japanese semiconductor industry conference,...

1985 JAPANESE SEMICONDUCTOR INDUSTRY CONFERENCE

April 14-16, 1985

Hakone Prince Hotel Hakone Japan

SUNDAY, April 14 5:00 p m to 8:00 p m

8:00 p.m. to 9:30 p.m

MONDAY, AprII 15

00 a m

00 a m

00 a.m

10:30 a m

11:00 a m

12:00 noon

1:45 p m

2:15 p m.

2:45 p m

3:15 p m

3:45 p.m.

4 15 p.m

6:00 p m

7:00 p m

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^ I J*»v^ ^Dataquest

Registration ».. * - ^ , ^ , , , ^ » . * , , . , . ,,. r. Main Lobby

Cocktails * -^. ^, Ballroom

Buffet Breakfast . . . - . . , , . r, ^. - - . .Restaurant "Sakura"

Registration Continues ,». . _^., * _ . , , . . Main Lobby

Welcome . . , . . » . . . . ^ -» .», . . e - ' - Congress Hall Gene Norrett Vice President Dataquest Incorporated

World Semiconductor Outlook * Congress Hall Frederick L Zieber Senior Vice President Dataquest Incorporated

Japanese Semiconductor Market . . : : . . . . Congress Hall Sheridan M. Tatsuno Research Analyst' Dataquest Incorporated

Concentrated or Welt-Balanced Products Strategy? . . . ^ . . Congress Hall

Tsuyoshi Kawanishi Director and Group Executive Semiconductor Group ToshIba Corporation

Break , . . . . _ , . < » . _ . Garden

Technology Futures . . . »4. .^**^* , ' Congress Hall Or William G. Howard Senior Vice f resident Director of Research and Development Motorola. Inc

Government Involvement: Help or Hindrance? Congress Hall Clyde Prestowitz Special Counsel to Ihe Secretary of Japanese Affairs ' -i U S Department of Commerce

Lunch Restaurant "Sakura"

Achievements and Challenges— A View from the Oldest and the Newest Congress Hall

D A DiLeo Product Marketing Manager—IC's AT&T Technology Systems

Fundamental Forces Driving the 32-Bit MRU Market Congress Hall

Richard L Sanquini Vice President and General Manager Microprocessor Group National Semiconductor

Break . . Garden

Japanese Semiconductor Industry—s The Coming New Age Congress Hall

Tomihiro Matsumura Senior Vice President NEC

Challenges and Opportunities Facing U.S. Equipment Suppliers in the Far East . . Congress Hall

Jon D. Tompkins President, Semiconductor Equipment Group Varian Associates

Silicon Pervasiveness ^ Congress Hall Kihachi Tamura President Shin-Etsu Handotai Co , Ltd

Cocktails On the Ship "Koma No. 2"

Dinner ^^ L . - * Congress Hall

Guest Speakers Congress Hall Dr. Atsuyoshi Ouchi W J Sanders III Vice Chairman of the Board Chairman of the Board, President NEC Chief Executive Officer

Advanced Micro Devices, Inc.

1985 JAPANESE SEMICONDUCTOR INDUSTRY CONFERENCE

April 14-16, 1985 Hakone Prince Hotei

Hakone, Japan

TUESDAY, April 16

8:00 a m Buffet Breakfast Restaurant "Sakura"

10:00 a m

10:30 a m

11:00 a^m.

MOS Memory Strategy: Face-to-Face with the New Market Realities Congress Hall

Lane Mason Senior Industry Analyst Dataquest Incorporated

Lithography Technology Today and Tomorrow - * , ^ , , . . Congress Hall

Shoichiro Yoshida Director, General Manager Industrial Supplies and Equipment Division Nikon (Nippon Kogaku)

Break ,, Garden

The Emerging Asian Semiconductor Industry . Congress Hall Dr. P. June Min Senior Managing Director Goldstar Semiconductor and Telecommunications

The Recent Development of Industry Information in Taiwan . . . . v . , . . ^ . . , . . . . Congress Hall

Dr Irving T Ho President Institute for Information Industry

11:30 a m

12:00 noon

1:45 p m

2:15 p.m

2:45 p m

4:15 p.m.

4:30 p.m.

7:00 p,m.

Status Quo and Tomorrow Japanese Semiconductor Industry

Hiroshi Shima Industry Electronics Deputy Director MITI

Lunch . .

MOS Memory, The Propulsion Power of the IC Industry

Sutezo Hata Executive Managing Director Hitachi, Ltd

A Fresh Look at Japan and Asia Eugene J Flath Vice President and Assistant General Intel Corporation

Panel Discussion • NEC • Intel • Hitachi • Motorola • Toshiba • National • GoldStar Semiconductor

Summary of Conference , , , Osamu Ohtake Manager, Research Dataquest Incorporated (Japan)

Cocktails and Buffet Dinner , .

Buses Depart for Tokyo . , , , , . , ,

Congress Hall

Restaurant "Sakura"

. . . . . Congress Hall

Congress Hall

Manager

Congress Hall

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A-1 C A-1 C A-2 C A-2 D A-2 A-2 A-2 A-1 A-1 A-1 A-2 A-1

A-1 A-1 A-2

A-1 A-1 A-1 A-1

C B-2 A-2 C C A-2 D B-2 B-1 C A-1 C A-1 B-2

B-2 C A-2 A-2 B-2 B-1 A-2 B-2 C

mm

4/14 4/14 4/14 4/14 4/14 4/14 4/15 4/14 4/15 4/14 4/14 4/14 4/14 4/14 4/14 4/14 4/15 4/14 4/15 4/14 4/16 4/15 4/14 4/13 4/15 4/14 4/15 4/14 4/14 4/14 4/14 4/14 4/15 4/14 4/14 4/14 4/14 4/14 4/14 4/14 4/14 4/15 4/14 4/14 4/14 4/14 4/14 4/14 4/14 4/14 4/14

^

4/15 4/ie 4/lf 4/16 4/lC 4/ie 4/lC 4/ie 4/lf 4/ie 4/lf 4/ie 4/lf 4/16 4/lf 4/16

4/16 4/16 4/18

4/16 4/17 4/16 4/16

4/16 4/lf 4/16 4/16 4/16 4/lf 4/16 4/16 4/te 4/16 4/16 4/16 4/16 4/16

4/16 4/ie 4/16 4/16 4/ie 4/16 4/16 4/ie 4/16

>», ^t, >», REGISTRATION DQJ

REGISTRATION OK

^ t t ^ K=g ROOM ^M

V VLSI TECHNOLOGY INC. V 9-y*-'5r$*A;{"' ^-:;?h 7>'"7' ^ j ^ ^ W "i? X X 3 > 7-* t ' 3? ;b V i ' >'° Z ^/ -f D >/ v* ^ A° > ^^ ^ ^ tt

2 A tt y

GIBSON. L. R M W 7%a5 W /J !?§ ^ HJ :t eg M —

A-2 c A-1 B-2

4/14 4/14 4/14 4/14

4/ie 4/ie 4/If 4/U

CJ li-208

• * .

••<{...

JSIS Conference - April 14-16, 1985 Hakone, Japan

F0ST-CX>NFBiU5NCB MEgTHlG

1. Room rate should be confirmed in conference letter.

2. Should explain details of room rate in the brochure(ie, rate service chg., tax). Include note in brochure regarding getting reservation in early in order to budget for appropriate rate.

3. Brochures should be out Feb. 1 (per GXi). Ad at the same time Datagram Dec. 1 & Jan. 1. Last ad should go out 2 weeks before conference. Brochure should be ready for Mo on Jan. 1. Majority of speakers should be locked in by Labor Day.

4. 02 suggests having workshops. GN disagrees. Ok to have small DQ presentations, but not called %K>rkshops, because people don't like to give away secrets in front of competitors.

5. Buses good. Food wonderful. High level of att:endee8. Facilities excellent. Copy of tliese notes should go to Gail Van Tubergen, DQJ staff, & marketing.

6. Keep more on schedule for speakers.

7. Seating plan at dlruter needs a little more planning.

8. Allot 45 min. per speaker, instead of 30 minutes.

9. Mechanics of seating vrent flawlessly^

10. Buffet lunch - Day 1 Sit down dinner - Day 1 [Arranged seating] Sit down lunch -<• Day 2 Buffet dinner - Day 2

11. Karaizawa-- possible site for next years conference-4 hour bus ride frem Tokyo. TOO far, should be no furtiher than 2 hours away.

12. Have podiuii close to a doBf' sO Gene cem. leave easily.

13. Lighting not controlled well. System 8hoald.be checked out beforehand. Also, projector buttons should be checked. Have AV people provide exactly the same egui{»ient in practice rocD as in the main meeting room.

-14. Translation - Guy was ok, woman not good. We should pick the exact people we want to translate. Mr. Fujii is good. Larry

. ,- Armstrong will give GN names of good people. Tomoko & Yamane both know Fujii.

8hoald.be

• ^

15. Yamane will do suonary of Japanese questionaires. 17 yes- - -Japanese opinion

20 no - - " on location for 19 7 next year

Mo will suBnarize U.S./Eur. guest.

16. Journalists no problem. Larry Armstrong could become a good friend of DQ (Buiness Week).

17. There was a problem with buses leaving. Mo bus for Odawara Station. Hiscommunications with travel agent. DQJ will apologize to clients affected.

18. GN got approx. 6 cards from people who want tapes of speeches. O^ will give GN the tapes. GN will mail out.

19. O^ will send picture of speaker to each one with thank you letter. .

20. Conference Attendee's-list - No way to make it accurate - too many last-minutie chemges.

21. Prospects (Frank Sammann) JSIS Prospects: Alps Electric - Hr. Yoshida

Canon ESI Japan Fuji - Xerox Fujitsu (Yu Hirano) Marubeni Hightech Monsanto (Charles Cook)- - : Naruini China ,Tony Watts <SGS)-ASIA Service

[Give Frank copy of Kuwahara's business card.]

SEH Tokyo Ohka Kogyo (photo resist ) Tokyo Sanyo Toshiba UTC (Mostek Japan) (Sam China)

Each person should copy all business cards to DQ conference staff (ie. Max and San Jose JSIS conference file).

Next year speakers - 1 American - 1 Japanese Speaker on manufacturing.

Pat to write newsleter Priority #1 when she returns

Copies of IC USA articles should go to 02

Datagram l ^ ra

4 7 ^ :ii^ ::=C N

=^ - ^ — ^> Sli

~r?' ^ L^ i ^ j : ^

Dataquest

J^

1 9 8 5 ^ 6 ; ! 1 1 B {'K)

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1 9 8 44j£i;!coAT&Aco^Mt^J: '?*H-r b n 5 a r : ^ " V 3 > • •^->TV VKz^h -X^fS.mV.ti-^z.'o^l^fz^ ^'^(OB:?^«i!j[R]$1^PJ-r5±-e^J^HTf5fl(DiljfpltiMg^j: ijCDtU^^L^f^hn^-t o

•Êlli " 7 ^ ' I ^ m t l i - ^ ^ i t ^ M M i ^ l t ^ " t t > 9 ^ - s ' - C - , H*lc^^t?.mi[HlcD • t r $ : ^ " $ ^ f i l ^ f c L * - r « T ^ fflimp^tl? LiiCf ^-To

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' ' ' ' • - ; • ' i l . ' • , , . , - - • • .

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Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company, 1290 Ridder Parl< Drive, San Jose, CA 95131, (408) 971-9000, Telex: 171973

-'•i;;5*S»SfSs'.«flt=i*S

mmm iStm&mmmm lEmm

1. mmm2^~iyQ o ) , T*^6.2tTa _ m) ' (IE)

19 84^^ffl 7 0% -^ 6 7%

2 . ^ ^ 7 ^*^a0Srtmif««t0!?&0lSM:9-»«l^ ( 1 9 8 4 ^ ) (IE)

-^ 17% —^ 8% —• 3 3% -^ 7% —> 3 3% —^ 6 7%

T V / V C R

^mm&^mmm oAWtm ^<Di&mmmmm &^wtmm mmi^mm

(m 1 3 %

9 %

4 1%

2 %

3 0 %

7 0 %

Correction - Please make following changes in the text & slide copy.

I aterial for Mr. Hiroshi Shima of Mill

1) Speech, page 4 (the third line from the bottom) error correction

70 percent 67 percent

2) Appendix 7 (Changes in the Relative Weight of Different Fields in the Demand for IC's in Japan)

1984 TV/VCR " Other consumer goods " OA machinery & equipment " Other equipment for industrial use " For consumer use " For industrial use

error

13% 9%

41% 2%

30% 70%

correction

17% 8%

33% 7%

33% 67%

Dataquest

JAPANESE SEMICONDUCTOR INDUSTRY CONFERENCE EVALUATION QUESTIONNAIRE

Hakone, Japan April t4-16, 1985

Thank you for attending our Japcnese Semiconductor Industry Conference. Would you please assist us jn planning our next conference by completing and returning this questionnaire?

1.' Please rate each praaen^ion on a scale of 1 to 10 (where 10 is highest in terms of youK approval):

CONTENT DELIVERY COMMENTS

Norrett, Welcome Speech

Zleber, World Senticonductor Outlook ^ ^ . £ _

l^tsuno, Japanese Semiconductor Market .JO 1

Matsumtira, The Coming New Age

Howard, Technology Futures

(1 to 10) (1 to 10) (Use reverse side if necessary)

•6 Prestowttz, Help or Hindrance?

DUjaOi The Oldest to the Newest

Sanquini, 3?-M AfPU Market

Kawaniahli Product Strategy?

TompmimbUiS. EquiprmntSuppliers

% i i n M | ^f^n Piirvasiveness —^_

Oucht, Dihrrer Speech

Sand«i«, Dinner Sf»ech

IMason, MOS Memory Strategy

\bshida, Lithography Tbchncriogy

IMIn, Asian Semiconductor Industry

Ho, Industry Information .

Shima, Status Quo wnd Tomorrow .

Hata, MOS Memory

Ptath, Japan and Asia

Ohtake, Summary

2. At our next conference, would you prefer more or less of the following types of ^takers?

MORE LESS

DATAQUEST Speakers

; Speakers from [.arge Semiconductor Comjsanies

;.s.- Speakers from Small Semiconductor Companies .

••tT: Speakers from Semiconductor Users

Speahftrs from Distributors ^ (over)

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

3. Please suggest other types of speakers you might lil<e to hear.

4. How would you rate the conference facilities (1 to 10)?

Location Guest Rooms Meals Meeting Rooms Recreational Facilities.

5. Conference location for April 1986: Maui, Hawaii

Will you attend? '

6. Topics that would be of interest to you for the next JSIS conference:

7. Comments:

8. Your primary interest in the semiconductor industry is as a:

Manufacturer User Other (PIease SpacIfy)

Name artd Company (optional)

CONSUMPTION CAPACITY

CATASTROPHE

THE SEMICONDUCTOR SAGA

Howard Bogert Robert McGeary

- 1 -© 1985 D a t a q u e s t I n c o r p o r a t e d O c t . 14 e d . - R e p r o d u c t i o n P r o h i b i t e d

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 RIdder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

AGENDA

DEMAND

SUPPLY

CAPACITY

PRICE

RECESSION

- 2 -

® 1985 D a t a q u e s t I n c o r p o r a t e d O c t . 14 e d . - R e p r o d i i c t i o n P r o h i b i t e d

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

DEMAND

CONSUMER DRIVEN

SAVINGS RATE INVESTMENT ALTERNATIVES

CREDIT RATE TAX RATE

MONEY SUPPLY INVENTORY

ADVERTISING NEEDS


Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

SEMICONDUCTOR DEMAND MEASURED BY BOOK/BILL RATIO

BOOKINGS VS. BILLINGS BY MONTH (1980-1985)

Billions of Dollars 1.1

0-2 |i n n i l II111 n i l II Mil i |n i I I I III i i | i III i i i m i | i I I I I m i l I |i III I 1980 1981 1982 1983 1984 1985

Source: DATAQUEST

- 4 -

Datapues. Incorporate? A ûllîaHPo*T^^.êSsln'^go°m^^n5ni9^0 R^^dV' pbt ol^ê Ftn^'folto'k'^'^^l /W^r ' ^ - ^^bS^ / Telex 171973

SEMICONDUCTOR DEMAND

BOOK-TO-BILL RATIO

IS VERY INELASTIC

LEADS BILLINGS BY FIVE MONTHS

AVERAGE IS 1.09

HAS NO RELIABLE PREDICTOR!

- 5 -® 1985 Dataquest Incorporated Oct. 14 ed.-Reproduction Prohibited

Dataquest Incorporated, A Subsidiary of A.G. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

SEMICONDUCTOR SUPPLY--CAPITAL SPENDING

U.S. AND JAPAN CAPITAL SPENDING (1980-1984)

Billions of Dollars

Em NORTH AMERICA • JAPAN

$3,480

$3,051

$1,902

$1,373 $1,349 $1212 $1 452

OL-^

$ 0 7 5 3 $1,009 $1,058

1980 1981 1982 1983 1984

Source: DATAOUEST

- 6 -1985 Dataquest Incorporated Oct. 14 ed.-Reproduction Prohibited


CAPITAL SPENDING

U.S. vs. JAPAN U.S. JAPAN

EQUITY LOW DEBT/EQUITY 5% SAVINGS RATE

BANKERS ADVERSARIAL MARGIN MOTIVE GROW EQUITY PROFITABILITY

COST OF CAPITAL 12% INDEPENDENT

DEBT HIGH DEBT/EQUITY 20% SAVINGS RATE

BANKERS PARTNERS CASH FLOW MOTIVE

COVER DEBT BURDEN MARKET SHARE

COST OF CAPITAL 6% CAPTURED

- 7 -© 1985 Dataquest Incorporated Oct. 14 ed.-Reproduction Prohibited


SEMICONDUCTOR SUPPLY--FORECASTED CAPITAL SPENDING

U.S. AND JAPAN CAPITAL SPENDING (1985-1990)

Billions of Dollars

8 m NORTH AMERICA n JAPAN

S6.S78

19073 S5.400 J5,439 $5,290

S3 85 1 14 117

12.664 S2 323, , $2 291

S2.9Sg

S4.788

1985 1986 1987 1988 1989 1990

Source: DATAQUEST

- 8 -© 1985 D a t a q u e s t I n c o r p o r a t e d O c t . 14 e d . - R e p r o d u c t i o n P r o t i i b i t e d


CAPITAL SPENDING

FORECAST ASSUMPTIONS

DATAQUESTS FORECAST FOR SEMICONDUCTOR REVENUE CAPITAL/REVENUE STEPPED FROM 1975 TO 1985 TREND CONSTANT AFTER 1985 U.S. CAPITAL/REVENUE LAGS REVENUE SEVEN MONTHS JAPAN CAPITAL/REVENUE COINCIDENT WITH REVENUE



CAPITAL SPENDING WORLDWIDE 1984-1990

Billions of Dollars

6

5

4

3

2

1

0

n U.S. • JAPAN C3 EUROPE • ROW CZl CAPTIVES 'iA

•I I V%

r. ' •

i l 'I

J r'S' '^

1 1984 1985 1986 1987 1988 1989 1990

Source: DATAQUEST



INSTALLED BASE--U.S. VS. JAPAN PROPERTY. PLANT. AND EQUIPMENT

Billions of Dollars

40

30

20

10

• U.S. O JAPAN

V* I

.^A .'\

«. -- 1 ,

N ( . ,, >. ' r '

L' -

1 ^

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

Source: DATAOUEST

- 11 -© 1985 Dataquest Incorporated Oct. 14 ed.-Reproduction Protiibited


CAPACITY MANUFACTURING ECONOMICS

rf-

/

^

J^ r

ss: <f^

Q2Q2 Qi C

<^Z ^".

^_

S^ :\t-

A £ ^ - - -

-^

Q'^Q^ Qi

BREAKEVEN ANALYSIS

Source: DATAQUEST



CAPACITY- -MANUFACTURING CARDIOGRAM

Percent

U.S. CAPACITY UTILIZATION North American Companies

00

90

80

70

60

c>n

/ \

\

\

/

/

/

^ ^ ^ ^

J

/ r

- - i

V \ 1

y f

i

J f

I

\

\

\ /

V

I

/

f

J

/

L

\ • * *

73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 Year

Source: DATAQUEST



CAPACITY--MANUFACTURING KNOW-HOW JAPAN PERCENT CAPACITY

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

Source: DATAQUEST

- 14 -® 1985 D a t a q u e s t I n c o r p o r a t e d O c t . 14 e d . - R e p r o d u c t i o n P r o h i b i t e d

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

CAPACITY--TWO CULTURES U.S. vs. JAPANESE

CAPACITY UTILIZATION

Percent

100

90

80

70

60

50 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

Source; DATAQUEST

i «

# ^^^^

*

*

^1

^ / \\x y o^ / \ V^ / "s \ y

X /

V



COMPARISON OF CHANGES IN U.S. SEMICONDUCTOR CONSUMPTION AND U.S. GNP

PERCENT CHANGE IN SEMICONDUCTOR CONSUMPTION

+ 70% + 60%

+ 50%

+ 40%

+30%

+ 20%

+ 10%

0

-10%

-20%

-30%

^^^^^^^^US. REAL GNP m ^ ^ (Right Axis)

f— U.S. SEMICONDUCTOR V ' CONSUMPTION '

(Left Axis)

PERCENT CHANGE IN GNP

^ ( /o

+ 5%

+ 3%

+ 1%

- 1 %

_ ' a 0/

O /o

1975 1980 1985

Source: DATAQUEST

- 11 -c 1985 Dataquest Incorporated Oct. 14 ed. -Reproduct ion P roh ib i t ed

Dataquesl Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

COMPARISON OF CHANGES IN U.S. SEMICONDUCTOR CONSUMPTION

AND U.S. REAL INVESTMENT PERCENT CHANGE IN SEMICONDUCTOR CONSUMPTION + 60%

PERCENT CHANGE IN REAL INVESTMENT

+60%

+40%

+30%

+20%

+ 10%

0

-10%

-20%

-30%

U.S. INDUSTRIAL PRODUCTION (Right Axis)

+ 25%

+ 20%

+ 10%

0

-10%

J-20% 1975 1980 1985

Source: DATAQUEST

- 12 -o 1985 Dataquest Incorporated Oct. 14 ed.-Reproduct ion ProtiiDited


COMPARISON OF CHANGES IN U.S. SEMICONDUCTOR CONSUMPTION

AND U.S. INDUSTRIAL PRODUCTION INDEX PERCENT CHANGE IN SEMICONDUCTOR CONSUMPTION + 60%

+ 50%

+ 40%

+30%

+ 20%

+ 10%

0

-10%

-20%

-30%

PERCENT CHANGE IN INDUSTRIAL PRODUCTION INDEX

+ 15%

+ 10%

+ 5%

0

-5%

-10%

1975 1980 1985

Source: DATAQUEST

- 13 -« 1985 Dataquest Incorpora ted Oct . 14 ed. -Reproduct ion Pron ib i t ed


COMPARISON OF U.S. SEMICONDUCTOR CONSUMPTION

AND U.S. ELECTRONIC EQUIPMENT INDEX PERCENT CHANGE IN SEMICONDUCTOR CONSUMPTION +60%

+ 60%

+40%

+ 30%

+20%

+ 10%

0

-10%

-20%

-30%

PERCENT CHANGE IN EQUIPMENT INDEX

U.S. SEMICONDUCTOR^ CONSUMPTION

(Left Axis)

+ 25%

+ 20%

+ 15%

+ 10%

1975 1980 1985

Source: DATAQUEST

- 14 -nataniiPQt Inrnrnor=.?»H ^^{^^^•J?^*^^9y^st Incorporated Oct. 14 ea . -Reproduct ion Pron ib i t ed Dataquest Incorporated, ;?SubsIdiary ofA.C. Nielsen Cofnpany /1290 Bidder Park Drive / San Jose, CA 95131 / (408^971-9000 / Telex 171973

SEMICONDUCTOR TO EQUIPMENT INPUT/OUTPUT RATIO

BEST COMPOUND FIT

I/O RATIO

1973 1975 1977 1979 1981 1983 1985

Source: DATAQUEST

- 19 -c 1985 Dataquest Incorpora tea Oct . 14 ed . -Reproduc t ion Prohi lDi ted


CHANGES IN SEMICONDUCTOR TO EQUIPMENT INPUT/OUTPUT RATIO

PERCENT CHANGE 30

20

10

0

- 1 0

- 2 0

- 3 0

- 4 0

— I I ' — —h—r

1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985

Source: DATAQUEST

- 20 -« 1985 Dataquest Incorpora ted Oct . 14 ed . -Reproduct ion P r o h i b i t e d

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

READ/WRITE MEMORY PRICE PER BIT CHANGES RELATIVE TO TREND LINE

PRICE DECLINE TO THE TREND LINE 20Z

15X

10X

5X

0

-5X

•10X

-15X

-20X

-25X

-30X

n ~1 n m nl I I \ • —

ANNUAL PRICE DECLINE 15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

65% 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986

Source: DATAQUEST

- 21 -c 1985 Dataquest Incorpora ted Oct . 14 ed . -Reproduc t ion P r o h i b i t e d

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

RELATIONSHIP BETWEEN RELATIVE BIT PRICE AND PERCENT CAPACITY UTILIZATION

X DEVIATION FROM AVERAGE 18

10

S

0

-5

-10

-15

-20

'30

M P

I I i

i I i I

i I • I I i i ^

1972 1974

Q RELATIVE BIT PRICE

1976 1978 1980 1982

D RELATIVE CAPACITY

198* 1986

Source; DATAQUEST

•

- 22 -© 1985 Dataquest Incorpora ted Oct . 14 ed . -Reproduct ion P r o n i b i t e d


IMPACT OF FUNCTION PRICE CHANGES

CHANGE IN CONSUMPTION 1985 /1984

PRICE MARKET FUNCTIONAL PER IN

UNITS FUNCTION DOLLARS

READ/WRITE MEMORY (BITS) READ ONLY MEMORY (BITS) MICROPROCESSORS (BYTES) MICROCONTROLLERS (BYTES) GATE ARRAYS (GATES)

+46% +65% + 4% + 20% +81%

-63% - 5 1 % - 2 1 % -33% -35%

Source:

- 4 6 %

- 1 9 %

- 1 8 %

- 1 9 %

+ 18%

DATAQUEST

- 23 -c 1985 Dataquest Incorporated Oct. 14 ed.-Reproduction Prohibited


INDUSTRY BOOKINGS 1974/1975 RECESSION AND 1984/1985 RECESSION

PERCENT OF PEAK

150

100

74/75 RECESSION

84/85 RECESSION

FORECAST

01 Q2Q3Q4Q1Q2Q3Q4Q1 Q2Q3Q4Q1 Q2Q3Q4Q1 Q2 03 Q4

- 24 -

© 1985 Dataquest Incorporated Oct. 14 ed.-Reproaudtion Pronidited


INDUSTRY BILLINGS 1974/1975 RECESSION AND 1984/1985 RECESSION

PERCENT OF PEAK

150

100 74/75 RECESSION

^1 FORECAST

01 02 03 04 01 02 03 04 Q1 02 Q3 Q4 Q1 02 03 04 01 02 03 Q4

- 25 -o 1985 Dataquest Incorpora ted Oct . 14 ed . -Reproduct ion P r o h i b i t e d


ESTIMATED QUARTERLY U.S. SEMICONDUCTOR CONSUMPTION

(Millions of Dollars)

1985

IC DISCRETE TOTAL

X CHANGE

10 DISCRETE TOTAL

X CHANGE

OUARTFR 1 $2,328

448 $2,776

-19.5X

$1,436 431

$1,867

4 . n

QUARTER 2 $2,068

430 $2,498

-10X

1986 $1,824

465 $2,289

22.6%

QUARTER 3 $1,675

403 $2,078

-16.8%

$2,184 480

$2,664

16.4X

QUARTER 4 $1,386

407 $1,793

-13.7%

$2,712 510

$3,222

20.9%

Source:

TOTAL $7,457 1.688

$9,145 -314%

$8,156 1.886

$10,042

9 6%

DATAQUEST

- 26 -c 1985 Dataquest Incorporated •Oct. 14 ed.-Reproduction Prohibited


STRATEGIC CONSIDERATIONS

FOCUS ON THE APPLICATION

ELIMINATE THE NEED FOR SECOND SOURCES

CORNER ENGINEERING RESOURCES

GET IN TOUCH WITH THE BILLION-TRANSISTOR ARCHITECTS

- 27 -c 1985 Dataquest Incorpora ted Oct . 14 ed . -Reproduct ion P r o h i o i t e d

Dataquest incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

STRATEGIC CONSIDERATIONS (Continued)

CONSIDER ALTERNATE WAFER FABRICATION STRATEGIES

BUILD NEW PLANTS WHEN EVERYBODY ELSE ISN'T

GENERATE CASH AT BUSINESS CYCLE TROUGHS

- 28 -c 1985 Dataquest Incorporated Oct. 14 ed.-Reproduction ProhiDited

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 /(408) 971-9000 / Telex 171973

Dataquest

Dataquest

ASICs IN JAPAN

K e i s k e Yawata C h i e f E x e c u t i v e O f f i c e r

Nihon LSI L o g i c C o r p o r a t i o n and Nihon S e m i c o n d u c t o r I n c .

Mr. Yawata i s C h i e f E x e c u t i v e O f f i c e r o f Nihon LSI L o g i c C o r p o r a t i o n and Nihon S e m i c o n d u c t o r I n c . , b o t h J a p a n e s e a f f i l i a t e s o f LSI L o g i c C o r p o r a t i o n o f M i l p i t a s , C a l i f o r n i a . P r e v i o u s l y , h e was P r e s i d e n t and C h i e f E x e c u t i v e O f f i c e r o f NEC E l e c t r o n i c s I n c . , a f t e r h a v i n g s e r v e d as G e n e r a l Manager o f NEC's i n t e r n a t i o n a l E l e c t r o n D e v i c e s D i v i s i o n . Mr. Yawata r e c e i v e d a B .E . d e g r e e i n E l e c t r i c a l Communica t ion E n g i n e e r i n g from Osaka U n i v e r s i t y and an M. E . E . d e g r e e from t h e E l e c t r i c a l E n g i n e e r i n g S c h o o l o f S y r a c u s e U n i v e r s i t y , where he a t t e n d e d g r a d u a t e s c h o o l on a F u l b r i g h t S c h o l a r s h i p .

D a t a q u e s t I n c o r p o r a t e d SEMICONDUCTOR INDUSTRY CONFERENCE

O c t o b e r 1 4 , 1 5 , and 1 6 , 1985 T u c s o n , A r i z o n a


B * A S I C m i l " A S I C i n J a p a n "

1. Diversification of Application

The a p p p l i c a t i o n of IC i n i t i a l l y cen te red around nain frane EDP and

telecommunication equipment. As the capacity of memory IC increased, that

applicat ion grew rapidly in EDP area. The development of microprocessors

made EDP and telecom terminals smarter. The application specific IC further

increased the use of semi-custom IC in such a way that prototype quant i t ies

of ASIC can be economically developed within a few weeks. The CAD software

or ien ted system enables designers to s imulate many c i r c u i t performance

before the c i r cu i t is fabricated in s i l i con . Many ASIC suppliers agree to

design and fabricate prototype IC's without a follow-on production contract .

I t gives researchers and designers more l a t i tude in the use of semicustom

IC's in programs such as the 5th Generation Super Speed Computer.

So ca 1 led ( ]me chat r o n i c s ^ j f h ich i s a J a p a n e s e / E n g l i s h word for the

application of e lec t ronics in machinery such as robots, pr int ing •achines,

copying machines, automobiles, video games, precision machinery and many

other conventional machines and equipment. These applications are ideally

su i t ed for ASIC because the u s e r s ' needs for a small quanti ty of custon

designed devices with d i f fe ren t s p e c i f i c a t i o n s can eas i ly be fulfilled

without a prohibitively high cost.

2. Energy Saving and Reduction in Size '

The p r o l i f e r a t i o n of IC 's made e l e c t r o n i c products shr ink in s i z e and

consume less power which perfectly matched the popular Japanese saying "Kei-

Haku-Tan-Sho" which means l ighter weight, thinner, shorter and smaller in

dimensions. Some examples of "Kei-Haku-Tan-Sho" are Walkman'''', 8 mm video

camera, LCD TV, and c r e d i t card s i ze c a l c u l a t o r , to name a few. Using

d i sc re t e IC 's instead of mechanical and electromagnetic par t s and ga te -

arrays instead of TTL lead the mechatronics to low energy consumption and

Walkman is a registered trademark of Sony Corporation.

- 1 -

Dataquest Incorporated, A Subsidiary of AC. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

Kei-Haku-Tan-Sho. CMOS technology in part icular played an important role in

energy" sav ing. This slogan or theme ideally su i ted the s i t u a t i o n Japan

faced at the time of the energy c r i s i s . By pursuing Kei-Haku-Tan-Sho Japan

developed compact cars , compact d i s c s , and many other e l ec t ron ic devices

which have a high potential for gate arrays . Because of the popularization

of TIL and microprocessors designers commonly used them in the e lce t ronic

c i rcu i t s designed.

In order to further reduce weight and size TTL and microprocessor components

must be eliminated and the e n t i r e p r in ted c i r c u i t board or even several

boards be integrated in a gate array . Sophisticated CAD software exis ts to

replace these boards with gate arrays or other ASIC devices which resul ts in

Kei-Haku-Tan-Sho. There are s t i l l many opportunities for ASIC to take over

from conventional electronic c i r cu i t s .

3. Oversupply of Commodity IC

The current over capacity s i tuat ion forced most broad line IC suppliers to

sh i f t t h e i r product mix toward semi and full custom products because of

the abundance of marketing opportunit ies . The price of a 64K DRAM is as low

as 40 cents and a 256K DRAM dropped from 4 dollars ear l ie r th is year to 1.70

do l l a r s today and has become u n a t t r a c t i v e to manufacture. Although the

price of ASIC has also declined, i t is s t i l l a t a reasonable level and one

can be profi table manufacturing ASIC which invited more competition. ASIC

technology is not something which can be developed overnight. It requires

CAD software. The lack of CAD software capabil i ty drives many salesmen to

re ly on low p r i ce s because they do not have other s t r e n g h t s to use in

s e l l i n g ASIC. Hopefully buyers and purchasing managers know tha t ASIC

supp l i e r s should f i r s t be chosen for t h e i r CAD software, not for t h e i r

price, because good ASIC is designed with good CAD software. There are many

other elements which are far more important than p r i ce , i . e . , var ie ty of

packages available to encapsulate an ASIC in, performance and speed of the

ga te , sca le of in tegra t ion the CAD software may co r r ec t l y handle, turn

around time of proto-typing, f i r s t time accuracy of design and the size of

the macro-cell l ib ra ry . A price quotation based on a per-gate-pr ice is a

ridiculous way to value ASIC.

- 2 -

Dataquest Incorporated, A Subsidiary of AC. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

4. Diversification of ASIC

As CAD software becones more sophist icated and wafer processing technology

is lore refined, the density of ASIC increases and consequently the c i r c u i t

performance d ive r s i f i e s . For t h i s to happen the library of •acroce l l s and

building blocks nust be expanded. Japanese customers expect ASIC suppliers '

development suppor t system and product development c a p a b i l i t y t o be

re l iab le , i . e . , broad ASIC product l ine, strong development system and quick

turn around tiwe. Major Japanese gate array suppl iers are responding to

such expectation by building more design centers, developing higher density

arrays with new building blocks including ROM, RAM and PLA. The prevailing _ — >^

technology is 2.0 u Si gate CMOS process with double metal layer, but : /

1.5 u technology i s emerging. Demand for complex ASIC such as analog

functions, CPU and peripheral fuctions integrated with logic c i rcu i t ry is

also popular among ASIC users .

Impact of Software Development

Japan i s one nation where hardware value is viewed more important than

software value. Although the software is beginning to be valued, the level

of recognit ion is not suf f ic ient ly high. Design serv ice is often times

given away, if there is a s ignif icant volume of components. If software is

not given s u f f i c i e n t v a l u e , the software development a c t i v i t i e s a re

discouraged and copyright is not respec ted . The fac t tha t a copyright

legislation has been enacted in Japan may indicate the increase of awareness

toward software and if i t is a trend, the awareness will be reflected in the

marketing andpurchasing a c t i v i t i e s . When the software is given full ci t izen

ship, the ASIC will real ly flower in Japan.

- 3 -


(Fig. I) Application of O O S Gate Arrays tiy Sector in Japan

(1962)

(Source: Yarvs Keizai)

(Fig. 2) Application of OCS Gate Arrays by Sector in Japan

(1983)

(Source: Yano Keizai)

- 4 -

Dataquest Incorporated, A Subsidiary of A C Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

(Fig. 3) Application of OOS Gate Arrays by Sector In Japan

(1984)

(Source: Yano Kelzal)

- 5 -


(Fi£. 4) Growth of Japanese Gate Array Shipment

(in IOC Million yen)

3,000

2.600 I-

2,000

1,500

1.000

BOO

JS&.

?,a-.2

a.362

1,923

A^SZi

1,253

863

sai.

fi2 eS B4 a5(£) B6(E) 87(E} Be(E) B9(E)

Year

(Source: Yaro Kelral)

- 6 -

Dataquest Incorporated, A Subsidiary of A C Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

(Fig. 5) Growtt-. of Japaneee OOE Cat* Array Shipner.t

(in MilUor. yen;

800.OOC

150.000

100,000

50.000

S,115

62

95^311

^ 3 1 5 ^ 2LJJ^

^iilf^ 5£,4Se

j L ^

03 B4

Yea.-

17i ''"' —

145,3^1

117,^97

1 B6(E; B7(EJ ee{E', eg a)

(Surce; Yanc Kelrai;

- 7 -

Dataquest Incorporated. A Subsidiary of A C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

Dataquest

THINK TANK AND SILICON CRANK: PARTNERS IN INNOVATION

Arthur J. Collmeyer Lesident

Weitek cbrporation

Dr. Collmeyer joined Weitek Corporation in 1981 as its first president. Previously, he was vice President of R&D at Calma Company, and later served as vice President/General Manager of Calma's Microelectronics Division. Prior to that time, he was employed at xerox Corporation and Motorola Inc. Dr. Collmeyer received B.S. and M.S. degrees in Electrical Engineering frcrni the University of Illinois and a Ph.D. in Electrical Engineering from Southern Methodist University.

Dataquest Incorporated SEMICONDUCTOR INDUSTRY CONFERENCE

October 14, 15, and 16, 1985 Tucson, Arizona


Dataquest

George W. Cone

Mr. Cone is a Senior Vice President ay^eattle Silicon inc.JjSSH and his career spans 27 years of experience in bbth bipolar and MOS technology. He holds seven patents that range from semiconductor processing to electrostatic printers. Before joining SSI, he was President and Chief Executive Officer of a start-up called Array Devices'inc. Mr. Cone was also one of the founders of Applied Micro Circuits Corporation, where he held the title of Vice President of Operations and Marketing. IXiring his tenure at Garrett Corporation's Micro Components Division, he was instrumental in growing sales to $50 million.

Walter P. Curtis III

Mr. Curtis is Vice President of Marketing at/^Silicon Compiler^ Inc. a t ( ^ tion^T" (SCI). He joined SCI after ten years with Nationai Semiconductor where

he was Director of Marketing for the Microprocessor Group. IXiring his tenure at National, he introduced the NS 32000 family of microprocessors and before that he held various management positions in both strategic marketing and field applications engineering. Mr. Curtis has also worked as a design engineer for Addressograph-Multigraph Corporation and was the primary developer of one of the first microprocessor-based, point-of-sale, and transaction processing systems for the banking, travel, and entertainment industries.

Douglas G. Fairbairn

Mr. Fairbairnj^ the Vice President of Design Technology at VLSI Technology Inc.<; ?VTjjS. He was a founder of VTI in 1980, and is currently responsible for all IC design tool development, marketing, and support. Before founding VTI, he was founder and publisher of VLSI Design Magazine, which was sold to CMP Publications in 1983. Mr. Fairbairn was with Xerox Palo Alto Research Center from 1972 until 1980. While at Xerox, he served as Architect Project Manager for the development of the first 16-bit portable computer and for an advanced office terminal system.

Dataquest Incorporated Semiconductor Industry Conference



Dataquest

Richard N. Gossan Jr.

Mr. Gossen is President and Chief Executive OfficeJ^-gf .s-j i iff9n 'frj'?''' Labs and his perspective comes from 17 years in the semiconductor industry. He spent 16 years with Texas Instruments (TI), where he participated in some of the early microprocessor development of the late 1960s. More recently, he was responsible for all MOS memory development at TI, including ttie 64K DRAM. Mr. Gossen joined Environmental Processing Inc. (EPI) in 1983 as Vice President of Business Development. At EPI he participated in the rapid growth that led to a successful initial public offering in July 1984.

Michael L. Hackwort:h

Mr. Hackworth is President and Chief Executive Officer ofyCirrus Logic Inc., and has more than 20 years of experience in the semiconHuctof' industry. As Senior Vice President at Signetics, Mr. Hackworth directed three product divisions, an MOS Technology Development Unit, the Albuquerque MOS Manufacturing Plant, and a total of more than 2,500 employees. In 14 years at Signetics, Mr, Hackworth's achievements included developing the bipolar digital marketing effort and directing and staffing the company's successful entry into MOS technology. He also has held a variety of marketing and sales positions at Motorola and Fairchild.

