The last two years have been pretty ugly for many folks in the semiconductor industry. The economy in the US continues shaky at best with growing deficits, high unemployment, states on the verge of bankruptcy . . .
As we've continually said, many companies have been very conservative with cash, hiring and new product development. Though many people have been increasingly optimistic about the future, the uncertainty has caused them to not act.
During this period of insecurity and conservatism, there has been a compounding demand for people and investment. Though companies may have a tough time justifying investment based on concrete improvements, they know they can't avoid it forever.
Though it must be treated as anecdotal, we've seen a significant change in activity over the past several weeks. We've noticed a step up in action with recruiting, consulting, investment, due diligence, systems selection, etc. I've talked to a number of folks that are still on the bench that say they've just started getting calls about job opportunities.
Like a New Year's resolution, what better time to make the plunge than the beginning of a new year. It seems like many companies have reached the point of deciding they must do something, even if it's wrong.
We can only hope this continues beyond anecdotal to something resembling the norm. It's been a long dry spell and some rain would sure be a welcome relief.
Friday, February 4, 2011
Thursday, December 23, 2010
Here's to a Great 2011
It is tough trying to sum up 2010 in a few words.
The industry will probably have record revenues, but you don't hear too many people celebrating. Some companies are doing well; others, not so well. Some people are doing well; others, not so well. This can, of course, be said of every year, but 2010 somehow seems much different. The uncertainty in what the economy and the government may do have instilled a conservatism throughout the industry that seems to suppress feelings of joy. If the industry continues doing well in 2011, maybe confidence will return and we can feel better about the future of our industry.
The industry will probably have record revenues, but you don't hear too many people celebrating. Some companies are doing well; others, not so well. Some people are doing well; others, not so well. This can, of course, be said of every year, but 2010 somehow seems much different. The uncertainty in what the economy and the government may do have instilled a conservatism throughout the industry that seems to suppress feelings of joy. If the industry continues doing well in 2011, maybe confidence will return and we can feel better about the future of our industry.
Monday, November 29, 2010
View from the Valley - Nobody Goes to Jail
Moore's Law is probably the most widely known characteristic of the semiconductor industry. Many are amazed at how uncannily accurate the law has proven to be. Since the law has for years been used to set long term development goals, there is an alternate view that the law has become a self-fulfilling prophesy. Either way, it's had an amazing run.
Gordon Moore laid down the basics of his Law in his 1965 paper. It has since been tweaked by Dr. Moore, himself, and interpreted by many. He observed, "The number of transistors that can be placed inexpensively on an integrated circuit has doubled approximately every two years."
To those of us in the industry, we don't give it a second thought. I would guess, however, that each of us may have a little different interpretation if we dig deeper. First, it applies only to the IC chip itself. It doesn't involve packaging and it doesn't involve speed or other IC performance. Second, it describes an "inexpensively" cost factor. It is not what a scientist can achieve in a laboratory, but rather what can be done in a commercial environment. Third, there is the dimension of time that is not precise. Fortunately, this evens out over a period of many years.
Historical progress has always caused me to focus on two main drivers for Moore's Law: wafer size and minimum feature size. In the back of my mind, I assumed you needed both to stay on target. When I started in the industry, wafer sizes were 1" and are now 12" (300 mm). Each diameter step approximately doubled the wafer area, and thus the number of chips, for around same processing cost. Over the past 35 years, geometries have gone from 8 micron (8000 nm) to 45 nm, roughly doubling the number of transistors per square inch every two years.
For the last couple of years, we have been facing a practical decision: to go to 450 mm wafers or not. There is no doubt that our industry has the technical wherewithal to design, build and operate 450 mm capacity. The pesky fly in the ointment is the word "inexpensively" in Moore's Law. I have broadened this to include "total cost," which includes not only the cost of manufacturing the chips, but the cost of designing and building the equipment and developing the processes. There is significant data to indicate that the semi fab tooling industry has still not fully recouped the investment in going to 300 mm.
For our industry to remain healthy, a move to 450 mm must allow the fab tooling vendors to recoup their investment and make a profit. Remember, these same vendors must also continue development to allow jumps to new nodes, which have been the main driver in the past. There is certainly a case that can be made that a move to 450 mm, with all its intended effort and cost, will dilute the focus and funding on node jump development to the point that no net gain will be realized.
The industry as a whole may well be better off by staying at 300 mm and driving node development in the x, y and even z dimensions. No matter what, the semiconductor industry will continue to make progress so that new generations of transistors will be less expensive than their predecessors. Whether we are able to maintain adherence to Moore's Law remains to be seen. But if we don't quite follow the Law . . . at least nobody goes to jail.
Gordon Moore laid down the basics of his Law in his 1965 paper. It has since been tweaked by Dr. Moore, himself, and interpreted by many. He observed, "The number of transistors that can be placed inexpensively on an integrated circuit has doubled approximately every two years."
