driving semiconductor industry optimization from u.s.-taiwan … · 2019. 12. 25. · driving...

Driving SemiconductorIndustry Optimization FromU.S.-Taiwan-China Relationships

Walden C. RhinesCHAIRMAN & CEOMentor Graphics Corporation

WCR, U.S.-Taiwan, December 20042

Copyright ©2004 Mentor Graphics Corporation.

U.S.-Taiwan-ChinaSemiconductor Optimization

� Growing the total semiconductor market� Efficiencies in the design of products� Increasing the pool of innovators� From litigation to cross-licensing



Multi-Year Compound Growth Rate of theSemiconductor Industry is Decreasing

0%10%20%30%40%50%60%70%80%

49Years

45Years

40Years

35Years

30Years

25Years

20Years

18Years

15Years

10Years

5Years

Comp

ound

Ann

ual G

rowt

h Rate

(CAG

R) %

Transistors Produced Semiconductor Revenue

Source: Transistors Produced – SIA, Semiconductor Revenue – VLSI Research

Transistors

Semiconductor Revenue



Integrated Circuit Unit Growth is StrongWhile Unit Prices are Flat

(Q1-1977 to Q3-2004)

-

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

Q177Q178 Q179Q180 Q181Q182 Q183Q184 Q185Q186 Q187Q188Q189 Q190Q191 Q192Q193 Q194Q195 Q196Q197 Q198Q199Q100 Q101Q102 Q103Q104

KUn

its

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

$ASP

Integrated Circuits (#K) Integrated Circuit ($ ASP)Source: SIA Blue Book Market Data

IC Unit Volume

IC Unit Prices



300 mm Fab Capacity Staged andWaiting for Demand in 2002

7R&D/Pilot

655,500 -to- 825,50038Total Production Fabs

150,000 -to- 300,00012Others

225,000 -to- 245,00010Announced/In process

56,0004Companies with fabs ready to ramp upproduction

224,50012Fabs Completed to date and in volumeproduction

WSM at FullCapacity

Count

Source: VLSI Research & Mentor Graphics



$-

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

Q1/90

Q1/91

Q1/92

Q1/93

Q1/94

Q1/95

Q1/96

Q1/97

Q1/98

Q1/99

Q1/00

Q1/01

Q1/02

Q1/03

Q1/04

$KRe

venu

e

Integrated Circuits ($K)

Semiconductor Integrated CircuitRevenue is Near an All-time High Level

Difference from Q3/00 All Time High ….. – 4%Difference from Q3/01 Low …………...… + 78%

78%1995 Shortage DrivenUp-cycle

2000 InventoryDriven Up-cycle 2004 Unit Driven

Up-cycle

Source: SIA Blue Book Market Data



Unit Volume Growing Faster than Revenue,Driven by Consumer and Wireless

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000Q1

90Q2

90Q3

90Q4

90Q1

91Q2

91Q3

91Q4

91Q1

92Q2

92Q3

92Q4

92Q1

93Q2

93Q3

93Q4

93Q1

94Q2

94Q3

94Q4

94Q1

95Q2

95Q3

95 Q495

Q196

Q296

Q396

Q496

Q197

Q297

Q397

Q497

Q198

Q298

Q398

Q498

Q199

Q299

Q399

Q499

Q100

Q200

Q300

Q400

Q101

Q201

Q301

Q401

Q102

Q202

Q302

Q402

Q103

Q203

Q303 Q403

Q104

Q204

Q304

Units

(# 00

0)

0.000

0.500

1.000

1.500

2.000

2.500

3.000

ASP

($)

IC Chip Units IC Chip ASP

1995High ASP due to Shortage

Units High, ASP Rising Late

2000Unit & ASP Both Peak

19%

Source: SIA Blue Book Market Data



* Note: Adjusted for Inflation Source: SIA, Federal Reserve Bank

As Unit Prices Stabilize, SemiconductorRevenue Growth Should Increase

1,000,000

10,000,000

100,000,000

1,000,000,000

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

$KRe

venu

e (20

03 D

ollar

s) &

K Un

its

0.1

1.0

10.0

100.0

$Unit

Pric

e (20

03 D

ollar

s)

Semiconductor Units (#K) Semiconductor Revenue ($K *) Semiconductor Unit Prices ($*)

Revenue

Units

Unit Price *



Semiconductor Driven by ConsumerOriented End-Markets

World Semiconductor Consumption by End-Market

46% 42%

11% 16%

15% 16%6% 8%

15% 8%6% 8%

2%1%

0%

20%

40%

60%

80%

100%

1998 2003

Data processing / Computer

Wireless Communications

Consumer Electronics

Automotive ElectronicsWired CommunicationsIndustrial ElectronicsMilitary / Aerospace