Dataquest Incorporated Semiconductor Industry Conference

October 14, 15, and 16, 1985 TXacson, Arizona


Dataquest

AN INDUSTRY IN TRANSITION

Alex Au P re s iden t and CEO

V i t e l i c Corporat ion

Dr. Au i s the founder and P r e s i d e n t of ViteTi^y Corpora t ion . P rev ious ly , he was VLSI Research Manager a t Faircniid- 'Semiconductor where he managed t:he design and manufacturing of a 64K CMOS s t a t i c RAM, a 16R NMOS EEPROM, and a 64K NMOS dynamic RAM. Pr io r to t h a t , he was R&D Director a t I n t e r s i l , a Senior Design Engineer a t F a i r c h i l d Semiconductor, and a Senior Design Engineer a t Hewlet t-Packard. He holds four p a t e n t s on MOS memory c i r c u i t s . Dr. Au received a B.S. degree in E l e c t r i c a l Engineer ing from the Univers i ty of Ca l i f o rn i a a t Los Angeles, and an M.S. degree and a Ph.D. in E l e c t r i c a l Engineer ing from Stanford Un ive r s i t y .

Dataquest Incorpora ted SEMICONDUCTOR INDUSTRY CONFERENCE


Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

POTENTIAL NEXT-GENERATION

PRODUCTS

VITEUC

1 MEGABIT VIDEO RAM FOR DIGITAL TELEVISION

Frame Storage May Require One to Four Megabits per Frame

Device Will Have High Speed Logic Functions For Data Processing Before Display

2 High Speed Serial Access Ports

W VITEUC

- 9 -


SUPER HIGH SPEED DUAL PORT SRAM

2Kx 8to 8Kx8 Required for Buffer Memory Applications

25 nS Access Time

On-Board Anti-Contention Logic

VITELIC

CONTENT ADDRESSABLE MEMORY FOR ARTIFICIAL

INTELLIGENCE APPLICATIONS

• Fast Searcii and Matcfi

• Large Memory

• Logic Capability

Compare Exclusive or Invert

W VITELIC

- 10 -Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

SUPER LOW STANDBY POWER DRAMS FOR SEMICONDUCTOR

DISK APPLICATIONS

T High Density, Low Cost DRAM

• Serial and Random Access

• Battery Back-Up

• Special Packaging

W VITELIC

MEMORY FOR HIGH TEMPERATURE APPLICATIONS

• 150 to 200 Degree Celcius Operation

• Designed to Compensate for High Leakage and Vt Reduction at High Temperatures

w VITELIC

- 11 -Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive/ San Jose, CA 95131 / (408) 971-9000 / Telex 171973

SUPER RELIABLE MEMORIES

• Organized x9

• Internal Error Checking and Correction

• On-Chip Functions to Ease Addition of External Error Checking and Correction

W VITELIC

THE CHALLENGE

OF THE NEW [VIEMORY MARKET

IT VITELIC

- 12 -Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

•"^ Dataquest

ASICs IN THE ANALOG WORLD

Alan Grebene ;?-= e:eai.dent

Hicro Linear Corporation

Dr. Grebene is the President of Micro Linear Corporation, which he founded in 1983 to serve t±e application-specific linear/digital LSI market. Previously, he founded Exar corporation of Sunnyvale, California, and until recently, served as Senior Vice president responsible for product development and marketing activities. Prior to tihat, he was Director of Product Development at Signetics Corporation. He has also held various technical and management positions with Sprague Electric and Fairchild. Dr. Grebene received an M.S.E.E. degree from tihe university of California at Berkeley and a Ph.D. from Rensselaer Polytechnic Institute.

Dataquest incorporated SEMICONDUCTOR INDUSTRY CONFERENCE



ASIC'S IN THE

ANALOG WORLD

Alan B. Grebene

President

Micro Linear Corporation

San Jose, California

PRESENTED AT

DATAQUEST SEMICONDUCTOR INDUSTRY CONFERENCE

OCTOBER 1^-16, 1985

TUCSON, ARIZONA

1 -


SYSTEMS IN THE ANALOG WORLD

Measuring and Sens ing

Media

• Industrial Cont rols

• T e l e c o m • Speech • Robo t ics

Data Aquis i t ion

Storage and

Transmiss ion Med ia

• Compu te r Pe r iphe rals

• Displays • T ransm i t te r s • Receivers

— Data In te r f ace

•Micro Linear-

TRENDS IN THE LSI WORLD

1 - INCREASING COMPLEXITY:

Component • Subsystem • Complete System

2 - SPECIALIZED APPLICATIONS: ( Special ized A

Increasing Complexity • Reduced Versat i l i ty ( Apnl icat ions J

Specialized Applications ASIC Solutions

3 - SYSTEM-LEVEL INTEGRATION:

System —on —a—Chip • Linear/Digital M ix

m^m^m^^^^^^'^mi^^^^^^^^^^mm^^^^^mmiîma^^^^îî^^^^^^Km^m^^^^^m^m^^^^^mmmm'^^^^^^^^î

- 2 -

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 RiddeV Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

"Hicro Linear-

• >

IN CUSTOM LSI DESIGN

THREE CRITICAL FACTORS ARE:

• Design Time

• Design Cost

" Design Talent

•Micro Linear'

LIMITED DESIGN TALENT

• There are over 250,000 Systems Designers, worldwide

• There are less than 250 Expert Linear LSI Designers in the world

RESULT:

There is less than one Linear LSI Expert for every 1000 Systems Designers!

•Micro L i near '

- 3 -


SOLUTION

Simplify and Automate Custom LSI Design through:

• NEW DESIGN CONCEPTS Semicustom Modular Design

• NEW CAD TOOLS

This has been done successfully in Digital LSI.

It has not been done in Linear LSI.

•nicro Linear

THE PROBLEM

Traditionally Linear LSI circuits are designed at the individual transistor/resistor level.

This approach has the following limitations:

• It requires an Expert LSI Designer

" No two designs are alike

Each design has to be individually "hand—crafted"

•Ricro Linear'

- 4 -

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Connpany / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

DIFFICULTIES OF ANALOG LSI DESIGN

• Difficult to specify • Difficult to simulate

• Difficult to interface

" Sensitive to chip layout

• Difficult to test

Therefore: Difficult to automate

•Micro Linear-

SPECTRUM OF ANALOG ASIC SOLUTIONS S I

CELL-BASED DESIGNS

HAND-CRAFTED FULL CUSTOM

•flicro Linear-

- 5 -Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

" \

TWO CLASSES OF LINEAR AND

MIXED LINEAR/DIGITAL ASICS

1 — Those requiring unique grouping of relatively standard functions:

BEST SERVED BY SEMICUSTOM

2 — Those requiring very high performance specialized blocks:

mmm^ ^ESJ SERVED BY FULL-CUSTOn««»«»« ^

•Micro Linear'

CHARACTERISTICS OF

LINEAR BIPOLAR TECHNOLOGY

• High performance (gain, bandwidth, noise)

• Less sensitive to chip layout

• Easier off—chip interface

• High power consumption

• Poor silicon efficiency

Best suited to Array Designs

•Micro Linear-

- 6 -

Dataquest Incorporated, A Subsidiary of A.C, Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

CHARACTERISTICS OF CMOS TECHNOLOGY

FOR ANALOG APPLICATIONS

• Poor performance (gain, bandwidth, noise) • Very sensitive to chip layout • Difficult Off—chip interface • Low power consumption • Sample / hold capability • High silicon efficiency • Can mix Linear / Digital functions

^^*^ Best suited to Standard—Cell Designs ^A'-

•Micro Linear-

r SEM

F

> (J

o _ j

• o z X

u LU h-

ICUSTOM TECHNIQUES

OR ANALOG ASICS

METHODOLOGY

cr <x. _ l o a. M (D

C/) O r o

ARRAYS

yy

X

STAND. CELLS

y

yy

>

Linear '^

- 7 -


I

LINEAR ARRAYS

RANDOM ARRAYS o Random grouping of resistors / transistors o Suitable for component—level design o Difficult to automate

STRUCTURED ARRAYS o Combinations of mini—arrays o Can be used with cell libraries o Suitable for function—level design o Easy to automate

•nicro Linear'

T H E T I L E - A R R A Y C O N C E P T An Array of Mask -P rog rammab le "Tiles"

j u n riivin

TILE ARRAY CHIP

Mask-Programmable "Ti les"

Customized with 2-Layers of Metal Each "T i le " Mask-Programmable into a Stand-Alone Linear Function Allows Automated Design of Linear LSI at Modular Function Level

•Micro Linear•


CUSTOM LSI DESIGN Case Study

PRODUCT: Disk Drive Controller ORDER QUANTITY: 20,000 Pieces

Development Tinne: Development Cost: Unit Selling Price: Total Program Cost:

TILE-ARRAY DESIGN

10 Weeks $ 12,000.00 $ 6.00

$132,000.00

CONVENTIONAL

FULL-CUSTOn

60 Weeks

$120, 000. 00

$ 5.00

$220, 000. 00

Advantages: • 90% Development Cost Savings

• 83% Reduction in Development Time

•Hicro Linear'

/ — X

A PARTIAL LIST OF LINEAR CELLS IN THE SC~2000 FAMILY

• Gain Cells (5 Cells)

• Operational Amplifiers (12 Cells)

• Buffer Amplifiers (3 Cells)

• Comparators (2 Cells)

• Sample/Hold (1 Cell)

• Voltage Reference (1 Cell)

• Bias Generators (3 Cells)

• Oscillators (2 Celts)

• Phase—Locked Loops (2 Cells)

• Multiplexers and Modulators

(5 Cells)

• Switched-Capacitor Filters (10 Cells)

• Continuous-Time Filters (2 Cells)

• Analog/Digital Converters (3 Cells)

• Digital/Analog Converters (3 Cells)

•^Hicro Linear-

- 9 -


ANALOG CAD/CAE TOOLS

SOFTWARE

• Device Modeling

• Circuit Simulation

• Circuit Synthesis

• Parameter Extractioii

• Cell Compilation

• Auto Place/Route

HARDWARE

Personal Computer Based

Workstation Based

Mainframe Based

•Kicro Linear'

r TWO KEY FACTORS IN

ANALOG DESIGN AUTOMATION

* Device Modeling

• Circuit Simulation

«,...«»« Particularly Critical in MOS Analog

'Micro Linear -" "^

- 10 -


Level I User-oriented (Linear-CAD I)

A HIERARCHY OF LINEAR LSI CAD TOOLS

Level II User-

Interactive

Level III Internal Host

Computer System

•Micro Linear•

TOTAL AVAILABLE MARKET FOR APPLICATION-SPECIFIC

LINEAR AND COMBINED LINEAR / DIGITAL LSI

1600

^ 1200

o I 800

^ 400 </>

0

m LINEAR/DIGITAL LINEAR

780 S9Q

440

IQBS 1986 1087

SOURCES. EDN. OATAOUEST. L C . E .

98D

1988

12QD

1989

•nicro Line*!'

- 11 -

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-900(3 / Telex 171973

TOTAL MARKET FOR APPLICATION-SPECIFIC

LINEAR AND MIXED LINEAR / DIGITAL LSI

e/j

2 g !J _j

</>

1600

12001-

800f-

400 1-

1985 1986 1987

SOURCES: OATAOOEST, GNOSTIC CONCEPTS. I.C. E.

1968 1989

•nicro Linear-

TOTAL MARKET FOR SEMICUSTOM

LINEAR AND MIXED LINEAR / DIGITAL LSI

1000

^ 750

o _l 500

J, 250 </>

^CELL-BASED DESIGNS ARRAY DESIGNS

240 350

140

1985 1986 1987

SOURCES. DATAQUEST, GNOSTIC CONCEPTS, I.C. E.

500

1988

700

I 198Q

•nicro Linear'

- 12 -Dataquest Incorporated, A Subsidiary of A C . Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

"N LINEAR AND MIXED LINEAR/DIGITAL

ASIC MARKET

F u l l Custom

Arrays

1985 = $290 Million

standard Cells

Full Custom

Arrays

1990 = $1,100 Million

•nicro Linear'

PRIMARY END-USER MARKETS FOR

LINEAR AND MIXED LINEAR / DIGITAL ASICS

• Telecommunications

• Computer Peripherals

• Industrial Controls & Instrumentation

" Military

v •Hicro Linear'

- 13 -


~ \

TRENDS IN ANALOG ASICS

INCREASING SEMICUSTOM CAPABILITY

o Structured Linear Arrays

o System-level mixed Linear/Digital ASICS using CMOS Standard Cells

INCREASING USER INVOLVEMENT IN DESIGN PROCESS

PROGRAMMABLE ANALOG ASIC'S

(Software—controlled Analog VLSI)

•Micro Linear'

SOFTWARE-CONTROLLED ANALOG ASICS

[

o o o o o o

111 n - • • t ANALOG IMWTS/OUTPUTS

ANALOG FUNCTIONS

MEMORY MICROCONTROLLER

DIGITAL FUNCTIONS AND INTERFACE

I t i l i . . . ! "ISITAl T T t t T t IHPUTS/0 IHPUTS/OUTPUTS

MICROPROCESSOR BUSS

•Micro Linear'


Dataquest

STRATEGIES FOR EFFECTIVE SILICON USE

Eli Harari President

WaferScale Integration, Inc.

Mr. Harari is the President and Chief Executive Officer of WaferScale Integration, Inc., Fremont, California. Previously, he was Vice President of Operations/Technology at Synertek, Inc.; Manager of Technology Development at Intel Corporation; and Manager of the Microelectronics Research Center at Hughes Aircraft Company. Mr. Harari invented the first commercial CMOS EEPROM and the CMOS NOVRAM. In addition, he holds more than ten U.S. and foreign patents in EEPROM, EPROM, DRAM, SRAM, serial memories, imagers, and semiconductor processing techniques. Mr. Harari received a B.Sc. degree in Physics with honors from Manchester University in England and a Ph.D. degree in Solid State Sciences from Princeton university.

Dataquest Incorporated SEMICONDUCTOR INDUSTRY CONFERENCE



y/ciPGfi/taLG

STRATEGIES FOR EFFECTIVE SILICON USE

y/ai'Gri/tciL^

• Effective Silicon Use Involves Unique Devices for Specialized Functions

• Effective Silicon Use Requires a Systems Perspective

• Tools Are Now Available to Enable the System Designer to Create Unique Devices

• Successful ASIC Companies Will Become the Natural Extension of the System Designer

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MARKET OPPORTUNITY WORLD STANOAnO

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WORLD STANOARO . CELL MARKET

IC . J19.37 8 (100H) Standard CcII $ Q.2S B (1.3H)

$51.54 B (100H) t 3.94 a (7.6H)

Standard Cell Market Will Grow 1546% in 5 Years

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- 1 -

Dataquest Incorporated. A Subsidiary of A C Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

y/ai^fBn/taLfz ASIC's Satisfy a Growing Need for System Companies: • Reduced System Cost

—Reduced Components, Boards, Power Supplies, Cooling

—Lower Assembly, Test, Bum-in Costs

• Enhanced Product Competitiveness —Higher Performance and Reliability —Smaller Size —Proprietary Design Protection —Feature Differentiation

INCREASED PROFITABILITY

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SEMI-CUSTOM EMPHASIS

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BASIC BARRIERS ARE FALLING

• Process Technology — CMOS VLSI Here Now, WSI Within Sight

• Manufacturing Yields — Automation Allowing Very Affordable Cost Per Gate, Very Reliable Silicon

• Workstations — Powerful, Affordable, Proliferating

- 2 -

Dataquest incorporated, A Subsidiary of A C. Nielsen Company / 1290 Ridder Park Drive / San Jose, GA 95131 / (408) 971-9000 / Telex 171973

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BASIC BARRIERS ARE FALLING • Design Software —

• Time to Market —

• Remaining Barrier —

Correct Design By Construction, Good Simulators and Place/Route, Expanding Large Block Libraries

8-16 Weeks Now Normal for VLSI Devices

Universal Embrace By System Designers

Tools Are Now in Place for Effective Use of Silicon

WHY THE NEED FOR A SYSTEM/SEMICONDUCTOR

PARTNERSHIP? • Systems Must Integrate on Silicon to Survive

• Capital Intensity of Semiconductor Facilities Must Be Diffused Among Users

• System and Semiconductor Complexity Require Scarce Complementing Skills

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TODAY'S STRATEGIC ALLIANCE

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USE OF SILICON • "System-on-a-ChIp" Solution

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- 4 -

Dataquest Incorporated, A Subsid iary of A C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

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- 5 -Dataquest Incorporated, A Subsidiary of A C. Nielsen Connpany / 1290 RIdder Park Drive / San Jose. CA 95131 / (408) 971-9000 / Telex 171973

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- 6 -

Dataquest Incorporated, A Subsidiary of A C Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

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- 7 -Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose. CA 95131 / (408) 971-9000 / Telex 171973

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- 8 -Dataquest Incorporated, A Subsid iary of A C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

SC^aFEn/caLE EFFECTIVE USE OF SILICON

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Graphics Processor Engine • CMOS •Syalam-oiva-Chlp" • Si IMIPS • Prototypes in 14 Waeks Attar Simulation Sign-off


Graphics Processor Engine • System Architect — Definition • SiIicon Integrator — Creation

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EFFECTIVE USE OF SILICON • HIGH PERFORMANCE SEMI-CUSTOM

APPLICATIONS: CAD/CAE Workstations High ResoIution Graphics Controllers Telecommunications Speech Processing Image Processing Graphics Engine Mini-Computers High Speed Industrial Control Local Area Network Controllers

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- 9 -Dataquest Incorpora ted, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose , CA 95131 / (408) 971 -9000 / Telex 171973

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EFFECTIVE USE OF SILICON REQUIRES: • Cooperative Business AIIiances

• Systems Definition by Systems Architects

• Efficient High LeveI Design Tools

• l.everaged Manufacturing Sources

• Latest SiIicon Technology

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- 10 -Dataquest Incorporated, A Subsidiary of A C Nielsen Company / 1290 Bidder Park Drive / San Jose, GA 95131 / (408) 971-9000 / Telex 171973

Dataquest

AUTOMATION OF LSI MANUFACTURING

Hiroyoshi Komiya Deputy Managerr Saijo Factory

Mitsubishi Electric Corporation

Dr. Komiya is a Deputy Manager of Mitsubishi Electric Corporation's Saijo Factory, and has general responsibilities for production and technology at the Saijo Factory. Before being transferred to the Saijo Factory, he was a Manager of the Equipment Engineering Department at Mitsubishi's Kitaitami Works, where he managed the design, development, and construction of production lines for the Saijo Factory. Before that, he worked as a Deputy Manager of the Memory and Microprocessor Department at the Kitaitami Works, as a member of the senior research staff for wafer processing technology at the cooperative laboratories of VLSI Research Association, and as a senior research staff member at Mitsubishi's Central Research Laboratories. Dr. Romiya holds a B.S. degree in Physics and a Dr. Science degree from Kyushu University.

Dataquest Incorporated SEMICONDUCTOR EQUIPMENT AND MATERIALS INDUSTRY SERVICE CONFERENCE

October 14-16, 1985 Tucson, Arizona

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, GA 95131 / (408) 971-9000 / Telex 171973

DR. HIROYOSHI KOMIYA

DEPUTY MANAGER, SAIJO FACTORY

MITSUBISHI ELECTRIC CORPORATION

AUTOMATION OF LSI MANUFACTURING

INTRODUCTION

AUTOMATION OF LSI MANUFACTURING HAS MADE PROGRESS IN ORDER OF THE

AUTOMATION OF INDIVIDUAL PRODUCTION EQUIPMENT, THE DEVELOPMENT AND USE OF

THE PRODUCTION MANAGEMENT SYSTEM, AND THE INTEGRATION OF MULTIPLE

EQUIPMENTS. RECENTLY, BIG EFFORTS ARE BEING MADE FOR MATERIALIZING A

TOTALLY AUTOMATED MANUFACTURING PLANT,

THE AUTOMATED MANUFACTURING LINE OFFERS SEVERAL BENEFITS:

1. THE NUMBER OF WORKERS IS DECREASED.

2. THE YIELD AND QUALITY OF LSI CHIPS BECOME HIGHER AND STABLE

BECAUSE THE HUMAN FACTORS, NAMELY, CONTAMINATION FROM PERSONNEL,

MIS-OPERATION DUE TO PERSONNEL, ETC., ARE ELIMINATED.

3. IT SIMPLIFIES THE VERY COMPLICATED PRODUCTION MANAGEMENT IN THE

MANUFACTURING LINE FOR LARGE VARIETY, SMALL VOLUME PRODUCTS LIKE

SEMI-CUSTOM LSI.

4. THE LEAD TIME BECOMES SHORTER AND THE WORK-IN-PROCESS DECREASES,

ETC.

-1-


ON THE OTHER HAND, THERE ARE SOME DEMERITS:

1. THE INVESTMENT IS INCREASED BECAUSE OF THE CONTROL SYSTEM AND

TRANSPORT SYSTEM ADDED.

2. IT BECOMES MORE DIFFICULT TO CHANGE THE LINE STRUCTURE WHEN THE

PRODUCTS ARE BEING CHANGED.

3. THE SPACE FACTOR AND THE WORKING RATES OF EQUIPMENT TEND TO

DECREASE, ETC.

THIS PAPER WILL DISCUSS SEVERAL PROBLEMS ABOUT THE AUTOMATION OF THE LSI

MANUFACTURING LINE.

- 2 -


STRUCTURE OF THE MANUFACTURING LINE

IN THE WAFER PROCESSING LINE, IT HAS BEEN QUITE COMMON THAT ONE EQUIPMENT

IS USED FOR SEVERAL PROCESS STEPS SINCE WAFERS PASS MANY TIMES THROUGH

SIMILAR PROCESSES AND EQUIPMENT HAS THROUGHPUTS MUCH DIFFERENT FROM EACH

OTHER. THE STRUCTURE OF THE AUTOMATED MANUFACTURING LINE, THEREFORE, IS

MORE COMPLICATED THAN THAT OF THE LINEAR STRUCTURE, IN WHICH WORK PASSES

ONLY ONCE THROUGH EACH PIECE OF EQUIPMENT,

THE OLDEST AND MOST POPULAR STRUCTURE FOR THE WAFER PROCESSING LINE IS THE

JOB SHOP STRUCTURE, IN WHICH THE SAME KIND OF EQUIPMENT IS GATHERED AND

PLACED IN THE SAME FAB AREA. FIGURE 1 SHOWS THE CONCEPT OF THIS

STRUCTURE. SUGIYAMA OF NEC ADVANCED THIS CONCEPT AND HAS PROPOSED THE

PROCESS CELL STRUCTURE.! THIS TYPE OF STRUCTURE MIGHT HAVE THE HIGHEST

FLEXIBILITY FOR CHANGE IN THE VARIETY AND VOLUME OF PRODUCTS, AND TO A

MODIFICATION OF THE LINE AND THE HIGHEST RATE OF OPERATION OF INDIVIDUAL

EQUIPMENT. ON THE OTHER HAND, IT REQUIRES THE INTER- AND INTRA-SHOP

TRANSPORT SYSTEMS TO" HAVE VERY HIGH EFFICIENCIES AND QUITE COMPLICATED

CONTROLS FOR THE TRANSPORT SYSTEM AND THE EQUIPMENT.

THE OPPOSITE EXTREME OF THE JOB SHOP STRUCTURE IS THE LINEAR STRUCTURE AS

STATED BEFORE. IN THIS STRUCTURE, THE TRANSPORT SYSTEM, THE CONTROL FOR

THE TRANSPORT SYSTEM, AND THE EQUIPMENT ARE GREATLY SIMPLIFIED. THE

FLEXIBILITY AND THE RATE OF OPERATION OF INDIVIDUAL EQUIPMENT, HOWEVER,

WILL BE EXTREMELY LOW, AND A PRACTICAL LINE WILL BE EXPECTED FOR THE MASS

PRODUCTION.

-3-


AS AN INTERMEDIATE STRUCTURE BETWEEN THE TWO TYPES OF STRUCTURES DESCRIBED

ABOVE, THERE IS THE BLOCK STRUCTURE, IN WHICH A LONG TRAIN OF PROCESS

STEPS IS DIVIDED INTO SEVERAL BLOCKS. THE BLOCKS ARE CONNECTED WITH EACH

OTHER INTO THE LINEAR STRUCTURE, AND INSIDE EACH BLOCK, THE LINE IS

CONSTRUCTED WITH THE JOB SHOP STRUCTURE. FIGURE 2 SHOWS THE CONCEPT OF

THE BLOCK STRUCTURE, WHICH, IN SHORT, IS AN OPTIMUM POINT OF COMPROMISE

BETWEEN THE JOB SHOP AND LINEAR STRUCTURES. THAT IS, IF THE NUMBER OF

BLOCKS INCREASES, THE BLOCK STRUCTURE WILL COME NEAR THE LINEAR STRUCTURE,

AND IF IT DECREASES, THE STRUCTURE WILL COME NEAR THE JOB SHOP STRUCTURE.

IT SHOULD BE DECIDED, DEPENDING ON THE CHARACTERISTICS OF THE PRODUCTION

LINE, IN WHAT WAY AND INTO HOW MANY BLOCKS THE PROCESS IS TO BE DIVIDED.

IN THE WAFER TESTING, ASSEMBLY, AND FINAL TESTING PROCESSES, THE LINES ARE

PRINCIPALLY CONSTRUCTED WITH THE LINEAR STRUCTURE. SOME PARTS OF THE LINE

CONSIST OF MULTI-PASSAGE FOR BALANCING THE THROUGHPUT AMONG PROCESS STEPS

OR FOR PROCESSING A VARIETY OF PRODUCTS. AFTER THE WAFER TESTING PROCESS

IS COMPLETED, THE UNIT OF WORK CHANGES FROM A WAFER TO A CHIP OR DEVICE,

AND THE WORK HAS NOT BEEN STANDARDIZED. THE LINE STRUCTURE, THEREFORE,

SHOULD BE DECIDED BY THE PRODUCTS OR PACKAGES TO BE MANUFACTURED AND BY

THEIR QUANTITIES.

-4 -


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THE CONTROL SYSTEM

THE CONTROL SYSTEM MUST ADDRESS THE FOLLOWING INFORMATION:

1. PROCESS INFORMATION: PROCESS PARAMETERS AND OPERATION OF EQUIPMENT.

2. QUALIFY INFORMATION: COLLECTION, ANALYSIS, AND MANAGEMENT OF THE TEST

PLUS INSPECTION DATA RELATING TO THE DEVICE QUALITY.

3. WORK FLOW INFORMATION: CONTROL AND TRACK OF WORK-IN-PROCESS.

4. EQUIPMENT INFORMATION: WARNING OF EQUIPMENT NOT IN PROPER CONDITION

PLUS COLLECTION, ANALYSIS, AND MANAGEMENT OF DATA RELATING TO THE

STATUS OF EQUIPMENT.

5. MATERIAL INFORMATION: CONTROL OF PURCHASE AND SUPPLY OF DIRECT AND

INDIRECT MATERIALS.

THE FUNDAMENTAL DATA BASE, INCLUDING BASIC PARAMETERS AND PROCESS FLOWS

THAT BECOME THE BASE OF INFORMATION DESCRIBED ABOVE, MUST BE INPUT

MANUALLY BEFORE THE SYSTEM STARTS TO WORK. THE ORDER OF WORK TO BE INPUT

AND THE PRIORITY THAT IS BASED ON THE SALES ORDER PLUS MARKETING

INFORMATION IS ALSO INPUT MANUALLY. THE DATA OR INFORMATION OTHER THAN

THAT DESCRIBED ABOVE IS DESIRABLE TO BE PROCESSED OR TREATED AUTOMATICALLY

WITHIN THE SYSTEM.

- 5 -


FIGURE 3 SHOWS AN EXAMPLE OF THE CONTROL SYSTEM ARCHITECTURE THAT HAS A

HIERARCHAL STRUCTURE OF FOUR HALVES. THE FACTORY LEVEL PROCESSOR IS IN

CHARGE OF MANAGING AND PROCESSING THE DATA FOR THE FACTORY MANAGEMENT

LEVEL. THE PROCESSORS CONTROLLING THE PRODUCTION LINE BY THE REAL-TIME

BASE ARE THE FIRST AND SECOND LEVEL ONES, AND CONTROLLERS OF INDIVIDUAL

EQUIPMENT ARE THE LOWEST LEVEL PROCESSORS. THE INTERFACE BETWEEN THE

SECOND LEVEL PROCESSORS AND THOSE OF INDIVIDUAL EQUIPMENT IS BASED ON

FIGURE 1.

THE BASIC CONCEPT OF THE CONTROL SYSTEM IS NOT DIFFERENT FROM THOSE FOR

MANUFACTURING LINES IN OTHER INDUSTRIES, AS IS UNDERSTOOD FROM THE

ARCHITECTURE SHOWN IN FIGURE 3. IN THE CASE OF THE LSI MANUFACTURING

LINE, HOWEVER, THE FOLLOWING SPECIAL FEATURES EXIST:

1. THE LINE CONSISTS OF PRODUCTION EQUIPMENT THAT IS SUPPLIED BY A LARGE

VARIETY OF EQUIPMENT VENDORS.

2. THE LINE DOES NOT HAVE THE LINEAR STRUCTURE, ESPECIALLY IN WAFER

FABRICATION.

3. BOTH THE RELIABILITY OF EQUIPMENT AND THE PROCESS CAPABILITY ARE

FAIRLY LOW.

4. THE PERIOD FOR RETURN-OF-INVESTMENT IS VERY SHORT, AND EVEN IN SUCH A

SHORT PERIOD, THE EQUIPMENT AND PROCESS ARE OFTEN CHANGED.

-6-


THEREFORE, THE FOLLOWING SHOULD BE CONSIDERED WHEN THE CONTROL SYSTEM IS

DESIGNED AND CONSTRUCTED:

1. THE SYSTEM DEBUGGING THE ACTUAL PRODUCTION LINE IS TO BE DONE

EFFICIENTLY IN A SHORT PERIOD.

2. COMMUNICATION AND MECHANICAL INTERFACES BETWEEN EQUIPMENT AND OTHER

SYSTEMS MUST BE STANDARDIZED.

3. TROUBLE IN ONE PIECE OF EQUIPMENT SHOULD AFFECT AS NARROW OF A REGION

AS POSSIBLE, AND THE EQUIPMENT CAN EASILY RETURN TO CONTROL THE SYSTEM

IN A SHORT PERIOD AFTER THE RECOVERY.

4. UNUSUAL TREATMENTS, SUCH AS REPROCESSING AND EXPERIMENTAL FLOW, CAN BE

EXECUTED EASILY.

5. THE SYSTEM MUST BE FLEXIBLE TO CHANGES IN PROCESS FLOW, PARAMETERS,

MODIFICATION AND REARRANGEMENT OF THE LINE.

- 7 -


TRANSP9RT SYSTEM AND LAYOUT

VARIOUS APPROACHES TO THE INTER-EQUIPMENT TRANSPORT SYSTEM HAVE BEEN

PROPOSED.2 OF THOSE, A SINGLE WAFER TRANSPORT OVER A FIXED TRACK IS

CONSIDERED TO BE DIFFICULT TO USE IN THE MASS-PRODUCTION LINE, THEREFORE,

A BATCH TRANSPORT WILL BE EMPLOYED BY USING CASSETTES OR MAGAZINE.

THERE ARE MANY TYPES OF TRANSPORT MACHINES: CONVEYERS, AUTOMATED GUIDED

VEHICLES, MOVING ROBOTS, CEILING MONORAILS, ETC. WHEN WE CHOOSE THE

TRANSPORT SYSTEM, WE MUST TAKE INTO ACCOUNT THE DUST GENERATION, TRANSPORT

CAPACITY, WEIGHT AND SIZE OF WORK TO BE TRANSPORTED, POSITION ACCURACY

REQUIRED AT TRANSFER POINTS, FLEXIBILITY TO THE CHANGE OF ROUTES AND

TRANSFER POINTS, SAFETY, METHOD OF COMMUNICATION, LAYOUT OF THE LINE, ETC.

A TRANSPORT SYSTEM CONSISTS OF A COMBINATION OF TRANSPORT MACHINES AS

DESCRIBED ABOVE. TEMPORARY STORAGE SITUATIONS ARE NECESSARY FOR ADJUSTING

WORK-IN-PROCESS, BRANCH STATIONS FOR TRANSFERRING WORK BETWEEN TWO

TRANSPORT MACHINES, STATIONS FOR REARRANGEMENT OF BATCHES, NUMBER READERS

FOR RECOGNIZING LOTS FOR WORK, AND THE CONTROL SYSTEM. BEFORE THE DESIGN

OF THE INTER-EQUIPMENT TRANSPORT SYSTEM IS COMPLETED, THE TRANSPORT

SIMULATION MUST BE SUFFICIENTLY PERFORMED, INCLUDING THE CASE OF UNUSUAL

TREATMENTS DUE TO THE SYSTEM OR EQUIPMENT BREAKING DOWN OR PROCESS

TROUBLE.

- 8 -


ONCE THE STRUCTURE OF THE LINE IS DECIDED, THE LAYOUT CAN BE DESIGNED IN

BASICALLY THE SAME WAY AS FOR THE CONVENTIONAL LINE, EXCEPT FOR THE

INTER-EQUIPMENT TRANSPORT SYSTEM BEING ADDED. THEREFORE, SPACE FOR THE

INTER-EQUIPMENT TRANSPORT SYSTEM MUST BE PROVIDED, TRANSFER OF WORK

BETWEEN EQUIPMENT AND THE TRANSPORT SYSTEM MUST BE PROVIDED, AND TRANSFER

OF WORK BETWEEN EQUIPMENT AND THE TRANSPORT SYSTEM SHOULD BE WELL

EXAMINED. FOLLOWING ARE SOME REQUIREMENTS TO BE TAKEN INTO ACCOUNT WHEN A

LAYOUT IS DESIGNED FOR THE AUTOMATED LSI MANUFACTURING LINE:

1. THE NUMBER OF CROSSINGS BETWEEN TWO TRANSPORT CHANNELS IS AS FEW

AS POSSIBLE.

2. MANUAL OPERATION IS POSSIBLE LOCALLY WHEN ANY PART OF THE CONTROL

SYSTEM BREAKS DOWN.

3. REMODELING THE TRANSPORT SYSTEM MUST BE LIMITED TO A PART AS

SMALL AS THAT OF MANUFACTURING EQUIPMENT WHEN THE LINE IS

REMODELED.

FIGURE 4 SHOWS AN EXAMPLE OF A LAYOUT OF THE WAFER PROCESSING LINE. THERE

IS A "MAIN STREET" AT THE CENTER OF THE LINE ON WHICH AUTOMATIC GUIDED

VEHICLES (AGV) RUN. THE AGV CARRIES WAFER CASSETTES BETWEEN ANY TWO

BRANCH STATIONS THAT ARE UNDER CONTROL OF A SECOND LEVEL CPU AS INDICATED

IN FIGURE 3, AND TRANSFERS THEM TO OR FROM THE BRANCH STATION. FROM A

BRA.NCH STATION, A MOVING ROBOT RUNS PERPENDICULAR TO THE "MAIN STREET",

AND CARRIES WAFER CASSETTES AMONG THE BRANCH STATION AND LOADERS/UNLOADERS

OF EQUIPMENT ALONG THE ROUTE OF THE ROBOT.

-9-


EQUIPMENT

AMONG TECHNOLOGIES FOR LSI FABRICATION, ONE WHICH IS DIFFICULT TO BE

AUTOMATED IS VISUAL INSPECTION. PARTICULARLY IN RECENT YEARS,

REQUIREMENTS ABOUT THE SIZE AND TYPE OF DEFECT TO BE DETECTED HAVE BECOME

EXTREMELY SEVERE, AND THOSE ABOUT THE QUALITY AND RELIABILITY OF DEVICES

DID, ALSO. THEREFORE, WE WILL HAVE TO GIVE UP THE AUTOMATION OF VISUAL

INSPECTION FOR NOW, EXCEPT WITH VERY SIMPLE CASES. THAT IS, THE VISUAL

INSPECTION SYSTEM, IN WHICH AN INSPECTION AND A JUDGEMENT ARE DONE

MANUALLY, AND THE INCIDENTAL TASKS ARE ALL AUTOMATED, WILL THEN BE A

PRACTICAL SOLUTION. THE REMOTE VISUAL INSPECTION SYSTEM, HAVING A HIGH

RESOLUTION ITV, HAS ALSO BEEN DEVELOPED FOR KEEPING WORKERS AWAY FROM

WAFERS OR CHIPS.

MOST EQUIPMENT FOR WAFER FABRICATION AND WAFER TESTING HAS ALREADY BEEN

AUTOMATED IN THE CASSETTE-TO-CASSETTE MANNER. SINCE THE WAFER CASSETTE IS

STANDARDIZED, NO LARGE PROBLEM EXISTS, EVEN BY USING COMMERCIALLY

AVAILABLE EQUIPMENT FOR THE AUTOMATION OF THESE TWO PROCESSES. A WAFER

HANDLER BETWEEN A CASSETTE AND A QUARTZ BOAT FOR A FURNACE, HOWEVER, WILL

HAVE TO BE DEVELOPED BECAUSE NO GOOD HANDLER IS AVAILABLE IN THE MARKET.

- 1 0 -


SINCE THE SHAPE AND SIZE OF WORK CHANGES DEPENDING ON PRODUCTS AND

PROCESSES IN FABRICATION BEYOND DICING, THE AUTOMATION OF INDIVIUDUAL

EQUIPMENT HAS MADE SLOW PROGRESS. ALTHOUGH SOME EQUIPMENT IS AUTOMATED IN

THE MAGAZINE-TO-MAGAZINE MANNER, THE MAGAZINE HAS NOT BEEN STANDARDIZED,

THIS SITUATION IS ONE OF THE BIGGEST PROBLEMS WHEN CONSTRUCTING AN

AUTOMATED MANUFACTURING LINE FOR THE ASSEMBLY AND FINAL TEST PROCESSES,

AND THEREFORE, A CONSIDERABLE AMOUNT OF EQUIPMENT MUST BE DEVELOPED BY

SEMICONDUCTOR MANUFACTURERS.

SUMMARY AND COMMENTS

THE STRUCTURE OF THE MANUFACTURING LINE, THE CONTROL SYSTEM, THE TRANSPORT

SYSTEM AND THE LAYOUT, AND INDIVIDUAL EQUIPMENT WERE DISCUSSED FROM THE

POINT OF VIEW OF THE AUTOMATION OF A LSI MANUFACTURING LINE. THE CONCEPTS

SHOWN HERE AS EXAMPLES ARE THOSE FOR THE MANUFACTURING LINE HAVING A

CERTAIN PURPOSE, AND IT IS NATURAL THAT THE LINE HAS ITS OWN CONCEPTS

DEPENDING ON ITS PURPOSES AND CHARACTERISTICS.

THE LARGEST PROBLEMS IN THE AUTOMATION OF LSI MANUFACTURING LINES ARE:

1. THE RAPID CHANGE IN PRODUCTS, PROCESSES AND PRODUCTION EQUIPMENT.

2. THE LOW RELIABILITY OF PRODUCTION EQUIPMENT.

3. THE LOW PROCESS CAPABILITIES.

SINCE THESE PROBLEMS WILL REMAIN FOR NOW, IT IS ESSENTIAL TO DESIGN THE

AUTOMATED LINE ON THE PREMISE OF THIS SITUATION.

IN CONCLUSION, THE ULTIMATE PURPOSE OF AUTOMATION IS TO MAKE THE

PRODUCTION COST MINIMAL. THEREFORE, TOTAL AUTOMATION IS NOT ALWAYS THE

BEST SOLUTION, BUT THE MOST APPROPRIATE COMBINATION OF AN AUTOMATED SYSTEM

AND HUMANS WILL MORE CLOSELY ADDRESS THIS ULTIMATE PURPOSE. IN OTHER

WORDS, "MANUALLY ASSISTED AUTOMATED PRODUCTION" WILL BE THE BEST CONCEPT

FOR THE AUTOMATED LSI MANUFACTURING LINE.

-11-

Dataquest Incorporated, ASubsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

REFERENCE DOCUMENTS:

1. NAOSHI SUGIYAMA: "FA TECHNOLOGIES IN VLSI FACTORY", SEMICON

OSAKA TECHNOLOGY SEMINAR 'SSM TECG, ORIGRAN ORIC, 0,83

(JUNE 1985)

2. JAMES G. HARPER, GLENN B. BURKHARD AND ROBERT T. NELSON:

"INFORMATION, COMMUNICATION, AND CONTROL IN FLEXIBLE WAFER

FABRICATION AUTOMATION: SOLID STATE TECHNOLOGY", (JANUARY 1985)

PAGE 119.


Dataquest

NEW PRACTICES IN LEADING EDGE MANUFACTURERS

James R. Burnett President

Institute for Microcontamination Control

Dr. Burnett is President of the Institute for Microcontamination Control, in Santa Clara, California. He practices in world-K:lass microelectronic manufacturing technology, consulting in contamination control, planning and design of leading-edge micromanufacturing plants, production engineering, and yield-related manufacturing practices. He also writes a regular column entitled "Wbrld-Class Practice" for Microcontamination magazine. Previously, Dr. Burnett was the Manager for New Manufacturing Plants, worldwide, for Intel Corporation. He also completed research and development on high-technology projects for the Atomic Energy Commission, the U.S. Air Force/Advanced Research Projects Agency, the Naval Bureau of Weapons, and NASA. Dr. Burnett received a B.S. degree in Aeronautics and an M.S. degree in Nuclear Physics and Mathematics from the University of Michigan and a Ph.D. in Applied Physics from Central University. He is a Registered Nuclear Engineer in California.

Dataquest Incorporated SEMICONDUCTOR EQUIPMENT AND MATERIALS INDUSTRY SERVICE CONFERENCE

October 14-16, 1985 Tucson, Arizona


PROCESS EQUIPMENT ISSUES - CLEANLINESS

noST PROCESS EOUIPNENT IS NOT NELL DESIGNED REGARDING ABILITY TO BE

REGULARLY CLEANED IN PRODUCTION.