To those of us in the industry, we don't give it a second thought. I would guess, however, that each of us may have a little different interpretation if we dig deeper. First, it applies only to the IC chip itself. It doesn't involve packaging and it doesn't involve speed or other IC performance. Second, it describes an "inexpensively" cost factor. It is not what a scientist can achieve in a laboratory, but rather what can be done in a commercial environment. Third, there is the dimension of time that is not precise. Fortunately, this evens out over a period of many years.
Historical progress has always caused me to focus on two main drivers for Moore's Law: wafer size and minimum feature size. In the back of my mind, I assumed you needed both to stay on target. When I started in the industry, wafer sizes were 1" and are now 12" (300 mm). Each diameter step approximately doubled the wafer area, and thus the number of chips, for around same processing cost. Over the past 35 years, geometries have gone from 8 micron (8000 nm) to 45 nm, roughly doubling the number of transistors per square inch every two years.
For the last couple of years, we have been facing a practical decision: to go to 450 mm wafers or not. There is no doubt that our industry has the technical wherewithal to design, build and operate 450 mm capacity. The pesky fly in the ointment is the word "inexpensively" in Moore's Law. I have broadened this to include "total cost," which includes not only the cost of manufacturing the chips, but the cost of designing and building the equipment and developing the processes. There is significant data to indicate that the semi fab tooling industry has still not fully recouped the investment in going to 300 mm.
For our industry to remain healthy, a move to 450 mm must allow the fab tooling vendors to recoup their investment and make a profit. Remember, these same vendors must also continue development to allow jumps to new nodes, which have been the main driver in the past. There is certainly a case that can be made that a move to 450 mm, with all its intended effort and cost, will dilute the focus and funding on node jump development to the point that no net gain will be realized.
The industry as a whole may well be better off by staying at 300 mm and driving node development in the x, y and even z dimensions. No matter what, the semiconductor industry will continue to make progress so that new generations of transistors will be less expensive than their predecessors. Whether we are able to maintain adherence to Moore's Law remains to be seen. But if we don't quite follow the Law . . . at least nobody goes to jail.
Thursday, September 30, 2010
Caution - Is Stability Possible?
The semiconductor industry has suffered from feast-famine cyclicality for over 40 years. The underlying driver is the fear-greed cycle, known well in psychology, finance, and other endeavors. In the past, I've compared this phenomenon to a football game with 4 quarters. There is no need to restate the quarters as most of you have been through more cycles than you would care to remember.
This cycle somehow feels different than any I've been through over the past 40+ years. Companies are growing their revenues, but are trying to do it with productivity, rather than adding new people. Since we do recruiting, I don't much care for a jobless recovery, but there is a positive side in that this time around we might keep ourselves from going from all out hiring to massive layoffs. There is some reaction to current business trends in capital spending, but some companies have made plans and are staying the course. I was particularly interested in the announcement by TSMC last week that they would continue with a very aggressive capital expansion plan in 2011, despite industry concerns over a potentially softening market next year. This type of move has typically only been made by a few companies, most notably Intel, in past cycles.
In every cycle I can remember, the postmortem states that we understand what happened and why and we're not going to let it happen again. Maybe, just maybe, we might do a better job of managing this cycle than we have in the past. Maybe there is a chance of better stability than we've seen before.
I don't want to get overly optimistic; however, as the fear-greed cycle is buried deep within the human DNA and is always ready to jump out and get us again.
This cycle somehow feels different than any I've been through over the past 40+ years. Companies are growing their revenues, but are trying to do it with productivity, rather than adding new people. Since we do recruiting, I don't much care for a jobless recovery, but there is a positive side in that this time around we might keep ourselves from going from all out hiring to massive layoffs. There is some reaction to current business trends in capital spending, but some companies have made plans and are staying the course. I was particularly interested in the announcement by TSMC last week that they would continue with a very aggressive capital expansion plan in 2011, despite industry concerns over a potentially softening market next year. This type of move has typically only been made by a few companies, most notably Intel, in past cycles.
In every cycle I can remember, the postmortem states that we understand what happened and why and we're not going to let it happen again. Maybe, just maybe, we might do a better job of managing this cycle than we have in the past. Maybe there is a chance of better stability than we've seen before.
I don't want to get overly optimistic; however, as the fear-greed cycle is buried deep within the human DNA and is always ready to jump out and get us again.
Monday, August 9, 2010
Fixing the Life Sciences Supply Chain
Health care reform has dominated discussion both within the Life Sciences industry and among the general public over the past year and will continue to be debated as the new legislation is slowly implemented. Front and center in this ongoing discussion how to contain spiraling costs. With pharma expected to fork over bigger discounts on their government business and as new taxes and fees are levied on both pharma and med tech, manufacturers will see some of their fat -- at least in comparison to other industries -- margins start to erode.
