SEMICON West wraps up today, July 11th, in San Francisco, CA, where over 30,000 gathered to discuss and present core issues for the semiconductor and electronics industry. Among the themes from this week is the call for collaboration during what is seen as a crossroads facing the industry. Challenges abound from foundries to end-devices and market strategies; opportunities certainly exist as well, the question is how we transition as an industry to realize stronger growth. At SEMICON West 2013 leaders from across the industry underscored that our challenges are best met through tighter supply chain relationships, earlier and deeper collaboration, and leveraging partners' strengths to succeed and continue to cooperatively innovate.
Game changing shift
The PC-era shift is a game changer in and of itself, reshuffling numerous supply chain networks and reweighting market strategies, and highlighting the importance of diversification along multiple variables (e.g., geographic, end-market, industry and market sector, technological/component focus, pricing, among others). While we continue to see the imbalance grow between the PC and mobility markets, with mobility set to double the once cornerstone PC market by 2016, technology itself is booming, as GlobalFoundries CEO Ajit Manocha underscored.
Although over two-thirds of attendees at Manocha's keynote identified the industry's leading challenge as being "economic," over "talent" or "technology," Manocha continues to present the full-picture of our industry's challenges along with the solution path, recognizing that it is not simply the macro-economic situation that is affecting the industry. Specifically, Manocha continued his call to a "Foundry 2.0" framework in his keynote address.
Foundry 2.0, as coined by Manocha, refers to the new relationship model necessary between foundries and their customers, one of "early and deep collaboration" that enables a virtual integrated device manufacturer (IDM) environment in which the foundry and the customer work together early in the design process to ensure the best technologies, designs, and ability to get high volume into the marketplace at the right time. Foundry 2.0 is in response to the shift and the present complexities that require improved supply chain operations and faster time to market capabilities in order to realize market successes.
R&D costs have risen steadily along with new technologies and increasingly challenging architectures. These costs trickle throughout the supply chain further impacting the end-product designs and market strategies, requiring careful margin, inventory, and return on investment all while targeting the right price and market segment with the end-device.
As David Christensen, senior research analyst with Gartner, presented in his opening keynote, that analysts continue to foresee improved economic conditions both external and internal to the semiconductor industry as we move into 2014. While there are many variables related to regional economic questions, the push-pull of mobility in driving memory growth as well as increased tablet sales and "utility/basic smartphones, as opposed to premium smartphones, will post 'strong' revenues this year and 'good unit growth,'" according to Christensen. As reiterated in the Gartner keynote, "the overriding trends that are affecting all of the high-technology industry, not just semiconductors […] are cloud, information, mobile, and social."
Collaboration is the strategic theme
Perhaps the unifying message from the various panels, keynotes, exhibits, and discussions is the call for increased collaboration across all of the industry's supply chains, extending all the way up to foundries. Yes, economics is at the core, but it is not the restricted understanding of macro-economics, but includes the growing financial costs of R&D, manufacturing at smaller and more complex nodes, down to the market risks and costs of end-devices.
Throughout SEMICON West, there is a distinct note of optimism around the continuation of Moore's Law but one based in realizing new ways to improve costs as new ways to improve yield, power and performance rise. With the 1x-nm nodes and certainly the 450mm challenges, we have both opportunities and hurdles to overcome as an industry, but the outcome projections are strong and point to new capabilities and power-plus-performance improvements that are going to continue to drive demand for high-tech products.