IT IS CONNON THAT EOUIPNENT CANNOT BE CLEANED UP TO MEET ITS

NEW CLEANLINESS PERFORMANCE/ AFTER IN USE AND HAVING GROUND UP SILICON

THROUGHOUT ITS WORKING PARTS.

SOME PROCESS EQUIPMENT CANNOT BE CLEANED WITHOUT A PROCEDURE MORE

LIKE MAJOR OVERHAUL THAN MAINTENANCE.


THE INSTITUTE RECOMMENDS THIS EVALUATION PROCEDURE FOR PROCESS EQUIPMENT:

A) PASS 500U WAFERS THROUGH THE MACHINE

B) MEASURE THE WAFER BREAKAGE RATE

c) CLEAN MACHINE BY MANUFACTURER'S RECOMMENDED MAINTENANCE PROCEDURE,

MEASURE DOWN-TIME REQUIRED

D) THEN* MEASURE THE PARTICLE CONTRIBUTION PER WAFER-PASS THRU THE MACHINE

WE BELIEVE JAPANESE DESIGNERS ARE AGGRESSIVELY WORKING ON CLEAN

PROCESS EQUIPMENT, AND WILL COMPETE IN THE US MARKET ON THAT STRENGTH.


PROCESS EQUIPMENT - REFURN AIR BLOCKAGE

THE NEW lOOZ LAMINAR CLEAN ROOMS HAVE 550 AIR CHANGES PER HOUR,

COMPARED TO 150 AIR CHANGES PER HOUR IN OLDER FACILITIES

PROCESS EQUIPMENT DESIGNERS MUST PROVIDE A RETURN-AIR BATH BENEATH

THEIR MACHINES OF AT LEAST 10 INCHES, CLEAR

BLOCKED RETURN AIR DESTROYS THE AERODYNAMIC BENEFITS OF THE CLASS 1

CLEAN ROOMS

PERFORATED FLOORS ARE NOT THE ANSWER FOR RETURN AIR, SINCE 75Z OF

CLASS 1 FACILITIES USE SIDE-WALL RETURNS


THE WORST CONTR IBUTOR TO Y I E L D L O S S W I L L BE PROCESS EQUIPMENT THRU

WAFER HANDLING AND INTERNAL DIRTINESS.

MANUFACTURING OF COMPLEX I-MICRON, LARGE AREA ULSI CHIPS WILL BE

MOSTLY PACED BY PROCESS EQUIPMENT CLEANLINESS PERFORMANCE.

USERS WILL MEASURE PROCESS EQUIPMENT CLEANLINESS BEFORE PURCHASE.

MHERE IT DOES NOT MEET SPECIFICATION, THEY WILL NOT BE BUYING IT -

REGARDLESS OF ITS PROCESSING PERFORMANCE.


CHARACTERIZATION PROGRESS DOWN THE DEFECT/CM2/L LEARNING CURVE

• IN ORDER TO SUCCESSFULLY PROGRESS DOWN THE DEFECT/CM2 CURVE/ PLANT

MUST BE ABLE TO ROUTINELY MEASURE WHERE THE ON-GOING MANUFACTURING

D/CH2/L IS SITUATED

0 PRACTICE IN SNALL OPERATIONS (SUCH AS AEROSPACE) IS REGULAR DAILY

PRODUCTION WITH DIE HAVING HIGHLY RECURRING PATTERNS^ WHERE CIRCUIT

DEFECTS CAN BE RESOLVED IN TESTING. POPULAR DIE IS DRAM IN LATEST

MANUFACTURING PROCESS

• MANY PLANTS CONSTANTLY RUN SOME DRAM AS A TOOL FOR MANUFACTURING DIE

YIELD IMPROVEMENT, EVEN WHEN IT IS NOT A SOLD PRODUCT

PROCESS EQUIPMENT ISSUES - INTEGRATION

• PREFER PROCESS EQUIPMENT BE INSTALLED PENETRATING THRU CLEAN ROOM WALL

INTO SERVICE AISLE

• INTENT IS TO DO SERVICE AND REPAIR ON BACKSIDE, WITHOUT ENTERING CLEAN

ROOM SIDE

• ONLY CONTROLS AND CASSETTE LOAD/UNLOAD STATIONS REMAIN IN THE CLEAN

ROOMS

PROCESS EQUIPMENT ISSUES - AERODYNAMICS

• CURRENT MACHINE CONFIGURATIONS MAKE IT DIFFICULT TO GET CORRECT

LAMINAR FLOW THRU BARE WAFER STATIONS AND TRANSPORT MECHANISMS

• CONTRIBUTES TO POOR PARTICLE PERFORMANCE OF MANY CURRENT MACHINES

• DESIGNERS NEED TO CONDUCT LAMINAR FLOW SMOKE STUDIES AROUND THEIR

SPECIFIC MACHINE CONFIGURATIONS TO GET PARTICLE REMOVAL BENEFIT OF THE

LAMINAR AIR


IN-PROCESS PARTICLE HEASUREMENTS

• USING NEW SURFACE-SCANNING PART ICLE MEASUREMENTS SYSTEMS TO

CHARACTERIZE INCREASE OF PARTICLES ON A WAFER/ THRU A PROCESS STEP

• SYSTEMS SEE SUB-HICRON PARTICLES ON BARE WAFERS, OR ON TH IN -F ILM

LEVELS WAFERS WITH A NON-PATTERNED WAFER SURFACES

0 SYSTEMS DO NOT WORK STRONGLY ON PATTERNED WAFER SURFACES

• NEXT-GENERATION SYSTEMS MIGHT BE ABLE TO LOOK AT PATTERNED SURFACES

• POSSIBLE TO QUANTITATIVELY MEASURE NUMBER OF PARTICLES PRESENT,

BEFORE AND AFTER SOME PROCESS STEP

• USE SYSTEM TO CHARACTERIZE THE INCREASE IN PARTICLES ON A WAFER FOR

EACH PROCESS WAFER HANDLING STEP

t PRACTICE IS TO INCLUDE, WITH PRODUCTION WAFER RUNS, A BARE CLEAN

WAFER, FREE OF OXIDES AND PATTERNS

• T H I S CHECK GOES THRU A L L WAFER HANDL ING STEPS, I N C L U D I N G

INSERTION/REMOVAL FROM PROCESS EQUIPMENT

• PARTICLE BUDGET LIMITS ARE SET FOR EACH PROCESS EQUIPMENT

t BEFORE AND AFTER EACH PROCESS STEP, THESE WAFERS ARE MEASURED FOR

PARTICLE POPULATION

t PARTICLE CONTRIBUTION PERFORMANCE IS MEASURED DAILY FOR EACH PROCESS

• PARTICLE CONTRIBUTION PERFORMANCE IS MEASURED TO REQUALIFY A PROCESS

EQUIPMENT AFTER CLEANING OR REPAIR

• NOW BEING USED IN EVALUATING NEW PROCESS EQUIPMENT FOR PURCHASE


AUTOHATION

0 STOP REWORK AND EXCESSIVE INSPECTION IN LITHOGRAPHY

DO IT RIGHT THE FIRST TIME

PRODUCT CYCLE TIME

t SHORTER CYCLE TIMES HAVE SEVERAL BENEFITS

M FASTER DIE YIELD IMPROVEMENT ON NEW PROCESS AND PRODUCTS

M MINIMIZES EXPOSURE TIME TO PARTICLES

M FASTER CUSTOMER RESPONSE IN CUSTOM AND PARTLY CUSTOM MARKET

PRODUCT CYCLE TIMES

• PLANTS ARE BEING PLANNED FOR FAST THRUPUT TINE OF WAFERS IN

MANUFACTURING

• THRUPUT TIMES OF EIGHT WEEKS HAVE BEEN COMMON IN PAST

• LONG PERIODS WERE SPENT IN LITHOGRAPHY, WAITING FOR REWORKED WAFERS

TO CATCH UP

t NEW PLANTS HAVE THRUPUT GOALS AT BETWEEN TWO AND THREE WEEK WAFER

CYCLE TIMES, INCUDING WAFER SORT

• AGGRESSIVE WORK-IN-PROCESS MANAGEMENT WILL BE ADOPTED AS PART OF

PHASE, AUTOMATION

• PLANTS ARE PLANNING RAMP-UP WITH 3 SHIFTS TO MINIMIZE THRUPUT TIME,

NOT FOR CAPACITY


CHARACTERISTICS OF CLASS 1 ROOnS

• AERODYNAMIC DESIGN PRODUCES S IGNIF ICANTLY BETTER

I S O L A T I O N BETWEEN OPERATOR TRAFFIC AND BARE WAFER AREAS.

• AERODYNAMIC FLOW OF LAMINAR AIR PROVIDES A HORIZONTAL AIR

CURRENT COMPONENT* QUICKLY REMOVING PARTICLES GENERATED

BY PROCESS EQUIPMENT.

• BARE WAFER AREA RECOVERS FROM MAJOR PARTICLE EVENT WITH 6

SECONDS

• ALSLEWAYS ARE CLASS 10. LOCAL MANUFACTURING WORK-FLOW

DONE WITHBOUT 'PROTECTIVE' BOXING

• BOXING USED ONLY FOR WIP STORAGE AND LONG-DISTANCE TRAVEL

t CHEMICAL DELIVERY DONE VIA SERVICE AISLES

PROCESS EQUIPMENT AUTOMATION

EACH PROCESS EQUIPMENT INTRINSICALLY AUTOMATED:

•• CASSETTE TO CASSETTE INTERFACE

•• INTERNAL WAFER TRANSPORT BY MECHANISM* TRACK OR ROBOTIC AS

APPROPRIATE

•• MICROCOMPUTER CONTROLLED FOR PROCESS STABILITY

•• BUILT-IN DIAGNOSTICS

OVERALL FAB WORK-IN-PROCESS COMPUTER MANAGEMENT SYSTEM, WITH

DISTRIBUTED WIP CONTROL AND CASSETTE HOLD STATIONS

CASSETTE TO QUARTZ TRANSFERS BY PRECISION SMART-EYED ROBOT


flEASURENENTS

t A MAJOR IMPROVEMENT IS ALL PROCESS-CRITICAL FACILITY PARAMETERS ARE

CONTINUOUSLY MEASURED AND RECORDED^ DETECTING PROBLEMS WHEN THEY START

CLASS I CLEAN ROOfIS

• THESE NEW PLANTS HAVE CLASS 1 IN THE BARE WAFER AREAS AND CLASS 10 IN

THE A I S L E W A Y S

• ROOMS HAVE IOOZ LAMINAR COVERAGE^ AND AERODYNAMIC FLOW AROUND THE

PROCESS EQUIPMENT

• THE ROOMS ARE MUCH CLEANER THAN PRIOR PRACTICE:

CLASS QF PRACTICE CRITICALPARTICLE SIZE CLEANLINESS IMPROVEMENT

CLASS 100 0.5 MICRONS 1 TINE

(FED STD 209B)

CLASS 10 0.5 MICRONS 10 TINES

CLASS 10 0.2 MICRONS 100 TIMES

CLASS 1 0.2 MICRONS 1000 TIMES


PLANT DESIGN/OPERATION

THE WRLD-CLASS PLANT DESIGNS ARE APPROACHED AS AN INTEGRATED SYSTEMS

PROBLEM

THE ORGANIZATION OF MANUFACTURING OPERATIONS* MATERIALS HANDLING,

PERSONNEL PRACTICES, AND FACILITY DESIGN ARE A SINGLE SYSTEMS PROBLEM

THESE NEW PLANTS ARE DESIGNED SO THAT THE FACILITY IS REMOVED AS A

POSSIBLE PROCESS STABILITY OR DIE-YIELD PROBLEM

KISS

• "KEEP IT SIMPLE'

• FACILITIES NOW ARE DELIBERATELY DESIGNED TO STAY ON SPECIFICATION ALL

THE TIME/ AND NOT BE A PROCESS-ISSUE

• EXAMPLES OF NON-ISSUE PROCESS-CRITICAL SYSTEMS:

00 LITHOGRAPHY RH AND TEMPERATURE ARE HELD CONSTANT REGARDLESS OF

OUTSIDE CONDITIONS

00 VIBRATION, THROUGHOUT THE FAB AREA

00 AIRBORNE PARTICLE CLEANLINESS

00 PROCESS GAS PURITY

00 DI WATER PURITY

00 INCOMING CHEMICALS PURITY

t

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 A Telex 171973

RELATIVE inPORTAHCE OF CONTAMINATION SOURCES IN WORLD-CLASS PRACTICE

(CURRENT INSTITUTE OPINION)

0) HANDLING OF WAFERS BY OPERATORS WITH VACUUM WANDS AND TWEEZERS, AND

ROLL-OVER C A S S E T T E - T O - C A S S E T T E TRANSFER. (NoT ALLOWED IN W O R L D - C L A S S

PRACTICE)

I) FLECHANICAL HANDLING OF WAFERS

2) PROCESS EQUIPMENT INTERNAL DIRTINESS

3) PERSONNEL, WHEN NOT FOLLOWING PROCEDURES NEAR BARE WAFERS

4) ULTRAPURE WATER SYSTEM

5) ULTRAPURE CHEMICALS USED IN PROCESS

6) JANITORIAL CLEANING IN ROOMS

7) PERSONNEL, WHEN FOLLOWING PROCEDURES

8) NEW FILTERS

9) TRANSFER OF WAFERS BETWEEN AISLES, BY CLEAN PROTECTIVE BOXING

10) TRANSFER OF WAFERS WITHIN CLASS 1/10 PROCESSING AISLES WITHOUT BOXING

11) CLEAN ROOM LAMINAR ENVIRONMENT

12) ULTRAPURE GAS SYSTEMS


THE YIELD CHALLENGE

THE PERIOD 1986 TO 1996 WILL SEE AT LEAST THREE MAJOR CYCLES OF

TECHNOLOGY UPGRADE IN MANUFACTURING INCLUDING:

00 1 MICRON BY 1990

00 0.7 MICRON BY 1995

THE PLANTS BEING DESIGNED TODAY ARE EXPECTED TO PERFORM COMPETITIVELY

ON 1996 TECHNOLOGY« WITH THE SAME FACILITY

T H E GREATEST CHALLENGE WILL BE D E F E C T / C M ^ PERFORMANCE IN

MANUFACTURING/ AS THE INDUSTRY GOES TO 1 MICRON AND BELOW

DIE YIELD MODELING SHOWS MANUFACTURING TECHNOLOGY MUST BE GREATLY

IMPROVED OVER TODAY'S PRACTICE* BY AT LEAST 10 TIMES IN DEFECTS/CM^

BEFORE 1990

FIGURE SHOWS TYPICAL CURRENT MANUFACTURING PERFORMANCE OF 0.5 D/CM^

AT 0.2 MICRONS DROPS BELOW LOZ YIELD BEFORE 1.25 MICRONS

NEXT FIGURE SHOWS D/CM^ PERFORMANCE REQUIRED TO MAINTAIN lOZ DIE YIELD

NEXT GENERATION "WORLD CLASS" PLANTS

PLANT DESIGN/OPERATION

CLASS 1 CLEAN AREAS

AUTOMATION

PRODUCT CYCLE TIME

IN-PROCESS PARTICLE AND DEFECT MEASUREMENTS

DEFECT/CM2 CHARACTERIZATION

10


NEW PRACTICES IN LEADING-EDGE HANUFACTURING

• THE CHALLENGE IN MANUFACTURING TECHNOLOGY (YIELD)

t WORLD CLASS PLANT FEATURES

t NEW OPERATING PRACTICES

• PROCESS EQUIPMENT ISSUES

TREND OF INDUSTRY - THE WORLD-CLASS PLAYERS

INDUSTRY IS NOW BUILDING A NEW LEVEL OF MICROELECTRONIC PLANT, THE

"WORLD-CLASS* (» 'CLASS 1* PLANT

PURPOSE IS TO ENABLE LEADING-EDGE MERCHANT MANUFACTURING COMPANIES

TO COMPETE PROFITABLY, WORLD-WIDE, ON MICROELECTRONICS COMING UP IN

THE NEXT 6 YEARS - THE "ULSI* CHIPS

THE ESSENCE OF ECONOMIC SUCCESS OF LEADING-EDGE MERCHANT COMPANY IN

ULSI PRACTICE IS DIE YIELD AND PROCESS UPGRADE FLEXIBILITY

ALL INSTITUTE-INVOLVED NEW MICROELECTRONIC PLANTS STARTED IN LAST TWO

YEARS HAVE BEEN DESIGNED TO BE WORLD CLASS, I . E . , NAXIMUM

UNCOHPROMISING EFFORT FOR DIE YIELD

THIS HAS COVERED OVER A DOZEN MERCHANT COMPANIES FROM THE LARGEST TO

THE LATEST START-UPS

11


Dataquest

CHALLENGES IN AUTOMOTIVE ELECTRONICS

Jerome G. Rivard Chief Engineer, Electrical and Electronics Division

Ford Motor Company

Mr. Rivard is Chief Engineer for the Electrical and Electronics Division of the Ford Motor Conpany. Prior to joining Ford, he spent 14 years with the Bendix Corporation, where he was Group Director of Engineering. He has also been associated with vickers incorporated, the U.S. Army Ballistic Missile Agency, and tJie General Motors Technical Center. Mr. Rivard received a B.S.M.E. degree vith honors from the University of Wisconsin.

Dataquest incorporated SEMICONDUCTOR INDUSTRY CONFERENCE



CHALLENGES IN AUTOMOTIVE ELECTRONICS

Jerome G. Rivard Chief Engineer

Ford Motor Company

INTRODUCTION

Good Morning. Once again I'm happy to be addressing my colleagues in the electronics community. The past couple of days have been most rewarding in terms of the information that's already been exchanged.

One hundred years ago, in 1885, Karl Benz, a German engineer, built the first workable automobile, a one cylinder, three-wheeled vehicle. We can imagine the challenges faced by Mr. Benz and other auto pioneers. There were basic vehicle needs to start, steer, run, and stop reliably.

Today, we're faced with quite a different set of challenges that I'm hopeful will be met in the near future.

Accordingly, I think the title selected—"Challenges in Automotive Electronics"—is most appropriate for this conference. There's no question that the auto industry's long term viability hinges on our mutual efforts to be innovative, cooperative, and driven by a dedicated commitment to achieve uncompromising levels of quality. I can't emphasize enough that achieving world class quality is our major challenge in the automotive electronics arena. The automotive industry realizes that the vehicle's electronic, electrical and mechanical systems must be in harmony. One system must not fail the other two. It's a little bit like Frank Sinatra's lyrics in the old song about "Love and Marriage"—you know the one where he sings that..."you can't have one without the other." That's domestic harmony that keeps people together. Vehicle harmony keeps people loyal to their car company and it attracts new owners. We know that today's auto buyer has a wide choice in automobiles. We also know that today's consumer will take his business across the street (or across the world) if his vehicle fails to deliver top-notch, world-class performance.

FORD'S LONG TERM QUALITY TARGETS

At Ford, we've established long term quality targets and through the major contributions of the semiconductor industry, we've made good progress over the past few years but much work remains to be done, and we need additional help to achieve our goals.

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Dataquest Incorporated, A Subsidiary of A 0. Nielsen Company/ 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

We can say with certainty that progress in the area of vehicle quality will require new approaches to both engineering and manufacturing motor vehicles. It will also require fresh, new approaches to the manufacturer—supplier relationship. The results of all these activities must make us cost competitive on a global basis while enhancing our quality levels.

Today, I'll discuss the current state of automotive electronics from a quality point of view...look at areas of specific concern that require our attention now...and review some electronic technologies where further development will usher in a host of automotive applications.

I think it's helpful to see where the automobile has progressed in terms of electronic applications.

This slide puts into perspective the significant presence of electronics in the automobile. The influence is rather remarkable when you think back only ten years when less than 20 per cent of these electronic systems were available.

NEED FOR CONSISTENT SUPPLIER QUALITY

Let me say, here, that I think our semiconductor suppliers, overall, can do an excellent job of building quality parts. It's simply a matter of consistency. We need to see quality parts produced each day of the week. I hope some of the suggestions I'll make in the next few minutes will assist our suppliers in meeting quality levels that are consistent, day-in and day-out.

At Ford's Electrical and Electronics Division, we've set some quality goals for ourselves. By 1988, we have a goal to have integrated circuit quality levels of below 50 parts per million and electronic module quality below 400 parts per million.

These quality levels are certainly attainable but, frankly, we need to first resolve some important issues with you, our semiconductor suppliers.

The first area where we need to harmonize our efforts is in the way that quality is measured.

-2-

Dataquest Incorporated, A Subsidiary of A.C Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

#

What's happening is this. Our incoming quality level at Ford and I'm sure elsewhere—differs dramatically from what our suppliers are telling us about their outgoing quality levels.

You'll note from the slide that there's quite a difference and what this tells me is that there's a measurement problem that needs to be made right. We're using different methods to measure quality. We're out of step on this issue quite significantly.

It appears that major differences exist in outgoing and incoming test programs... inadequate component specifications related to part application...or several other factors could come into play here. To improve this situation, there are several actions I would like to see our suppliers take.

As a semiconductor supplier, and to help us understand the reasons for early field failures, you should be gathering "burn-in-data" on your components—and have a good idea how this data helps you as a quality screen. I also hope that you would share this data with us. We would like to know, for example, what your "infant mortality" rate is—and how long and at what temperature should we be burning parts in?

During the burn-in process, is it possible that some parts are being damaged by electrostatic discharge? Is burn-in the best screen for all parts? It's essential that we learn the answers to these kinds of questions. Customer satisfaction and loyalty are at stake!

I Strongly urge suppliers—who provide Ford Motor Company with complex microcomputers—to utilize computer aids to help develop designs capable of fault elimination that approaches 100 per cent.

We'd like you--our suppliers—to visit our manufacturing plants to see, first hand, how your parts are processed. And, during your visits, pick up some failed parts and take them back to your company for a thorough failure analysis.

Once you've analyzed failed parts, tell us what's been discovered. More importantly, make the design, process, and test program changes required. If you think that we're doing something to damage parts, don't hesitate to tell us. The old days of doing business are gone, I hope, forever. We're not going to "shoot the messenger" for bringing us bad news.

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Dataquest Incorporated, A Subsidiary of A C. Nielsen Company / 1290 Bidder Park Drive / San Jose. CA 95131 / (408) 971-9000 / Telex 171973

Also, I would like you to insist on "correlation" and to make your test engineers available to work with us. And, please, don't tie our hands with "non-disclosure" agreements for information which is not really secret. Work with us as partners who trust each other and share information.

Another area we need to address is specifications. We have to Stop thinking in terms of tolerances but, rather, design circuits to target values. At Ford, our specifications will soon emphasize target values and we'll expect our suppliers to provide parts with very tight distributions around our target values.

This approach will provide for better design margins in Ford products and this means better quality...reliability...and better yields for you.

Something else to consider is electrostatic discharge which is becoming a larger factor in quality and reliability concerns. You probably know that the major problem involving ESD is in the latent damage which shows up in the field. Let's be certain that our people are aware of this problem and that manufacturing plants and integrated circuits are up to the latest standards of ESD protection.

At Ford, we've tightened our requirements to 2000 volts—the industry standard Human Body Model—and we've adopted the so-called Charged Device Model which is widely used in Japan. This last model simulates the effects of charged machinery such as integrated circuit handlers.

Once again, I would ask you to visit our plants and tell us if you think there's an area where we can improve. I would like our suppliers to understand Ford facilities as they relate to ESD considerations. Of course, it works both ways because I continually encourage people from our Division to visit supplier plants. Getting to know each other's facilities makes good business sense for the manufacturer and supplier team to follow. Only good results can be expected from visiting and understanding each other's facilities.

OUR CHALLENGES AND OPPORTUNITIES

Now, let's look at some specific areas that present us with an array of challenges...and opportunities.

- 4 -

#

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose. CA 95131 / (408) 971-9000 / Telex 171973

Ford, along with most of the electronics industry, believes that surface mounted devices offer the best potential for improving electronic packaging density. Another benefit of SMD's is enhanced reliability. Ford has, in fact, committed itself to implementing surface mounted device technology and we've initially targeted radios and engine control modules. By the end of 1985, Ford will have placed a cumulative total of 84 million SMD's with an expected increase to a cumulative 3 billion SMD's in the 1990's.

Let me give you a good news-bad news perspective on the current state of surface mounted devices. Looking at advantages, I've mentioned the important benefit of higher component density. To date, board space savings has amounted to one third to one half—and permitted more circuit functions and complexity. In addition, SMD's provide us with a meaningful size and weight reduction at the module level.

The SMD process is highly automatable.

Surface mounted devices also provide improved shock and vibration characteristics and because of the shorter interconnects, there's lower electromagnetic and radio frequency interference susceptibility.

Now, taking a look at the other side of the coin, here are some areas that need to be improved.

Consider the importance of machine compatibility with package tolerances—and the board layout. Time and time again, we've seen that incompatible equipment and parts just don't mix. I'd also like to remind you that electrostatic discharge can be a problem if conductive tapes are not used.

There's a current lack of component availability and Standardization. For example, small outline transistor packages vary in footprint and body sizes. This results in various problems with circuit layout and manufacturing.

Plastic "J" leaded quad packs require improved planarity since problems are occurring during subsequent reflow solder operations. We would like to have less than a 2 mil variation across all leads.

We would like to see IC suppliers improve their component reliability by evaluating their components through various soldering processes. These processes include wave soldering, infra-red, and vapor phase. These soldering techniques represent Ford's current and future assembly requirements and assistance is needed in determining the reliability factors.

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Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose. CA 95131 / (408) 971-9000 / Telex 171973

Moving on, we need to have SMD tape and reel standards because, from a user perspective, the ability to utilize a reel on any given machine is a significant advantage. We should also have a conductive, plastic embossed tape. Basically, I see a need to determine the best tape material for the industry.

We would also consider it to be a positive step to see the development of SMD packaging with lower thermal resistance.

Tape automated bonding offers the potential for quality improvement, size reduction, and better thermal management. We believe that the semiconductor industry needs to bring this technology into the mainline manufacturing system and we strongly encourage the industry's action in this area.

Looking at testability issues, we feel that significant improvements are required for handling equipment involving small outline transistors, small outline integrated circuits, and quad packaging. Currently, the co-planarity of device leads may be distorted by test equipment handlers and burn-in sockets.

There's a need to develop effective methods of applying "burn-in" and other conditioning screens to SMD packaged IC's. When evaluating devices that are packaged as small outline integrated circuits, test sockets are required for quick insertion and removal. These test sockets are very expensive and the handling process results in a high probability of damaging the parts when they're mounted or removed from the sockets. Now, even though this particular problem may be unique to the test equipment makers, we all retain a vested interest in the development of the right equipment.

I hope that the concerns I just presented will be acted upon by our semiconductor suppliers at a quicker pace. I know you're working on many of these concerns already. The resolution of these issues will help bring us the quality products that are demanded in today's global automotive market—and, as a spin-off benefit, answer the needs of the electronics market in general.

BETTER BUSINESS PRACTICES

Next, I'd like to switch gears for a few minutes and talk about better ways of doing business.

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Dataquest Incorporated, A Subsidiary of AC Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

Ford Motor Company is encouraging its suppliers to plan for quality through new, improved business and manufacturing practices.

We're encouraging a no-secrets, up-front, open relationship with each supplier. We're reducing our supplier base to those companies who meet "best in quality" credentials from planning to manufacturing. Ford is looking for long term, partnership-type relationships.

One technique we'd like to see all of our suppliers adopt is statistical process control. In what should be considered to be ancient history, most manufacturers used screens to weed out bad parts. No more! This method is both wasteful and costly. Establishing a statistically-controlled process simply means that the quality level can be controlled, maintained, and improved based on reproducible, consistent results. Screening should be practiced primarily for monitoring and feedback purposes, not to eliminate unacceptable parts. Unfortunately, screens are still required to weed out infant mortality.

A key benefit of SPC is the ability to consistently produce product uniformity. As I mentioned earlier, at Ford we're designing to target values and our specifications will soon reflect this. Moreover, we expect tight distributions around these target values—and these target values are attainable through statistical process control and design of experiments.

Let me remind you that by the 1990's, electronic content per vehicle should be about $1400 worldwide. The U.S. electronics content per vehicle today is projected to be $650.

Currently, the overall automotive electronics market is at $2 billion anually. One conclusion we can draw with certainty is the need for technological breakthroughs and a need for the highest product quality to support this expanded electronic content.

Now that we've looked at some areas of mutual concern, I would like to talk about a number of electronic technologies and their automotive applications.

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Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408)971-9000/ Telex 171973

ELECTRONIC TECHNOLOGIES AND THEIR AUTOMOTIVE APPLICATIONS

Memories

The expanded use and sophistication of microprocessors in automobiles has required large amounts of read-only memory, ROM, and the need to turn around new ROM codes quickly. Let me just say that the strides the industry is making toward cost effective EPROM and E2pR0M is most appreciated. In fact, EPROM's are having a major impact on our engine control program in the 1986 model year.

The ability to reprogram the microcomputer after manufacture—using an on-board EPROM or E2PROM—is also a highly desirable goal. With respect to alterable memory, reprogramming ability will result in a reduction in part inventory for the semiconductor manufacturer and the user and will provide for last minute changes which always seem to be required. Our ongoing concern here is with reliability and quality levels since the EPROM or E2PROM on board a micro-computer is not as easily tested as a standard memory.

Power Devices

With the continued growth of automotive electronic systems, the use of power devices will increase substantially. Recently, power devices and control circuitry have been combined on a single IC, resulting in a smart power device. This development opens the door to new applications which could include power supplies, electronic relays, multiplex wiring, and actuator drivers.

For these applications to become "real-world," we need lower costs and further reductions in on-resistance. Smart power devices need to be capable of being utilized in a multiplexed wiring system.

For example, we need the following on-resistance performance at 20 amps. A drop of less than one volt on the high side switch—and a drop of less than one half volt on the H Driver. We also need to see costs come down to $2.00 and $6.00 respectively.

Microprocessors

There's no sense in reviewing the obvious—the tremendous advances we've had in microprocessor technology. There are, however, a few areas where certain developments would represent major progress—and make a great deal of sense.

-8-


Because today's vehicle applications require large amounts of power, there's an immediate need to improve the basic input-output capability. This improvement may require a combination of device technologies on the same chip, a challenge the semiconductor industry is presently pursuing.

The combination of more powerful computers and drivers will increase the range of control functions, reliability, and will allow direct microprocessor control of such items as electronic instrumentation and audio systems.

Data Sharing, among vehicle systems, is another worthy goal that promises many customer benefits including vehicle reliability and added functional content. A good example would be data sharing between the vehicle's engine module and electronic instrumentation. This would eliminate redundant sensors.

We're looking for cost effective Digital Signal Processing for application to our audio products. The fast pace at which design rules are shrinking will hopefully bring the day closer when the DSP complex functions can be implemented on a die size which is cost competitive—on a system basis--with today's analog approaches.

Sensors

Another key technology with strong automotive ties is sensors—and the need for sensors continues to increase. I'm looking for the development of smart sensors—the integration of electronics into sensing elements. This accomplishment would enable us to perform signal conditioning, self diagnostics, and simple vehicle computations.

We also need new sensor developments to meet such automotive applications as fluid level checks and condition, non-contacting rotary and linear position accelerometers for use in ride and handling control, accurate and durable mass air flow management, and in-cylinder engine parameters.

I'd just like to interject a thought here on sensor suppliers. We've found that those companies who have full service capability provide us with the best sensor products. Full service means a sensor supplier who has outstanding capabilities in technology, design expertise, manufacturing, and application experience.

Along with the potential sensor developments and company capabilities I just mentioned, we'll need advances in distributing power and information throughout the vehicle.

-9-

Dataquest incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

Multiplex Wiring

There's no question that the wiring harness has become complex and bulky. Multiplex wiring offers a solution to the ever-growing nest of wires. Our vision calls for a multiplex wiring system that consists of a "bus" that's made up of power and ground wires and a pair of signal wires that interconnect all of the vehicle's modules, actuators or loads. Each of these products would have an intelligent interface to the bus. To achieve this vision, we need continued development of key technologies by our electronic suppliers. These key technologies include smart power high side drivers and H drivers with ratings of 4, 10, and 20 amps which are needed now—while 40 amp versions carry a lower priority. These devices should have overload protection and provide status feedback.

Microcomputer features we would be happy to see include CMOS with a "sleep mode" for low key off current, on-chip E2pR0M to help us minimize the number of unique modules and microcomputer codes, additional on chip RAM (50-100% increment to current RAM availability), and an on-chip serial port for the logic level portion of the multiplex signal bus interface.

There's a need for a line driver with low voltage drop—and an on-chip line receiver, both, which operate from 10 to 16 volts DC.

Finally, on our multiplex wiring "want list," are insulator piercing connectors that are reliable in an automotive environment. This development would, of course, ease the connection to the multiplex wiring bus.

SOMMARY

Over the past several minutes, I've reviewed the key challenges and opportunities facing those of us in the electronics community. I have no doubt that all of these Challenges and opportunities will be fully exploited.

I began this talk by emphasizing the need for quality parts and I want to end on the same note.

I urge all of you to consider the issue of quality, its short-term and long range implications.

Quality products—supported by a quality attitude throughout the industry—is the key to the present and the future.

-10-


#

Quality electronics, designed and manufactured to exacting' standards, will earn us the worldwide consumer acceptance we all aspire to. This may sound like a philosophy we all learned in Engineering 101, but, unfortunately one that hasn't always been fully embraced.

Ford has the Ql Preferred Quality Supplier Program that provides recognition to suppliers who have consistent high levels of product quality. These suppliers are rated on a number of criteria that takes into consideration the supplier's overall quality effort. The semiconductor companies rated Ford Ql are listed on this slide.*

I congratulate the management and employees of these firms for their dedication to quality workmanship.

At Ford, we're committed to make quality an inherent ingredient of our corporate culture. It must be a basic commitment in every employee's work ethic.

I hope that all of our suppliers (and potential suppliers) adopt a similar corporate-wide perspective.

In closing, I'd just like to emphasize that the time to move forward on the worldwide electronics front has never been more pressing.

We can identify our challenges. We can see our opportunities. We can take action to achieve our mutual goals.

The automotive industry and Ford Motor Company welcomes your ideas, innovation, and enthusiasm.

Thank you.

* The Ford Ql semiconductor companies are:

Cherry Semiconductor; East Greenwick, Rhode Island General Instruments; Hicksville, New York Motorola; Phoenix, Arizona NEC; Fukui City, Japan RCA; Mountaintop, Pennsylvania Sprague; Concord, New Hampshire Texas Instrumments; Dallas, Texas Toshiba; Kawasaki, Japan

-11-

Dataquest Incorporated, A Subsidiary of A C. Nielsen Company / 1290Rldder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

10ns

SPEEDIPOWER PERFORMANCE OF INTEGRATED CIRCUIT TECHNOLOGIES

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Analyzers, Digital Oscilloscopes, ^-Wav© Equip - RAMs, Fllp-Flops, MSI/SSI Logic, Analog Circuits,

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- 3 -


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[ BBLI GIgaBIt Logic

- 4 -


m\^

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• Directly Transferrable SI Processing Techniques and Equipment

- Dry Processing - Plasma Etching - Ion Implantation - 1 fiM Photolithography

• A Number of System Manufacturers Mave Committed Themselves to the Utiliiation of QaAs IC's (HP, Cray, Tektronix, Hughes,...)

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- 5 -


MERCHANT

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- 6 -Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

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- 7 -


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- 8 -


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- 9 -

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Teiex 171973

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• MILITRRY

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- 10 -

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

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- 11 -


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[GBLJ Gig a Bit Loyic


Japanese Semiconductor Industry Conference

April 14-16, 1985 Hakone Prince Hotel

Hakone, Japan • - - a S**l*f

1290 Ridder Park Drive San Jose, Caiifornia 95131-2398

(408) 971-9000 Telex: 171973

Sales/Service offices:

UNITED KINGDOM GERMANY DATAQUEST UK Limited DATAQUEST GmbH 144/146 New Bond Street Rosenkavalierplatz 17

London WIY 9FD D-8000 Munich 81 United Kingdom West Germany

(01) 409-1427 (089) 91 1064 Telex: 266195 Telex: 5218070

FRANCE JAPAN DATAQUEST SARL DATAQUEST Japan, Ltd.

41, rue Ybry Azabu Heights, Suite 711 92522 Neuilly-sur-Seine Cedex 1-5-10, Roppongi, Minato-ku

France Tokyo 106, Japan (01) 758-1240 (03) 582-1441 Telex: 630842 Tfelex: J32768

The content of this report represents our interpretation and analysis of information generally available to the public or released by responsible individuals in the subject companies, but is not guaranteed as to accuracy or completeness. It does not contain material provided to us in confidence by our clients.

This information is not furnished in connection with a sale or offer to sell securities, or in connection with the solicitation of an offer to buy securities. This firm and its parent and/or their officers, stockholders, or members of their families may, from time to time, have a long or short position in the securities mentioned and may sell or buy such securities.

Printed in the United States of America. All rights reserved. No part of this publication may be reproduced, stored in retrieval systems, or transmitted, in any form or by any means—mechanical, electronic, photocopying, duplicating, microfilming, videotape, or otherwise—without the prior written permission of the publisher.

© 1985 Dataquest Incorporated

Dataquest

1985 JAPANESE SEMICONDUCTOR INDUSTRY CONFERENCE April 14-16, 1985

Hakone Prince Hotel Halcone, Japan

SUNDAY, April 14 5:00 p.m. to 8:00 p.rh.

8:00 p.m. to 9:30 p.m.

MONDAY, April 15

8:00 a.m.

8:00 a.m.

9:00 a.m.

9:10 a.m.

9:30 a.m.

10:00 a.m.

10:30 a.m.

11:00 a.m.

11:30 a.m.

12:00 noon

1:45 p.m.

2:15 p.m.

2:45 p.m.

Registration Main Lobby

Cocktails Ballroom

Buffet Breakfast .Restaurant "Sakura"

Registration Continues Main Lobby

Welcome Congress Hall Gene Norrett Vice President Dataquest Incorporated

World Semiconductor Outlook Congress Hall Frederick L. Zieber Senior Vice President Dataquest Incorporated

Japanese Semiconductor IMarket Congress Hall Sheridan M. Tatsuno Research Analyst Dataquest Incorporated

Concentrated or Well-Balanced Products Strategy? Congress Hall

Tsuyoshi Kawanishi Director and Group Executive Semiconductor Group Toshiba Corporation

Break Garden

Technology Futures Congress Hall Dr. William G. Howard Senior Vice President Director of Research and Development Motorola, Inc.

dovemment Involvement: Help or Hindrance? Congress Hall Clyde Prestowitz Special Counsel to the Secretary of Japanese Affairs U.S. Department of Commerce

Lunch Restaurant "Sakura"

Achievements and Challenges— A View from the Oldest and the Newest Congress Hall

D.A. DiLeo Product Marketing Manager—IC's AT&T Technology Systems

Fundamental Forces Driving the 32-Bit MPU Market Congress Hall

Richard L. Sanquini Vice President and General Manager Microprocessor Group National Semiconductor

Break Garden

(over)


3:15 p.m. Japanese Semiconductor industry— The Coming New Age Congress Hall

Tomlhiro Matsumura Senior Vice President NEC

3:45 p.m. Challenges and Opportunities Facing U.S. Equipment Suppliers in the Far East Congress Hall


4:15 p.m. Silicon Pervasiveness Congress Hall Kihachi Tamura President Shin-Etsu Handotai Co., Ltd.

6:00 p.m. Cocittails On the Ship "Koma No. 2"

7:00 p.m. Dinner Congress Hall

8:00 p.m. Guest Speakers Congress Hall Dr. Atsuyoshi Ouchi Vice Chairman of the Board NEC

W. J. Sanders III Chairman of the Board, President Chief Executive Officer Advanced Micro Devices, Inc.

TUESDAY, April 16

8:00 a.m. Buffet Brealcfast , Restaurant "Sakura"

9:00 a.m. MOS Memory Strategy: Face-to-l=ace with the New Market Realities Congress Hall


9:30 a.m. Lithography Technology Today and Tomorrow Congress Hall

Shoichiro Yoshida Director, General Manager Industrial Supplies and Equipment Division Nil<on (Nippon Kogaku)

10:00 a.m. Break Garden

10:30 a.m. The Emerging Asian Semiconductor Industry Congress Hall Dr. R June Min Senior Managing Director Goldstar Semiconductor and Telecommunications

11:00 a.m. The Recent Development of Industry information in Taiwan Congress Hall

Dr. Irving T. Ho President Institute for Information Industry

11:30 a.m. Status Quo and Tomorrow Japanese Semiconductor Industry Congress Hall


12:00 noon Lunch Restaurant "Sakura"

1:45 p.m. MOS Memory, The Propulsion Power of the 10 Industry Congress Hall

Sutezo Hata Executive Managing Director Hitachi, Ltd.

2:15 p.m. A Fresh Lxrak at Japan and Asia Congress Hall Eugene J. Rath Vice President and Assistant General Manager Intel Corporation

2:45 p.m. Panel Discussion Congress Hall • Goldstar • Intel • Hitachi • Motorola • Toshiba • Advanced Micro

Devices, Inc. 4:15 p.m. Summary of Conference Congress Hall

Osamu Ohtake Manager, Research Dataquest Incorporated (Japan)

4:30 p.m. Cocktails and Buffet Dinner Ballroom

7:00 p.m. Buses Depart for Tokyo ,

:::)aDataqijest

Dataquest

JAPANESE SEMICONDUCTOR INDUSTRY CONFERENCE April 14 through 16, 1985

Hakone, Japan

List of Attendees

Masaaki Abe

Taizo Abe

Dwain Aidala Susan Aidala

Junsuke Amano

Koichi Ando

Paulo Aratangy

Norio Ashitate

Peter Bacon

Richard Battelle

David Carter

Roger Chamber land

Hong Jo Chang

Sadakiyo China

Jacques Clay

Mike Connors

Patricia Cox Neal Cox

E. David Crockett Ann Crockett

Maureen Davies Gareth Davies

Nobuynki Denda

Capital Research Company

Shinko Electric Company, Ltd.