78%82%

Source: Gartner/Dataquest



Taiwan Has Been Leading theConsumer Growth Markets

* Note: Adjusted for Inflation Source: Taiwan Ministry of Economic Affairs, 2002

Foundry ServicesMask ROM

IC PackagingNotebook OEM

LCD MonitorCD-R

CD-RWDVD

PC CameraEthernet Card

HUBADSL Modem

Wireless LAN (WLAN)Analog Modem

71.0%48.0%30.4%49.0%39.2%83.3%70.3%74.5%58.0%66.0%74.8%59.6%60.0%41.7%



China & Taiwan DominateMotherboard Production

PC Desktop Motherboard Production

75%72%71%

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,000

2003 2004 2005

Prod

uctio

n -$ M

illion

s

0%

20%

40%

60%

80%

100%

Glob

al Sh

are

China/Hong Kong Taiwan All Other WW Share

Source: Gartner/Dataquest, 2004



China/Taiwan Dominatethe Graphics Card Industry

Graphics Cards

77% 77% 78%

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,000

2003 2004 2005

Prod

uctio

n -$ M

illion

s

0%

20%

40%

60%

80%

100%

Glob

al Sh

are

China/Hong Kong Taiwan All Others WW Share




China/Taiwan Leading inNotebook Production

PC Notebook Computers (Subsystems)

64%62%61%

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2003 2004 2005

Prod

uctio

n -$ M

illion

s

0%

20%

40%

60%

80%

100%

Glob

al Sh

are





China Leading the OpticalDisk Drive Industry

Optical Disk Drives

39% 41% 44%

02,0004,0006,0008,000

10,00012,00014,00016,00018,00020,000

2003 2004 2005

Prod

uctio

n -$ M

illion

s

0%

20%

40%

60%

80%

100%

Glob

al Sh

are

China/Hong Kong Taiwan All Others WW ShareSource: Gartner/Dataquest, 2004



China/Taiwan DominateFlat Panel Monitors

Flat Panel Monitors

67%67%65%

0

5,000

10,000

15,000

20,000

25,000

30,000

2003 2004 2005

Prod

uctio

n -$ M

illion

s

0%

20%

40%

60%

80%

100%

Glob

al Sh

are





China’s Cellular Phone Production

Source: IC Insights Emerging Markets 2004

33%31%

0

100

200

300

400

500

600

2002 2003

Millio

ns of

Cell

ular H

ands

ets

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Perc

ent o

f Wor

ldwide

Sha

re

Local Chinese Firms Cell Phone Production Foreign Firms China Cell Phone ProductionWorldwide Cell Phone Production China's Productions Share



China/Taiwan Lead in Ink-Jet PrintersInk-Jet Printers

52%53%50%

0

2,000

4,000

6,000

8,000

10,000

2003 2004 2005

Prod

uctio

n -$ M

illion

s

0%

20%

40%

60%

80%

100%

Glob

al Sh

are





China/Taiwan Only a Quarter of thePC Desktop Systems Market

PC Desktop Computers (CPU & Memory)

24%23%21%

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2003 2004 2005

Prod

uctio

n -$ M

illion

s

0%

20%

40%

60%

80%

100%

Glob

al Sh

are

China/Hong Kong Taiwan All Other WW Share




China/Taiwan Lag in Entry-Level ServersEntry-Level Servers

9% 9% 9%

0

5,000

10,000

15,000

20,000

25,000

2003 2004 2005

Prod

uctio

n -$ M

illion

s

0%

20%

40%

60%

80%

100%

Glob

al Sh

are





China Growing in 2.5G Digital Cellular(Taiwan not Available)

2.5G Digital Cellular

20%

38% 39%

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

2003 2004

Prod

uctio

n -$ M

illion

s

0%

20%

40%

60%

80%

100%

Glob

al Sh

are

China/Hong Kong All Others WW Share




Manufacturing Labor Not Driving USSemiconductor Cost

17% 15%

32% 31%

19% 16%

13% 16%

8% 4%

10% 17%1% 1%

0%

20%

40%

60%

80%

100%

1992 2002

Taxes & Other

Manufacturing Labor

Non-Labor Manufacturing

Sales, General & Administration

Research & DevelopmentNet IncomeDepreciation

Source: Semiconductor Industry Association, 2003 Databook

Cost Structure of US-Based Merchant Producers – 1992 vs. 2002



Machinery and Equipment Drive Fab Cost



0

10

20

30

40

50

60

.35 micron .25 micron .18 micron .13 micron 90 nm

Desig

n Cos

t ($M

illion

)Hardware Design Cost Software Design Cost

Cost of Design is Becoming a MajorPortion of Total Semiconductor Cost

2 MillionLogic Transistors





Source: IBS, Analysis of the Relationship Between EDA Expenditures and Competitive Positioning of IC Vendors



