image Sources: Suni Medical Imaging, eHow.com, Nikon, California State University Fullerton, College of Business and Economics -Biometrics Resources, Banner Engineering Corp
42 WCR Semiconductor Dynamics: Myth vs Reality
New Personal Computing Applications Drive Unit Volume Growth and Cost Reduction
43 WCR Semiconductor Dynamics: Myth vs Reality
Desktop Computer Market Growth Is Slowing After 30 Years S‐Curve Technology Adoption: Desktop Computer
Cumulative Shipments ('000)
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0 1981
1986
1991
1996
Source: Semico & Mentor Graphics
44 WCR Semiconductor Dynamics: Myth vs Reality
2001
2006
2011
2016
Microprocessor and Memory Share of IC Market at 16 Year Low 100%
Windows 95 Shipped 90%
Windows 3.1 Shipped 80%
Windows 3.0 Shipped 70% 60%
Windows 2.0 Shipped 50% 40% 30% 20% 10%
Memory
Source: SIA/WSTS
45 WCR Semiconductor Dynamics: Myth vs Reality
Processors
Other
20 08
20 07
20 06
20 05
20 04
20 03
20 02
20 01
20 00
19 99
19 98
19 97
19 96
19 95
19 94
19 93
19 92
19 91
19 90
19 89
19 88
19 87
19 86
0%
DRAM Price Learning Curve Price Per Bits (Millicents)
100 1978 1979 1980 10
Strong Demand Weak Supply 1981 1982
1983
1
1988 1984 1985 1986
1987 1989 1990 1991 1993 1992 1994
0.1
1995 1996 1997
Excess Capacity Price Erosion
1999 1998
0.01
2000
2001 2002
0.001
2003 2004
Excess Capacity Price Erosion
2006 2005
2007 2008
0.0001 1
10
100
1,000
10,000
100,000 1,000,00 10,000,0 100,000, 0 00 000
Cumulative Bit Volume (Bits x 1012) Source: ICE Status 1998 & 2008-09 McClean Report IC Insights
46 WCR Semiconductor Dynamics: Myth vs Reality
Four Generations of DRAM Under $1 $1,000.0
64M
256M 512M
4M
16M 1G
2G
1M
$100.0
128M
$10.0 256K
$1.0
Four Generations Under $1/Unit
19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09
$0.1
Source: SIA/WSTS & Semico
47 WCR Semiconductor Dynamics: Myth vs Reality
DRAM Price/Unit Back to 1986 Levels DRAM ASP 18 16
Price per Unit ($)
14 12 10 8 6 4 2
19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08
0
Source: SIA/WSTS
48 WCR Semiconductor Dynamics: Myth vs Reality
Flash on a Much Steeper Price per Function Trend
Source: IC Knowledge
49 WCR Semiconductor Dynamics: Myth vs Reality
New Generation of Low-Cost Processors “…Many wonder whether beefier chips are necessary: a standard Intel Core 2 Duo processor costs $133 versus $43 for the Atom and $53 for the older Celeron, according to Bernstein Research.” CNET – CES 2009, “First third-generation Netbook: HP Mini 2140,” Jan 5, 2009
“Intel data shows the margin for the Atom, which has 85 percent of the netbook market, is about 11 percentage points below the margin for dual-core processors.” Reuters, “Intel’s Atom: too much of a good thing?” May 7, 2009
50 WCR Semiconductor Dynamics: Myth vs Reality
“…the 45-nm Atom costs about $29, compared with $279 for the company's Penryn Core 2 processor for standard notebook computers. “ Source: EE Times, “Low Atom margins hurt Intel again, says analyst,” Dylan McGrath, April 15, 2009
Netbooks Emerge to Take Advantage of the New Cost Paradigm Netbook Unit Forecast 50,000
Units (000)
40,000
30,000
20,000
10,000
0 2006
2007
2008
2009
2010
Source: Semico
51 WCR Semiconductor Dynamics: Myth vs Reality
2011
The Notebook Market Appears to Have Many Years of Growth Ahead S‐Curve Technology Adoption: Notebook Computer 4,000,000
Cumulative Shipments ('000)
3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0
1988
1993
1998
Source: Semico & Mentor Graphics