Mitsubishi Electronics America, Inc.


Marubeni Hytech Company, Ltd.

Sid Microelectronica, Ltda.

Ashitate Electric Company, Ltd.

Philips I.D.C.C.

Prime Computer, Inc.

AT&T Bell Laboratories

Harris K.K.

Daewoo Semiconductor Company, Ltd.

Mostek Japan K.K.

Hewle t t - -Packa rd Company

Jardine Fleming Securities, Ltd.

Dataquest Incorporated



Intel Japan, K.K.


Dan DiLeo

John Dishman

Richard Dyck

Brian Edelman

Herbert Fenkhuber

Manny Fernandez

Eugene Flath

Ryoj i Fuj isawa

Masaru Furuta

Mutsushi Furuya

Dr. Kurt Garbrecht

Wi11iam Glaser

Ray Gouldsberry

Ralph Greenburg Miriam Greenburg

Harold Grubb

Stuart Harris Sandy Harris

Sutezo Hata

Hans He in

Yu Hirano

Dr. Irving T. Ho

Yoshikazu Hori

Harry Horie

Toshio Hoshino

Satoko Hoshizaki

AT&T Technologies, Inc.


Teradyne K.K., Ltd.

Ford Motor Company

S i emens AG


Intel Corporation

Tokyo Electron, Ltd.



Siemens AG>

RCA Corporation

Monolithic Memories

Motorola, Inc.

IBM Corporation

American Microsystems, Inc.

Hitachi, Ltd.

Siemens Corporation

Fujitsu, Ltd.

Institute for Information Industry

Nissec, Ltd.


Fuji Electric Company, Ltd.

Dataquest Japan Limited


Dr . Wi 11 i am Howard

Susumu Ichinose

Kunio Ikisu

Yoshinori Inoi

Nakaharu Inoue

Takeshi Ishida

Kaoru Ishikawa

Akihiko Itoh

Akiro Itoh

Takio Itoh

Sh i g eno r i Iwakuma

Richard Jacobs

Shimpei Kamata

Takahiro Kamo

Hisao Kanamaru

Akira Katayama

Eiji Kawamura

Tsuyoshi Kawanishi

Bert Kehren

Jung Soon Kim

S. H. Kim

Tomoko Kodama

Cheryl Koopmans

Michael Kubiak

Motorola, Inc.

Oki Electric Industry Company. Ltd

Fuji Electronics Company, Ltd.

Suwa Seikosha Company, Ltd.

Miyazaki Oki Denki K.K.

Alps Electric Company, Ltd.

Okamoto Machine Tool Works, Ltd.

ESI Japan, Ltd.

Nippon Denso K.K.


Victor Company of Japan


Takeda Riken Company, Ltd.

Intel Japan, K.K.

Hitachi, Ltd.



Toshiba Corporation

United Technologies Corporation

Gold Star Company, Ltd.

Samsung Semiconductor & Telecommunications Company, Ltd.


Harris Corporation

Semiconductor Industry Association


Michio Kumazawa

Hidehiro Kimitomo

Kyoj i Kurata

Toshio Kurihara

Yoshio Kurihara

Yoshiharu Kusuda

David Laws

Robert Lenz

Leo Lin

Hiroshi Maekawa

Albert Maringer

Lane Mason

Gerard Matheron

Shlgeki Matsue

Tsuyoshi Matsukuma

Takeo Matsiimoto

Tomihiro Matsumura

Karen Mavec

Richard May

Michael Michigami

Dr. P. Jvme Min

Junj i Miyamoto

Hisashi Mizoo

Okamoto Machine Tool Works, Ltd

NEC Corporation

Asahi Microsystems, Inc.

National Semiconductor Japan, Ltd


Matsushita Electric Industrial Company, Ltd.


RCA Corporation

AT&T International

Hitachi Metal, Ltd.

Siemens K.K.


Dieli

NEC Corporation

Nissei Sangyo Company, Ltd.

Sanshim Electronics Company, Ltd.

NEC Corporation

Jardine Fleming Securities, Ltd.

U.S. Department of Commerce

United Technologies Corporation

Goldstar Semiconductor & Telecommionicat ions , Ltd.

Matsushita Electric Industrial Company, Ltd.

Fuji Xerox Company, Ltd.


Tatsuo Morotomi

Yuichi Murano

Yoshihiko Nagasato

Manher Naik

Tomokatsu Nanakura

Hiromichi Nakamura

Nobuo Nakamura

Hisashi Nakane

Nagayoshi Nakano

Masakazo Nanseki

Eiji Nishi

Gene Norrett

Mark Norwood

Detlef Nuglisch

Pat O'Malley

Rokuro Ochi

Shusaku Ogawa

Katsuhiko Ghara

Shinj i Ohba

Shoichiro Ohga

Katsufumi Ohmori

Kazuo Ohta

Osamu Ohtake

Tadao Ohtsuka

Saneaki Oshikoj i

Idemitsu Petrochemical Company


Asahi Chemical Industry Company, Ltd

National Semiconductor Corporation

Sumitomo Metal Industry

Japan Silicon Company, Ltd.

Nippon Kogaku K.K.

Tokyo Ohka Kogyo Company, Ltd.

D a t a q u e s t Japan Limited


LTX Company, Ltd.


Intel Corporation

Siemens AG

Nippon Motorola, Ltd.

Wacker Chemicals East Asia, Ltd.

Asahi Microsystems, Inc.

Crestronics

NEC Corporation

Shin-Etsu Handotai Company, Ltd.

Nissec, Ltd.

Narumi China Corporation


Naigai Kizai Kaisha, Ltd.

Western Digital Japan, Ltd.


Dr . Atsuyoshi Ouchi

Se-Jung Park

Gerald Parker

Nand Prasad

Clyde Prestowitz

G. Roy Rondo

Kimishiro Saito

Frank Samnann Nancy Sanmann

W. J. Sanders III

Richard Sanquini

Haj ime Sasaki

Satoshi Seki

Esther Sharp

Greg Sheppard

Keizo Shibata

Horoshi Shima

Kazuo Shimizu

Yong Kyxm Shin

Yoshiaki Shoj i

Charles Sikes

Michael Solomon

Bob Stevens

Kanji Sugihara

Jean Suhner

NEC Corporation

IBM Corporat ion

IBM Corporation

Interlek, Inc.

U.S. Department of Commerce

Genrad, Inc.

NEC Corporation




NEC Corporation


Burr, Egan Sc Deleage & Company

Fairchild Semiconductor

Toshiba Corporation

MITI

Oki Electric Industry Company, Ltd.

Gold star Company, Ltd.

Matsushita Electronics Corporation

IBM Corporation

Osaka Sanso Kogyo, Ltd.

Genrad, Inc.

NEC Corporation

Motorola Semiconductor, Inc.


Akira Suzuki

Fumio Suzuki

Kazuo Suzuki

Saburo Suzuki

George Swanson

Minoru Takagi

Kihachi Tamura

Akira Tanabe

Akira Tanabe

Koj iro Tanaka

Sheridan Tatsimo

Francois Thionet

Howard Thoele

Hitomi Tojiki

Jon Tompkins

Robert Tsao

Yu Uemura

Kiyoshi Uragami

Wi 11iam Watson

Antony Watts

Toshiyuki Yamada

Reiko Yamadashima

Se i i chi Yamaguchi

Masaaki Yamamuro

Nanako Yamane

Sprague Japan, Inc.


NEC Corporation

Sumitomo Eaton Nova Corporation

Sumitomo Eaton Nova Corporation

Nippon Megatest K.K.

Shin-Etsu Handotai Company, Ltd.

Canon, Inc.

Intel Japan, K.K.

Seiko Instruments & Electronics, Ltd.


Hewlett—Packard Company

Monsanto Company

Olympus Optical Company, Ltd.

Varian Associates

United Microelectronics Corporation


Hitachi, Ltd.

National Semiconductor Japan, Ltd.

SGS Semiconductor (PTE), L td .

Sony Corporation


Koito Manufacturing Company, Ltd.

Tokyo Sanyo Electric Company, Ltd.



Kanehiro Yamashita

Keisuke Yawata

Minoru Yoshida

Shoichiro Yoshida

Hiroshi Yoshihara

Masao Yoshitomi

Hideo Yoshizaki

Frederick Zieber

Alps Electric Company, Ltd

Nihon LSI Logic Corporation

General Electric Japan, Ltd.

Nikon (Nippon Kogaku)

IBM Japan, Ltd.


Texas Instruments Japan, Ltd.



i -~- -"-".' )"•.•( Dataquest

Dataquest

JAPANESE SEMICONDUCTOR INDUSTRY CONFERENCE April 14 through 16. 1985

Hakone, Japan

List of Attendees

AT&T Bell Laboratories David Carter, Supervisor, Technology Assessment Group John Dishman, Head, Technology Planning Department

Richard Jacobs, Director, VLSI Design Laboratory

AT&T International Leo Lin, Business Manager

AT&T Technologies, Inc Dan DiLeo, Manager, Product Planning


Alps Electric Company, Ltd.

David Laws, Managing Director W. J. Sanders III, Chairman, President & Chief Executive Officer

Takeshi Ishida, Marketing Manager Kanehiro Yamashita, Division Manager, Yokohama Division

American Microsystems, Inc. Stuart Harris, Market Research Sandy Harris

Asahi Chemical Industry Coi!q>any, Ltd. Yoshihiko Nagasato, Electronics Administration, Assistant General Manager

Asahi Microsystems, Inc. Kyoji Kurata, Director, Marketing Shusaku Ogawa, Manager, Administration

Ashitate Electric Company, Ltd. Norio Ashitate, President Masaru Furuta, Manager, The First Sales Division

Mutsushi Furuya, Executive Advisor & Corporate Planning

Yoshio Kurihara, Manager, The Third Sales Division

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Coinpany /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

Burr, Egan & Deleage & Company Esther Sharp

Canon, Inc . Akira Tanabe, General Manager, Optical Products Development Center

Capital Research Company Masaaki Abe, Investment Analyst

Crestronics Katsuhiko Ohara, President

Daewoo Semiconductor Company, L td . Hong Jo Chang, Managing Director

Dataquest Incorporated Patricia Cox, Research Analyst Neal Cox E. David Crockett, President Ann Crockett Maureen Davies, Administrative Assistant Gareth Davies Manny Fernandez, Senior Vice President & Director, CEO Strategy Services Lane Mason, Senior Research Analyst Gene Norrett, Vice President <Sc Director Frank Sanmann, Vice President, Marketing Nancy Sanmann Sheridan Tatsuno, Research Analyst Frederick Zieber, Senior Vice President

Dataquest Japan Limited Satoko Hoshizaki, Conference Assistant

Tomoko Kodama, Conference Assistant Yuichi Murano, Research Analyst Nagayoshi Nakano, Research Analyst Masakazo Nanseki, Senior Marketing Manager Osamu Ohtake, Associate Director Satoshi Seki, Marketing Manager Yu Uemura, Research Analyst Reiko Yamadashima, Conference Assistant Nanako Yamane, Research Coordinator

Dieli Gerard Matheron


ESI Japan, Ltd. Akihiko Itoh, Systems Sales

Fairchild Semiconductor Greg Sheppard,. Strategic Marketing Analyst

Ford Motor Company Brian Edelman, Manager, Electrical &c Electronics Division

Fuji Electric Company, Ltd. Toshio Hoshino, General Manager Electronic Components

Fuji Electronics Company, Ltd. Kunio Ikisu, President

Fuji Xerox Conqsany, Ltd. Hisashi Mizoo, Director, Advanced Products & Technology Research Laboratory

Fujitsu, Ltd. Yu Hirano, Manager, Overseas Engineering Support

General Electric Japan, Ltd. Minora Yoshida

Genrad, Inc. G. Roy Rondo, Director Bob Stevens, Manager

Gold Star Company, Ltd Jung Soon Kim, General Manager, Central Research Lab

Yong Kyxin Shin, Managing Director

Goldstar Semiconductor & Te I ecoimnuni cat i ons

Dr. P. June Min, Senior Managing Director

Harris Corporation Cheryl Koopmans, Market Research Manager, Semiconductor Division

Harris K.K. Roger Chamber land, President


Hewlett-Packard Company Jacques Clay, Manufacturing Manager Francois Thionet, Materials Manager

Hitachi Metal, Ltd, Hiroshi Maekawa, Manager, Corporate Sales, Administrative Division

Hitachi, Ltd. Sutezo Hata, Executive Managing Director Hisao Kanamaru, Department Manager, Marketing Sc Planning Department Kiyoshi Uragami , Manager, Marketing Sc Planning Department

IBM Corporation Harold Grubb, Manager Se-Jung Park, Senior Engineer Gerald Parker, Program Manager, Process Technology Charles Sikes, Manager

IBM Japan, Ltd. Hiroshi Yoshihara, Technical Evaluation

Idemitsu Petrochemical Company Tatsuo Morotomi, Manager, Commercial Devs1opment

Institute for Information Industry Dr. Irving T. Ho, President

Intel Corporation Eugene Flath, Vice President & Assistant, General Manager

Mark Norwood, Manager, Corporate Market Research

Intel Japan, KK. Nobuyuki Denda, Manager, Sales Headquarters Takahiro Kamo Akira Tanabe

Interlek, Inc. Nand Prasad, Executive Vice President

Japan Silicon Company, Ltd. Hiromichi Nakamura, Vice President

Dataquest incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

Jardine Fleming Securities, Ltd. Mike Connors, Director, Research Karen Mavec, Research

Koito Manufacturing Company, Ltd. Seiichi Yamaguchi, Executive Managing Di rector

LTX Company, Ltd. Eiji Nishi, Sales Manager

MITI Horoshi Shima, Industry Electronics Deputy Director

Marubeni Hytech Company, Ltd. Koichi Ando

Matsushita Electric Industrial Ccnnpany, Ltd.

Yoshiharu Kusuda, General Manager Junji Miyamoto, Supervisor, Marketing Engineer

Matsushita E l e c t r o n i c s Corporation Yoshiaki Shoji, Manager, Corporate Planning

Mitsubishi Electric Corporation Junsuke Amano, Managing Director, Semiconductor Division

Akira Katayama, General Manager, Overseas Marketing Department Fumio Suzuki, Assistant General Manager, Newer Metals & Product Department

Masao Yoshitomi, Manager, Semiconductor Strategic Marketing

Mitsubishi Electronics America, Inc. Dwain Aidala, Assistant General Manager Susan Aidala

Miyazaki Oki Denki K.K. Nakaharu Inoue, Manager, Product Division

Monolithic Memories Ray Gouldsberry, Director, Comnunications

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408)971-9000 / Telex 171973

Monsanto Company Howard Thoele, Product Director Electronics

Mostek Japan K.K. Sadakiyo China, President

Motorola Semiconductor, Inc. Jean Suhner

Motorola, Inc. Ralph Greenburg, Manager, Marketing Statistics

Miriam Greenburg Dr. William Howard, Senior Vice President, Director of Research 8c Deve1opment

NEC Corporation Hidehiro Kunitomo, Supervisor, Chief Strategic Marketing Researcher

Shigeki Matsue, General Manager, Memory Products Division Tomihiro Matsumura, Senior Vice President Shinji Ohba, General Manager, International Electronic Devices Division Dr. Atsuyoshi Ouchi, Vice Chairman of The Board

Kunishiro Saito, General Manager, Electronic Devices Marketing Division Hajime Sasaki, General Manager, Microcomputer Products Division Kanji Sugihara, Assistant General Manager, Electronic Device Group Planning Office

Kazuo Suzuki, Assistant General Manager, International Electronic Devices Marketing

Naigai Kizai Kaisha, Ltd. Tadao Ohtsuka, President

Narumi China Corporation Kazuo Ohta, Director & General Manager


National Semiconductor Corporation Manher Naik, Director, Strategic Market ing Richard Sanquini , Vice President Microprocessors

National Semiconductor Japan, Ltd. Toshio Kurihara, Manager, Digital Marketing Wi11iam Watson, President

Nihon LSI Logic Corporation Keisuke Yawata. President k Chief Executive Officer

Nihon Teksel Company, Ltd. Muneyoshi Samejima, Vice President

Nikon (Nippon Kogaku) Shoichiro Yoshida, Director & General Manager, Industrial Supplies Sc Equipment Division

Nippon Dense K.K.

Nippon Kogaku K.K.

Akiro Itoh, Managing Director

Nobuo Nakamura, Managerial Staff Industrial Supplies

Nippon Megatest K.K. Minoru Takagi, President

Nippon Motorola, Ltd. Pat O'Malley, Manager, Strategic Marketing

Nissec, Ltd. Yoshikazu Hori, Director, Sales Division Manager KatsuftJini Ohmori, Marketing Manager

Nissei Sangyo Company, Ltd. Tsuyoshi Matsukvima, General Manager, Technical Marketing

Okamoto Machine Tool Works, Ltd. Kaoru Ishikawa, Sales Department Mi Ohio Kumazawa, Research Sc Development Department

Dataquest Incorporated, A Subsidiary of A.C. Nielsen CoInpany /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

Oki Electric Industry Company, Ltd

Susumu Ichinose, Director, Marketing « Sales DiVIs1 on

Kazuo Shimizu, General Manager, Marketing Planning Department

Olympus Optical Company, Ltd. Hitomi Tojiki, Manager, Corporate Research Division, Semiconductor Sect ion

Osaka Sanso Kogyo, Ltd. Michael Solomon, General Manager Special Gases

Philips I.D.C.C, Peter Bacon, IC Sales & Marketing Manager , Far East

Prime Computer, Inc. Richard Battelle, Conmodity Specialist Electronic Components

RCA Corporation Wi 11ian Glaser, Manager, Market Development Robert Lenz, Administrator, Sales Analysis

SGS Semiconductor (PTE), Ltd. Antony Watts, Strategic Marketing Manager

Samsung Semiconductor Sc Telecommunications Company, Ltd.

S. H. Kim, General Manager, Planning Department

Sanshim Electronics Company, Ltd. Takeo Matsumoto, General Manager, Marketing

Seiko Instrviments & Electronics, Ltd. Kojiro Tanaka, System Department

Semiconductor Industry Association Michael Kubiak, Manager, Statistical Programs


Shin-Etsu Handotai Company, Ltd. Shoichiro Ohga, Senior Managing Director Kihachi Temiura, President

Shinko Electric Company, Ltd. Taizo Abe, Director, Engineering Department

Sid Microelectronica, Ltda. Paulo Aratangy, Superintendent Director

Siemens AG Herbert Fenkhuber Dr. Kurt Garbrecht Detlef Nuglisch, Junior Director, Corporate Purchasing

Siemens Corporation Hans He in, Manager, Market Research

Siemens K.K. Albert Maringer, Manager, Product Planning

Sony Corporation Toshiyuki Yamada, General Manager, System LSI Project, Semiconductor Group

Sprague Japan, Inc. Akira Suzuki, General Manager

Sumitomo Eaton Nova Corporation Saburo Suzuki, President George Swanson, Vice President

Sumitomo Metal Industry Tomokatsu Nakamura, Manager

Suwa Seikosha Company, Ltd. Yoshinori Inoi, Director, Semiconductor Division

Takeda Riken Company, Ltd. Shimpei Kamata, Director, Research & Development Division

Teradyne K.K., Ltd. Richard Dyck, Representative Director


Texas Ins t rvunents J apan , Ltd. Hideo Yoshizaki, Chairman of the Board

Tokyo Electron, Ltd. Ryoj1 Fujisawa, Managing Director Harry Horie, Manager, Semiconductor FA Sales Department

Takio Itoh, Manager, EC Marketing Eiji Kawamura, Managing Director

Tokyo Ohka Kogyo Co., Ltd. Hisashi Nakane, Director

Tokyo Sanyo Electric Company, Ltd. Masaaki Yamamuro, Sales Department

Toshiba Corporation Tsuyoshi Kawanishi, Director and Group Executive, Semiconductor Group

Keizo Shibata, Manager, Semiconductor Group

U.S. Department of Comnerce Richard May, Commercial Officer Clyde Prestowitz, Special Counsel to the Secretary of Japanese Affairs

United Microelectronics Corporation Robert Tsao, President

United Technologies C o r p o r a t i o n Bert Kehren, Director, Strategic Planning

Michael Michigarni , Director, Strategic Planning

Varian Associates Jon Tompkins, President, Semiconductor Equipment Group

Victor Company of Japan Shigenori Iwakuma, Manager, Research & Development Division

Wacker Chemicals East Asia, Ltd. Rokuro Ochi, General Manager, Planning Office

Western Digital Japan, Ltd. Saneetki Oshikoj i , President

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Dme I San Jose, CA 95131 / (408) 971-9000 / Telex 171973

Dataquest

Dataquest

JAPANESE SEMICONDUCTOR INDUSTRY CONFERENCE SPEAKERS

Gene Norrett Vice President Dataquest Incorporated

Dr. Atsuyoshi Ouchi Vice Chairman of the Board NEC

Frederick L. Zieber Senior Vice President Dataquest Incorporated

W.J. Sanders III Chairman of the Board, President Chief Executive Officer Advanced Micro Devices, Inc.

Sheridan M. Tatsuno Research Analyst Dataquest Incorporated


Tsuyoshi Kawanishi Director and Group Executive Semiconductor Group Toshiba Corporation

Shoichiro Yoshida' Director, General Manager Nikon (Nippon Kogaku)

Dr. William G. Howard Senior Vice President Motorola, Inc.

Clyde Prestowitz Special Counsel to the Secretary of Japanese Affairs U.S. Departmient of Commerce

Dr. P. June Min Senior Managing Director Goldstar Semiconductor and TeleccMmnunications

Dr. Irving T. Ho President Institute for Information Industry

D.A. DiLeo Product Marketing Manager - ICs AT&T Technology Systems


Richard L. Sanquini Vice President and General Manager Microprocessor Group National Semiconductor

Sutezo Hata Executive Managing Director Hitachi, Ltd.

Tomihiro Matsumura Senior Vice President NEC

Eugene J. Flath Vice President and Assistant General Manager Intel Corporation


Osamu Ohtake Associate Director Dataquest Incorporated

Kihachi Tamura President Shin-Etsu Handotai Co., Ltd.


Dataquest

WELCOME

Gene Norrett Vice President and Director

Japanese Semiconductor Industry Service Dataquest Incorporated

Mr. Norrett is a Vice President of Dataquest and Director and founder of its Japanese Semiconductor Industry Service. He specializes in the Japanese semiconductor market, focusing on analysis and interpretation of semiconductor statistics, with specific research into market forces, economic trends, and company portfolio analysis and strategies. Mr. Norrett is based in the Dataquest corporate headquarters, but directs a research staff in the Dataquest Tokyo office. Prior to joining Dataquest, Mr. Norrett spent 14 years with the Motorola Semiconductor Group, serving in various marketing and management positions. He was most recently Manager of Market Research, where he was responsible for research analysis of Motorola's and the world semiconductor industries' trends. In this capacity, he served as the company's representative to the Semiconductor Industry Association, and was Chairman of the Association's Trade and Statistics Committee. Mr. Norrett has traveled extensively in both Japan and Europe and has developed an awareness and thorough understanding of their semiconductor markets. His educational background includes a B.A. degree in Mathematics from Temple University, and an M.S. degree in Applied Statistics from Villanova University. He has also taken graduate courses in Marketing from Arizona State University.

Dataquest Incorporated JAPANESE SEMICONDUCTOR INDUSTRY CONFERENCE

April 14-16, 1985 Hakone, Japan


Dataquest

THIS PRESENTATION WAS NOT AVAILABLE

IN TIME FOR PUBLICATION


(::>a Dataquest

Dataquest

WORLD SEMICONDUCTOR OUTLOOK

Frederick L. Zieber Senior Vice President

General Manager, Semiconductor Division Dataquest Incorporated

^..^^[Af^^K^Y'

Wf ^ (s^ffW^

Mr. Zieber is a Senior Vice President of Dataquest, a member of its Executive Committee, and the General Manager of its Semiconductor Division. The Semiconductor Division includes the Semiconductor Industry Service, the European Semiconductor Industry Service, the Japanese Semiconductor Industry Service, the Semiconductor User Information Service, and the Semiconductor Equipment and Materials Service. Mr. Zieber has 13 years experience in market research and consulting to the semiconductor industry, and previously worked in the semiconductor industry for nine years. He has experience in processing, designing, manufacturing, and testing integrated circuits and discrete devices. He holds two patents in semiconductor processing. Mr. Zieber has a B.S. degree in Electrical Engineering frtan Stanford University and an M.B.A. degree from the Graduate School of Business at Stanford University.

Dataquest Incorporated JAPANESE SEMICONLUCTOR INDUSTRY CONFERENCE


Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 RIdder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

^

V \

•s WORLD SEmCONDUCTOR

OUTLOOK

V

TZi.

Monday, April 15 FREDERICK L. ZIEBER Dataquest Incorporated

INDUSTRY OUTLOOK

- 1 -© 1985 Dataquest Incorporated April 14 ed.-Reproduction Prohibited


BOOK/BILL RATIO 1984

1.5

0.5

JUL AUG SEP OCT NOV DEC JAN FEB MAR

WHY IS IT SO BAD? wwiIwwiriTIIiHwnigwwmBiTiwrMiffciwiiim

CONFLUENCE OF:

• TREMENDOUS CHANGE IN EXPECTATIONS

• OVERBOOKINGS

• WEAK PC MARKET

• HIGH PRICES, SET TO FALL



SEMICONDUCTOR MARKET GROWTH nfiTiw»M>niWTawmwiiT»i>r(i»iIi niiiiiIi»I»wIiI]IiIiJ

YEARS 64-67 67-70 70-75 75-81 81-85

GROW 64% 33%

155% 266% 130%

SH-BJNK (10%)

(25%)

(29%)

(10%)

(17%)

aiiirliiirffiTifil

THE DIFFERENCE IN THIS CYCLE: THE U.S. ECONOMY IS GROWING;

REAL SEMICONDUCTOR USAGE IS GROWING.


Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Pari< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

CAPACITY

CAPITAL SPENDING NORTH AyUUCA V t JAPAN

w n i0i«

ESS M

M$n 1171 WTt IMO

1=3

IW1 I t TIAM

4«»AM



mrmfamKtMM ttmJti nimm»

CAPACITY ISSUES

• 6-INCH WAFER

• 2-MICRON MINIMUM DIMENSIONS

• 24-HOUR FACTORY OPERATION

WAFER FAB COSTS PKH SQUAM MCM

ARXESCOST DMATSttALeOST

- 5 -© 1985 Dataquest Incorporated April 14 ed . -Reproduc t ion Proh ib i t ed


RETURN ON CAPITAL

HISTORICAL AND FORECAST CAPACITY UTIUZATION



WORLDWIDE SEMICONDUCTOR INDUSTRY GROWTH

(Percent in Dollars)

1984 1985 1986 1987

WORLDWIDE

U.S. JAPAN EUROPE ROW

47%

47% 48% 51% 48%

2%

-3% 7% 8% 0%

18%

16% 20% 18% 21%

24%

22% 26% 24% 27%

WORLDWIDE SEMICONDUCTOR CONSUMPTION

(Billions of Dollars)

1984 1989

WORLDWIDE $27.9 $59.9

U.S. 12.7 24.1 JAPAN 8.3 20.1 EUROPE 4.8 11.0 ROW 21.2 4.6



WORLDWIDE SEMICONDUCTOR CONSUMPTION (Percent by Region)

1984 1989

./ttl U.S. ^ JAPAN n EUROPE n ROW

WORLDWIDE SEMICONDUCTOR INDUSTRY AVERAGE GROWTH 1984 -1989

(Percent)

20

15

10

WORLD U.S. JAPAN EUROPE ROW

- a -© 1985 Dataquest Incorporated April 14 ed.-Reproduction Prohibited


ESTIMATED QUARTERLY CHANGE IN U.S. SEMICONDUCTOR CONSUMPTION

Percent CMange

2{)

15

10

5

0

-5

10

2.2Z 1 1

Q1

17.4^

11.n 14.6;?

7.BZ

13.9 J!

D.U/

' •

(6.5;?)

Q2 Q3 Q4 Q1 Q2

II

Q3 Q4

1

ESTIMATED QUARTERLY CHANGE IN U.S. SEMICONDUCTOR CONSUMPTION

Percent Change

15

10

5

0

-5

-10

-15

13% _a^

6.0SE 7.72

3.7Z 4.7%

(6.5%)

(10.6;!!}

1984 -1985

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

- 9 -© 1985 Dataquest Incorpora ted Apr i l 14 ed. -Reproduct ion P roh ib i t ed


ESTIMATED U.S. SEMICONDUCTOR CONSUMPTION

(Millions of Dollars}

DISCRETE DEVICES

INTEGRATED CIRCUrTS

TOTAL

1983 1984 1985

$1,423 S 1.911 S 1.748

6.914 10.178 9.953

$8,337 $12,089 $11,701

ESTIMATED CHANGE IN U.S. SEMICONDUCTOR CONSUMPTION

Percent Change

60

50

40

30

20

10

-10

-20

34.33!

A7.ZX 45.0Z

1 • 1 I

f ? ? X ) r 1 *) y 1 I fc.&M ( \ U . i t £ 1

(8.52}

DISCRETE IC TOTAL DISCRETE IC TOTAL

1983 to 1984 1984 to 1985

fH^i^\^%_ U^ ^ ^h^:\^^^x^ f - 10 -

© 1985 Dataquest Incorporated April 14 ed.-Reproduction Prohibited


SEMICONDUCTOR TECHNOLOGY TRENDS

AVERAGE PRICE PER FUNCTION (ICs) (Millicents)

1,000

100

10 74 76 78 73 80 81 82 63 84

jCpy^ jP^^i



<rFCTn3TTri;);wfHLJ?ftraTJ

COST MODEL

CURI^ENT FUTURE

MMMUM DIMENSION

WAFER SIZE

PROCESSNG COST

CHIP SIZE (MILS SQUARE)

YIELD

CHIP COST TO PRODUCT COST

3 MICRONS

4 INCH

$140

200

30%

4X

2 MICRONS

6 INCH

$220

250

50%

4X

ll^ict^^^ ^r^ J6 [ULIT^- ^K-^"^

^9 m-'-^^'F'/ & '- ktt-

COST MODEL

GOODDE

DECOST

FNSI^D PRODUCT COST

TRANSISTORS PER DE (OOO's)

COST PER TRANSISTOR

-S'/J Ji'^

CURRENT

100

$1.49

$5.60

60

9.3m4

r

FUTURE

200

$1.10

$4.40

211

2.1m^

'



TECHNOLOGY HAS A LONG, LONG WAY TO GO

• DENSITY

• YIELD

• PROCESSING

• COST

• ARCHITECTURE

• CMOS

• EPROM. EEPROM

• CAD

• ASIC'S

• PERFORMANCE

NO SLOWDOWN

INDUSTRY TRENDS



::aDataquest

-

Dataquest

JAPANESE SEMICONDUCTOR MARKET

Sheridan M. Tatsuno Research Analyst


Mr. Tatsuno is a Research Analyst for Dataquest's Japanese Semiconductor Industry Service. He is responsible for analyzing trends in Japanese government policies and financial markets. He is also responsible for analyzing technology trends within the industry, and specifically tracks R&D spending, patent applications, and new product developments quarterly. He has seven years of experience in market research, planning, and international finance with Bechtel and Woodward-Clyde Consultants. Mr. Tatsuno has a B.A. degree in Political Science from Yale University and a Master's degree in Planning and Policy Analysis from Harvard University's Kennedy School of Government. In addition to these credentials, Mr. Tatsuno is fluent in Japanese, French, and Spanish and has authored a book called "The TechnoPolis Vision; Japan's High-Tech Strategy for the 1990's and Beyond."

D;A { J ; ^ ^y^vX^-k^»v-^ ^T^j^A^ j;^^^^^t: ^




JAPANESE SEMICONDUCTOR

MARKET

SHERIDAN TATSUNO April 15, 1985

- 1 -O 1985 Dataquest Incorporated April 14 ed.-Reproduction Prohibited


- 2 -

O 1985 Dataquest Incorporated April 14 ed.-Reproduction Prohibited


WORLDWIDE SEMICONDUCTOR REVENUES (Billions of Dollars}

40

30

20

10

15.0

5.2

34.3^

/ y

19.2

7.1

37.3^

28.6

11.3

39.4^

TOTAL

ALL OTHER COMPANIES

JAPANESE COMPANIES

1982 1983 1984

Source: DATAQUEST

- 3 -C 1985 Dataquest Incorporated April 14 ed.-Reproduction Prohibited


30

25

20

15

10

5

0

WORLDWIDE IC REVENUES (Billions of Dollars}

10.7

3.4

32.4%

y 14.3

5.0

34.9^

/ /

/ /

22.3

8.2

36.8%

TOTAL

ALL OTHER COMPANIES

JAPANESE COMPANIES

1982 1983 1984

Source: DATAQUEST



TOP

RANKING 1984

1 2 3 4 5 6 7 8 9

10

1983

1 2 3 4 5 6 7 8 9

10

10 IC SUPPLIERS WORLDWIDE

COMPANY

Tl NEC MOTOROLA HITACHI NATIONAL INTEL FUJITSU TOSHIBA AMD SIGNETICS

TOTAL JAPANESE

MILLIONS OF DOLLARS

1984

$ 2,373 1,797 1,680 1,496 1,203 1,201 1,072 1,035

936 765

$13,558 $ 5.400

PERCENT CHANGE

552 642 461 642 392 552 772 692 852 762 432 672

Source: DATAQUEST



MOS MEMORY RANKINGS--

RANKING 1984 1983

1 1 2 3 3 2 4 5 5 7

COMPANY

HITACHI NEC Tl FUJITSU TOSHIBA NEXT 5 TOP 10

t JAPANESE

1984 REVENUES ($ Millions}

$ 897 713 693 512 396

1,575 $4,786

58.4%

1984

PERCENT CHANGE

79^ 108%

87% 84% 79% 48% 73%

90%

Source: DATAQUEST

- 6.-O 1985 Dataquest Incorporated April 14 ed.-Reproduction Prohibited


MICRO RANKINGS--1984

RANKING

1984 1983

t 1 2 2 0 3 4 10 5 5

COMPANY

INTEL NEC MOTOROLA AMD MATSUSHITA NEXT 5 TOP 10

Z JAPANESE

1984 REVENUES ($ Millions)

$ 676 391 296 200 136 567

$2,266

38 .U

PERCENT CHANGE

69^ 65% 4 U

245^ 55% 29% 63%

55%

Source: DATAQUEST


Dataquest Incorporated, A Subsidiary of A.C. Nielsen Connpany /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

MOS LOGIC RANKINGS--1984

RANKING 1984 1983

1 1 2 3 3 2 4 5 5 4

COMPANY

MOTOROLA TOSHIBA NEC NATIONAL AMI NEXT 5 TOP 10

t JAPANESE

1984 REVENUES ($ Millions)

$ 370 304 292 205 140 571

8 1,882

49.0^

PERCENT CHANGE

46^ 58^ 42% 66% 26% 56% 56%

58%

Source: DATAQUEST

- 8 -



JAPANESE SEMICONDUCTOR INDUSTRY ACHIEVEMENTS

PERCENT

bO

40

30

20

10

n

^ .J.: i^^^^ja^B^^^S^WSs^^ji^S'^

2 OF ISSCC

••^-f^^^- WORLDWIDE ..•IIiny^P^ IC SALES

• • ' ' * ' ias;/

- ^ S N A R F OF U.S. 1 MARKET

1979 1980 1981 1982 1983 1984 1885

Source: DATAQUEST



NUMBER

40

30

20

10

THE BOOM IN JOINT VENTURES AND LICENSING

REVISION OF FOREIGN

INVESTMENT LAW

TOTAL (34)

LICENSING (22)

JOINT VENTURES (12)

0 i- '*^-'-^-^--^^"-^-1..-^,...^

70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 YEAR

Source: DATAQUEST



THE INVESTMENT BATTLE MILLIONS OF DOLLARS

600

NEC (521) FUJITSU (500) HITACHI (460) TOSHIBA (429}

MATSUSHITA (333)

Source: DATAQUEST



PERCENT

U.S.-JAPAN INVESTMENT AND WORLDWIDE MARKET SHARE

70

INVESTMENT rx OF SALES)

77 78 79 80 81 YEAR

82 83 84

Source: DATAQUEST


Dataquest Incorporated, A Subsidiary of A.G. Nielsen Company /1290 Bidder Parit Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

1984 GOVERNMENT ACTION

• WORLD SEMICONDUCTOR TRADE STATISTICS (WSTS) PROGRAM i

• 4.2% TARIFF ELIMINATED

• U.S. CHIP PROTECTION ACT

• NTT PROCUREMENT AND JOINT R a D

• JAPAN PATENT OFFICE COMPUTERIZATION



EMGES

- 14 -



1985 CHALLENGES

• OVERCAPACITY

• NEWCOMERS

• TRADE IMBALANCE

• MARKET OPPORTUNITIES

• 1985 CONSUMPTION FORECAST



ERCAPACITY



NEW PRODUCTION LINES IN JAPAN

FAB ASSEMBLY TEST

1983 1984

5 20 4 , 14 6 16

15 50

1985

12 5

10 27

TOTAL

. 37 23 32 92

Source: DATAQUEST



PLANNED NEW PRODUCTION LINES IN JAPAN

1963-1S85

KYUSHU HONSHU

SHIKOKU

- 18 -

e 1985 Dataquest Incorporated April 14 ed.-Reproduction Prohibited


JAPANESE IC INVENTORY

MILLIONS OF UNITS 550

300 -

1982 1983 1384

Sourva: DATAQUEST



INVENTORY BUILDUP PERCENT OF PRODUCTION

ICs TOTAL SEMICONDUCTORS

10 11 12

Source: DATAQUEST



DRAM

SRAM

ROM

TIL

1984 PRICE DECLINES

PRODUCT

64K dSOns} 256K (150ns}

16K NMOS (16K X 1} 16K CMOS (4K X 4} 64K CMOS {8K X 8)

256K NMOS 1Mb ROM

• • •

7400 74 LS

Q1 84 vs Q1 85

-45% -60%

-25Z -24% -33%

-26% -52%

+ 22% + 22%

Source: DATAQUEST



EWeo^CRS

-Si.



NEWCOMERS-

COMPANY

SONY SUWA SEIKOSHA RiCOH PIONEER YAMAHA • MINEBEA LSI LOGIC JAPAN IMT

1984 SALES ($ Millions}

S177 136 32

6 21

m m

-JAPAN

KEY PRODUCT AREA

LINEAR ICs MOS LOGIC CMOS CUSTOM ICs GATE ARRAYS CMOS GATE ARRAYS MOS MEMORY GATE ARRAYS OPTO DEVICES

Source: DATAQUEST



COMPANY

DAEWOO GOLD STAR

HYUNDAI

SAMSUNG

NEWCOMERS-

( $

1884

Millions)

0 $15

"

0 $60

-KOREA

KEY PRODUCTS

QUIT TEMPORARILY BIPOLAR LOGIC,

MOS MEMORY,

CUSTOM IC MOS MEMORY, MPU

MOS MEMORY, MPU/MCU

KOREAN

ELECTRONICS $45 DISCRETES/BIPOLAR

Source: DATAQUEST



NEWCOMERS- -TAIWAN

COMPANY

ERSO

viTELic ; MOSEL QUASEL PRESIDENT

KUO HENG

FINE

PHOTRONICS

0/nc

1984 SALES ( $

$1

Millions}

/ ' * 0 0 0

$ 5

$11

$ 8

^zy i

(1982)

^5G

KEY PRODUCT AREA

MOS MEMORY, MCUs, TELECOM. LINEAR

CMOS DRAMS MOS CMOS DRAMS BIPOLAR,

DISCRETES. CMOS BIPOLAR, MOS.

DISCRETES BIPOLAR, MOS,

DISCRETES OPTO

Source: DATAQUEST


Dataquest Incorporated, A Subsidiary of A.C. Nielsen Connpany /1290 Ridder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

^IMBALANCE.

- 26 -o 1985 Dataquest Incorporated April 14 ed.-Reproduction Prohibited

Dataquest Incorporated, A SubsidiaI^ of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

U.S. SHARE OF JAPANESE MARKET

BIPOLAR DIGITAL ($326 MILLION)

MOS LOGIC TOTAL IC LINEAR

MOS MEMORY

1882 1983 1984

Source: DATAQUEST



JAPANESE SHARE OF U.S. MARKET

MOS MEMORY ($1.4 BILLION)

TOTAL IC

MOS LOGIC BIPOLAR DIGITAL LINEAR

1982 1983 1984

Source: DATAQUEST



U.S.-JAPAN SEMICONDUCTORS TRADE IMBALANCE

BILLIONS OF DOLLARS

'3 2.5

2

1.5

1

0.5

0

0.5 -1

1.5

i m U.S.-JAPAN 1=1JAPAN-U.S. \Z3 U.S. BALANCE

—

1980 1981 1982

J

1983 1984

Source: DATAQUEST


Dataquest incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

TRADE FRICTION OR OPEN MARKETS?

TRADE IMBALANCE

JAPANESE MARKET OPENING

• CHIP PROTECTION • IMPORT SURCHARGE • QUOTAS • BUY AMERICAN

• SEMICONDUCTORS • TELECOMMUNICATIONS • INDUSTRIAL

ELECTRONICS



Ol^lPpRTUNlt


Dataquest Incorporated, A Subsidiary of A.C. Nielsen Cooipany /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

JAPANESE MARKET OPPORTUNITIES BILLIONS OF DOLLARS

40

30

20

10

CONSUMER

io.1 TOTAL

4.72 SOUND

2.92

VIDEO 5.6%

INDUSTRIAL

291 TOTAL 15.02 INSTRUMENTATION

15.02 TELECOM

12.02

FA/OA 16.42

1984 1985 1984 1885

Source: DATAQUEST



HOT NEW MARKETS

CONSUMER i i .