Source: Dataquest, ASIC/SOC: “Rebuilding After the Storm”, 11/19/02

Design Flexibility and Cost are DrivingDesign Starts to Field Programmable Logic

05,000

10,00015,00020,00025,00030,000

1995 1996 1997 1998 1999 2000 2001 2002 2003

#of D

esig

n St

arts

ASIC COT PLDs >100K



SoC Design Requires Integrationof Disparate Parts



Semiconductor Support ofOriginal Design Manufacturers

Then

Now� Datasheet

� Pricing� Production Commitment

� Application Notes

� Reference Designs

� Embedded RTOS� Firmware Modification

� Customization

� Application Software

� Application Engineers



Cost-Effective Custom IC Design RequiresRaising the Level of Abstraction

Performancedriven HWR3G ENGINE

BlueTooth Controller

IR &RS232

Compression& Encryption

Engine

CPUCore

DSPCore

RTOSBlueTooth DriverComp/Enc DriverIR/RS232 Driver FPGA

FunctionalDifferentiation

Software

Transistor

Gate

RTL

IP Blocks & Buses



Platforms Enable Simplified SoC Design� Customer demands

— Fast turn-around time— Easy access to pre-qualified

building blocks— Web enabled

� Design technology— Core platforms— ‘Big’ IP— Emerging SoC bus standards— Embedded software— HW/SW co-verificationFar Peripherals

Near PeripheralsCore



And Automation ofIP Selection & Integration



Shift in System/SoC Design EmpowersGrowing Number of Engineers

IP & Platform Creation

5,000+Designers

100,000+Designers



Semiconductor Learning Curve

1.00E-071.00E-061.00E-051.00E-041.00E-031.00E-021.00E-011.00E+001.00E+011.00E+021.00E+03

1.00E+00 1.00E+02 1.00E+04 1.00E+06 1.00E+08 1.00E+10 1.00E+12 1.00E+14 1.00E+16 1.00E+18 1.00E+20

Cummulative Transistors Shipped

Price

/Tra

nsist

or (a

djus

ted

for i

nflat

ion)

System Cost Reduction MakesNew Applications Possible

Source: Mentor Graphics, SIA, Woodrow Federal Reserve Bank



Increasing the Number of InnovatorsIncreases Innovation



Geographic Distribution ofElectronics Innovators is Changing

0

50,000

100,000

150,000

200,000

250,00019

7519

7619

7719

7819

7919

8019

8119

8219

8319

8419

8519

8619

8719

8819

8919

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

01

China Japan South Korea United States United Kingdom Germany

Growth Analysis CAGR 1990 –to-- 2000China ………………………….. 6.1%Japan …………………..…….. 2.4%South Korea …………...……. 7.2%United States ………………… -0.5%United Kingdom ……………... 7.7%Germany …………………….... -0.9%

Source: National Science Foundation, Science & Engineering Indicators - 2004

ENGINEERING GRADUATES



Design Work Will Be DoneConcurrently At Many Locations

Master

Split &JoinDesigner-to-Designer

Updates

Digital Designer

Analog DesignerDigital Designer

RF Designer

� Divide design into sections� Layout sections in parallel� Share progress with other designers� Merge sections back into master

design

� Simultaneous design on a commondatabase

� Dynamic update of designer’s views� Heterogeneous design tool environment



Manufacturing Yield ImprovementRequires “Design for Manufacturing”

� DRC Rules– Checks design

compliance withprocess rules

� DFM Rules– Define the optimal layout

for highest yield– Must be implemented in

an RET-awareenvironment



Design Guidelines vs. Design Rules� Designers need to know which design features most

affect manufacturing yield

DRCRule

DFMRule

Priority Fixes



Designers Need to Know Effects ofManufacturing Variability

12% Underdose 8% Underdose 4% Underdose

SiliconValidation

Identify weak post-RET regions

Probability to failure report

Probability offailure ranking

Best

Worst

Process Models

Litho EtchCMP

Overlay



Next Wave of Growth inNumber of Designers

110

1001000

10000100000

1000000

1970 1980 1990 2000 2010

~5,000

~50,000~500,000

Number ofDesigners

Custom ICASIC

FPGA

~5,000,000

Platform-basedDesign



The Most Rapid Period of Innovationin History 1947 - 1987

� AT & T provides open licensing of transistor patents.� Patent-holders not favored in litigation – No Federal

Circuit dedicated to patent appeals� Broad cross-licensing for relatively low fees



Litigation Slows Innovation andInhibits Market Growth

� ITC used for fast track to block import of productsviolating U.S. patents

� Extreme cost of litigation favors the wealthy� Use of patents to prevent innovative competition� Licensing companies buying up patents and

demanding fees or threatening litigation



Business Innovation Occurs Everywhere

� $17.6B sales 2004� 200+ stores worldwide� 400 million store visitors

annually� 84,000 employees in 44

countries� Ingvar Kamprad the #1 or

#2 wealthiest person in theworld

IKEA

driving semiconductor industry optimization from u.s.-taiwan … · 2019. 12. 25. · driving...

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