52 WCR Semiconductor Dynamics: Myth vs Reality
2003
2008
2013
2018
2023
Application Specific Chips Drive Unit Growth
53 WCR Semiconductor Dynamics: Myth vs Reality
Semiconductor Logic Design Starts* 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 1994
1995
1996
1997
1998
1999
Source: Gartner/Dataquest Market Trends
54 WCR Semiconductor Dynamics: Myth vs Reality
2000
2001
2002
2003
2004
2005
2006
2007
* Without programmable logic
2008
Semiconductor Logic Revenue Per Design Start* Average Revenue per Design Start 14,000,000 12,000,000
$ Dollars
10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 2002
2003
2004
Source: Gartner/Dataquest Market Trends
55 WCR Semiconductor Dynamics: Myth vs Reality
2005
2006
2007
* Without programmable logic
2008
Special Purpose Logic Increasing in Share of Semiconductor Revenue MOS Special Purpose Logic As a Percent of Semiconductor Revenue 25%
20%
15%
10%
5%
0% 2001
2002
2003
Source: IC Insights
WCR Semiconductor Dynamics: Myth vs Reality
2004
2005
2006
2007
2008
ASICs Enable Sub $20 Mobile Handset
“…Spice Mobile which has launched a “people’s phone” priced under $20 …Globally 20% of overall mobile market is represented by sub $40 phones and this segment…we may soon get to buy phones for as low as $10 .” Digital Inspiration “Spice Mobile does a Nano, unveils ‘People’s Phone’ at Rs.800” February 14, 2008
57 WCR Semiconductor Dynamics: Myth vs Reality
31+ Million Additional New Subscribers in India 4th Quarter 2008
India Subscribers in Millions 600 500 400 300 200 100 0 2002
Source: Telecom Regulator Authority of India March 2009
58 WCR Semiconductor Dynamics: Myth vs Reality
2003
2004
2005
2006
2007
2008
2009f
Wireless Subscribers Approaching Maturity But Replacement Cycles Still Strong S‐Curve Technology Adoption: Mobile Phone
Cellular Subscribers ('000)
8,000,000
6,000,000
4,000,000
2,000,000
0 1994
1999
Source: Mentor Graphics
59 WCR Semiconductor Dynamics: Myth vs Reality
2004
2009
2014
New Cell Phone Subscribers in China & India Will Be 2X Larger Than Total US Subscribers in 3 Years Numbers in Millions
2007E Subscriber Base
2011F Subscriber Base
2011F Penetration
New Subscribers
2007-2011 CAGR
Asia/Middle East/Other
870
1,315
85%
445
11%
China
550
885
65%
335
13%
India
220
525
44%
305
24%
Africa
250
490
52%
240
18%
Latin/South America
295
515
87%
220
15%
North America
275
335
94%
60
5%
Russia
80
120
86%
40
11%
Japan
100
120
94%
20
5%
Western Europe
430
450
98%
20
1%
Eastern Europe
140
155
91%
15
3%
3,210
4,910
71%
1,700
11%
Total
Asia is, by far, the most attractive market for new cell phone sales India will grow the fastest but still will have the lowest penetration rate
Source: IC Insights, Emerging Markets 2008
60 WCR Semiconductor Dynamics: Myth vs Reality
High End Cell Phones Gaining Market Share 417 Million Units
1.1 Billion Units
Mobile Phone Market Share by Category 100
10.2%
24.2% CAGR
17.2%
80.4%
9.1% CAGR
61.0%
9.4%
21.7% CAGR
21.8%
90
Market Share (%)
80 70 60 50 40 30 20 10
Basic Cell Phones
Mid-Range Cell Phones
Source: Semico Research
61 WCR Semiconductor Dynamics: Myth vs Reality
08 20
07 20
06 20
05 20
04 20
03 20
02 20
20
20
00
01
0
High-End/Smart Cell Phones
New Markets Drive Semiconductor Unit Market-Driven Eras of Electronic Innovation Volume Growth and Cost Reduction
Packaged IC
Microprocessor
SoC, VLSI, DSP
Multiprocessing Giga bit, non-volatile memory
Military & Aerospace
Desktop Computer
Communications
Converged Appliances