1 '

OFFICE (OAJ

FACTORY (FA)

TELECOM

COMPACT DISC 8mm VTR j DIGITAL TV I SECURITY SYSTEMS MINI-FAX LAN (LOCAL AREA NETWORKS) WORD PROCESSING ENGINEERING WORKSTATION ROBOTS SENSORS FLEXIBLE MANUFACTURING SYSTEMS OPTICAL CONNECTORS DIGITAL PBX ELECTRONIC PHONO



EMERGING TECHNOLOGIES

• ORIGINAL CMOS MPUs/MCUs • GATE ARRAYS AND STANDARD

CELLS (ASICs) • APPLICATION-SPECIFIC STANDARD

CIRCUITS (ASSCs) • GaAs LASERS AND DIGITAL ICs • CCD PICKUP DEVICES • 3-D ICs AND CAD SYSTEMS • BIOELECTRONICS



PERCENT

15

10

5

0

-5

-10

-15

1985* SEMICONDUCTOR CONSUMPTION FORECAST

(% Change from Previous Quarter}

U.S. JAPAN ( •

( •

37

i

1,7

77

:t:-

S.&

£.1

L9

I 1

ao.bi d U ]

Q1

*CAL£MDfm VEAR

Q2 Q3 Q4 Q1 Q2 Q3 Q4

Source: DATAQUEST



PERCENT

1985 SEMICONDUCTOR CONSUMPTION FORECAST

{% Change from 1984)

0.9

I J .

U.S. JAPAN ia3

»2i

i £

iZ.2)

7,1 11

0.7

7.0

1111)

ai 02. 03 01 TOTAL Q i 02 03 Q1 TOTrtL

Soutte: DATAQUEST


Dataquest Incorporated , A Subsidiary of A.C. Nie lsen Company / 1 2 9 0 Ridder Park Drive / San Jose , CA 95131 / (408) 971-9000 / Telex 171973

JAPANESE SEMICONDUCTOR CONSUMPTION

TRILLION YEN

2.5

2

1.5

1

0.5

^ 51 . e ^ , . - - ^

1.3 0.4

0.9

^ - ^ 3 7 ^ 7 ^ , ^ - ^

57.52

2.0

0.5

t.5

^n^^-"'*^^

2.1

0,5

1.6

' TOTAL 7.0%

DISCRETE -2.62

ICs 10.4%

1983 1984 1985

Source: DATAQUEST

- 38 -O 1985 Dataquest Incorporated April 14 ed . -Reproduc t ion Prohibi ted


1985 CONSUMPTION FORECAST

(Millions of Dollars) i

t [. U.S. Q1 Q2 Q3 Q4

DISCRETE $ 425 $ 429 $ 443 $ 451 •C 2.301 2,388 2,517 2.737 TOTAL $2,726 $2,827 $2,960 $3,188

JAPAN

DISCRETE $ 452 $ 461 $ 489 $ 531 'C 1,452 1,480 1,569 1,709 TOTAL $1,904 $1,941 $2,058 $2,240

TOTAL

S 1,746 9,953

$11,701

$1,933 6.210

$8,143

PERCENT GROWTH

-8.5 -2.2 -3.2

-2.6 10.4 7.0

- 39 -



MARKET STATUS--SUMMARY

• INVENTORIES GROWING • COMMODITY PRICES COLLAPSING • SHIFT TO ASICs AND ASSCs • ENTRY OF NEWCOMERS • TRADE IMBALANCE ACCELERATING • GROWING TELECOMMUNICATIONS AND

OA MARKETS • GROWTH IN CHINA AND OTHER ASIAN

NATIONS

- 40 -



.KES^T^ Dataquest

Dataquest

CONCENTRATED OR WELL-BALANCED PRODUCTS STRATEGY?

Tsuyoshi Kawanishi Group Executive, Semiconductor Group

Director of the Board Toshiba Corporation

Mr. Rawanishi is Group Executive, Semiconductor Group, and Director of the Board of Toshiba Corporation. He started his career as a production engineer at Toshiba's Transistor Works (now the Microelectronics Center), and has spent his career at Toshiba in the development of its semiconductor business. He has served as Assistant Group Executive of the Semiconductor Group, General Manager of the Transistor Works, General Manager of the Ohita Works, and Manager-Production Engineering of the Ohita Works. Mr. Kawanishi received a Bachelor of Engineering degreee in Electrical Engineering from the Tokyo Institute of Technology.




Introduction

Semiconductors are the growth industry of the future, not

only as the so-called:;^VJ^ce of industry^' but as the driving

force behind electronics and the information revolution that

will open the way to the 21st century.

At the same time, no industry gives executives as many

ulcers.

(1) Supply and demand fluctuations are violent.

(2) Technological advance is rapid.

(3) Massive capital investment is required.

(4) Multi-spectrum technological support is required.

(5) Price reductions over time are the norm.

For these reasons, a sound operational strategy is vital,

and is directly reflected in a semiconductor firm's fortunes.

I would like to discuss the strategy for semiconductor business-

concentrated product line or balanced product line strategy.

1. The Semiconductor Market and Industrial Groups

A. Scales of various markets

The semiconductor industry is global, comprising several

large markets such as for discrete and bipolar devices, memory

chips, and logic circuits. This is summarized in Figure 1.

Every company in this industry is competing each other for a

- 1 -


stronger position in the market based on its own specific

Strategy.

B. Leading industrial groups and characteristics

Semiconductor manufacturers can be broadly divided into

two types: concentrated and well-balanced. Both types include

top-class firms, as listed in Figures 2 and 3.

I would like to consider which strategy is better in the

medium- and long-terms.

2. Merits and Demerits of Both Strategies

The two Strategies have various strengths and weaknesses.

The advantages of one are usually the disadvantages of the other

A. Concentrated strategy

The major strength of the concentrated strategy is that it

allows focused capital investment without distraction from

diverse goals. A direct result is a clear industrial image.

Also, high growth can be expected when demand for the focused

specialty line is high.

The related weakness is that the firm's performance is

vulnerable to the market growth rate and price fluctuations in

the specialty, leading to a less stable operational stance.

Development of products in a high-growth field is capital

- 2 -

Dataquest Incorporated, A Subsidiary of AC. Nielsen CorTipany /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

intensive, but as all fixed expenses must to be absorbed by

that same concentrated field the company's financial options

are few. This, in turn, reduces funds available for developing

new products and lines. The concentration also limits spin-ojj

applications from other product technologies.

From the customer's viewpoint, service problems arise if

the chips in a given product have to be obtained from more than

one manufacturer.

7 ^ B. \ Well-balanced strategy/ \-

The major strength of the well-balanced or broad product

range strategy is that profitability is spread and gives greater

operational stability. Annual sales growths of transistors,

rectifiers, logic and memory chips show inter-related market

fluctuations. As illustrated in Figure 4, when memory and logic

device growth slows, transistors pick up, while rectifiers remain

Steady.

Figure 5 shows price variation. Prices for memories and

microprocessors drop sharply, and those for Switching-Diode and

logic devices more slowly. \

Thus, a firm with various product lines that react \

differently in the market is better able to respond to /

fluctuations, and is more stable.

- 3 -


( ^ The second strength is that a wide array of products from

discrete devices to memories allows customers to procure all

the chips for a given product from one source. A breakdown of

the types and quantities of semiconductors used in representative

equipment reveals that a wide range of products from transistors

to LSIs is common/ as shown in Figure 6.

2,\ The third advantage is that technical cross-over and spin

off effects are greater. Figure 7 shows some examples between

memory, logic, BiP-ICs, and discrete devices. To simplify, the

many technologies in semiconductor manufacturing continue to be

cross-supportive. The basic materials technology and individual

circuit characteristics developed for discrete devices are

applied in ICs, while IC production leads to advances in micro-

fabrication and production technology. These technologies will,

in turn, provide a solid foundation when venturing into a new

field or product line.

i_i\ The fourth strong point of a well-balanced product strategy

is that capital investment in high-growth fields can be dispersed. ®

which promotes stable financial management.

At the same time, the strategy has its weak points,

mirroring the strengths of the concentrated strategy.

C ncgjitrated capital investment is difficult, and the corporate

image is less clear.


3. Example of a Well-balanced Strategy

Toshiba upholds a well-balanced philosophy in its basic

operation l_,s.trafeegy"; * —

A. Toshiba semiconductor product lineup

Distribution of Toshiba semiconductor products is almost

equally divided among discrete devices, bipolar circuits, logic

chips, and memories. As shown in Figure 8, the product line

appears to be well-balanced, which is the result of continuous

intense product assessment.

B. The key to success

The basic requirement for a well-balanced product line is

accurate analysis of market conditions, and preservation of

balance within the line. This requires a full understanding of

the features of the many products involved. In other words,

the returns, in sales and profit terms, on investment must be

considered carefully for each product, and investment and

manufacturing decisions taken accordingly to lead to optimization.

The first criterion is the ratio of capital investment to

sales. Figure 9 compares the capital investment required for

various product groups to give an equal sales volume. It is

Clear that returns are higher on discrete devices and logic

chips than for memories.

- 5 -

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 I (408) 971-9000 / Telex 171973

Next, the research and development investment ratio in

Figure 10 shows that discrete devices and bipolar chips produce

higher returns than memory devices.

Likewise, the sales volume per researcher varies with each

product group, as Figure 11 indicates.

In all cases, the rapid advances in memory chip technology

require more capital for facilities, research and development,

and research personnel, and less for the mature discrete device.

For bipolar ICs, technological progress in micro-fabrication

has called for state-of-the-art production facilities, while

the maturity of the technology itself has reached the point

where investment in research personnel is modest. For logic

chips, on the other hand, technological advances opening the

custom market have boosted research and development costs,

whereas investment in production facilities is still relatively

low.

The key to a successful well-balanced product strategy is

a firm grasp of all these aspects, and sound decisions on

capital investment in continuing high-growth product areas,

such as memory chips.

Another critical factor is a broad fundamental technology

base, which gives spin-off and technical cross-over benefits.

Each item in the Toshiba product line is supported by various

basic technologies. As shown in Figure 12, there are the

- 6 -


production and power technologies for discrete devices, CMOS

technology for LSIs, and bipolar linear technology in consumer

products.

The mutual reinforcement of the specific technologies used

leads to new items such as a Bi-CMOS and Super Integration, and

makes the well-balanced strategy even more effective.

4. Why a Well-balanced Product Strategy?

The semiconductor market varies greatly by product group

in growth fluctuations and returns on investment in manufacturing

facilities, research and development, and research personnel.

From the operational standpoint, each has its strengths and

weaknesses, but the basic managerial precept remains minimizing

risk and sustaining a stable business performance. This is the

core of Toshiba's well-balanced product strategy.

The semiconductor market will continue shifting from devices

to systems, leading to further customization of ICs, as illustrated

in Figure 13.

It is already possible to concentrate an entire system

into a single chip for watches and calculators, and now single-

chip televisions are close to commercialization. Accordingly,

semiconductor manufacturers must be able to respond instantly

to user requirements. Production of a full array of

- 7 -


semiconductors by a single manufacturer is essential for

single-source supply for a given product, and also for the

reduction of multiple semiconductor products to a single chip.

Thus the well-balanced product strategy fits the requirements

Of the full-range electrical manufacturer with a total systems

approach.

5. Final Decisions

Every industry and firm has its own history and special

characteristics, which are inevitably reflected in their product

strategies. Toshiba has a basic background of discrete and

bipolar device development, and VLSI technology gained primarily

from CMOS semiconductors. We consider that the best strategy

for the future is the intensive development of high-growth

products that can effectively and interactively utilize these

basic technologies. To rephrase slightly, Toshiba believes a

concentrated in-depth device selection based on a well-balanced

product line is essential to staying ahead.

#»#

- 8 -


IVIARKET SCALE BY PRODUCTS (WORLD PRODUCTION)

1$83

$ 187 Billion

1987 E

$ 41.1 Billion

T O S H I B A I B A —*

Memory

CONCENTRATED

Bipolar

T /

*" / - " '

"^'Cn ' ^ \ ^ ~ ~ - ^

" . ^

A Lo

Lso

h

J '

- 50

gic

GROUP

1

50

Share {%)

— ^ - ^ T O S H I B A ^

- 9 -


Memory 50 1

BALANCED GROUP

Bipolar

51}

J>^^ N > ^ 50

^w \

-

/-^Z / / • / '

V T

50

Logic

Share (%)

_ rII5(;

——~^-^— T O S M I O A - ^

LAG IN DEMAND FLUCTUATION BY PRODUCT

(%)

100

50

0

J. Memory

MijL / " ^ j-^ Logic

\ y ' \ ^ ^ ^ ' ~~ HeCtIIIBf

'80/4 '81/4 '82/4 '83/4

(Year/Year chan

T

96%)

O S H I B A —

- 10 -


INDEX MARKET PRICE DETERIORATION BY PRODUCT

{ • s n / . a - 1 0 0 )

(%) TOO

S O

7 0

O l ^ ^ - - ^ ° -

-N.-~-

1 S W - O i

• ^ — _ C M O S -t - O Q l C

R M o t o - C o u f D l o r

( S>t i f s m o o t h a s o )

S e i l f ^ ^ f U

t ' 6 4 K

D R A lV I

( V e a r )

• 8 5 / 1

T O S H I B A

NUMBER OF PARTS USED IN TYPICAL END PRODUCT

C-TV

VCR

Personal / ^ ^ computer ,

Main frame

Auto mobile ^ ^ ^ ^

Disc

45

190

187

22,240

34 S

Bipolar

3

25

49

3,000

45

IVIemorv

I

0

5!

36,000

4

Logic

4

10

117

50

77

' T O S M I B A .

- 11 -


INTERACTION OF TECHNOLOGIES

Hi. speed tech.

CMOS processing

VL processing

CAD

Prod, tech

Materials & basic tech.

HF processing

VL procesiting

T O S H I B A •

TOSH

/ Logic

ri^^ \ Memory

BA'S PRODUCT M I X

Disc \

7p \

\ Bipolar /

1 1 ' > - ^ FY 1984 _ 1 Sales 440 Billion Yen

^^•^^-^~^^—^-^^—^-^.m~— T O S M I B A -

- 12 -

Dataquest Incorporated, A Sutisidiary of A.C. Nielsen Connpany /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

COST EFFECTIVENESS OF INVESTMENT

Disc

Bipolar

jB | [ | f f l | n n n

SI I iml I fcialj ICEI Iln31 IllcXjl I I I L I I U I

Jffl ITffl [fe [Tffl [ p

0 s;<;=i

Memory

MJlra Qs n 1

a! 11 on J 11^1 ToCl I I rn j I U^^l IJ*^ I LI ^ M m I

Logic

JEB I ffl Uffi Iffi Iffl

• TOSMJBA '

R & D EFFECTIVENESS

(Memory = 100%)

I 100 . 200 300 4QQ;%)

Memory

DIS

Relative sales per unit of R&D

(Sales/R&OI

T08>-<ISA •

- 13 -


COST EFFECTIVENESS OF ENGINEER

Sales per engineer (Memory = 100%)

(T

Memory Logic Bipolar Disc

• T O S H I B A '

TECHNOLOGIES AND PRODUCT SUPPORTING BALANCE

•

. Disc

Bipolar

Memory

Logic

Pw - Device Opto - Device

Bipolar - Linear LSI Bi-CMOS Technology

DRAM (256k. 1M) EP-ROM (256k, 128k) S-RAM (64k, 256k)

CMOS Technology Gate Array, Super Integration

T O S H IBA

- 14 -


MULTIPLE IC PRODUCT OPTIONS

Electronic Calculator

• T O B M I B A '

- 15 -


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#

TECHNOLOGY FUTURES

William G. Howard, Jr. Senior Vice President

Director of Research and Development Motorola, Inc.

Dr. Howard is Senior Vice President and Director of Research and Development at Motorola, Inc. He has held a variety of managerial positions at Motorola in the linear integrated circuits area. Before his previous position, he was Vice President and Director of Technology and Planning for Motorola's Semiconductor Products Sector. Dr. Howard holds three patents, has published 10 papers on various subjects, and is co-author of the book, Basic Integrated Circuit Engineering. Dr. Howard is a member of the National Academy of Engineering of the United States of America, IEEE, Sigma Xi, Tau Beta Pi, Eta Kappa Nu, and Phi Kappa Phi professional societies. He has also served as the chairman of the U.S. Department of Commerce's Semiconductor Technical Advisory Committee and is now chairman of the Advisory Group on Electron Devices, Working Group B, of the Department of Defense. Dr. Howard received bachelor's and master's degrees frcan Cornell University. He also worked as assistant professor of engineering and computer sciences at the University of California at Berkeley, where he earned his doctorate.




Dataquest




iXiDataquest

Dataquest

GOVERNMENT INVOLVEMENT: HELP OR HINDRANCE?

Clyde V. Prestowitz, Jr. Counselor to the Secretary of Commerce for Japan

International Trade Administration U.S. Department of Commerce

Mr. Prestowitz is Counselor to the Secretary of Commerce for Japan in the International Trade Administration of the U.S. Department of Commerce. In this position he is the principal policy advisor to the secretary on all aspects of commercial relationships between the United States and Japan. He also advises the under secretary for international trade and the assistant secretary for international economic policy. Prior to joining the Commerce Department, Mr. Prestowitz was affiliated with Prestowitz Associates, a consulting and import/export group based in New Caanan, Connecticut. Previously, he was associated with the American Can Company, Egon Zehnder International Consulting in Japan, and the Scott Paper Company. He also served as a foreign service officer in Washington D.C. and Holland, and worked as a newspaper reporter. Mr. Prestowitz received a B.A. degree fr( n Swarthmore College, M.A. degrees from the East-West Center of the University of Hawaii and from Keio University in Tokyo, and an M.B.A. degree from Wharton School of Finance. He is fluent in Japanese, Dutch, German, and French.




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Dataquest

SPEECH TITLE TO BE ANNOUNCED

D.A. DiLeo Product Manager, Integrated Circuits

AT&T Technology Systems

Mr. DiLeo is Product Manager for Integrated Circuits at AT&T Technology Systems. His responsibilities include satisfying internal AT&T and merchant market segments. Products into these markets include custom ICs, memory, microprocessors, codecs, telecommunications, and information processing applications for large systems and consumer products. Mr. DiLeo is also a council member of the Joint Electronic Device Engineering Council (JEDEC) and several professional engineering associations. In addition to undergraduate and graduate engineering degrees and executive M.S.A. accomplishments, Mr. DiLeo holds several patents in microelectronic device design and fabrication techniques.




AT&T Slide 1

C 1985 AT&T lt:i inoloijicfi In,

AT&T 1984 COMPONENT SALES

© 198S AT4T Technologies Inc

Slide 2

- 1 -


MARKET FORCES

• Worldwide Deregulation

• Globalization

• Technology Impact

© I9S5 AT«T Technologies Inc

Slide 3

CUSTOM MOS INTEGRATED CIRCUITS

O 1085 ATftT Technologies Inc

Slide 4

- 2 -


SILICON CONTENT IN TELECOM EQUIPMENT

Relative Content

Slide 5

Slide 6

1985 AT&T Technologies Inc

- 3 -


CUSTOM EXAMPLE 10 Custom Chips

Board Reduction

Parts Reduction

Power Reduction

Cost Reduction

8:1

10:1

>2:1

4:1

Slide 7 ® 198S ATCT Technologies Inc

Slide 8

- 4 -

Dataquest Incorporated, A Sut)sidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

aides

AT&T DESIGN RULE PROGRESS Average Poly, Window. & Metal Features

Design Rules

Microns

C 1985 AT&T Tof •l•^.^lf^ti,,.-. |.>.

Slide 10

- 5 -


AT&T DESIGN RULE PROGRESS CUSTOM MOS

Typ. Unloaded Gate Delay

Design Rules -Microns

© 1985 AT4T Technologies ino

Slide 11

AT&T CUSTOM COMPLEXITY

TRANSISTORS/ CHIP

120K

100K -

80K --

60K -

40K -

20K -

1974

Slide 12

1984

(0 1965 AT&T Tectmotogies inc

- 6 -


WHY CUSTOM

Lower Cost

More Functionality

Higher Density

Lower Power

Design Security

Slide 13 © 1985 AT4T Technologies Inc

MERCHANT CUSTOM MARKET

$ Millions

Slide 14

1.400

1,200

1,000

800

600

4OO

200

Standard Cell

Gate Array

Full Custom

(Source: Electronics) O 19SS AT&T Technologies Inc

- 7 -

Oataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose. CA 95131 / (408) 971-9000 / Telex 171973

CHIP PHOTOGRAPH

Slide 15

AT&T COI^MUNICATION DEVICES

• Network - CODECS - T l Interface - ISDN Basic Access

• Data Communications - Modems - Protocol Controllers - Data Encryption Processors

• Signal Processors - DSPs - Speech Circuits - Microprocessors/Computers

© 1985 AT4T Technologies Inc

Slide 16

- 8 -


AT&T FUTURE CUSTOM

ISDN Bas ic

Access

Signal

Processing

CODECS

Integrated System

on a Chip

Protoco l

Contro l lers

Slide 17 C iflHS rtTST T..

GLOBAL AT&T

Slide 18 1985 AT&T Technologies inc

- 9 -


DaDataquest

Dataquest

FUNDAMENTAL FORCES DRIVING THE 32-BIT MPU MARKET

Richard L. Sanquini Division Vice President Microprocessor Group


Mr. Sanquini is Division Vice President of the Microprocessor Group at National Semiconductor Corporation. He has worked for 24 years in the semiconductor industry at both RCA Solid State Division and National Semiconductor Corporation. For the last seven years he has been directing National's microprocessor business. His responsibilities have included the development and introduction of National's Series 32000 family, the industry's first commercially available 32-bit microprocessor. Mr. Sanquini received a B.S.E.E. degree from the Milwaukee School of Engineering and did graduate work in engineering at Columbia University. He has taught semiconductor courses at the University of Michigan and has published 21 papers on integrated circuits.




FUNDAMENTAL FORCES DRIVING

THE 32-BIT MPU MARKET

R. L. SANQUINI VICE PRESIDENT

MICROPROCESSOR DIVISION NATIONAL SEMICONDUCTOR CORR

2 National Semiconductor'

"CURRENTLY PREVAILING VIEWS ABOUT THE FUTURE DEMAND FOR HIGH POWERED COMPUTATIONAL ELEMENTS ARE SOMETIMES MISGUIDED.

ONE SUCH MYTH SAYS THAT THE DEMAND FOR 32-BIT (OR LARGER) PROCESSORS IS LIKELY TO BE LIMITED, BECAUSE MOST APPLICATIONS DO NOT NEED SO MUCH COMPUTATIONAL POWER.

WHAT THIS PROJECTION FAILS TO CONSIDER IS THE COMPUTATIONAL NEED FOR ERROR-TOLERANCE AND USER FRIENDLINESS THAT ARE ESSENTIAL IF WE EXPECT ORDINARY MORTALS TO USE TOMORROW'S MICROCOMPUTER EFFECTIVELY" . . . RAJ REDDY

a National Semiconductor

- 1 -

LMrisii-1

.4::


32-BIT MICROPROCESSORS

MORE PERFORMANCE

PER PRICE

PER UNIT OF AREA

(PERFORMANCE/PRICE/AREA)

2 National SemiconductDr <

PRODUCTIVITY IMPROVEMENT

PERFORM MORE TASKS IN PARALLEL

REDUCE NON-PRODUCTIVE PERIODS

MINIMIZE THE OVERHEAD

a Nf^lonal Semiconductor <

- 2 -


32-BIT TECHNOLOGY CONTRIBUTION

ENHANCE EXISTING APPLICATIONS

MAKE POSSIBLE DESIRED APPLICATIONS

CREATE NEW APPLICATIONS

' a National Semiconductor —

PRODUCTIVITY IIMPROVEIWENT AREAS

INDUSTRIAL INTEGRATION

2 National Semiconductor < LWIi)1'I

- 3 -


THE LAB & OFFICE

PROJECT/DEPT 1 PROJECT/DEPT.

• DESK TOP

NETWORK

1 J

^ y<=>y<=>,.^fs^ • ^^^^^ p . IMANUFACTURING

FILE SERVER 2- DATA CENTER

S National Semiconductor'

THE MANUFACTURING

LtNEI LINEj

£ ROBOTS hIACtlINE TOOLS

NETWORK

3 3

^<=i^<=.y. DATA UNKS OFFICE LAB

SATELUTE PROCESSOR

I National Semiconductor — ^ ^ - ^

DATA CENTER

- 4 -

Dataquest I nco rpora ted , A Subsidiary of A.C. N ielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Te lex 171973

32-BIT CONTRIBUTION AREAS

TODAY

3M1 — DESK TOP/ENG. WORKSTATION/ ROBOTICS

3M10 — FILE SERVER/SATELLITE PROCESSOR

— COMMUNICATION/NETWORK/ DATA LINK

a National Semicondiictor <

32-BIT MICROPROCESSOR APPLICATIONS

THE "DESK TOP" — 3M1

FEATURE REQUIREMENTS

MULTITASKING MULTIFUNCTION NETWORKING GRAPHICS "CUBIC FEET"

I National Semiconductor <

- 5 -


32-BIT MULTI-MICROPROCESSOR APPLICATIONS

THE FILE SERVER — 3M10

10 MIPS 10 MPfXEL 10 MOrTE

FEATURE REQUIREMENTS MULTIPORT MULTIPROCESSORS DATA BASE HIGH-SPEED DATA LINK "CUBIC FEET" ERROR-TOLERANCE

a National Semiconductor <

32-BIT MICROPROCESSOR APPLICATIONS (UNITS)

OTHERS 2m TELECOM, MIL, ETC.

1985

OWPC 32,7*i

CAD/CAE Z4.8U

CAM/RDBOnCS l l . m

SOURCE: DATAQUEST 10-1S-S4

a National SemlconductDr <

- 6 -


32-BIT MICROPROCESSOR APPLICATIONS (UNITS)

1990

SOURCE: DATAQUEST 10-15-84

I National Semiconductor '•

OA/PC WVi

OTHERS 4K

CADICAE m

CAM/ROBOTICS 4 ^

LN/1S11-1

32-BIT MICROPROCESSOR APPLICATIONS

TOMORROW — ARTIFICIAL INTELLIGENCE

Ai REQUIREMENTS FOR FUTURE 32-BIT PERFORMANCE

VISION 100 MIPS

NAVIGATION & MOBILITY 1,000,000 MIPS MANIPULATION SPEECH & LANGUAGE SEARCH CONDITION — ACTION

100 MIPS

1,000 MIPS 5,000 MIPS

100,000 MIPS

- 7 -



KEY EVALUATION FACTORS

• SOFTWARE AVAILABILITY & EFFICIENCY

• COMPLETENESS OF THE HARDWARE CLUSTER

• SYSTEM PERFORMANCE

• SYSTEM PRICE

• TIME TO MARKET

• SUPPLY RISKS

I National SemlcondtictDr ' kNM931-t



SOFTWARE AVAILABILITY & EFFICIENCY

COMPLETENESS OF THE HARDWARE CLUSTER

SYSTEM PERFORMANCE

SYSTEM PRICE

TIME TO MARKET

SUPPLY RISKS a National SemiconductDr'

- 8 -

Dataquest Incorporated, A Subsidiary of AC. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

32-BIT MICROPROCESSORS — SOFTWARE

• SUPPLIED BY MPU VENDOR

• CONVERSION OF MINI & MAINFRAME BASED SOFTWARE

• DEVELOPED BY ISV AS A RESPONSE TO MARKET DEMAND

• DEVELOPED ON A PARTNERSHIP BASE

• DEVELOPED BY USERS I National SemicondiA tor ^ ^ — ^ - — ^ — » « — i ^ - ^ ^ - ^ — . ^ - ^ ^


SOFTWARE — WHERE'S IT COMING FROM?

A. OPERATING SYSTEM — UNIX

B. LANGUAGES & SOFTWARE ENGINEERING TOOLS

C. APPLICATION SOFTWARE

a National Semlcondix tDr

I.M/1S31.I

- 9 -


32-BiT MICROPROCESSORS

SOFTWARE — UNIX

• "DE FACTO STANDARD" — PORTABLE

• PROVIDES ALL REQUIRED SUPPORT FUNCTIONS FOR 3M1 & 3M10

• DEMANDS 32-BIT "POWER & TORQUE"

a National Semicondiictor'






• SYSTEM PRICE

• TIME TO MARKET

• SUPPLY RISKS

I National Semiconductor ~

- 10 -

Dataquest Incorporated, A Subsidiary of AC. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973


HARDWARE CLUSTER

C COMPUTING CLUSTER BUS ] • UNIX EFFICIENT -^ PERFORMANCE

• COMPLETENESS — PRICE, TIME TO MARKET/CUBIC FEET

• UNIX/CLUSTER INTEGRATED -* RELIABILITY, TIME TO MARKET

a National Semiconductor' LWIUt-l

32811 MICROPROCESSOR FORECAST TAM ($ MILLION)

1000

900

800

700

600.

500

400

300

200

100

0

r 32-BIT COMPUTING CLUSTERS

/

/

^ r 32-BIT ^ CPU ONLY

^ ^ (OATAQUESTI

— ^ I I I ,

1984 1985 198B 1987 19SB 1983 1990

- 11 -







• SYSTEM PRICE

• TIME TO MARKET

• SUPPLY RISKS I National Semiconductor ^ — ^ — — ^ ^ — i ^ ^ ^ — ^ ^ ^ ^ - ^ ^ ^ ^ — ^ ^ ^ ^

32-BIT MICROPROCESSORS NEW CRITERIA FOR MEASURING

MICROPROCESSORS

SYSTEM PERFORMANCE = CPU PERFORMANCE X EFFICIENCY

3C=

fg^^xxxxxa

EFFICIENCY

I National SemicondiK^

. ^ S ^ S ^ ^

ENGINE POWER ~ FRICTION LOSS ENGINE POWER

- 12 -



SYSTEM PERFORMANCE WArr

STATES

CLusren

'"" Cv'

< ^

™ O

i WAIT

STATES

WAIT STATES

o^a ! A - K J CACHE l/LA,i I v v l ""TRoi xj-y I

A-N W MEIHORY

A K DISKS { ) GRAPHICS N K COMM

A K PROCESSOR ( ; CLUSTER N — K I=1...n

CPU — "MIPS" X EFFICIENCY = SYSTEM — "MIPS' I National Semiconductor —i

32-BIT MICROPROCESSORS "STAND-ALONE" CPU DESIGN

SYSTEM PERFORMANCE BEHAVIOR

15IM

^om

sm

FREOX-fS im

FREQX ,•

• AFFER 2 WS THE 50% FREQ INCREASE LOSES ENTIRELY THE EXPECTED PERFORMANCE GAIN!

• AFTER 3 WS THE 2 CURVES ALMOST OVERLAP!

• AFTER 5 WS EFFICIENCY DROPS TO 50%!

"•"-fT X

± 3 4

WAIT STATES a National SemiconductDr •

- 13 -

Dataquesf Incorporafed, A Subsidiary of A C . Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973


CPU DESIGN MUST BE PERFORMED AS AN INTEGRAL PART OF

— HARDWARE CLUSTER

— REAL SYSTEM NEEDS

— AVAILABLE SUPPORTING TECHNOLOGY (e.g. MEMORY, CACHE, etc.)

— SYSTEM SOFTWARE REQUIREMENTS

a National SemiconductDr'






• SYSTEM PRICE

• TIME TO MARKET

• SUPPLY RISKS a National Semiconductor ^ — ^ ^ ^ ^ ^ • ^ ^ - ^ ^ ^ - ^ ^ ^ ^ ^ ^ — ^ ^ ^ ^

- 14 -


SYSTEM PRICE EVOLUTION 3M1 & 3M10

9 KtaHonal SemlccHKluctDr •

THE 32-BIT MICROPROCESSORS PUT THE SUPER MINI PERFORMANCE WHERE THE PRODUCTIVITY IMPROVEMENT NEEDS ASK FOR: AT THE WORKING LEVEL

32-BIT MICROPROCESSOR

SYSTEMS

PRICE PERFORMANCE

UNIT AREA

TODAY

2 National Semknnductor <

- 15 -







• SYSTEM PRICE

• TIME TO MARKET

• SUPPLY RISKS

I National SemlcorKJuctor •

TIME TO MARKET

32-BIT HARDWARE CLUSTER COMPLETENESS

SOFTWARE & TOOLS COMPLETENESS

UNIX-CLUSTER INTEGRATION

S National Semiconductor'

- 16 -


SUPPLY RISKS

MULTIPLE SOURCES

PROVEN TECHNOLOGY

S National SemiconcKJclDr <

SUMMARY

1990 — 32-BIT MICROPROCESSORS

^ INTEGRAL PART OF MOST SYSTEMS

ix 8-BIT & 16-BIT — SECONDARY ROLES

a National Semiconductor <

- 17 -

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / S.m Jose, CA 95131 / (408) 971-9000 / Telex 171973

(::)aE>ataquest

5u?: (;:)a Dataquest

JAPANESE SEMICONDUCTOR INDUSTRY—THE COMING NEW AGE

Tomihiro Matsumura Senior Vice President and Director

NEC Corporation

Mr. Matsumura is currently Senior Vice President and Director of NEC Corporation and is responsible for semiconductor operations. He was previously General Manager of NEC's Integrated Circuit Division. Prior to that, he worlced for the Integrated Circuit Division in the fields of circuit design, product planning, and microcomputer system design. He was also engaged in the development of discrete semiconductors at NEC. Mr. Matsumura graduated from the Engineering Department of Nihon University and continued in the same department as a graduate researcher for four years.




JAPANESE SEMICONDUCTOR INDUSTRY

— COMmC NEW ERA —

INTERNATIONAL SPOTLIGHT ON JAPAN

- 1 -


JAPANESE SEMICONDUCTOR MARKET

SOURCE DATAQUEST

JAPANESE SEMICONDUCTOR SHIPMENTS

SOURCE DATAQUEST

- 2 -


SEMICONDUCTOR SUPPLIERS RANKING

1975 1978 1981 1984

1 2 3 4 5 6 7 8 9

10

] [ ] C

] C

J L

J

JAPANESE SUPPLIERS SOURCE OATAQUEST

WHY

1. NEW APPLICATION/ LARGE SCALE

2. ENGINEERING RESOURCES

3. CONSISTENT CAPITAL EXPENDITURES

- 3 -

Oataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Parl Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

CREATING NEW IVIARKET

/ c & c

PC

VTR

CTV

CALCULATOR

EDP — I —

70 '80 30

ENGINEERS ENGAGED IN JAPANESE IC INDUSTRIES

EMPLOYMENT

15,000-

10,000-

5,000

SOURCE MiTi


ELECTRICAL AND ELECTRONIC ENGINEERING GRADUATES

GRAD

20,000-j

UATES

10,000-

SOURCE MINISTRY OF EDUCATION MORGAN STANLEY

70 73 76 79

U.S. & JAPANESE MERCHANT CAPITAL PERCENT OF

EXPENDITURES jm

m 3,000-1

2,000-

1,000-

-30

-20

-10

U.S. _ JAPAN

rnm 78 79 '80 '81 '82 '83 '84 SOURCE DATAQUEST

- 5 -

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder i v. r Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

WW ESTIMATED CAPITAL EXPENDITURES AS A PERCENT OF IC REVENUES

100-

50

•75

%

11%

25% 35%

'80 '85

SOURCE DATAQUEST '82

JAPANESE SEMICONDUCTOR INDUSTRY CONCERNS

L GLOBAL APPROACH

2. COn/lPETITIVE TECHAIOLOGY

3. RELATED INDUSTRIES

- 6 -


OVERSEAS SEMICONDUCTOR FACILITIES

^.Wi^^^

ANNOUNCED PAPERS AT ISSCC PAPERS 100

'71 '73 75 77 79 '81 '83 '85

- 7 -


JAPANESE LICENSING AGREEMENTS IN 1984

JAPAAIESE NON-JAPANESE

10

c ^

3 13

SOURCE DATA QUEST

JAPANESE EQUIPn/IENT iVIANUFACTURERS GROWING (SEMiCONOUCTOR RELATED REVENUES)

(BILIOI\IS OF YEN)

NIKON

CANON

DISCO

SHINKAWA

TAKEDA

TOKYO ELECTRON

ULVAC

ANELVA

1980

3.0 10.0

6.6 7.4 9.4

19.2

8.0 1.6

1983

20.0

15.0

11.4

11.4

24.0

39.0

16.0

8.1

1984E

45.0

22.0

17.6

20.0

38.0

72.2

28.0

16.0

AGR 1980-1984

96.8%

21.8%

27.7%

28.2%

41.8%

39.3%

36.7%

77.8%

SOURCE DATAQUAST & NEC

- 8 -


SILICON PRODUCTION IN JAPAN

TON 3,000-

2,000-

1,000

84/80 AGR

16%

WORLD 84/80 AGR

36%

'80 '81 '82 '83 '84 SOURCE NEC

- 9 -


mftm^tiBtwmm

iSS5H*0ifi

1. n^co^^Mi^mm 2. B:^±m<D^^mWiiim

3. i^mi^j>(-ti-<7>tii^m^>^>^'

- 1 -

Oataguest Incorporated, A Sutisldiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

B:$:(Dmm{$mm

75 '7» -ai

B^^mmoymmwtam

B$

20-

10-

SOURCE DATAQUEST

- 2 -

Oataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

mmwy-—f3-(Diiimm3ydFyci' iUti 1978

1 [

2 L

5 C 6

7

8

9

10

] [ 3 [ I

4 I I

3 :

1 C

1 C

1981

^

H C

1984

B:*:±«l

SOURCE DATAQUEST

* ( 7 ) i

1. rjj*ii!l^(7>!5:^

2. ^mt)(DikX

3. Jii!flD«:ig#JS»

- 3 -


mmm^0$5t!

. * ^ -

c&c PC

VTR

CTV

Calculator

EDP

70 '80 '90

&m^u

15,000

10,000-

5.000 O ^*^^tam

75 •78 •81 •84 SOURCE MITI

- 4 -

Oataguest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

^mm^ 20. 000-

10. 000-

'70

mmmo^^^mmn

JAPAN

73 76 79 SOURCE IVIINISTRY OF EDUCATION

MORGAN STANLEY

*@ • B*^-* -©^f i iJSg*i^

M$ 3,000-1

2,000

1,000 U.S.

[JAPAN

SS-hi^tb -TAnoA

-30

-20

-10

78 73 'm '81

- 5 -

*82 *83 '84 SOURCE DATAQUEST


iciiinMizm?>^mmBi]Si^Mmm)

100-

50-

75 '80 '85

SOURCE DATAQUEST '82

Bto^^mn ttcDii

1. B 1^ b

2. :tf}i>±Jl'1^m(D^^t^^

3. mm.m^<Dm^

- 6 -


cifn-n)Vfj:^mmi&(Dmm

issccm^mmwn ^mn^ 100-

50- u.s.

'71 '72 '73 '74 '75 '76 '77 '78 '79 '80 '81 '82 '83 '84 '85

- 7 -


B*3£||a)ajB3?3S 1984 H*±^ ^m±m

10 d ^

13

Source Data Quest

(lO^R)

NIKON

CANON

DISCO

SHINKAWA

TAKEDA

TOKYO ELECTRON

ULVAC

ANELVA

1980

3.0

10.0

6.6

7.4

9.4

19.2

8.0

1.6

1983

20.0

15.0

11.4

11.4

24.0

39.0

16.0 n 4

8.1

1984E

45.0

22.0

17.6

20.0

38.0

72.2

28.0

16.0

AGR 1980~1984

96.8%

21.8%

27.7%

28.2%

41.8%

39.3%

36.7%

77.8%

SOURCE DATAQUEST & NEC - 8 -

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Coinpany /1290 Ridder Park Drive / San Jose. CA 95131 / (408) 971-9000 / Telex 171973

B:ii0)mf&mi/[jziy^m TON

3,000-

2,000-

1,000-

24%

WORLD

JAPAN

- 9 -

84/80 AGR,

16%

46%

84/80 AGR

36%

'801 '81 '82 '83 '84

SOURCE NEC

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Parl( Drive / San Jose, CA 95131 / (406) 971-9000 / Telex 171973

Dataquest

CHALLENGES AND OPPORTUNITIES FACING U.S. EQUIPMENT SUPPLIERS IN THE FAR EAST

Jon D. Tompkins President, Semiconductor Equipment Group

Corporate Vice President Varian Associates \^/sj^t^

^ino ' Mr. Tompltins is President of the Semiconductor Equipment Group and a Corporate Vice President at Varian Associates. The Varian Semiconductor Equipment Group (SEG) consists of the Extrion Division, which manufactures ion implantation systems; the Lithography Products Division, which manufactures electron beam maskmaking systems; and the Thin Film Technology Division, which manufactures sputter coaters for metallization in semiconductor manufacturing. Varian SEG is also a partner with Tokyo Electron Laboratories (TEL) in a manufacturing joint venture known as TEL-Varian. Before joining Varian, Mr. Tompkins spent five years as an investor, director, and operating manager for several small high-technology companies. Previously he held senior management positions at Spectra Physics, Inc., a major supplier of coimnercial laser products. He also spent four years at Hewlett-Packard in a variety of marketing positions. Mr. Tompkins received a B.S. degree in Electrical Engineering from the University of Washington, and a Master's Degree in Business Administration from Stanford University.