Historically, supply chain efficiency has not been the highest priority for manufacturers given the high margins they become accustomed to. It may start to get more attention now as the entire health care industry -- from health care providers to manufacturers -- look at ways to improve value and reduce costs. Supply chain expert Lora Cecere of the Altimeter Group has an excellent post in her blog that covers this in more detail:
http://www.supplychainshaman.com/supply-chain-excellence/it-will-take-more-than-a-band-aid/
Historically, supply chain efficiency has not been the highest priority for manufacturers given the high margins they become accustomed to. It may start to get more attention now as the entire health care industry -- from health care providers to manufacturers -- look at ways to improve value and reduce costs. Supply chain expert Lora Cecere of the Altimeter Group has an excellent post in her blog that covers this in more detail:
http://www.supplychainshaman.com/supply-chain-excellence/it-will-take-more-than-a-band-aid/
Friday, August 6, 2010
View from the Valley - Semicon: Then and Now
July is Semicon West time. Below is a quick look at what we saw and heard as well as a look back at Semi West over the years.
Semicon: 1971 to 2010
I went to Semicon West, as I have for the last bazillion years. Though most things stay the same, each show seems to have a bit of its own personality. The show this year seemed particularly open and spacious. There were wide aisles and lots of sitting areas with benches. This seemed like a thoughtful touch by the organizers, until Larry pointed out that the outer reaches of the show floor were blocked off and the common space was probably so the show didn't feel smaller.
The mood was generally upbeat, with most manufacturing equipment vendors reporting robust backlogs. At the same time, there was a tone of worry in several of the presentations voicing that the market may be overheating, with some evidence of double booking. There's still an underlying fear among some that the current strength in the market may not have staying power.
It's hard to believe that it's been almost 40 years since the first show at the Fairgrounds in San Mateo. Back then, everyone parked on the dirt around the horse track and walked into buildings that would house the pie judging contest and 4H exhibits during the fair. It was a couple of buildings with a relatively small collection of exhibitors. Companies booked rooms at the Villa Hotel on the El Camino to host hospitality suites... many of which were more memorable than the event itself. The show grew and blow-up buildings were added to house assembly and test. They were usually pretty hot inside and on at least one occasion, didn't stay blown up.
The show outgrew the Fairgrounds and moved to the newly expanded Moscone Center in San Francisco in 1992. Early on, there was lots of griping from Silicon Valley folks who didn't want to have to drive ALL the way into the City, find parking, etc. The show grew too large for Moscone and assembly/test was moved to the San Jose Convention Center. This upset many of the vendors that served both fab and assembly/test as they had to either ignore one segment or pay to have two booths. After several years, Moscone West was completed and the show once again reunited. At the peak, Semicon used the entire Moscone complex. Over the past several years, the show has been shrinking. The Solar segment has taken over the West Hall and Semicon has collapsed back into North and South Halls. What will next year bring... I guess we wait and see.
Semicon: 1971 to 2010
I went to Semicon West, as I have for the last bazillion years. Though most things stay the same, each show seems to have a bit of its own personality. The show this year seemed particularly open and spacious. There were wide aisles and lots of sitting areas with benches. This seemed like a thoughtful touch by the organizers, until Larry pointed out that the outer reaches of the show floor were blocked off and the common space was probably so the show didn't feel smaller.
The mood was generally upbeat, with most manufacturing equipment vendors reporting robust backlogs. At the same time, there was a tone of worry in several of the presentations voicing that the market may be overheating, with some evidence of double booking. There's still an underlying fear among some that the current strength in the market may not have staying power.
It's hard to believe that it's been almost 40 years since the first show at the Fairgrounds in San Mateo. Back then, everyone parked on the dirt around the horse track and walked into buildings that would house the pie judging contest and 4H exhibits during the fair. It was a couple of buildings with a relatively small collection of exhibitors. Companies booked rooms at the Villa Hotel on the El Camino to host hospitality suites... many of which were more memorable than the event itself. The show grew and blow-up buildings were added to house assembly and test. They were usually pretty hot inside and on at least one occasion, didn't stay blown up.
The show outgrew the Fairgrounds and moved to the newly expanded Moscone Center in San Francisco in 1992. Early on, there was lots of griping from Silicon Valley folks who didn't want to have to drive ALL the way into the City, find parking, etc. The show grew too large for Moscone and assembly/test was moved to the San Jose Convention Center. This upset many of the vendors that served both fab and assembly/test as they had to either ignore one segment or pay to have two booths. After several years, Moscone West was completed and the show once again reunited. At the peak, Semicon used the entire Moscone complex. Over the past several years, the show has been shrinking. The Solar segment has taken over the West Hall and Semicon has collapsed back into North and South Halls. What will next year bring... I guess we wait and see.
Thursday, May 20, 2010
Why Potato Chip Makers are Smarter than Silicon Chip Makers
Margins continue to be top of mind for chip industry. Competing on price is clearly not an option. The comparison between the two chips is not entirely ridiculous. "Design Registration" is akin to Frito-Lays getting the corner shelf space at Walmart or Safeway.
30 of the top 150 chip companies have standardized on Model N's Revenue Management suite to globally manage their pricing, concessions, opportunity tracking, margin protection, etc. Check out the Youtube channel to listen to some of the chip makers who are not playing the russian roulette with their prices. http://www.youtube.com/user/revenews
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