System of Systems
Auto, aerospace, medical,
Consumer / Computer Communications
1970
1980
1990
62 WCR Semiconductor Dynamics: Myth vs Reality
2000
2010
2020
Rising Design Costs Limit New Applications
63 WCR Semiconductor Dynamics: Myth vs Reality
Transistors Produced per Electronic Engineer Nearly 4-Orders of Magnitude since 1985 Transistors/Engineer
Total Electronic Engineers
10,000,000,000,000 1,000,000,000,000 100,000,000,000
Q uantity
10,000,000,000 1,000,000,000 100,000,000 10,000,000 1,000,000 100,000 10,000 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: Technology Research Group – EDA Database, 1986, EDA TAM, 1989 & Gartner/Dataquest 2005 Seat Count Report, Gary Smith EDA, 2008 Seat Count Analysis VLSI Research, 2008 - Transistors Produced Analysis
64 WCR Semiconductor Dynamics: Myth vs Reality
EDA Revenue Is Flat 2% of IC Revenue EDA License & Maintenance/IC Revenue (% Percent) 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 1996
1997
1998
1999
2000
2001
Source: Mentor Graphics, EDAC MSS & SIA WSTS
65 WCR Semiconductor Dynamics: Myth vs Reality
2002
2003
2004
2005
2006
2007
2008
1.00E-04
1.00E-04
1.00E-05
1.00E-05
1.00E-06
1.00E-06
1.00E-07
1.00E-07
1.00E-08
1.00E-08
1.00E-09 1.00E+13
1.00E+14
Source: SIA, VLSI Research, Federal Reserve
1.00E+15
1.00E+16
1.00E+17
1.00E+18
1.00E+19
IC Revenue/Transistor ($)
EDA Cost/Transistor ($)
EDA Cost per Transistor vs Total IC Revenue per Transistor
1.00E-09 1.00E+20
Note: EDA Cost Consists of EDA License and Maintenance revenue adjusted for Inflation… 1985 - 2007
66 WCR Semiconductor Dynamics: Myth vs Reality
SOC Design Costs Forecasted to Exceed $100 Million Within 3 Years 120
100
Impact of Design Technology on SOC Consumer Portable Implementation Cost
$ US Millions
80
60
40
20
0 2007e
2008f
2009f
Hardware Costs
2010f
1
Software Costs
2011f
2012f
2
Notes: 1 2
Source: 2007 ITRS Roadmap
67 WCR Semiconductor Dynamics: Myth vs Reality
Total Hardware Engineering Costs + EDA Tool Costs Total Software Engineering Costs + Electronic Software Design Tool Costs
Software Developers Outnumber Hardware Designers 2-to-1 Hardware
(in 000’s)
Software
400 350
312
348.3
337.8
325.8
300 250 200
159.5
158.5
157.6
156.6
150 100 50 0 2006
2007
Source: VDC - Embedded Systems Market Statistics 2007
68 WCR Semiconductor Dynamics: Myth vs Reality
2008
2009
System Design Has Shifted to the Semiconductor Suppliers
Apps
Apps
Apps
Apps
Apps
Much of what was part of the endsystem is now incorporated within a System-On-Chip
Service Abstraction Middleware OS
CPU MEM
SW SW Driver SW Driver SW Driver Driver
HW HW
HW HW
Buses
69 WCR Semiconductor Dynamics: Myth vs Reality
Rising Design Costs Limit New Applications Semiconductor Companies Are Assuming More of the System and Embedded Software Engineering Design Responsibility
70 WCR Semiconductor Dynamics: Myth vs Reality
Realities of the Semiconductor Industry The semiconductor recovery will be faster than the overall economy
New technology adoption at same rate as in the past No evidence of overall consolidation (yet) in the semiconductor industry
Despite decreasing hardware design cost/transistor, design costs will increase due to the increasing role of embedded software
Unit growth and innovation will drive the 35% per year per transistor cost reduction needed to enable the next wave of applications 71 WCR Semiconductor Dynamics: Myth vs Reality
72 72 WCR Semiconductor February, 2009 Dynamics: Myth vs Reality