CHALLENGES AND OPPORTUNITIES FACING US EQUIPMENT SUPPLIERS IN JAPAN MARKET

Good afternoon ladies and gentlemen. As the President of the

Semiconductor Equipment Group of Varian Associates it is an

honor to be able to represent american manufacturers of

semiconductor equipment at this important conference.

(Slide 1): I have three objectives in my presentation. I

intend to describe the role that Varian Associates plays in the

world and Japanese semiconductor marketplaces as a supplier of

state-of-the-art production tools. I intend to define the

opportunities that I see for United States equipment companies

in the Japanese market. Finally, I will discuss the challenges

facing american companies and, in fact, all foreign companies as

they compete for marketshare in Japan. Where appropriate, I

will use Varian's experience to illustrate important points.

(Slide 2): Varian Associates is a leading supplier of high

technology semiconductor manufacturing equipment. Varian has

been involved in the industry since the middle 1970's. We are

currently involved in three aspects of semiconductor

manufacturing. They all focus on wafer fabrication. They

include ion implantation, where we are the worlds largest

manufacturer and the largest supplier to the Japanese market;

thin film coatings, where we believe that we are the largest

supplier of sputtering machines for metallization in the world

and in the Japanese market, and lithography, where we have been

involved in the electron beam mask making market for several

years. We also manufacture MBE systems and we are in the

- 1 -


process of improving our competitive position in the rapid

thermal annealing marketplace.

Our sales of semiconductor manufacturing equipment in our fiscal

year 1984 were about $190 million. As a total corporation

Varian had sales of $929 million. We distribute our products in

Japan through Tokyo Electron Limited (TEL). We also manufacture

ion implanters in Japan at TEL-Varian, a joint venture that we

have with Tokyo Electron Limited. As many of you know, we have

been involved for a long time in the Japanese semiconductor

market and, as a result, we believe that we can comment

objectively with regard to the opportunities and challenges

facing foreign suppliers to your marketplace.

(Slide 3): We have three opportunities in your marketplace.

First, according to Dataquest data, your market is the largest

market for capital equipment and it is imperative for us to

participate on that basis alone. Second, due to your striving

for technology leadership you offer a ready market for leading

edge manufacturing tools. Third, your market represents an

Opportunity for exposure for companies like Varian to new

technical approaches that can serve as the foundation for future

manufacturing tools. I would now like to address in more detail

each of these important opportunities.

(Slide 4): This slide shows that Japan became the largest

single country market for semiconductor capital spending in the

1983 and 1984 period of time. Although there is some question

regarding the absolute amount of spending that will occur in

1985 due to the softness in our industry, it is clear from this

Slide that the gap between capital spending in Japan and North

America is projected to increase in the future.

- 2 -

Dataquest Incorporated, A Subsidiary of AC. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

(Slide 5): Japan is clearly a ready market for new

manufacturing tools. We at Varian agree that this demand is

being principally driven by the high focus among Japanese

semiconductor companies on leadership in the DRAM marketplace.

Although I cannot say with total accuracy that all of the

following technical innovations are being solely driven by

Japanese semiconductor designers, we at Varian are certainly

aware of several advances in semiconductor design that are

challenging us to accelerate our product development efforts.

We are very aware of plans within the industry to use 200 mm

wafers in 1986. This clearly has significant impact on our

medium current serial implanters and on all product development

in the deposition area. We see the development of megabit and

larger DRAMs expanding the range of implants that we will have

to provide. We are very aware of the requirement for improved

step coverage in films. We are tracking very closely the

increasing use of silicides in designs and, obviously the move

to the four megabit DRAM will require submicron design rules

that in turn push new lithography approaches such as x-ray to

the forefront. Overlaying all of these technology drivers in

the product lines that Varian currently serves, are dramatic

changes in the requirements for particulate reduction, higher

reliability levels, and compatibility with future automation

approaches.

This continued rush of technology innovation makes it essential

that United States equipment supplier focus their efforts on new

product design very carefully and invest aggressively to compete

in your marketplace. As an example (Slide 6) the Varian

Semiconductor Equipment Group research and development spending

has increased as shown in this slide from a level of 9.8% in

1982 to a projected level in 1985 of almost 13%. This dramatic

increase in our level of spending should underscore for you how

serious Varian intends to compete in the future market for

semiconductor capital equipment.

- 3 -


(Slide 7): We believe that Japan represents a source of new

technical ideas and approaches for Varian and other United

States semiconductor equipment companies. It is my perception

that you have increased your willingness to share technology

with United States equipment companies in order to ensure that

solid manufacturing solutions are forthcoming for the one

megabit DRAM programs. We recognize the fact that some of this

is being encouraged by government actions in Japan. The result

will be more timely availability of important manufacturing

tools for use in your market.

I would now like to change directions and discuss the challenges

to US companies in competing in Japan. I believe four

Challenges predominate. First, we must track rapid technology

innovation at a time when our equipment design cycles seem to be

increasing. Second, we must meet the unique needs of your

market. Third, we and all foreign suppliers to your market must

convince you that support for our products is available on a

timely basis. Finally, we will be increasingly challenged to

meet your needs for automation compatibility.' Now I would like

to talk about these challenges in some detail.

(Slide 9): We are definitely challenged by the unique market

needs in the Japanese market. In preparing for this

presentation, I gave considerable thought to what is truly

unique about your market. In the final analysis, I believe

three items differentiate your market from any other market in

the world. Japanese semiconductor designers are taking

approaches to device design at this time. That can place

specific, unique requirements on basic tool performance. A good

example of this is the fact that your designers have

concentrated much more heavily in the past on molysilicide

applications compared with designers in other country markets.

This unique requirement not only places a challenge on US

equipment designers to meet the unique performance requirement,

it also requires that we be able to support that required

process in this marketplace.

_ 4 _

.taquesf Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose. CA 95131 / (408) 971-9000 / Telex 171973

Japanese semiconductor companies often times require minor

changes to the equipment in order to meet a unqiue internal

requirement. Your needs for customized interfaces, etc. exceeds

that Of any other country market. Thus, in order to

successfully serve you market we must be able to provide

customization to our product. This was a key driver behind the

decision to form our joint venture with TEL.

As a result of the need to support processes locally and to

serve the needs of your market for customization, US equipment

companies must have a local presence in order to successfully

compete in the Japanese market. There are two popular

approaches. First, companies are forming joint ventures.

Second, they are opening wholly owned subsidiaries. We at

Varian choose the joint venture route early in our involvement

in your market. We have been involved with Tokyo Electron

Limited in our joint venture since 1981. Both companies have

made a major investment in this activity. It now consists of

two buildings located at the TEL manufacturing site in

Nirasaki. These buildings occupy about 90,000 square meters of

space. Our joint venture employs about 150 manufacturing

personnel. We are very pleased with this joint venture. It

allows US to react quickly to your needs for customized ion

implantation systems. It allows us to continue to work with the

powerful TEL Sales and Service organization in providing almost

a perfect solution to your requirements for leading edge

manufacturing tools.

Slide 10 Shows you the facilities in Nirasaki. Note the

buildings are new. They are modern; they are very efficient.

Slide 11 shows you the inside of one of the buildings. This building is dedicated to manufacturing medium current ion implanters. Almost all of our medium current implanters for Japanese consumption are now manufactured in Nirasaki at our joint venture.

- 5 -


(Slide 12): Customer support is essential to high productivity

in any semiconductor manufacturing plant. With the

concentration of industry in your country, it appears as though

Japanese semiconductor manufacturers have been able to pull

equipment support much closer to your factories at a rate faster

than your competitors in the United States and Europe. One of

the principal reasons why we originally committed to our

relationship with Tokyo Electron Laboratories was their

commitment to near site support for all of the equipment that

they would supply. We believe that approach is working and is a

major reason why most Japanese semiconductor companies prefer to

buy Varian ion implanters and sputter coaters.

(Slide 13): The last challenge that I would like to discuss

today has to do with the role we and other US equipment

manufacturers can play in the automation of Japanese wafer fabs.

This is proving to be a difficult challenge for all of us. It

is primarily due to some fundamental differences between

Japanese semiconductor companies and counterparts in other

countries. The principal difference that I have noted, is the

fact that almost all of you have strong inhouse computer

systems, and software capability. This allows you to undertake

a large part of the automation task without outside help. It

reduces the interaction that we as an equipment company need to

effectively supply you with automation solutions. In addition,

it appears as though you are undertaking automation with great

secrecy. This, in effect, is also making it more difficult for

US manufacturers to help you solve your automation problems. In

addition, it appears as though you are not interested in

adopting the communications protocol accepted by SEMI as the

industry standard. I do not clearly understand the state of

that at the present time. However, I do know that virtually all

US manufacturers are designing next generation equipment around

the SECS II protocol. If you shy away from it we run the risk

- 6 -

.taquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

of incompatibility. That will further increase the difficulty

in helping you solve your automation problems. We at Varian are

dedicated to remaining an important supplier of essential tools

for your wafer fabrications. We need a forum to insure that

your needs are communicated to us and thus we can respond with

the appropriate tools at the appropriate time to solve your

problems.

I would like to close by thanking Dataquest for giving me an

opportunity to comment on the challenges and opportunities

facing United States semiconductor equipment cornpanies. We at

Varian thank you for your business and your support. We look

forward to competing aggressively for share in your market in

the years to come. Thank you. It's been a pleasure to speak

today.

varian CHALLENGES AND OPPORTUNITIES

FACING U.S. EQUIPMENT SUPPL IERS IN J A P A N MARKET

- 7 -

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder ParK Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

DATAQUEST PRESENTATION OBJECTIVES

vanan

• ROLE OF VARIAN IN WORLD AND JAPAN SEMICONDUCTOR INDUSTRY

• OPPORTUNITIES FOR U.S. EQUIPMENT COMPANIES IN JAPAN MARKET

• CHALLENGES FACING U.S. COMPANIES IN JAPAN

VARIAN IS A LEADING SUPPL IER OF HIGH TECHNOLOGY SEMICONDUCTOR MANUFACTURING EQUIPMENT yarian

• INVOLVED IN ION IMPLANTATION, THIN FILM COATINGS (SPUTTERING AND MBE), AND LITHOGRAPHY

• FY'84 SALES: $ 1 9 0 MILLION

• DISTRIBUTE IN JAPAN VIA TEL

- MANUFACTURE IN JAPAN (TEL-VARIAN JOINT VENTURE)

- 8 -

ataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose. CA 95131 / (408) 971-9000 / Telex 171973

T H E O P P O R T U N I T Y IN J A P A N

van an

• PARTICIPATE IN THE LARGEST EQUIPMENT MARKET

• READY MARKET FOR LEADING EDGE TOOLS

• EXPOSURE TO NEW TECHNICAL APPROACHES

J A P A N IS T H E L A R G E S T M A R K E T

. . THE GAP IS GROWING vanan

MILLIONS OF

DOLLARS

(THOUSANDS)

9

8

7

6

5

4

3

2

1

O

CAPITAL SPENDING NORTH AMERICA VS JAPAN

U.S. COMPANIES JAPANESE COMPANIES

-•OuHLt l>ATAlllfc«.l

75 76 77 78 79 80 81 82 83 84 85 86 87 80 ytAH

- 9 -


JAPAN IS A READY MARKET FOR NEW TOOLS

vanan

• DRIVEN BY DRAM DEVELOPMENT

- SUBMICRON DESIGN RULES - 200MM WAFERS - EXPANDING RANGE OF IMPLANTS - IMPROVED STEP COVERAGE IN FILMS - BROAD USE OF SILICIDES

• U.S. SUPPLIERS MUST FOCUS EFFORTS CAREFULLY AND INVEST TO COMPETE

VARIAN SEG R&D IS INCREASING TO MEET MARKET NEEDS

vanan

1982 1983 1984 1985E

R&D AS % OF SALES 9.8 10.4 11.1 12.7

- 10 -


JAPAN IS A SOURCE OF NEW TECHNICAL APPROACHES

•• varian

• ALSO DRIVEN BY DRAM PROGRAMS

• ENCOURAGED BY GOVERNMENT ACTIONS

THE U.S. COMPANY CHALLENGE IN JAPAN

TRACK RAPID TECHNOLOGY INNOVATION

van an

-Tf^.l-.V^-^ • J^ • MEET UNIQUE MARKET NEEDS

^^f^y> • CONVINCE CUSTOMERS THAT SUPPORT IS AVAILABLE Aff

>1' ^ ^ • MEET NEEDS IN AUTOMATION

- 11 -


REPRODUCTIONS OF SLIDES 10 AND 11

WERE UNAVAILABLE AT TIME OF PUBLICATION

- 12 -

Jtaquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

UNIQUE MARKET NEEDS IN JAPAN

• BASIC TOOL PERFORMANCE . . . REQUIRES "PROCESS" SUPPORT

• CUSTOMIZATION

• LOCAL PRESENCE IS CRITICAL - JOINT VENTURE - SUBSIDIARY

varian

THE SUPPORT ISSUE varian

CRITICAL TO U.S. SUPPLIER SUCCESS

JAPAN FAB AUTOMATION varian

• A DIFFICULT CHALLENGE TO U.S. MANUFACTURERS - STRONG IN-HOUSE CAPABILITY - SECRECY - DIFFERENT PROTOCOLS

• U.S. SUPPLIERS OFFER NEEDED TOOLS . . . WE NEED A FORUM TO ENSURE JAPAN NEEDS ARE COMMUNICATED

- 13 -


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Dataquest

SILICON PERVASIVENESS

Kihachi Tamura President

Shin-Etsu Handotai Co., Ltd.

Mr. Tamura is President of Shin-Etsu Handotai Co., Ltd. He joined Shin-Etsu Chemical Co., Ltd., in 1948, and has held a variety of administrative positions within the company since that time. In 1972, he became President of Shin-Etsu Handotai and in 1983 he was also appointed to Vice President and Representative Director of Shin-Etsu Chemical. Mr. Tamura received a Bachelor of Science degree from the Department of Science at Hakkaido Imperial University.

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DINNER SPEAKER

Atsuyoshi Ouchi Vice Chairman of the Board Representative Director

NEC Corporation

Dr. Ouchi is Vice Chairman of the Board and Representative Director of NEC Corporation. In addition, he presently holds concurrent posts as Chairman of NEC Home Electronics, NEC Kansai, NEC Yamagate, NEC Toyama, and NEC Environment Engineering. He is also a member of the Board of Directors of 11 other domestic and overseas subsidiary companies of NEC Corporation. Dr. Ouchi joined NEC in 1942, and has held a variety of managerial and executive positions, each with increasing responsibility. Before assuming his current position, he was Senior Executive Vice President and Representative Director. Dr. Ouchi was awarded the Japan Industrial Technology Grand Prize frcan the Prime Ministry of Japan in 1974 for the development of a high-performance computer system, and received the Blue Ribbon Medal frcan the Japanese government in 1984. Dr. Ouchi graduated from the E.i.ectrical Engineering Department, Faculty of Technology, Tokyo Imperial University, and received a B.E. degree. He also received a D.E. degree from the University of Tokyo for research into the applications of negative impedance converters.




Dataquest




(::>aDataquest

Dataquest

DINNER SPEAKER

W.J. Sanders III Chairman of the Board, President,

Chief Executive Officer Advanced Micro Devices Inc.

Mr. Sanders is Chairman and founder of Advanced Micro Devices Inc. and is also the company's President and Chief Executive Officer. Before founding AMD, Mr. Sanders was Group Director of Marketing Worldwide at Fairchild Semiconductor. Previous positions at Fairchild included Sales Manager, Regional Sales Manager, Area Sales Manager, Department Head, and Director of Marketing. Prior to Fairchild he was in the engineering department of Douglas Aircraft Co. and was a Sales Engineer in the mid-America area for Motorola Semiconductor. Mr. Sanders is also a co-founder and director of the Semiconductor Industry Association, and co-founder of the Santa Clara County Manufacturing Group, the Semiconductor Research Corporation, and the Microelectronics and Computer Technology Corporation. He is a member of the Board of Directors of Donaldson, Lufkin and Jenrette and The Listed Company Advisory Committee of the New York Stock Exchange. Mr. Sanders graduated from the University of Illinois College of Engineering with a B.S. degree in Electrical Engineering.




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Lb^S^Oii DaDataquest

E>ataqiiest

iVIOS MEMORY STATEGY: PARTNERS AND ADVERSARIES

Lane Mason Senior Industry Analyst

Semiconductor Industry Service Dataquest Incorporated

Mr. Mason is a Senior Industry Analyst for Dataquest's Semiconductor Industry Service. He has been with Dataquest for seven years, during which he has gained increased responsibility for coverage of MOS and bipolar memory markets, as well as for general research support. Mr. Mason previously worked for Hughes Aircraft and Raychem Corporation. He has a B.S. degree in Physics from the California Institute of Technology and has done graduate work at the University of California at Los Angeles in the Department of Economics.


April 14-16, 1985 HaKone, Japan


MOS MEMORY STRATEGIES FACE-TO-FACE WITH THE NEW MARKET REALITIES

Lane Mason Sr. Industry Analyst

Semiconductor Industry Service Dataquest Incorporated

(Title Slide)

Steadily over the past five years, and dramatically over the past five months, the MOS memory market has taken on a new set of attributes, a new and enlarged supplier base, become drastically more competitive, has seen a shift in emphasis on the criteria for success, has approached new thresholds in technology development, and cultivated new markets with varied applications and performance requirements. Those who have failed to stay abreast of the new market realities have been punished mercilessly.

Driven by the unseen force of the market, facing insatiable demand brought on by their own successes in cost reduction, every MOS memory chipmaker has had to review his strategy for market participation—several times—in order to stay in tune with the long-term market direction. These strategic decisions, and the ability to execute accordingly, have allowed manufacturers to enjoy large profits in 1983 and 1984, and to weather the flood of red ink in 1981 and 1982...and perhaps 1985.

The short period 1981 to 1984 also saw funding of 17 new memory start-ups, for which several hundred million dollars was wagered on the proposition that the MOS memory market was large enough and diverse enough to offer opportunities to compete profitably, despite the recognized intense competition. The success o r . failure of these new entrants has yet to be seen, but 1985 and 1986 will surely be a trial by fire.

(Slide 2)

What I would like to do in my presentation today is the following:

First, I would like to take a look at the dramatic change in the MOS memory market in just the past five years, with special emphasis on the emerging dominance of Japanese manufacturers and the importance of manufacturing efficiency in the mainstream commodity memory markets.

- 1 -



Next, I would like to take a look at the strategic response and competitive positioning that have been adopted by all participants in the market, including the Japanese, in response to the present day characteristics of the market as well as the expectations of market development over the next five years. I'll want to take a look here especially at the business thrust of the numerous start-ups that have been funded in the past four years.

Finally, I'll want to take a look at the expected MOS memory market development for the next five years and try to evaluate the relative strengths and weaknesses of the various competitive strategies during that period. In a market growing an average of 25 to 30 percent per year, and developing a more diverse character, well-executed strategies are bound to be able to ride that growth. But also, some strategies are destined to fail.

(Slide 3)

Perhaps the most important change that has occurred in the MOS memory market in the past five years is a shift in the manufacturing base from the United States to Japan. In 1980, which was the final profitable year of the previous memory cycle, U.S. manufacturers had 74 percent of a market that was about $2.4 billion. At that time, they had more than 60 percent of the leading density dynamic RAM, the 16K, which sold for about an average of $4.60 that year.

The next two years were exceedingly tough as prices plummeted, and when we emerged to the equivalent point in the next cycle, Japanese producers of MOS memory now controlled more than half of the market. Although many reasons are given for this increase in Japan's market share at the expense of U.S. producers during the intervening four years, prominent among those must be the nature of the commodity memory market and the strength of the Japanese in being vertically integrated, high volume, production-oriented manufacturers.

Looking ahead at the next year or two, we can see that the fate of the U.S. share of the market will deteriorate even further as the product areas which show the most significant revenue growth, the 64K SRAM and 256K DRAM, are the areas where Japanese dominance is overwhelming. In addition, after a brief pause in market penetration in the EPROMs market during late 1983 and 1984, Japanese manufacturers are now back in force and give every indication of again turning their significant manufacturing skills on those markets. It is altogether possible that the market shares in MOS memory between the United States and Japan for 1986 could be the exact reverse of those that we saw six years earlier in 1980, with the Japanese then controlling nearly three-fourths of the market and U.S. manufacturers controlling as little as one-fourth of the market.

- 2 -



(Slide 4)

In the short life span of two generations of commodity memory product, Japanese manufacturers have moved from a vastly inferior position to overwhelming dominance of the mainstream market. During that time, virtually every U.S. manufacturer has proven to be unable to keep up with their steady low-cost production and timely new product introduction. (Slide 5)

Although we have seen that production has shifted strongly in favor of the Japanese over the last memory production cycle, in this next slide (Slide 6) we've shown a couple of other occurrences in the marketplace. First of all, we compare 1980 and 1984. The top five manufacturers had about the same market share going into the cycle as coming out, with slightly more than 52 percent. If we enlarge that base to the top ten, we show that the top ten manufacturers' share fell by about 3 percent, and if we cast our net even wider, we see that the top 20 manufacturers share of the total business has declined by about 7 percent. So, I think that the market is not becoming more concentrated. in fact, if we look at the number of vendors, we see that another entirely different occurrence is taking place. New manufacturers are entering the market and establishing their market share, often in narrowly defined market segments. These are the companies that have started up over the last four or five years, and they have yet to grow to the point where they can be truly significant players from a revenue point of view in any of the major markets. This, of course, is a natural consequence of the market diversification that is taking place, where many of these new companies are strategically focused on new markets, new products, new technologies, or other strategic approaches.

(Slide 7)

Specifically, these start-ups have shown a lot of interest in the EEPRC^ market, high performance memories, as well as the new technological directions like CMOS dynamic RAMs that are beginning to develop. In addition, there are even some of these manufacturers aimed directly at the center of the market with the intention of emulating the Japanese successes of the last five years. We'll be talking more about these strategic approaches of these new start-ups shortly.

(Slide 8)

Several things are apparent in the new market environment that MOS memory manufacturers face today. Summarizing the previous several slides, we see, first, that the Japanese manufacturers have, by virtue of the market numbers alone, some secret of success in their operations that large U.S. manufacturers often lack. Second, it's becoming extremely expensive to play in the MOS memory market which is leading many of the less well-financed companies to certain market participation approaches of necessity. Third, we've seen that there is a tremendous surge of new

- 3 -



suppliers to the MOS memory market in the form of start-ups focused on the emerging diversification in the marketplace itself. New markets are targeting specific markets, specific technologies, or specific parts of the account base. Fourth, every manufacturer participating in the MOS market as a whole would probably admit to the undeniable truth that production of high volumes of leading edge VLSI product is essential in driving the process technology available to the entire MOS product portfolio. And, for most manufacturers, the only place such volumes can be sufficient is in the MOS memory product lines, such as dynamic RAM, static RAM, and EPROM.

(Slide 9)

Over the past five years, the most successful manufacturers in the MOS memory market (viewed from a share-of-market point of view) have been those who exhibited the characteristics listed on the next slide. While this is, by no means, meant to denigrate the achievements of the smaller manufacturers who have been instrumental in developing new markets, new technologies, and new levels of performance, from a sheer market size point of view, the absolute impact of those manufacturers has yet to be seen in the aggregate market numbers. The manufacturing attributes and strategic thrust that has played the most important role over the past five years are probably the ones listed on this slide.

First and foremost among these is the capability to manufacture efficiently extremely high volumes of the same part. This requires close attention to detail, excellence in manufacturing management, efficient capital utilization in the manufacturing process, and the ability to produce a high quality product at an ever-decreasing cost.

Second, most of the manufacturers that have moved up in their market presence over the past five years have generally had quite smooth transitions into the new products. Their progression from one generation of memory product to the next has been much more evolutionary, and the new products have been brought into production more easily than they have for those manufacturers who have fallen behind in the markets. The more successful vendors have viewed, for example, the dynamic RAM market as more of a continuum rather, than succession of successive device densities. The 64K dynamic RAM density, for example, is only the current vehicle for serving the demand for high volume, low-cost RAM, and it is an absolute certainty that this product will eventually be supplanted by 256K dynamic RAMs which will, in turn, be replaced by 1-megabit dynamic RAMs. Product and process planning and an unwillingness to discount this certain eventuality is a key part of their planning process.

Third, these manufacturers tend to be quite advanced technically as is required since leading-edge processes are invariably first brought up in the high volume MOS memory product line. The first high volume 2um process showed up, for example, in Hitachi's and Toshiba's 64K SRAMs.

- 4 -



Fourth, and importantly, most of the major successful companies in the MOS memory market for the past five years have had large financial resources, and often a captive source of demand, which serve to offer an effective buffer against the ups and downs in prices that occur periodically in the MOS memory market.

Fifth, and finally, successful manufacturers have a large degree of product and process synergy, giving recognition to the fact that a tremendous amount of what is learned in high volume MOS memory manufacturing can never be sold for revenues or profits, but can be transferred within a company to good advantage in other parts of the product line. Conversely, maintenance of several distinct and diverse processes in the facility spread resources thin, and fail to take advantage of the coimnonality that can exist between many separate parts of the product line.

It is ray conviction that any manufacturer whose strategy does not honestly contain a significant element of the "success attributes" listed here, will face severe problems in the coming five years. Standard product, commodity memory will be dominated by low-cost producers who can absorb the losses in market downturns, and bring their new products out smoothly. Targeted market suppliers may be relegated to smaller, more-design intensive markets or have no place at all where they can maintain a profitable business.

In niche markets, market and product development takes considerable amounts of design effort and applications expertise, and though margins may be large, on a percentage basis, total available revenues will be small. If those niche markets do grow, the new market opportunity will attract nore efficient producers. Therefore, it will be difficult to hold onto these markets as they mature. Manufacturers with narrow product lines or narrow target markets can be buffeted mercilessly by the wild fluctuations.

Manufacturers who find their place in smaller or itrare narrow markets will be less able to drive their mainstream process—because of lower volumes—and unable to make fullest use of the coproduct of their greater "process know-how expertise." They will be less able to stand the stress of the intensely driving market.

New Strategic Directions for Dominant Commodity Memory Suppliers

If we take a look at the strategic direction for those manufacturers who already seem best to embody the success factors listed on the earlier slide, and see what their strategic direction will be for the coming years, then I think we'll see there will be two rather different points of departure for pursuit of the same market. These manufacturers, such as Fujitsu, Hitachi, and NEC, as well as the emerging second level Japanese—Mitsubishi, Oki, and Toshiba—are increasingly starting to look

- 5 -

@ 1985 Dataquest Incorporated April 15 ed.-Reproduction Prohibited


at what might be considered secondary market opportunities in the MOS memory area. These can be higher performance niches, special packaging, special parts of the account base, or other deviations from the mainstream commodity part of the market in which they have been so successful over the past several years.

As we have seen, memory suppliers with weak manufacturing capabilities or those unable to make smooth product transitions have been pushed out of the large commodity memory part of the market. It may well prove to be true that for those manufacturers who are left dominating that market, the best opportunities for new market growth and profit lie in these secondary markets.

It also follows from the further "application specificity" in the commodity memory product line that these markets, once small, may now pose the most rapid growth opportunity as well. NEC is not ignoring the video RAM market, Hitachi is not ignoring the CMOS DRAM market, Toshiba is not ignoring the 2Kx9 SRAM market, Fujitsu the 100ns DRAM or 16Kx4 DRAM market, etc. These substantial subsegments are being serviced by the best processing technology in the business.. .and are often the same markets in which manufacturers with lesser manufacturing skills are targeting to get, or retain, a foothold in the market. We have to ask, which developing markets can be best serviced by the volume "production mills" and which can be best serviced by the "niche marketers."

Now, I want to take a look at some of the alternate strategies that have been adopted by other companies now participating in the MOS memory market.

New Market Making

One strategy that several of the recent start-ups have incorporated into their business plans is one in which they hope to take a new technology, with new features and develop new markets. A variant of this is to take a new technology and try to displace a more embedded

.' technology in an established market.

If we look at this first case, I think the best example that we have is the EEPROMs market, which has formed part or all of the business foundation for several of the start-ups that have come on the scene in the last four or five years. It is the hope of these manufacturers that their early entry into the market will afford them a competitive advantage by knowing the likes and dislikes of the systems people as well as identifying the applications, sockets, and customer base.

However, as we have seen, especially in the EEPROM market and in its variants, such as the NVRAM market, or even the newer high speed EEPROM market, this market has proven to be exceedingly slow to develop for a variety of reasons. Although the market has grown steadily for many

- 6 -



years, it is still quite small and only recently has begun to settle out on a identifiable set of standard features and applications. During this market development phase, a tremendous amount of the energy of the participating companies has been absorbed by market development and technology development chip and circuit redesign efforts. Now we're beginning to understand the needs and the dimensions of the market better, but at the same time, those who are most responsible for market development are having their market position jeopardized by the entry of larger, more manufacturing-oriented participants.

As a result, Intel, Seeq, and Xicor may have been most responsible for the market development, but the ultimate benefit may eventually accrue to more recent entrants, AMD and Hitachi or Toshiba. The problem, of course, is that while new markets, in their unsettled state, afford individual entrants the opportunity to own a big share of a small protected market, full development of these markets is an expensive and time-consuming task. In fact, it's more time-consuming than merely waiting off to the side for the market to take shape, and for the systems designers to be educated, and in time, turn the high volume manufacturing capabilities on and squeeze the early entrants, who may lack such manufacturing capabilities out of the market.

Technical Leadership

Another strategy that has been adopted by several U.S. manufacturers has been to always try to stay a step ahead of the game, be the first manufacturer to a new speed barrier, be the first manufacturer to a new level of integration, be the first manufacturer to a performance point which manufacturers with lesser technical capabilities are incapable of achieving. While this technical leadership strategy has proven successful many times, especially in the case of Intel with their high speed 2147 4K static RAMs family in the late 1970s and early 1980s, and their market leadership in EPROMs, and even their process in novel architectures in CMOS dynamic RAMs, technical leadership has been shown to be increasingly difficult to sustain over long periods of time, especially when the strategy is pursued at the expense of high volume, low-cost manufacturing capability, and smooth transitions to succeeding generations of parts. Volume producers are refining their process steadily, and in the absence of any prorietary barriers to entry (which may or may not exist) can eventually come close to any performance level having market value.

A technical leadership strategy requires almost flawless execution, and any failure to do so can immediately relegate the company to a secondary position in the market, if they don't also have low-cost manufacturing capabilities.

- 7 -

(D 1985 Dataquest Incorporated April 15 ed.-Reproduction Prohibited


Infant Mortality

Start-up MOS memory manufacturers, because they lack financial resources or a well-developed product line to buffer them from the wild price fluctuations in the market, will often find themselves in an exposed position. That exposure is roughly proportional to have how close they are to the center of the commodity market in which they play. Thus, a manufacturer with a narrow product line selling dynamic RAMs, EPROMs, or static RAMs, will find himself more vulnerable than one developing a new market or a new technology.

Strategies that position the manufacturer in the center of the market may look good for short periods of time, but in the absence of business reserves in terms of alternative products or significant financial resources, will often lead,as well, to fortunes that turn drastically in a short period of time. This is merely a consequence of small manufacturers participating in a market dominated by much larger manufacturers where the product pricing is subject to significant and rapid declines. The 1985-1986 time period will undoubtedly cause some extreme difficulty for some of the emerging start-ups, who may have just gotten their production up and running and their feet in the market, only to be knocked down by plummeting prices and contraction of demand.

Strategies That Work

One group of strategies that appears to be quite effective in protecting manufacturers from the rapid price declines in the market is to insulate themselves through market or account choice, or by developing greater product line synergy. Manufacturers that sell to the market will find those purchase decisions Isased much more strongly on price than manufacturers who develop good customer relationships, develop product portfolios that sell into specific accounts or specific applications, and instead of selling to the market, sell to the application or to the customer. In this way, they can reduce the importance of price alone on the purchase decision and broaden it to include service, breadth of product line offered, coimnitment during the ups and downs of the market, guaranteed supply during periods of device shortage, guaranteed quality levels for deliveries to that particular account, and close working relationships. That will enable the systems company purchasing the component to maintain a market leadership position in its business through the service that it gets from its component supplier.

Manufacturing efficiencies' principal contribution to the market is low-cost, and for component manufacturers who can't compete strictly on a low-cost basis, users will often pay something above the lowest price in the market for additional service that the component supplier can offer. In some instances, this is more difficult in the commodity memory market than it is, for example, in the customs circuits or microprocessor peripherals market. Nonetheless, there are some opportunities for close user/vendor relationships which can protect the interests of both parties.

- 8 -



More Product Differentiation

Niche marketers that have been successful have differentiated their product enough to give them an advantage over their competition (a cost or time barrier), but not so much that a major rethinking of the application by systems designers is necessary before production volume can build. The more that the product supplier must do retrain customer's thinking, to convince him that he needs a new feature, the slower will be the market development. A short conceptual step for the systems' designer is the fastest way to product acceptance and market growth. Best they say "Ahai That's just what I was looking for," and, if users want red packages, a vendor will be more successful selling them red packages than trying to convince them that color doesn't matter.

The successes and difficulties that memory makers have experienced over the past five years offer ample evidence of some of the keys to success, and ways to balance off strategic strengths and weaknesses, so as to grow profitably into a relatively secure market position.

(Slide 18)

Based on our experience in the MOS memory market for the past five years, as well as the prospective market developments for the coming five years, what can we say about evaluating the potential for success or failure of the strategies of the various participants in the market? One message that has come across consistently is the belief that every major MOS memory product market will ultimately be dominated by efficient manufacturers, and this means efficient manufacturing over the entirety of the product life cycle. Although manufacturers can certainly be successful in smaller markets through excellence in technology, market knowledge and other focuses of the numerous start-ups, sufficient market growth will invariably throw those markets into the province of manufacturers with highly efficient low-cost manufacturing capabilities. In the absence of first rate manufacturing capabilities, the industry may evolve to the point where new emerging markets are cultivated, developed, and initially exploited by small manufacturers, and later turned over to large manufacturers to. drive processes forward and prices downward, thus pushing the trailblazers out of market.

The experience of the last several years also tells us that the market mainstream standard multi-sourced commodity products has tremendous momentum in the factories of the current supplier base, in the minds of systems designers, and the design-ins in the installed base and in the process familiarity of the component manufacturers. This momentum ensures that the shape of the market for the next couple of years will look very much like the market today, although we will invariably see the gradual fragmentation into specific application memories as well as the displacement of the older technologies and generations of parts.

- 9 -



(Slide 21)

In looking over the strategies that appear to have been the most successful for manufacturers that are unable to compete on a strictly manufacturing cost basis, it appears that the most successful approach is to tie one's strategy closely to specific markets, specific customers, and specific applications. In this way, manufacturers can be insulated from finding themselves in a market that is only price-driven. Here, they can develop their memory and other MOS product portfolios in a fashion to take maximum advantage of their position with their suppliers or of their market knowledge.

(Slide 22)

We've seen also from the strengths and weakness of all participants over the last five years that a successful long-term strategy participation in the MOS memory market requires strengths in many disciplines. Many of the entrepreneurial ventures that emerged in the early 1980s have been built around individuals who had expertise in several of the areas, but are now having difficulties because they could not present to the marketplace a uniformly strong business front line, and there's nothing like the brutal lessons of the marketplace to make these weaknesses painfully obvious.

Finally, if we look at the opportunities for successful participation in the MOS memory market, there are still several strategic options open to manufacturers.

(Slide 23)

For smaller nanufacturers just coming into the market who are less well-financed than the giants dominating the market, it is almost a necessity to develop strategic alliances in order to supplement your strengths and weaknesses with those of another manufacturer, so that a balanced high quality business can be developed. None of the start-ups and many of the existing firms in the market have insufficient strength and resources to attack these markets by themselves. The tremendous capital requirements for establishment of new fabs, the early vulnerability of manufacturers as their product lines are being filled out and developed, and the time required to develop newer markets along newer application or technology lines, all dictate that new manufacturers can reduce the risks of participation substantially by tying their fortunes in with those of more established producers. It is our perception that often the start-ups listed in the earlier slide do not adequately recognize their own strengths or weaknesses and have been reluctant to enter into strategic alliances with other manufacturers. In the past two years, however, we have seen increasing numbers of extensive cooperative arrangements between production-oriented and between design intensive or process-oriented start-ups and more established or better funded manufacturing-oriented producers. Undoubtedly, this will result in more efficient utilization of fab capital, the natural response to the increasing capital intensity of the industry.

- 10 -

(g) 1985 Dataquest Incorporated April 15 ed.-Reproduction Prohibited


(Slide 24)

For large scale participation in the MOS memory market, manufacturers are left with two options: the first is to adopt the strategy of emulating the Japanese successes of the past several years, adopting a long-term strategic outlook based on manufacturing efficiencies, low-cost production and product obsolescence; the second for manufacturers that find themselves unable to compete on a strict price basis. They still have an opportunity to be a mainstream supplier in the MOS memory business.

But by no means will these manufacturers even be able to ignore the criteria for success for large volume producers outlined in one of the earlier slides. They will have to supplement their shortcomings as a high volume lowest cost manufacturer with a significant amount of what we'll call the American plan, based on applications orientation, design expertise, excellence in marketing, close user-vendor relations and other methods often found among the strategies of the emerging producers.

(Slide 25)

The only alternative left is to accept a position as a niche market memory supplier, which will invariably limit your participation to the smaller, but perhaps more profitable markets, which are insulated from the mainstream either by their size, unique applications, or specific customers. The drawback here is that the relatively low volumes of these markets and design intensity will reduce the other learning curve attributes that accrue to participants in the mainstream part of the market.

Smaller participants in the market can always take advantage of a more deliberate effort to learn more from each of their production efforts, thereby transferring process expertise to other parts of their product line with a more limited exposure to the ups and downs of the mainstream part of the market.

(Slide 27)

All of these can afford manufacturers opportunities to participate in the MOS memory market of the second half of the decade, but at the same time, it must be recognized that the mainstream part of the market offers both tremendous profit benefits, as well as potentially significant business risks that are unable to smaller producers.

- 11 -

@ 1985 Dataquest Incorporated April 15 ed.-Reproduction Prohibited

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Connpany / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

— T°T'- T-i:::- DataQuest.

KOS MEWORV STRATEGIES

Face - to -Face with the New Maricet R e a l i t i e s

Dataquest.

MOS MEMORY STRATEGIES

OUTLINE

Dramatic Change in MOS Memory Market 19B0-1985

Manufacturing Ef f i c i ency Dominates the Commodity Market

S t r a t e g i c Response and Competit ive P o s i t i o n i n g

Beat 'em. Join 'est, Avoid 'em

Opportuni t ies and S t r a t e g i e s for Success

- 12 -

© 1985 Dataquest Incorporated Apr i l 15 ed. -Reproduct ion Proh ib i t ed


Dataquest

THE CHANGED HOS MEMORY MARKET

MARKET SHARES BX HOME BASE OF PRODUCER

U . S . ^

J a p a n ^

Europe

ROW

T o t a l Revenues

(*B |

1$90

74%

'^^*___

2

0

loot

$ 2 . 4

1 ^ 8 4

44% \

5

0

UOt

S G . 4

(1985)

35%

60

4

1

100%

S 6 . 0

(1986)

l e s s

more

l e s s or e q u a l

more

100%

$ 7 . 2

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THE CHANGED

MOS

MOS

MEMORY

MEMORY MARKET

REVENUES

1980

T e x a s I n s t r u m e n t s I n t e l MosteK M o t o r o l a

— NEC

— H i t a c h i N a t i o n a l AMD

— F u j i t s u _ T o s h i b a

$ 3 3 0 $308 $ 2 5 9 $ 1 5 5 $150 $149 $ 1 3 5 $107 $ 1 0 5 $ 75

Source OATAOUEST

- 13

gj 1985 Dataquest Incorporated April 15 ed.-Reproduction Prohibited


o^ vf

7^-—T. : : :- BataqiMMrt

^ — ' • •

THE CHANGED HOS

MOS MEMORY

Ccnpanv

Hitachi NEC Texas I n s t . Fuj i t su Toshiba I n t e l Hostek Motorola Mitsubishi AMD

MEMORY MARKET

REVENUES 1964

Revenues

S897 $713' $654 $512 S396 $373 $350 $305 $27B S260

Change in Ranl<

+ 5 + 3 ^ - 2 + 5 — + 5 ~ - 4 - 4 - 4 4- 9 — - 2

THE CHANGED MOS MEMORY

MEASURES OF (%

Pep 5 Top 10 Top 20

Total Number o f Suppl iers

MARKET

MARKET CONCENTRATION OF TOTAL $)

1975

61.4% 78.6% 97.5%

33

1 9 B 0

5 3 . 3 % 7 8 . 7 % 94.4%

41

Sou'ce

1984

52.4% 75.6% 87.7%

60

DATAOUES^

- 14 -

© 1985 Dataquest Incorporated April 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

1— C l ^^^T -, D a t a q u e s t

THE KEK

MOS MEMORY

Ccinpany

Cypress Semiconductor Exel Microe lec tron ics Hyundai E l e c t r o n i c s Innos Integ rated Device Tech . I n t e r n a t i o n a l CMOS Tech . L a t t i c e Semiconductor Micron Technology Modular Semiconductor MOSel Performance Semiconductor Quasel Seeq Technology S i e r r a Semiconductor T r i s t a r VISIC V i t e l i c

VLSI Technology Wafer Scale I n t e g r a t i o n Xicor

MARKET

START-

S t a r t Date

1982 1983 1983 1978 1981 1983 1983 1979 1983 1984 1984 198 3 1981 19B4 1983 198 3 1984

1981 1983 1978

DJVIRONMENT

DPS SINCE 1978

Lead Funding

U.S. -Venture U.S . -Ven tu re Hyundai-Korea U.K. Gov't U.S. -Ven tu re U . S . - v e n t u r e U . S . - v e n t u r e U.S. -Venture U.S./Japan U.S./Taiwan U.S . -Venture U.S./Taiwan U.S. -Ven ture U .S . -ven tu re Samsung-Korea U . S . - v e n t u r e Taiwan-U .S. v a r i o u s U.S. -Ven ture U . S . - v e n t u r e U . S . - v e n t u r e

Products

Fast SPAM EEPROM SRAM/EEPROM P a s t SRAM/DRAM F a s t SRAM CMOS/EEPROM P a s t SRAM/EEPROM DRAM CMOS DRAM P a s t SRAM F a s t SRAM CMOS DRAM EPROM/EEPROM ROM (ASIC) DRAM F a s t RAM CMOS ORAM

RDM /EE /Fast SRAM EPROM/EEPROM EEPROM/NVRAM

- 15 -

© 1985 Dataquest Incorporated Apr i l 15 ed.-Reproduct ion Prohib i ted


Dataquest.

THE NEW MARKET ENVIRONMENT

What's the Outlook Today 19SS MOS Memory Market

Japan makers have something that most U .S . makers don't

Expensive to p a r t i c i p a t e . . . the c o s t has grown fas ter than the market

No shortage o f new s u p p l i e r s . . . a n d new niches

Recognized inportance of MOS memory to r e s t of product l i n e

Technology , iwrket s i z e , a l l advanced remarkably:

$2 .4 b i l l i o n o f 5\M production (1980) t o

$6 .3 b i l l i o n o f 2um production (1984)

_ r^'-^^;?!- Dataquest,

\r) ¥ rr^ vl' lAf

}^ W-

^ < ^ ^ K'.A "V

KEYS TO MARKET SUCCESS

CHARACTERISTICS OF LEADING LARGE PRODUCERS

c<^r/' High Volume Manufacturing Efficiency

Smooth Transitions to New Products

Technically Advanced

Great Financial Resources—Often Large Captives

Product and Process Synergy

U-^'-'^

[cH* f'"" ^

- 16 -

© 1985 Dataquest Incorporated April 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

d>v iu

3j-^» ppn^ iioi^"^

-_ Z^ZZZT <:•.:- Dataquest.

4 STRATEGIC RESPONSE TO THE NEW REALITIES

Emulate...the winners

Differentiate.. .the product

Educate... the naiKet

Inrvsvate

Insulate...yourself and your markets

Consolidate...resources with another company

Capitulate

(jvx i^-^

Dataouest.

MEMORY MAKER'S DILEMMA..

DRAM Market

Dual Port SRAM Market

$]j6 million/day

3 $10 million/year

- 17 -



Dataquest,

THE LIMITS TO NICHE MARKET STRATEGIES

Extended development/growth cyc le

Design i n t e n s i v e (and redes ign , too)

When na rkets get l a r g e , they become a t t r a c t i v e to we l l - f inanced companies

_ ZlLTZT'.:•.} - Dataquest

NICHE MARKET STRATEGIES — POSITIVE SIDE

• Protected

• Low-visibility

W Profitable

• Price-stable

- 18 -

© 1985 Dataquest Incorporated Ap r i l 15 ed.-Reproduction Prohibited


/66 n >^pi^

Dataquest.

NICHE MARKET DILEMMA...

Are there enough niches to go around?

Z rrr.:!:!' Dataquest,

MARKET DILEMMA FOR FAST-BREAK STRATEGIES

Efficient manufacturers will eventually move down learning curve and beat you on price

(^J>y? ci^Tyjl^X^

pi^e^ruL.

1^ n^cc^-^^ '^'r^ i-lS-O- Jr^l--^-^

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•t-

^v)t< Lu.ui

- 19 -



v^ >. tlHI

Ol"!" ^

Dataquest.

MARKET DILEMMA FOR TECHNOLOGV LEADERS:

Flawless performance required

1 . ^ ^

Dataquest.

DILEMMA FOR F INGERS OF NEK PRODUCT MARKETS

Market aevelopnent time exceeds new product des ign time

- 20 -

© 1985 Dataquest Incorpora ted A p r i l 15 ed. -Reproduct ion P r o h i b i t e d


Dataquest.

CONCLUSION * I

Every »ajor MOS wemory product narket will ultimately be dominated by efficient nanufacturers

Dataquest.

CONCLUSION *2

The BBfket mainstream —standa rd , mul t i sou rced , comaodity products—has tremendous nomentuni, and w i l l Terrain the p i i n a r y revenue growth v e h i c l e and p rocess d r i ver fo r the fo reseeab le f u t u r e .

- 21 -

© 1985 Dataquest Incorporated Ap r i l 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

Dataquest,

COROLLARX TO CONCLUSION 12

F a i l u r e to develop the a b i l i t y to compete in the narIcet mainstrean w i l l poee a ser ious l i m i t to long - te rm revenue growth and p r o c e s s development

Z2V(!!! Dartaquest.

CONCmSION *3

Successful strategies—for those who can't compete in #1 or t2—will be those that t ie products t ightly to specific narRets, specific customers, and specific applications

- 22 -



a '^l-r\/llir\

,_ 'T ' "^Ti!i!i' Dataquest .

CONCLUSION *4

Strength i s required in nany discipl ines:

Process Product planning Design Manufacturing excellence Marketing

Forward view Management

No single one or two elements is adequate for long-term success in the MOS memory market.

P;:::;; Dataquest.

OPPORTUNITIES FOR SUCCESSFUL PARTICIPATION

Strategic Alliance:

Identify your strengths and wealcness

and

Align yourself with a partner for mutual benefit

^ . if^a-^y^rfU- __

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- 23 -

© 1985 Dataquest Incorporated A p r i l 15 ed.-Reproduction Prohibited


Dataquest.

OPPORTUNITY FOR SUCCESSFUL PARTICIPATION

For large scale market presence, 2 choices:

1 . 100% Japanese Style

2. 901 Japanese Style

plus

60% American Plan

Dataquest

OPPORTUNITY FOR SUCCESSFUL PARTICIPATION

Resignation to niche market presence...

• smaller markets, but more profitable

• Bore secure markets

• nemory, itot MEMORY

Source DATAOUES^

- 24 -



Dataquest

LITHOGRAPHY TECHNOLOGY: TODAY AND TCM4ORROW

Shoichiro Yoshida Director emd General Manager

Industrial Supplies and Equipment Division (Nikon) Nippon Kogaku K.R.

Mr. Yoshida is Director and General Manager of the Industrial Supplies and Equipment Division of (Nikon) Nippon Kogaku K.K. Previous positions at Nippon Kogaku K.K. include Design Section Manager of the Scientific Instruments Department in the Instrument Division, General Manager of the Designing Department in the Industrial Supplies and Equipment Division, and General Manager of the Sales Department in that division. While Mr. Yoshida was in the designing divisions, he was in charge of developing astronomical telescopes, spectrophoneters and monochrometers, ruling engines, optical precise measuring machines, and semiconductor equipment such as measuring instruments and wafer steppers. Mr. Yoshida received a Bachelor of Engineering degree from the Faculty of Precision Engineering at Tokyo University.




Lithography technology , Today and Tomorrow

Now is the VLSI era represented by 256K DRAM.

We find some manufacturers to have already succeeded in developing

prototypes of 1 M DRAM in research and development level and to start

feasibility study for establishing mass-production technologies.

I would like to talk about device integration trends for the coming 10

years and lithography technology movements to cope with it under the these

circumstances.

- 1 -

Dataquest Incorporated, A Subsidiary of AC. Nielsen Company /1290 Ridder ParK Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

F u - t u i - ^ F ' o r - ^ s c as!-t^ o f L.±-t.tio^r~skptiy T ^ c l ^ i n o X o ^ y

Min. Linewidth Overlay Accuracy

0 •-

1985 86 87 88 89 90 91 92 93 94 95 96 97

Optical Lithograpliy ^

X-ray Li ttiograptiy .

' >

F » r - o t > X e i n s e m d S o X u - f c i o n s o f O p - t ^ A c a X L i t l i o g r - a p t i y

1. Resolution Higlier Nuaerical Aperture

lap

Oeve lopaent of Optical System for U.V.Light

Sljorter Wavelength —r~ luprovement and Development of Light Source

2 . Alignment "C n

Multi-layer r e s i s t

Die-by-Die Alignment

Com posi te-c hip

Higher Speed of Each Function 3 . Throughput

Imprx)vement of Light Source and Resist

A . Re l iab i l i ty—, Part ic le —r- Full-Automatic System

L Higher Detectabi l lty of Part i c le

Se lf-D iagnost ic System

I Computer Aided Machine Control System ( F M S )

- 2 -

Dataquest Incorporated, A Subsidiary of AC. Nielsen Company /1290 RIdder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

Lithography Technology, Today and Tonorrow

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- 3 -


Dataquest

Dataquest

THE EMERGING ASIAN SEMICONDUCTOR INDUSTRY

P. June Min Senior Managing Director

Goldstar Semiconductor, Ltd,

Dr. Min is the Senior Managing Director of Goldstar Semiconductor, Ltd., and is responsible for semiconductor, computer, and communication systems manufacturing and marketing. He is also Director of Goldstar Software, Ltd., and Director of the Korea Information Science Society. Before establishing Goldstar Semiconductor, Dr. Min was a member of the Board of Directors of Goldstar Tele-Electric Co. Ltd., in charge of information and communication systems. Prior to joining Goldstar, he was a program manager at Xerox and spent 10 years managing several computer software/ hardware development projects at IBM Corporation where he was the recipient of five IBM contribution awards. Dr. Min received a B.S. degree in Electronics Engineering from Yonsei University in Korea, an M.S. degree in Electronics Engineering from Purdue University, and a Ph.D. degree in Computer Science from Purdue University.


April 14-16, 1985 Hakoiie, Japan


The Emerging Asian Semiconductor Industry

P. June Min

Goldstar Semiconductor

Seoul, Korea

During the last decade, semiconductor industries of U.S.

and Japan have been playing the leading role in both the

technology development and new product introduction. This .. .

trend is not expected to change within the next decade, and

the pace of technical developments in the two countries is

even accelerating. Besides the two countries, significant

industrial activities in semiconductors are found in Europe,

Canada and a few far eastern countries including Korea and

Taiwan. The purpose of this talk is to describe the projected

growth path of a semiconductor industry in a developing country

with the specific example of Korean semiconductor industry. If

Korean semiconductor industry prove to be successful in the next

decade, it could serve as a model .of setting up high technology

indiistries in developing countries.

Semiconductor technology is viewed as essential to be success

ful in many other industries. Due to this strategic importance,

the big industrial conglomerates in Korea have made strong

commitments to develop semiconductor technology despite many

difficulties. For these companies to be successful, several

Strategic factors - market, technology, people, and finanical

resources - should be carefully laid out and executed. The need

for large capital investment, large gap in technology compared

to U.S. or Japan, lack of qualified personnel in both technology

and marketing, all provide substantial difficulties to Korean

semiconductor industry. The talk will address how some of the

challenges would be dealt with by discussing actual examples.

- 1 -


THE EHIERGBNG KOREAN SEMICONDUCTOR INDUSTRY

-STATUS AND FUTURE PROSPECTS-

P. JUNE MN

I GoldStar Scmicondutor, Ltd. SEOUL. KOREA

THE ESmEROINS KOREAN SEMICONDUCTOR INDUSTRY

-PRESENTATION OUTLINE-

INTRODUCTION

GROWTH PROJECTION

STRATEGY ELEMENTS

OPPORTUNITY FOR PARTNERSHIP

- 1 -


KOREA:THE DEiaoaRAPHY IN 198S

POPULATION

GNP ($B)

41,209,000

Per Capita GNP($)

AREA( miles')

ECONOMY S

AGRICULTURE

INDUSTRIAL

SERVICE

TR

86.3

2,094

38,200

UCTURE

14.6%

34.0

51.4

KOREAN GROWTH PATH TOWARD AN ADVANCED NATION

YEAR

1962-1966

1%7-1971

1972-1976

1977-1981

1982-1986

1987-1991

1984 GNP:

GNP GROWTH RATES(7o)

—

8.7

10.1

5.5

7.2

8.0

$80 BILLION

: . : •

GOAL

BASE FOR DEVELOPMENT

INDUSTRIALIZATION

GROWTH

GROWTH

STABILITY

TOWARD AN ADVANCED NATION

SOURCE : BANK OF KOREA ECONOMIC PLANNING BOARD

- 2 -


STATISTICS-I: SEMIGONDUCTOR MARKET SIZE

WORLD TOTAL

NORTH AMERICA

JAPAN

WESTERN EUROPE

REST OF WORLD

KOREA

KOREA/WORLD(%)

1983 18,685

8.286

5,568

3,370

1,461

180

0.96

(MILUONS OF DOLURS)

1984 25,767

12,008

7,517

4,212

2,030

290

1.13

1985 32,856

15,562

9,426

5,305

2,563

401

1.22 SOURCE:DATAQUEST

STATISTICS-I: CAnTAL INMESTMENT FOR SERHCONDUCTOR

(MILLIONS OF DOLURS)

1984 1985 1986 1987 1988 CAG %

KOREA 220 346 456 597 701 33.6

U. S. A. 3,438

JAPAN 3,922

37.8*

58.5*

* CAG% FOR U. S. A. AND JAPAN ARE FOR PERIOD BETWEEN 1977-1981.

SOURCE:GOLDSTAR SEMICONDUCTOR, LTD. JAPAN ECONOMIC J.

- 3 -


STATISTICS-1: SEMICONDUCTOR PRODUCTION

(MILLIONS OF DOLURS)

1984 1985 1986 1987 1988 (*^||)

TOTAL WORLD 25,767 32,856 37,283 41,149 49,990 18.0 CONSUMPTION

KOREA 205 403 655 923 1,250 57.1

%0F WORLD 0.8 1.2 1.8 2.2 2.5

SOURCE: DATAQUEST GOLDSTAR SEMICONDUCTOR, LTD.

STRATEGY ELEMENTS

MARKET TECHNOLOGY TECHNICAL PERSONNEL FINANCIAL RESOURCES ROLE OF GOVERNMENT

- 4 -


STRATEGY ELEM£NTS:MARKET

VERTICALLY INTEGRATED MARKET

DOMESTIC MARKET

WORLD MARKET

-OPEN MARKET

-FOUNDRY/CONSIGNMENT

BUSIMESS ARRAHBEHEHTS WITH OVERSEAS FIRHS GOLDSTAR SEMICONDUCTOR

-

SAMSUNG SEMICONDUCTOR & TELECOMMUNICATIONS

HYUNDAI ELECTRONICS

KOREA ELECTRONICS

DAEWOO

ANAM INDUSTRIAL, CO.

- AT & T

LSI LOGIC

AMD

- SHARP INTEL

- INMOS

- TOSHIBA

ZILOG

MMI

MICRON TECH

Tl

- NORTHERN TELECOM

- Vi ORLDWIDE PACKAGING SERVICE

- 5 -


STRATEGY ELEMENTS : TECHNOLOGY YZ.M^ TECHNOLOGY FRODUCT^

1984 3 MM NMOS 64K DRAM 8BIT MICROPROCESSOR(Z80) 16K SRAM

3/iM CMOS GATE ARRAY 1985 2MU NMOS 256K DRAM

2 m CMOS 64K SRAM 256K DRAM GATE ARRAY

TECHNOLOGY CONSIDERATIONS

-TECHNOLOGY TRANSFER AND OWN R&D

-PROCESSING AND DESIGN

-INDUSTRY-UNIVERSITY COOPERATION

- 6 -


STRATESY ELIiEMTS: TECHNICAL PERSOMHEL REQUIREMENTS OF FIVE LARGE CORPORATIONS

Ph. D M. S. B. S. Tech Sales($iVI)

SOURCE;

1985 18

160 590 473 403

MTI, KOREA

GOLDSTAR

1988 91

320 1,150 1,146 1,250

SEMICONDUCTOR, LTD

STBATEO? Rmmn - ROLE OF GOVERNHEHT

PAST PERFORMANCE:

• IDENTIFY THE IMPORTANCE OF SEMICONDUCTOR TECHNOLOGY

• PARTIAL FUNDING FOR TECHNOLOGY DEVELOPMENT

(8 BIT fiC, VTR IC)

FUTURE D IRECTION:'

• SUPPORT THE GROWTH P U N OF INDUSTRY

• EMPHASIS AND FUNDING FOR R & D

- 7 -


GOiL IF mmm SEISICOMDUCTOR INDUSTRY

• ESTABLISH SEMICONDUCTOR TECHNOLOGY TO SERVE THE

COUNTRrS TRANSITION INTO AN ADVANCED INFORMATION

SOCIETY

• PROVIDE A MUTUALLY BENEFICIAL BUSINESS OPPORTUNITY

TO WORLD CLASS ELECTRONICS FIRM IN THE DESIGN AND

MANUFACTURING OF ADVANCED SEMICONDUCTOR COMPO-

NENTS AND SYSTEMS

OPPORTUNITY FOR PARTNERSHIP

r/IANUFACTURINQ : COST ADVANTAGE

MARKET SHARE

ENGINEERING TALENTS

D E S I G N : ENGINEERING TALENTS

MARKET UNIQUENESS

- 8 -


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THE RECENT DEVELOPMENT OF THE INFORMATION INDUSTRY IN TAIWAN

Irving T. Ho President

Institute of Information Industry

Dr. Ho is President of the Institute of Information Industry in Taiwan. He is also Vice Chairman of the National Science Council. His responsibility at both organizations is to upgrade information technology and promote information industry in Taiwan, ROC. Previously, he was Director-General of the Hsinchu Science-Based Industrial Park. Prior to that, he was with IBM for 16 years,during which he won the TBM invention achivement award 12 times and was granted 36 patents in the field of computer hardware and subsystems. During leaves from IBM, he taught at Stanford University for one quarter and served as Far East Chair Professor at the National Taiwan University for one academic year. Dr. Ho has an M.S. degree and a Ph.D. in Electrical Engineering from Stanford University. He served as a research associate at Stanford and a consultant at Fairchild Semiconductor after his graduation.

Q^^cUJ^O^^

Qw ; CH) ,

^ f^mC^^ (jattvi^




A REPORT ON THE RECENT DEVELOPMENT OF INFORMATION INDUSTRY IN TAIWAN, R.O.C,

INTRODUCTION

Since the R.O.C. government made it a policy in 1979 to develop her information industry as one of her strategic industries, the industry has built up tremendous momentum and achieved an astoni shing growth rate in recent years. This report will provide the audience an overview of R.O.C.'s information industry via recent development and activities in the following selected areas.

I. ' The Growth in Export

II. Products and Manufacturers

III. The Building-Up Semiconductor Industry

IV, Industry Promoters

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- 1 -


I. THE GROWTH IN EXPORT (1 of 5)

0 For years, the textile industry had been the leading exporter among the R.O.C. industries.

o In 1983, the electronics and electrical industries combined outgrew the textile industry and became the R.O.C.'s No. 1 exporter.

INDUSTRIAL EXPORT (in B. US$)

__ INDUSTRY __ 1983 1984

E 8c E , 1^4.85 ( 19.Oil;) 6.58 ( 21.6%)

a^'Xs Textile \sr^"^-^4.60 ( 18.3%) 6.00 ( 19.7*) Machinery 3.34 ( 13.3%) 3.83 ( 12.63!)

Others 12.31 ( 49,4X) 14.04 ( 46.1%)

TOTAL 25.10 (100.0%) 30.45 (100.0%)

- 2 -



0 The information industry began to have export of products in 1980, and amounted to only about five millions in US$.

0 Among all electronics products, information products have been enjoying the highest growth rate in export.

ELECTRONICS PRODUCTS EXPORT (in M. US$)

__ PRODUCTS __ 1983 1984

Consumer 1,404 ( 64.0!!;) 1,604 ( 55.8%)

Telecomm 478 ( 21.8X) 354 ( 12.38;)

Information 289 ( 13.2«) 891 ( 31.OX)

Instrument 23 ( 1.0%) 27 ( 0.9%)

TOTAL 2,194 (100.0%) 2,876 (100.0%)

- 3 -



0 The growth in export has been very impressive in almost the entire spectrum of the products the information industry produced,

0 In 1983^ the trend has also been reversed in the content of the information industry export. The last two years data show that the growth in product export has reached almost twelve times as fast as compared to that for the components and parts.

INFORMATION INDUSTRY EXPORT (in M. USS)

__ PRODUCTS .M^^- 1982

Micro Computer

Di sk Dr i ve

Pr i nter

Terminal

Moni tor

NES Peripheral

Product Total

Components and Parts

TOTAL s

2

< 1

> 4

21

34

2

64 (40X)

96 (60%)

160

_ 1983 _

12

15

12

97

131

22

289 (69%)

129 (31%)

418

_ 1984 _

152

86

23

207

319

104

891 (89%)

3^2-e©

41^-^ w^

4 -



0 In 1984, R.O.C.'s information industry exported products, components and parts to over seventy countries, with more than 90% of the export went to only six countries.

0 Efforts .are being made by the government and the industry to diversify the market, particularly to the Japanese market.

DISTRIBUTION OF INFORMATIION INDUSTRY EXPORT BY DESTINATION (Value in %)

Total Micro Disk DESTINAT'N Exprt Cmptr Drive Prntr Trm'l Mnitr Othrs

U.S.A. 69.1 59.9 85.3 74.3 76.9 71.1 58.2

U.K. 7.7 3.5 2.2 - 2.6 17.3 4.4

Hong Kong 4.8 8.4 3.4 4.5 2.6 1.5 9.8

Netherland 3.9 1.0 0.2 18.9 11.1 1.9 1.9

W. Germany 2.8 3.3 1.1 0.4 0.2 0.2 9.7

Canada 2.3 1.9 0.7 0.1 0.3 3.9 3.0

Ireland 2.0 9.6 - - 0.3 1.5

Australia 1.1 1.-9 0.5 0.3 1.7 0.3 1.5

Singapore 0.8 1.8 1.0 0.3 0.1 0.1 1.8

Belgium 0.5 0.1 0.1 - 2.1 0.1 0.1

Others 5.0 8.6 5.5 1.2 2.1 2.1 9.6

TOTAL 100.0 100.0 100.0 100.0 100.0 100.0 100.0

- 5 -


I. THE GieOWTH IN EXPORT (5 of 5)

The current goals set for the R.O.C.'s information industry are to reach the following by the end of 1980s:

0 A total of US$4.6B worth of annual production, equivalent to a 23>.of then worldwide aarket of information products

0 A total of US$3.28 worth of annual product export, or 703! of the 4.6B production

0 A domestic market of US$2.3B, or IX of then worldwide market.

B.O.C.'s TARGET FOR 1989 (in B. US$)

Expcted Annual

CGR 1983 1984 1989 (84-89)

R.O.C. Information Product Export .289 .770 >>> 3.2 33.0!K

(.891; (29.2S;)

Worldwide Infor. Product Market 96.8 112.0(*) >>> 230.0(*) 15.53!

R.O.C.'s Share 0.33! 0.73! 1.43! (0.83!)

* Source : ADL ( ) 1984 actual value, and correspondingly reduced CGR

requ irement

- 6 -

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose. CA 95131 / (408) 971-9000 / Telex 171973

II, PRODUCTS AND MANUFACTURERS (1 of 4)

0 1436 companies contributed to the US$891M export of information products in 1984.

0 70II{ of the export were made by on ly 12 leading companies. Although the shares contributed by the leading 25 companies were more evenly distributed as compared to the 1983 data.

100 r-

No. of Companies

- 7 -


II. PRODUCTS AND MANUFACTURERS (2 of 4)

0 Major manufacturers are (in alphabetical order)

...DOMESTIC. ADI Ca.l -Comp Continental Liberty Lung Hwa Mi tac Multi tech Sampo Taiwan Telecom Tatung TECO

...FOREIGN Ampex Atari Taiwan Capetron i c Digital Taiwan Primages Qume Taiwan Wang Taiwan WYSE Zenith Taiwan

0 Tatung took over from Digital Taiwan the position of No. exporter of information products in 1984.

THE LEADING CONTRIBUTORS TO PRODUCT EXPORT __.

COMPANY Mi cro Cmptr

Disk Dr i ve Prntr Trm'1

ADI Ampex Atari Cal-Comp Capetron i c Continental Digital Liberty Lung Hwa Mi tac Multi tech Primages Qume Sampo Telecom Tatung TECO Vang WYSE Zenith

X X

x x x

x x

x x

X X

x x

x x

Mni tr

X X

x x x

- 8 -



MICRO COMPUTER

o About 50 companies export 8 bit machine. Average FOB around US$250

0 AboutC^O/companies export 16 bit machine. Average FOB arounoOSSlOOO

o Monthly shipment: 10,000 - 20,000 Units

DISK DRIVE ^ ^. (1*^'" ^^•vy^ ^

0 No export until the second half of 1982

o About 17 companies export floppy disk drive.

0 More than 6 companies export micro-Winchester disk drive.

PRINTER

o Although the printer export had a 913! increase in 1984 as compared to 1983, it has the lowest growth rate among the major products.

0 Eight companies exported printers in 1984. Higher growth is expected for 1985 as more companies are getting ready to start their production.

- 9 -



TERMINAL & MONITOR

o It has been built up based upon the successful TV Industry to be the stronghold of R.O.C.'s information industry.

0 R.O.C. is generally recognized as the world's No.l monitor exporter.

0 About 30 companies export terminals and monitors. At -. least 10 have the capability to deliver more than lOK

units per month.

0 A total of 3,500,000 units were exported in 1984.

0 Majority of the components and parts are locally supplied -- 70% in quantity and 503! in value.

0 Color tubes and IC chips are mostly imported from Japan. Local tube makers and semiconductor industry are getting to be more competitive.

PC. / .^

- 10 -


III. THE BUILDING-UP SEMICONDUCTOR INDUSTRY (1 of 4)

R.O.C.'s semiconductor industry comprises three major segments:

0 Wafer Manufacturing 0 IC Fabrication 0 IC Packaging.

WAFER MANUFACTURING

0 There are two companies producing wafers.

o Tatung Co. manufactures 2''-2.5'' wafer -- using Floating Zone process -- for diod and transistor fabrication.

0 Sino-American Silicon Products, Inc. manufactures 4" wafer -- using CZ process -- to supply local semiconductor companies.

IC PACKAGING

0 R.O.C. started to build up the labor intensive IC packaging business in 1967, and now has more than 10 companies engaging in this business.

0 Export value increased from US$124N in 1978 to US$326M for 1983, at an annual growth rate of 21.3!K.

IC FABRICATION

0 The Electronic Research and Service Organization (ERSO) of the Industrial Technology Research Institute serves as R.O.C.'s technology promoter for IC fabrication.

0 There are four major manufacturers: UMC, Vitelic, Quasel, and Mosel.

- 11 -



IC FABRICATION continued

AJ ERSO

1 / ^

R.O.C. started her IC fabrication in 1977 by funding an XR5. 0 * s project to set up an IC experimental p l a n t with RCAJ technology,

ERSO now possesses 2 micron Silicon-gate CMOS technology with single poly an~d double metal, and has production capability for the following products:

-- Linear and consumer ICs -- 8-bit microprocessor -- 16-128 KB ROM.

o ERSO's recent technology development include: -- Upgrading to 1,5 micron technology level -- Developing a CAD environment to upgrade VLSI design

capabi1i ty -- Establishing a low cost and fast turnaround (3 wks

from logic complete to prototype) custom IC design environment for gate arrays

-- Setting up a common IC design center to support local IC industry and facilitate technology transfer.

- 12 -



IC FABRICATION continued

B. MANUFACTURERS

C u M c ] ^ ^36,/n

[ Vitelic, Quasel, Mosel y

0 Established in 1980 with technology transferred from ERSO. Recently invested US$2.5M to set up an IC design company in the silicon valley in U.S.

0 Product lines are similar to that of ERSO. The most well-known consumer products include telephone dialer chips, melody chips, and time-keeping chips.

_- I |3,ncU- 5 ^ — "" ^ ,-, < ''

0 All three are newly established with venture capital and local investments.

o Focusing primarily on design, engineering and manufacturing of memory ICs

0 Capable of producing 16K SRAM with 2 micron CMOS and 64K DRAM products with 1.5 micron CMOS technology

- 13 -

Dalaquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973


IC FABRICATION -- continued

C. FUTURE INVESTMENT

In the next 3 to 5 years, all four companies have plan to invest heavily in the development and production of large capacity memory chips.

PLANNED INVESTMENT

Investment

Targetted Products

UMC

USSIOOM

EPROM SRAM and Mi cro-proc'or

Vitelic

US$ 55M

DRAM

Quasel

USSIOOM

DRAM

Mosel

US$ 40M

EPROM SRAM

o These companies plan to continue to cooperate with ERSO and to pursue the 'Jntershore' o^peration in order to acquire up-to-date techno logy," To maintain low development cost, and to have easy access to the market.

*" 'irM^^trt.

- 14 -

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Parl Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

IV. INDUSTRY PROMOTERS _ a. „ii.ju{ L^J^ ^- ^^ Four organizations are heavily involved in the promotion of R.O.C.'s information industry.

•lop.ent Bureau (IDB) -M.^-^ U^. M^^"^ i^'''-'i) 0 Industrial Deve; -- Overall responsibility to help develop RTO.C.'S infor

mation industry

0 Institute for Information Industry (III) -- Information industry planning -- Manpower development for information industry -- Software technology upgrade

0 Electronic Research and Service Organization (ERSO) -- Hardware technology upgrade

0 Science-Based Industrial Park Administration (SIPA) -- Development of a 5000-acre industrial park to provide^

an ideal environment for technology-intensive industries

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- 15 -


• V - - ^ ^ " " f Dataquest

Dataquest

STATUS QUO AND TOMORROW, JAPANESE SEMICONDUCTOR INDUSTRY

51 'iocki: x + s Hlroshi Shima

Director of Industrial Electronics Ministry of International Trade amd Industry (MITI)

Mr. Shima is Director of Industrial Electronics in the Ministry of International Trade and Industry (MITI). Prior to his current position, he had extensive experience in industrial policies and technology, and most recently was Director of Cast and Wrought Products of MITI. In addition, he worked temporarily at the Ministry of Finance, Science and Technology Agency and Economic Planning Agency. Mr. Shima received a Bachelor of Engineering degree in Precise Mechanical Engineering from the University of Tokyo.




I. The basic Japanese approach to high-technology industries,

including the semiconductor industry

(1) The rapid growth of high-technology industries is extending

economies, increasing world trade, investment, and technology,

and even assisting the recovery of the world economic situation

while improving our standard of living.

(2) The electronics industry is the most important of the

several high-technology fields, and forms the basis for further

technological development. The semiconductor industry is the

core of electronics and the basic motive force supporting high-

technology development.

(3) Additional trade, investment, and technological exchange

in this field is the key to overall improvement in world trade.

(4) The main participants in the semiconductor field, Japan

and America, should strive for even freer semiconductor trade,

and work to avoid regulative actions while eliminating any

existing trade barriers.

- 1 -

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Connpany /1290 RIdder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

II. The promotion and results of exchanges in high-technology

industries between Japan and America

(1) The progress made by the U.S.-Japan Work Group on High-

Technology Industries, which was set up in May 1982, is

especially important (refer to Appendices 1, 2).

(2) Concrete benefits have resulted, such as the adoption of

the above-mentioned basic approach to high-technology industries

by Japan and the United States (refer to Appendix 1).

(3) In addition, the MOSS Talks on the Electronic Sector began

in February, 1985.

III. The Japanese electronics and semiconductor industries

(1) The scale of the Japan-America-Europe electronics industry

is estimated at $255 billion for 1983, a 13.4 percent rise over

the previous year.

1983 composition: USA 56 percent

Europe 23 percent

Japan 21 percent

(Refer to Appendix 3.)

- 2 -


(2) Recent trends in the Japanese electronics industry

The 1984 production figures were ¥16.431 trillion, a 28.7

percent increase over 1983. Industrial electrical equipment

reached ¥5.9912 trillion, a 30.2 percent increase based on

growth in computers; electronic components rose some 23.0

percent, and active components including ICs grew 51.4 percent

to ¥3,0483 trillion (refer to Appendix 3).

(3) Future estimates for the electronics industry (refer to

Appendix 4)

Industry specialists estimate yearly growth rates over the

medium term at 12.4 percent for the Japanese industrial

electronic equipment industry and 15.4 percent for the consumer

electronics industry.

(4) Trends in the IC industry (refer to Appendix 5)

The 1984 Japanese IC market was ¥1.4193 trillion, a

63 percent growth over the previous year. A 20 percent yearly

growth rate is predicted for the medium term (refer to

Appendix 4).

- 3 -


IV. IC characteristics, importance, and demand fields in Japan

(1) Today's IC industry

The IC industry is the vital power behind the electronics

industry's development, and has been called the 'rice of industry'

or 'the crude oil of industry', signifying its critical importance.

The IC industry requires a concentration of high-technology

expertise, where various technologies such as electronics, physics,

chemistry, mechanical engineering, and mathematics are integrated

in pattern design.

(2) The original IC was developed for use in computers, but

new uses are being discovered daily. The range of current

applications, including televisions, radios, clocks, calculators,

audio equipment, cooking appliances and refrigerators, air

conditioners, cameras, automobiles, and countless others, was

not even considered some years ago. A number of different

applications, such as logic ICs, memory ICs, amplifiers, and

micro-computer ICs, include entire systems (refer to Appendix 6).

(3) The recent growth in industrial applications has led to

further increases in IC production in Japan. The percentage of

ICs used in industry rose from 51 percent in 1980 tovPH percent

in 1984. In principle, this trend is expected to continue in

the future (refer to Appendix 7).

- 4 -

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /•1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

V. Activities of American semiconductor firms in Japan

(1) The Japanese market for electronics, including semi

conductors, is open, as is the American market. Both nations

eliminated a 4.2 percent tariff on semiconductors in March 1985

(refer to Appendix 9).

(2) In the semiconductor field, cooperative research and

technical exchanges between the two nations is common (refer to

Appendix 8).

A. American firms such as IBM, Motorola, and TI are competing

successfully in the growing Japanese market (refer to

Appendices 5, 9).

Japan market growth US firms' sales growth

1983 +28% +100%

1984 +63% +40 - 100%

(Refer to Appendix 5.)

B. Japanese firms have entered the American market, primarily

in the 1978-1983 period (refer to Appendix 8).

C. As technological levels rise in Japan, technology flows

between the two nations are also increasing (refer to

Appendix 8).

- 5 -


VI. The role of government in high technology

(1) The role of government in high-technology fields is to

improve the climate for private investment and research activity,

as mentioned by the US-Japan Work Group on High-Technology

Industries. The Japanese government is actively following this

policy (refer to Appendix 2).

(2) In Other words, the government is striving to preserve

freedom in trade, investment, and technological exchange, and

to ensure that foreign capital firms operating in Japan are

treated the same way as Japanese firms. The importance of the

research/investment environment in the United States is realized

as well. In Japan this is viewed as a mechanism supportive of

the market, and policies are being applied to assist private

activity.

VII. Conclusion

Now and in the future, Japan and the United States need to

work to further deepen mutual understanding through the use of

such organizations as the US-Japan Work Group on High-Technology

Industries, to preserve and improve the current attitude of

cooperation and smooth interaction, to eliminate protectionism,

and to Strive to ensure the mutual existence and success of

both semiconductor industries.

- 6 -


(Appendix 1)

US-Japan discussions concerning semiconductors

May 1982

July 1982

October 1982

February 1983

April 1983

October 1983

November 1983

In recognition of the importance of high

technology, the US-Japan Work Group on High-

Technology Industries was formed.

The first meeting of the Work Group was held.

The first Recommendation was drafted.

The first Recommendation was submitted to

both governments, and both agreed to act on

its advice.

The Semiconductors Subcommittee was formed,

and analysis of semiconductors was started.

The draft of the Recommendations of the US-

Japan Work Group on High-Technology Industries

on Semiconductors was written.

The Recommendation was submitted to both

governments, and both agreed to act on the

Recommendation, aiding the industry.

- 7 -


(Reference)

(1) Tariff

Elimination of semiconductor tariff in March 1985.

(2) Data collection

Accumulation and analysis of shipments by both nations

since July 1983.

(3) Trade promotion

Aid to semiconductor industries, the overall economic plan

of the Japanese government, the NTT Semiconductor Reliability

Testing Certificate System (initiated March 1984 - See TI

certification reports, e t c ) .

(4) Investment

Provision of information to foreign capital firms concerning

establishment of businesses, promotion of investment in

Japan (initiated 1984), other.

(5) Technology

Semiconductor chip protection law, established in October •

1984 in the U.S., and approved by the Cabinet of Japan on

March 19, 1985.

(6) Access to industrial groups

The addition of foreign capital firms to the Electronic

Industries Association of Japan (Texas Instruments Japan,

Ltd. in September 1983, and Nippon Motorola Ltd. in

November 1983), other.

- 8 -


February 1985 Initiation of MOSS (Market Oriented Sector

Selective) Talks on the Electronics Sector

March 18, 1985 The second MOSS Talks on the Electronics

Sector

- 9 -


(Appendix 2)

RECOMMENDATIONS OF THE U . S . - J a p a n WORK GROUP

ON HIGH TECHNOLOGY INDUSTRIES

SEMICONDUCTORS

PREAMBLE fZ^i^ifv^y

The U.S.-Japan Work Group on High Technology Industries has

discussed the current status and the future prospects of

development of the semiconductor industries in both countries and

believes that:

- it is essential for the health of the world semiconductor

market that free and open markets exist in both

countries.

it is important that both governments, without having

resort to restrictive measures, maintain and facilitate

mutually beneficial trade, investment and technology

transfer between the two countries in the semiconductor

sector.

In view of tihis, the U.S.-Japan Work Group on High Technology

Industries makes the following recommendations to the appropriate

authorities and semiconductor industries of both countries.

TRADE

(Tariff)

Both governments should take steps towards the mutual elimination

of their tariff on semiconductors.

Note: The tariff elimination will naturally be realized after

necessary internal procedures are completed in both

countries.

- 10 -


eA^^^

(Data Collection)

The joint semiconductor data collection effort initiated in July

this year should be continued with good faith in order to prevent

unnecessary misunderstandings caused by the laclc of statistics that

tends to take place in high technology areas where the product life

cycle is short; and to promote mutual' access to each other's market

supported by a better appreciation of the market trend. The joint

data collection should be operated in a flexible .manner, as has

been discussed, responding to the progress in technology.

(Promotion of Trade)

3. Both governments and semiconductor industries of both countries

should take the following actions with the expectation that the

trade between the United States and Japan would expand under the

free trade principle.

(1) For the purpose of increasing U.S. participation in the

Japanese market, the Government of Japan should encourage

Japanese semiconductor users to enlarge opportunities for

U.S.-based suppliers so that long-term relationships could

evolve with Japanese companies.

(2) The Government of Japan should take care to apply the

Comprehensive Economic Measures, announced on October 21,

1983, to the promotion of Imports of semiconductors produced

by U.S.-based manufacturers as well.

(3) The U.S. Government should encourage the U.S. semiconductor

Industry to: (a) strengthen its sales and marketing efforts,

(b) hold sales promotion seminars and exhibitions, (c)

increase its understanding of the Japanese market by opening

an office in Japan, and (d) consider utilizing the applicable

provisions of the U.S. Export Trading Company Act where

appropriate.

Both governments should extend their good offices to such

endeavors by providing information and other appropriate

assistance, as necessary.

- 11 -

0 . , „„ .s , ,„o=,„„,.,«. . s * , i , . „ o, A.C. . ! . , „ „ Co™p.„, , , « „ « „ „ p „ , „ . , , 3,„ , „ „ , ^^ ^,,^, / (408) 971-9000/Telex 171973

(4) The U.S. Government should continue to enforce its laws which

assure competitive and nondiscriminatory opportunities in the

U.S. market for Japam-based semiconductor firms.

(5) Both governments should reaffirm the importance of the role of

governments in the semiconductor market in vigorously

safeguarding the rules of the marketplace and preventing

anti-competitive or predatory practices.

(6) Both governments should encourage their semiconductor

producers to make active use of NTT's system for testing and

certification of conformance with its reli2Lbility guidelines.

In support of this objective, the Government of Japan should

encourage NTT to hold meetings in Japan and the U.S. to

explain the certification process.

II. INVESTMENT

(Removal of barriers to investunent)

1. Recognizing the importance of the free flow of investment where

hindracnes or inhibiting factors for investment flow exist, both

governments should make best efforts to mitigate or remove them.

2. Each government should encourage the inward flow of investment by

the semiconductor industry of the other country.

(Investment promotion measures for foreign capitalized domestic

companies)

3. Both governments should facilitate participation of foreign

^ capitalized domestic companies in regional investment promotion

rJ^W^_^ schemes such as Technopolis Development Scheme of the Government of

Japan, with a view to encouraging investment by foreign capitalized

domestic companies. Both governments should continue to take

measuras.,juch as provisions of information for this purpose.

- 12 -


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,^/At^ {^l>4'^

III. TECHNOLOGY

(Promotion of technology exchange)

1. Both governments should encourage mutually beneficial exchanges of

technology on a commercial basis.

2. The Reliability Center for Electronic Components of Japan and am

appropriate organization in the United States such as the

Semiconductor Industry Association's Committee on Quality should be

encouraged to proceed with information exchange and other

cooperative undertakings in order to promote technical exchange in

the fields of semiconductor reliability and testing methods.

3. Both governments should recognize that some form of protection to

semiconductor producers for their intellectual property is

desirable to provide the necessary incentives for them to develop

new semiconductor products. And both governments should take their

own appropriate steps to discourage the unfair copying of

semiconductor products and the manufacturing and distribution of

the unfairly copied semiconductor products.

4. Each government should strive to provide inventors with sufficient

patent protection taking note of the different situation in

examination procedure between the two countries.

Both governments should further strengthen the cooperative

relationship between their patent agencies and strive to minimize

the time required for the processing of patent applications.

IV. OTHER

(Access to trade associations)

1. Both governments should encourage that all firms in the

semiconductor industry (whether such firms are directly or

indirectly owned or controlled by nationals or firms of any

country) have equal access .to relevant trade associations.

- 13 -


(Implementation)

2. The relevant authorities and semiconductor industries of both

countries should begin implementation of these recommendations by

November 1983.

(Miscellaneous)

3. Both governments should consider, as appropriate, issues relating

to semiconductor trade, investment and technology in the

semiconductor sector in the U.S.-Japan Vock Group on High

Technology Industries. The Work Group should review implementation

of the measures described above and their effects at least twice a

year, with the first review to occur during the first quarter of

1984.

These recommendations are submitted in accordance with the terms

of reference of the U.S.-Japan Work Group on High Technology

Industries and are subject to the terms of its Recommendations of

February 1983.

- 14 -

Datapuest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder ParK Drive / San Jose, CA 95131 / (408, 971-9000 / Telex 171973

^

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c ^ ^ ^

A^ (Appendix 3)

The International Position of Japan's Electronics Industry (1982-1983) Unit: million dollars

Year

Consumer Electronics

Industrial Electronics

Parts

Total

United States

1982

11,827

88,830

26,807

127,464

1983

14,170

98,735

30,926

143,831

Europe

1982

13,551

30,152

9,718

53,421

1983

13,729

33,683

10,370

57,782

Japan

1982

14,187

15,835

14,055

44,077

1983

16,147

19.383

17,875

53,405

(Note) For 1982 $1 =¥248.3

For 1983 $1 =¥237.52

Source: Collected by EIAJ based on data from Electronics magazine, EIA statistics, and others.

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Production Forecast of Japanese Electronic Equipment & Components (in hundred million yen)

Product/Year


Video Equipment VCRs

CTVs Other

Audio Equipment


Communication & Radio Application Equipment

Electronic Application Equipment (Including computer)

Electric Measuring Instrumentation

Electronic Business Machine

1983

38,338

1984 (Estimate)

45.525

1985 (Estimate)

47.746

84/83

(%)

118.8

95/84 (%)

104.9

23,351 15,140

6,846 1,366

14,985

46,018

14,758

29,310 19,670 7,475 2,615

16,215

59,912

17,737

31,046 20,130

7,880

3,036 16,700

68,937

19,836

125.5 129.9

109.2 158.5

108.2

130.2

120.2

105.9 102.3 105.4

140.2 103.0

1150

111.8

23,911 33,570 39,377 140.4 117.3

4,249 4,823 5,338 113.5 110.7

3,099 3,782 4,386 122.1 116.0

Sub Total 84,354 105,437 116,683 125.0 110.6

Electronics Components Passive & Mechanical Active

Electronic Tubes Discrete IC

Others

22,725

20,130

4,528 4,207

11,395 435

27,952

30,483 5,774

6,067

18,642 438

123.0 151.4 127.5 144.2 163.6 100.6

Total 127,645 164,310 128.7

Source: Electronic Industries Association of Japan

- 16 -


n O)

(Appendix 4) 1) Demand Projections for Electronics Products for Industrial Use in Japan and the United States

(Japan)

JPN

- - . . . F.Y. .

V bill ion

(Percent Change)

$ Mil l ion

(Percent Change)

1982

4,030

16,185

1983

4,903 (21.7)

20,601

(27.3)

(Forecast) 1984

6,232

(27.1)

26,185

127.1)

(Forecait)

1987

8,931

37,525

(Forecast)

1988

9,946

41,790

1987/1984

(Annual average 12.7)

(Annual average

127)

1988/1984

(Anrmal awerai

12,4)

(Annual averai

12.4)

Source: E IAJ (Oct . , 1984)

Note: Industrial Electronics

Communica t ion & Radio Appl ica t ion Equipment

Electronic Applica t ion Equ ipment (Including Computer)

Electric Meamting Instrumen ta t ion

Electronic Business IVIachine

(U.S.A.)

^^~^~-^ ^^ c .y .

U.S.A. $ rviillion

(Percent Change)

1982

106.929

1983

124,558

(16.5)

(Forecast)

1984

147,617

(18.5)

(Forecast)

1987

210,926

1987/1984

(Annual average

12.61

I

r

Source: E lec tronic (1984)

N o t e : Electronics equ ipmen t for industrial uses

• Data Processing System & Peripherals, Business Machine Systems

• Communica t ion Equipmen t & Systems

• Industrial Electronics

• Test & Measuring Equipment

• Analy t ical Equipment

• Medical Electronic Equ ipmen t

• Government Electronics

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2) Demand Projections for Consumer Electronics in Japan and the United States

(Japan)

$ Mill ion

(Percent Change)

1983

N.A.

1984

N.A

1985

14.689

1987

N.A

1990

30,099

1990/1985

(Annual

average 15.4)

Source: JEMA (Mar., 1984)

Note: Based on 20 main products (which make up about 80-85%

of the total).

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(U.S.A)

$ Mi l lion (Percent Change)

1983

20.084

1984

21,277 (5.9)

1985

N.A

1987

23,832

Source: Electronics (1984)

1987/1984


n Q.

0) •o •g (T o oi Csl

(World)

$ Mi l lion

(Percent Change)

1985

60,48G

1990

126,506

1990/1985

(Annual

average 15.91

Source: JEMA (Mar., 1984)

Note: Based on 20 main products (which make up 85% - 90%

of the total).

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3) Projections on IC Shipments for Japan and the United States

Year

United States

Japan

Western Europe

Others

Total

1983

6,318

(126.3)

3,984

(145.5)

2,263

(115.8)

771

(154.5)

13,335

(130.8)

1984

9,847

(155.9)

6,204

(155.7)

3,492

(154.3)

1,215

(157.6)

20,757

(155.7)

1987

16,092

11,374

6.129

2,381

35,976

Annual average

growth 1987/1984

17.8

22.4

20.6

25.1

20.1

Note: EIAJ also announced In March 1983

of IC production between 1982 and

Source: WSTS (Sept. 1984)

(Based an announcements of SIA In

September 1984. Taken from the

report] of Japan Machinery Export

Association and JETRO.)

thai the average annual growth rate

19B6 wil l be 20.5% wor ld wide.

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(Appendix 5)

The IC Market in Japan and the Activit ies of U.S. Corporations Based in Japan

1) Trends in the IC Market in Japan

Year

I Item

Market size (YIOO mill ion)

1983

8,683

( + 28)

1984

14,193

(+63) Increase over prev. yr. (%)

Source: The machinery statistics of the Ministry

of International Trade and Industry and

the customs statistics of the Ministry of

Finance.

Note: Market size = Production — Exports + Imports

2) The Activit ies of American Corporations (major examples)

Company name ~^-~^

National Semiconductor

Japan

Advanced Micro Devices K.K.

! 1983 sales/incr. 7^984 (est.) sales/incr. ~|

over prev. yr. over prev. yr. Remarks

V7 bill ion

( + 100)

y iO .5 bil l ion

(+50)

Nikkei Sangyo Shimbun 8/23/1984

(Talks by President, W.G. Watson dated

22, 1984)

( + 100)

Dempa Shinbun 8/25/1984

( + 100) I (Talks by President Sanders

i dd. 8/23/84)

Analog Devices of Japan Inc. VB.3 bil l ion

(N.A)

Texas Instruments Japan Limited

Intel Japan K.K.

Harris K.K.

Nippon Motorola L td .

Nissec Limited's Fairchild Semiconductor

V68 8 bill ion (N.A)

V8.5 bil l ion

(+60)

V110.5 bil l ion

(+60)

( + 100) (+50)

Nikkei Sangyo Shimbun dd. 8/10/1984

Nikkan Kogyo Shimbun dd. 3/4/1985

V7 bill ion

( + 100)

¥20.0 bil l ion (N.A)

V7 bil l ion

(N.A)

V10.5 bill ion (+50)

¥30.0 bil l ion

(+50)

V10.0 bil l ion

(+43)


(Talks by President Grove dd 6/7/84)

Dempa Shimbun dd. 6/14/1984

Dempa Shimbun dd. 4/12/1984;


(Talks by President Irie dd. 4/12/1984)


- 20 -


3) Recent Trends Related to Production, Exports, and Imports of IC industry in Japan

Unit: hundred million yen!

( ) % change over prev. yr. Vfs-a-vts the world

Vis-a-vIs the U.S.

Export

Import

1981 1982 1983

1996 i 2351 j 4238 (108.9) 1 (142.8) j (148.7)

1143

(105.01

1274 i 1526 (111.5) j (119.8)

712 1168 1843 ^ ^ ° " ( 98.4) (104.0) (157.9)

Import

Production

Market size 1

Reliance on imports from the U.S. (%)

705 j 835 (101.3) j (118.5)

6888 1 8352 (120.8) 1 (121.3)

6035 (121.7)

11.7

6775 (112.3)

12.3

1984

7768 (183.3)

2222 (145.6)

3722 (201.9)

1076 1 1636 (128.9) i (152.1)

11395 1 19739

(136.5) i (173.2)

8683

(123.2)

12.4

14193 (163.4)

11.5

Source: The machinery statistics of the Ministry of International Trade and Industry and the customs statistics of the Ministry of Finance.

Note: 1) Market size = Production amount + Import amount — Export amount 2) The degree of reliance on imports from the U.S. (the share of imports

f rom the U.S.) = the amounts imported from the U.S./the market size 3) Since the shipments of U.S.-owned companies in Japan are not

included in the figures in 2), the share of U.S.-related products is higher (perhaps by several percentage points).

- 2 1 -


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(Appendix 7) Changes m the Relative Weight of Different Fields in the Demand for IC's in Japan

1980 C .Y.

' 1 9 8 2

1984

\

V. \

T V / V T R

15%

A u d o equipment

17%

\ F o r consumer e lectronic

\ (49%)

\

T V / V C R

2 2 %

T V / V C R

17^

; /

Audio equipment

8%

Other

consumer e lectronics

17%

\

\

Audio

equ ipment

14%

X Other

consumer electronics

15%

/ / ^ A For industrial e leclror ic i .--' / \

(49%i y ' / ^

Other consumer goods _J^

?f-

Computer

15%

Compu tet

16%

Computer

13%

X

Te lecommunications/ measuring instruments

12%

Te lecommuni cations/ measuring instruments

1 1 %

O A machinery and

equ ipment

16%

For industrial e lectronics

Te lecommuni^ cat ion/ measuring instrument

10%

/ ( 51%)

O A machinery and

equ ipment

19%

Other

industria l

electronics

8%

/ f

- - /

1 Other

mduslrlal electronics

7%

x^ y \ / X y" For Consumer Electronics \ / i (51%) X 1

\

Other equipment for

industria l use

O A machinery and equ ipment J^—-—^

•^^ - 7 ? ^ ~ ^ j 3 Ic

For consunter use

(3eO 33?^

J J

J V For Industria l use

6 0 70 BO 90

1 0 20 : M 4 0

387

V bi l l ion

550

n fN)

1197

100

5 0 Source: For 1980 and 1982, f rom E lectronic Industries Association

of Japan . and for 1984, f rom the E lectronic Machinery

Section of the Ministry of Internationa l Trade and

Industry .

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CO

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CO

<

(Appendix 8)

Examples of Mutua l Exchange and Cooperation Between Japanese and American Companies in the Field of IC's

o o o O)

• Expansion by Major U.S. Companies into Japan

(in the field of manufacture and sale of semiconductors)

IVlostec Japan L td .

Analog Devices L td .

Nihon IVIotorola, L td .

Nihon IBIVI, L td .

Asah l Micro Systems L td .

N ihon LSI Logic L td .

Harris L td .

Company name

Texas Instruments Japan Limited

A.IVI.I. Japan, Ltd.

Nissec Limited

Advanced Micro Devices K.K.

Nihon Signetics Japan Ltd.

Intel Japan Ltd.

Zilog Japan K.K.

Parent company

T.I .

A.M. I .

Falrchild

A.M.D.

Signetics

Intel

Zilog

Date established

1968.4

1971.10

1972.10

1974.12

1975.9

1981.4 (1976)

1977.10

Line of business

Manufacture and sale; production plants (Oita, Saitama, Ibaragi)

Sale

Manufacture and sale; production plant in Nagasaki

Sale

Sale

Sale; design center in Ibaragi

Sale

Moitec 1979 .10 Sale

Ana l og Devices 1969 .12 Manufacture and sale; product ion plant in Kanagawa

Mo torola 1982.10 Manu facture and sale; product ion plant i n Fukush ima

I .B .M . 1937.6 Manufacture ; product ion p lan t in Shiga

A M I 1983.6 Manu facture and sale; des ign center in T o k y o

LSI Log ic 1984 .3 Manufacture and sale; a product i on plant being planned

Harr is 1984 .6 Sale

Nat iona l Sem iconductor Japan L td . NS 1980.1 Manufacture and sale; a product ion plant in the plann ing stage; design center in Tokyo

CO

o •iT

< o <D tn O

ro CO

ra CL

1 ^

I -o •D

•sT DC ^ O

O) I <N

C ra a. E o o c <D

o <

ra T3

w <

a

0) 3 cr ra

• Expansion by Major Japanese Companies into the United States

Company name

Exar Integrated Systems

Hitachi Semiconductor America

NEC Electronics Inc.

Fujitsu Microelectronics Inc.

Toshiba Semiconductor USA

Mitsubishi Semiconductor America

NEC Electronics Inc.

Parent company

Rohm

Hitachi Ltd.

NEC

Fujitsu

Toshiba Corp.

Mitsubishi Electric

NEC

Date established

1974,4

1978.5

1978.12

1979.8

1980.4

1983.8

1983

Location

Sunnyvale, Calif.

Dallas and Irving, Texas

Sunnyvale, Calif.

San Diego, Calif

Sunnyvale, Calif.

Durham, North Carolina

Rosehitl, Calif.

Fujitsu Microelectronics Fujitsu 1984.9 Port land. Oregon in tN

S (U

t-o o o O)

00 o • *

< o

c nl W

ra Q.

•a -o ir o o oj

• Major Examples of Technological Cooperation Between Japan and the United States

Hitachi LttS. -• Hewlett Packard: Provision of 64K D R A M technology

Toshiba Corporaiion -» Zi log: Refined processing techno logy related to 64K O R A M

Zilog -• Toshiba Corporation; Micropfoceiior technology

NEC " A M I , Zilog: Microprocessor techno logy

Oki Denki and Fujitsu *- Intel: Microprocessor techno logy

Fujitsu ^ M M I , Tej<a» Instruments: Gate array techno logy

NMB '- I N M O S : 256K D R A M techno logy

In addition, there have been cross-licensing arrangements between Japanese companies, on the hand, and U.S. companies such as Texas Instruments, Motorola , Fairchitd and so fo r th.

ra a E o o c <D

o <

<5 •u in n CO

<

o Q . O O

ra Q

(Appendix 9)

Representative testimony by American semiconductor firm officers

1. Roy P. Shields, President, National Semiconductor Japan

(December 20, 1983 Nikkei Sangyo interview)

- To NS, which is trying to market semiconductors world

wide, it is not only reasonable, but necessary for us to

make a strong showing in Japan.

- Industrial competition in Japan is intense, not only among

foreign capital firms that have entered the market, but

also among Japanese manufacturers. All these corporations

must meet the challenge and provide the products users

demand.

- The governments are working towards a solution of the trade

friction in semiconductors, and I am optimistic.

- To succeed in the market, the view must be to the future

regardless of the ups and downs of the market, and operations

and investment must continue. Our aim is to build up a

market for semiconductors in Japan, and I am confident we

will.

- 26 -

Jtaquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

2. M. D. Bohn, Vice-President, LSI Logic (April 5, 1984 Nikkei

Sangyo interview)

- Japan is the second biggest semiconductor market in the

world. Japan is critical to LSI Logic as a central point

in the network.

- Thanks to the cooperation of the stock and bond houses,

the capitalization went well. The Japanese organization

eventually aims to be run by a Japanese management and

Japanese workers. We plan to build a factory as soon as

possible, and we are already considering the purchase of

land.

3. Toshiaki Irie, President, Nippon Motorola (April 12, 1984

Dempa Shimbun interview)

- It is 20 years since Motorola began supplying devices to

the Japanese market. Nippon Motorola is the successor.

- We want to hold the top position among foreign capital

semiconductor makers in Japan within a few years. We will

be actively improving our production system soon.

- When a foreign-capital maker has an unstable supply line,

he receives many complaints from domestic users. A system

that provides full support and confidence to the representa

tives is needed. We are building up that support system

now, and will continue to work to build a firm base.

- 27 -


4. A. S. Glove, President, Intel (June 7, 1984 Nikkei Sangyo

interview)

- We will continue to increase shipments to the second biggest

semiconductor market in the world, Japan, and we want our

sales there for 1990 to reach $1 billion.

- Japanese users are increasing purchases of American products,

including Intel's, during the present supply crunch, which

is having a good effect on both nations. Even if the

present situation changes, I don't think purchasing patterns

will return to their old ways.

- Intel will meet the demands of Japanese users for stable

supply.

5. J. Sanders, Chairman, AMD (August 25, 1984 Dempa Shimbun

interview)

- We aim to be the top foreign capital firm in Japan in five

years.

- The fact that AMD has been in Japan for ten years shows

how well we realize its importance.

- AMD high-quality products will be recognized in Japan,

too. Our shipment figures already show a significant rise.

- 2 8 -

Jtaquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

6. William G. Watson, President, National Semiconductor Japan

(August 23, 1984 Nikkei Sangyo, Dempa Shimbun interviews)

- I do not think the Japanese market is closed.

- In Japan, personal relationships and trust built up over

many years are valued, and it is a fact that it is difficult

for Westerners to force their way in, but we understand

the Japanese market character. The only point is how much

effort we put into developing the market.

- NSJ has come with this approach, and is putting a lot of

effort into Japan ... and the results are starting to show.

- There are many semiconductor makers in Japan from overseas,

and TI is probably the most advanced. This is because

they recognized what the future was going to bring and

found Japanese employees at an early date. NS is using

this as an example in the development of NSJ.

##«

- 29 -


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- 3 -

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

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1 9 8 3

1 4 . 170

9 8 . 7 3 5

3 0 . 9 2 6

1 4 3 . 8 3 1

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1982

1 3 . 5 5 1

3 0 , 1 5 2

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5 3 . 4 2 1

1983

1 3 . 7 2 9

3 3 . 6 8 3

1 0 . 3 7 0

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1982

1 4 . 1 8 7

1 5 . 8 3 5

1 4 . 0 5 5

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1983

1 8 . 1 4 7

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1 7 . 8 7 5

5 3 . 4 0 5

( f t ) 1982=^ (i 1$ = ¥ 2 4 8 . 3

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{ihm : ELECTRONICS 1^. E I A S t f t t i ^ ^ t S t c E I A J S R U i t * . )

- 10 -


Production Forecast of Japanese Electronic Equipment 8i Components (m hundred mill ion yen)

Product/Year


Video Equipment VCRs CTVs Other

Audio Equipment


Communications! Radio Application Equipment

Electronic Application Equipment (Including computer)

Electric Measuring Instrumentation

Electronic Business Machine

1983

38,336

1984 (Estimate)

45,525

1985 (Estimate)

47,746

23,911 33,570

84/83 (%)

118.8

95 /84 (%)

104.9

23,351 15,140 6,846 1,366

14,985

46,018

14,758

29,310 19,670 7,475 2,615

16,215

59,912

17,737

31,046 20,130 7,880

3,036 16,700

68,937

19,836

125.5 129.9

109.2 158.5

108.2

130.2

120.2

105.9 102.3 1054

140.2 1030

115.0

111.8

39,377 140.4 117.3

4,249 4,823 5,338 113.5 110.7

3,099 3,782 4,386 122.1 116.0

Sub Total 84,354 105,437 116,683 125.0 110.6

Electronics Components Passive & Mechanical Active

Electronic Tubes Discrete

IC Others

22,725

20,130

4,528

4,207

11,395

435

27,952

30,483

5,774

6,067

18,642

438

123.0 1 5 L 4 127.5 144.2 163.6 100.6

Total 127,645 164,310 128.7

Source: Electronic Industries Association of Japan

- 11 -


(«^44)

1) Demand Projections for Electronics Products for Industrial Use in Japan and the United States

(Japan)

F.Y.

^ ^ H -1982 1983

(Forecast) (Forecast) 1984 1987

(Forecast) 19S8 1987/1984 1988/1984

JPN

V billion (Percent Change)

j S Million I (Percent Change)

4,030 4,903 (21.7)

6,232 (27.1)

8,931 9,946 (Annual average 12.7)


16,185 20,601

(27.3)

26,185

(27 .1) 37,525 41,790 (Annual average

12.7) (Annual average

12.4)

Source: EIAJ (Oct., 1984) Note: Industrial Electronics

Communication & Radio Application Equipment Electronic Application Equipment (Including Computer) Electric Measuring Instrumentation Electronic Business Machine

(U.S.A.

' ^~~~~^--__C^Y.

1 U.S.A. S Million

(Percent Change)

1

1 1982

j 106,929

1

1

1983

124,558 1 (16.5)

(Forecast) ' (Forecast) 1984 1987

147,617 210,926 (18.5)

1 1987/1984

(Annual average I 1 12.6)

Source: Electronic (1984) Note: Electronics equipment for industrial uses

• Data Processing System & Peripherals, Business Machine Systems

• Communication Equipment & Systems • Industrial Electronics . Test & Measuring Equipment

• Analytical Equipment • Medical Electronic Equipment • Government Electronics

- 12 -


2) Demand Projections for Consumer Electronics in Japan and the United States

(Japan)

$ Million (Percent Change)

1983 1984 1 1985 j 1987

N.A. [ N.A i 14,689 • N.A 1 ' : I . 1

1990

30,099

1990/1985


Source: JEMA (Mar., 1984) Note: Based on 20 main products (which make up about 80-85%

of the total).

(U.S.A)


1983

20,084

1984 1985

21,277 I N.A (5.9)

1987

23,832

1987/1984


Source: Electronics (1984)

(World)


] 1985

' 1 60,486

1 t

1990

126,506

1990/1985


1 i

i

Source: JEMA (Mar., 1984) Note: Based on 20 main products (which make up 85% — 90%

of the total).

- 13 -


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1 3 . 3 3 5

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1 9 8 4

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23 -


I - -- - , S««

1 >r^::^ ' i"" :)a Dataquest

Dataquest

MOS MEMORY, THE PROPULSION POWER OF IHE IC INDUSTRY

Sutezo Hata Executive Managing Director and Group Executive

Electronic Devices Group Hitachi, Ltd.

Mr. Hata is Executive Managing Director and Group Executive of the Electronic Devices Group at Hitachi, Ltd. He is in charge of electron tube products and semiconductor devices. Previous positions at Hitachi have included General Manager of the Mobara Works, General Manager of the Electron Tube Division, and General Manager of the Semiconductor and IC Division. Mr, Hata received a Bachelor of Engineering degree in the Electrical Course from the Faculty of Engineering at Kyoto University, Japan.




In the past, MOS memory has been the main driving force

behind the development of the semiconductor industry, and its

importance as the prime propulsion power in the field will

undoubtedly be even greater in the future. MOS memory is the

core of the semiconductor industry and holds the key to future

development for the following reasons:

- Of the total of ICs and semiconductors produced, the

portion which rely on MOS memory is quite large.

- The growth rate is high for MOS memory, compared to other

devices.

- MOS memory advances tend to lead other technological

improvements in the IC manufacturing industry.

1. W-W Semiconductor Shipments and MOS Memory

I would like to discuss world semiconductor shipment trends

in the past 10 years. The world semiconductor market in 1975

was about $4 billion, but it grew to nearly $14 billion by 1980,

and is expected to reach some $28 billion this year. Compound

annual growth rates for the semiconductor industry over these

10 years have averaged 20 percent, of which ICs overall were 27

percent. MOS memory showed a 37 percent growth, revealing the

manner in which the MOS memory device has continued to lead

semiconductor development.

- 1 -

Dat'aquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

Next, let us compare MOS memory's share of the world

semiconductor market this year, 5 years ago, and 10 years ago.

In 1975, almost half of the market was for discrete devices.

MOS ICs held some 19 percent, of which only 7 percent was MOS

memory. By 1980, the IC share had grown to about two-thirds of

the total market, and MOS memory had risen to 17 percent. In

today's market, ICs account for 80 percent, MOS ICs for 47

percent, and MOS memory now accounts for about a quarter of the

overall market. It is clear from these figures that MOS memory

is a device with great potential for the semiconductor industry,

critical not only because of its growth rates, but also for its

high ratio of total market sales.

Another illustration of the growth of the MOS memory

industry is the number of manufacturers that have entered the

field. Ten years ago, 33 firms were producing MOS memory; by

1980, the number had risen to 41; and this year the number of

manufacturers is expected to reach 64.

2. Worldwide MOS Memory Shipments

Let US turn now to world MOS memory sales volumes on a

product type basis. The 1985 sales volume is estimated at about

$7 billion, of which about half is dynamic RAM (DRAM) devices,

followed by static RAM (SRAM) 18 percent, EPROM 19 percent, and

mask ROM at 13 percent. The compound annual growth rate of

- 2 -

Dataquesf Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

DRAM in the last 5 years is 28 percent, significantly higher

than the total MOS memory device figure of 23 percent.

Examining consumption geographically, the 1980 distribu

tion showed 63 percent for the American market, followed by

Europe at 22 percent, Japan at 13 percent, and other areas at 3

percent. In 1984, U.S. consumption shrank to 48 percent, and

Europe to 16 percent, while Japan rose to 31 percent and other

areas to 5 percent. The demand growth of the Japanese market

stands out, and this is due to the high growth of the Japanese

electronics industry, especially the significant growth of

office automation equipment such as personal computers and

wordprocessors.

The bit sizes of manufactured DRAMs over the last 5 years

have also changed, first from 16K to. 64K, and now a shift from

64K to 256K is occurring in the market. The introduction of

the next VLSI, the IM DRAM, is expected at any time. Examining

this change in bit size from the viewpoints of sales amount and

total bit demand, it can be seen that the cross-over from the

16K to the 64K chip occurred in 1982 on a sales level, with 64K

chips reaching their highest peak in 1984. 256K DRAM chips

made their first real appearance on the market in 1982, and

showed a high growth rate, but it appears that they will not

overtake 256K chip sales until next year or later. Total bit

demand shows a roughly geometrical growth for total DRAM bit

- 3 -


demand, with demand levels for 16K intersecting 64K demand in

1982. It is expected that 256K DRAM bit demand will almost

reach 64K DRAM levels significantly this year.

In 1980, the primary areas of MOS memory application were

in the computer field, consisting of mainframes and minicomputers,

The primary field today, however, is OA equipment, which has

become the number one market with the massive demand for personal

computers and related equipment.

3. Expansion of MOS Memory Demand

AS illustrated above, the MOS memory marketplace has been

expanding. Some of the major reasons for this are:

- MOS memory uses leading edge process technology, and the

rate of technological advance is high, leading to high

cost-performance values for equipment, and therefore demand

increases.

- MOS memory has come to be used extensively in computer and

personal computer production because of expansion of the

high integration levels and low cost.

- With the advent of microcomputers, MOS memory has also

come to be used in a wide variety of small systems designed

for use with microcomputers.

The range of applications has been expanding for at least

four reasons: (1) the adoption of electronics in electrical and

- 4 -


mechanical products, (2) the creation of new products through

electronic technology advances, (3) the development and

diversification of computers, and (4) the digitization in

telecoms. In the future, the development of networking and

systemization made possible through the linking of computers,

DA, and telecommunications will further widen applications.

The characteristics of the single most critical applica

tion field, personal computers, are listed below, and these

same factors will undoubtedly lead to continuing growth in

demand for MOS memory in the personal computer market.

- Personal computers are the driving engine behind OA market

development.

- The RAM size per unit will continue to increase because:

(1) As data levels continue to rise in society, the

potential to process increasing amounts of data is

necessary, and (2) The amount of software requiring

unified, relatively complex, and high-performance mass

memory is increasing.

Taking the IBM PC as an example of the development process

for personal computers, it is obvious that RAM size increases

are dependent on MOS memory development. For instance, business

personal computers sold from 1985 on are expected to have a

standard basic configuration of 512K bytes composed of 256K

DRAMS.

- 5 -


4. Technological Evolution of the MOS Memory

Turning next to the ever-continuing technological advances

being made in MOS memory, the major technologies involved in

MOS memory production are mass production technology, which is

supported by fine pattern process technology, and functional

diversity, which is required to meet the widening market

demand. C-MOS products for lower power consumption and the

diversification of packaging such as small packages will have

to be mentioned here. Let me describe these technologies in

somewhat more detail.

Advances in fine-pattern process technology and the

introduction of related technologies have vastly increased the

number of elements that can be integrated on a single chip.

Current devices are 2 ym, and new applications for 2 ym

technology and products are being actively pursued. Basic

technology development activities, centered around the Central

Research Laboratory of Hitachi Ltd., are on the verge of

perfecting practical 1.3 ym technology.

Process technology advancement has supported the fantastic

growth of MOS memory capacity at a rate at which it quadruples

every 3 years, and the same growth rate seems likely to

continue for some time to come.

Two examples of chips utilizing the most advanced

technology would be the iMbit DRAM and the 256Kbit SRAM.

6 -


Trends in MOS memory technology include high density, high

speed, low power, high performance, and high density packaging.

The trend towards high performance can be easily illustrated by

DRAM devices.

In the 16Kbit age, memory organization was only XI, and

only the page mode was available functionally. In the 256Kbit

age, however, XI, X4 and X8 architectures are demanded, and the

functional variations have also grown to include the static

column mode and the nibble mode, among others. Hitachi's

response to these demands is represented by the following DRAM

products.

Product development was completed for a X4 type 64Kbit

chip, and the 256Kbit device was made available in nibble mode,

X4 type, and static column mode designs. A X8 type pseudo-

static RAM is currently under development, and it is reasonable

to expect further variations in the coming 1Mbit age.

Concurrently, we are intensively promoting the application

of C-MOS technology, which seems to be most suited to the

current marketplace requirements for miniaturization and power

conservation. Furthermore, the development of Hi-CMOS

technology at Hitachi has led to CMOS devices that are the

equal of N-MOS technology chips in terms of integration levels

and speed.

- 7 -


Hi-CMOS technology was first utilized in a 4Kbit static

RAM in 1978. In 1979, a 16Kbit static RAM was commercialized

and a new world standard was established. This helped to make

Hi-CMOS technology a world standard also. Currently, work is

being done on the mass production of 64K SRAMs using Hi-CMOS

technology, as well as the development of a 256K SRAM device,

and the application of the technology to other devices is also

being actively advanced.

Hitachi realized the superiority of C-MOS from the very

Start, and has made whole-hearted efforts to incorporate this

technology into its products. The effects of C-MOS application

are being felt by products in every field today.

A glance at general trends in packaging shows surface

mounts and plastic surface mounts becoming more and more common.

Let me mention here the plastic surface mounts used at Hitachi,

which were developed in accordance with international standards

such as JEDEC. The PLCC package is suited to DRAM applications,

SOP to SRAM Chips, and FPP to mask ROM devices.

5. Potential Future Trends of MOS Memory

Finally, I would like to discuss the future of MOS memory.

The technological revolutions will no doubt continue, leading

to even greater memory volume and diversification of the types

which are manufactured. Function integration, one example of a

new trend in the field, is leading to "system on-chip."

- 8 -


Fine pattern process technology will support continuing

increases in MOS memory volume, and the realization of a

practical 16Mbit DRAM chip is envisioned by the 1990's. The

SRAM will no doubt see a parallel development.

In the past, the 4 major product types were DRAM, SRAM,

EPROM, and mask ROM, but the diversification of market needs,

brought on by expanding applications and advances in design

technology, has led the major lines to swell to 8, including

EEPROM and PSRAM. This expansion of basic device types will

probably continue for some time, and will eventually lead to

the development of special memory devices such as video RAM and

built-in on-chip systems which include MPUs.

Let me take the EEPROM as an example of a new memory device.

The EEPROM is a ROM capable of handling erasure and writing

electrically. It has the additional merit of providing non

volatile data without the need for backup batteries, which are

required for SRAM devices. This critical point will no doubt

lead to high growth in the future. Advances are being made now

that will improve the performance of EEPROM chips, which we

expect to grow into a full-fledged member of the product line

shortly. This EEPROM technology will apply to many fields,

including on-chip memory for MPU (microprocessor) use.

Microprocessors are single-chip CPUs in which ROM and RAM

memory have been integrated on-chip. The non-volatile memory

- 9 -

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company/ 1290Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

in these single chip microcomputers will probably change from

mask ROM to EPROM, and eventually to EEPROM in the future.

EPROM on-chip microcomputers have been built through the

combination of C-MOS EPROM and C-MOS CPU devices, as shown here.

This diagram shows changes in system configuration due to

LSI advancement. The early periods saw hardware logic and small-

volume memory systems, but the introduction of microprocessors

changed the picture considerably. The further introduction of

single-chip microcomputers which include on-chip memory has

already begun to show its effect in current trends in system

development. A logical extension of this trend leads to the

future age of the one-chip system, where the entire functional

system is integrated onto a single chip.

###

- 10 -


DATAQUEST JAPANESE SEIVIICONDUCTOR INDUSTRY CONFERENCE

MOS MEMORY: THE PROPULSION POWER OF IG INDUSTRY

0 HITACHI

APRIL 1985

S. HATA

0 Hitachi, Ltd.

- 1 -

WHY MPS MEIVIORY

MASSIVE VOLUME MARKET

HIGH GROWTH MARKET

MOS MEMORY DRIVES IC TECHNOLOGY

- 1 1 -


WORLDWIDE SEMICONDUCTOR SHIPMENTS AND MOS MEMORY

W O R L D W I D E S E M I C O N D U C T O R S H I P M E N T S

3D

= 20

1Q

C. A. G. R. 80-85 75-85 TOTAL SEMICON. 15% 20%

I C 20 27 DISCRETES 4 9 MOS MEMORY 23 37

^

75 7G 77 78 79 80 81 82 83 84 85

(SOURCE)H1TACHI,LTO.

0 HITACHI 3 -

% OF MOS MEMORY IN TOTAL SEMICONDUCTOR SHIPMENTS

MOS MEMORY 7%

MOS MEMORY MOS MEMORY 17% f - ^24%

1975 I^ HITACHI

1980 - 4

1985 (SOURCE)HiTACHUTD.

- 12 -


COMPANIES INVOLVED IN MOS MEMORY -MERCHANT SUPPLIERS-

f U.S. BASED

EUROPEAN BASED

JAPAN BASED

OTHERS

TOTAL

1975

20

3

9

1

33

1980

24

5

12

0

41

1985

38

8

13

5

64 J

0 HITACHI - 5 (SOURCE) DATAQUESTJNC.

0 HITACHI

WORLDWIDE MOS MEMORY SHIPMENTS - B Y PRODUCT T Y P E -

<^ 4

C .A .6 .R . 80-85 TOTAL MOS MEMORY 2 3 %

DRAM 28 SRAM 20 EPROM 20 MASK ROM 19

O : % IN TOTAL

^ M A S K ROM

3S

EPROM

SRAM

ORAM

81 82 83 84 85

(SOURCE)HITACHI,LTD.

- 13 -


WORLDWIDE MOS MEMORY SHIPMENTS - B Y GEOGRAPHIC REGION-

1980 rR.O .W .3% 1984 rR.O.W.5%

(SOURCE)HITACHI,LTD. > HITACHI

WORLDWIDE DRAM SHIPMENTS - B Y BIT S I Z E -

US$ VALUE

s 2

lOOK

10K

IK

100

10

1

BIT DEMAND

. TOTAL DRAM 1

JS^

/L^Ki ' y 2 5 6 K

^ ] 6 K

NK

81 BZ B3 84 85 80 81 82 83 84 85

(SOURCE)HITACHI,LTD. 0 HITACHI

- 14 -


WORLDWIDE MOS MEMORY SHIPMENTS - B Y END USER SEGMENT-

CONSUMER

INDUSTRIAL & OTHER

2 1 %

0 A 23%

CONSUMER

INDUSTRIAL & OTHER

19%

0 A 34%

TELECOM 9%

HITACHI

/ 38% / \

< _ ^ ^ TELECOM^ ^•^ ^ 11%

1980

- 9 -

/ COMPUTER \ / ^ 28% /

1985 (SOURCE)HITACHI,LTD

EXPANSION OF MOS MEMORY DEMAND

MOS MEMORY: DEMAND DRIVEN MARKET

EXPANSION OF APPLICATION FIELDS

MASSIVE USAGE IN PERSONAL COMPUTERS

0 HITACHI - 10

- 15 -


EXPANSION OF APPLICATION FIELDS r

CONSUMER

COMPUTER

0 A

TELECOM

INDUSTRIAL

1975-1980 V T R

ELEC.6AME HOME APPLIANCES

MAINFRAME MINI COMPUTER

PERSONAL COMP. WORD PROCESSOR

F A X C. 0. EXCHANGE

P B X TELEPHONE A U T O

INSTRUMENTS N C

1980-1985 VIDEO DISC

COMPACT DISC HOME SECURITY

SUPER MINI

P C NETWORK E. TYPEWRITER

DIGITAL PBX DIGITAL C.O.EX.

ROBOT

1985-

HOME AUTOMATION

SUPER COMPUTER

WORKSTATION

V A N L A N 1 N S

CAD CAM FACTORY AUTOMATION ,

©HrTACHl - 11 - (SOURCE)HITACHI,LTD.

WOS IVIEIVIORY MARKET IN PERSONAL COIVIPUTERS

PERSONAL COMPUTER AS A DRIVING ENGINE OF THE OFFICE AUTOMATION SYSTEMS

RAM SIZE EXPANSION

(1) INCREASE OF NEEDS TO PROCESS MORE INFORMATION

(2) INCREASE OF SOPHISTICATED SOFTWARE

0 HITACHI 12

- 16 -


IBM PC RAM SIZE

r

MODEL

P C

PC XT

PC AT

? •

INTRODUCTION

AUG 81

MAR 83

AUG 84

? 85

RAM SIZE

64K BYTES

256K BYTES

512K BYTES

512K BYTES

MOS MEMORY

16K DRAM

64K DRAM

128K DRAM

256K DRAM

> HITACHI 13

TECHNOLOGICAL EVOLUTION OF MOS MEMORY

Trend of High Density by Fine Pattern Process Technology

Trend of Intelligent Function

Toward C-MOS

Diversification of Package

0 HITACHI 14

- 17 -


IMPROVEMENTS IN PROCESS TECHNOLOGY

"s S

i O S

_E

i ^

32

16

0

8

4

2

1

1

-

]5jum

-

-

10' /

. _ i _ I

Vfl V ^ B ^ H

Wj

'

\L i ^ i ^ ^

/¥ 1

w r—

7 t - J -

10' / —

J ^

• \

\ _

• • • •

- '

r—

10' /

/ .

"

-

\'-3 ^ t

— I

• 1 0 '

JlO^ s

-10 bO

1966 1970 1974 1978 1982 1986

10


0 HITACHI 15 -

0 HITACHI

HIGH DENSITY TREND OF DYNAMIC RAM

16K

64K

MEIMORY CELL SIZE (RELATIVE) 256K

1 - (10 )1 1(0 53)11 (0.27)D (0.07)n

7 6 '78 '80 '82

16

•84 '88 YEAR


- 18 -


,MmmBif

• H i ••••'Slri -^C-Tir t ' J

Es • ( • V

.4 «--

.V ^ i ' ' • • ^ ^ 1

r p jiSfefig.-'

HwH^PR

'3 ''':•'

•14/.

'Ml ^^IHH

. . r M . . - . . . ^ , . - t t - Y i - .

0 HITACHI

1M bit Dynamic RAM 17

- ^ T T T P ^ . ^ . - .iJ:^*—- - . •

*iL. ^'M> * r i>

256K bit Static RAM 0 HITACHI 18

- 19 -

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, GA 95131 / (408) 971-9000 / Telex 171973

Qoi^'^

TECHNOLOGY TREND OF MOS MEMORY

0 HITACHI

HIGH SPEED/LOW POWER

oFJne Pattern Process

Technolosy oToward C-MOS

HIGH DENSITY PACKAGING

oSkinny PKG

OPLCC/SOP

oMoilule

h V

MOS l iEMORY TECHNOLOGY

HIGH DENSITY ODRAM

256K-^1M oSRAM

64K-^256K

OEPROM

im-^m

HIGH PERFORMANCE OMEMORYORGANIZATION:X1,X4,X8 OHIGH SPEED ACCESS

(Nibble, Static Column, etc.)

19 -

MARKET NEEDS FOR DYNAMIC RAM r

Bit-Density

4K

16K

64K

256K

ITACHI

Memory Organization

XI

®

@

@

@

X4

®

@

X8

O

@

- 7n -

Function

Page Mode

O

©

©

ORequ

Nibble Mode

O

© ired

Static Column

O

© ©St

Pseudo Static

O

© rongly

- V

Access Time

1 5 0 -250ns

1 0 0 -200ns

1 0 0 -200ns

1 0 0 -200nsj

Required

- 20 -

Dataquest Incorporated, A Subsidiary of A.C Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

TECHNOLOGICAL EVOLUTION OF DYNAIYIIC RAM (64K)

IHR Technolog!

0 HITACHI

(256K)

21

TOWARD C-MOS

(1M)

1 HM50256 1 Page

HM5025T 1 Nilible 1

JH 1 HM50464 1 64KX4 Page

HM50465 G4KX4 Nibble

HM5125fi Static CDlumn

HM65256A 32KX8 PS

.

o OMemory Organization

X l , x 4 , x 8

OFunction

High Speed Page

Nibble

Static Column

Serial Out

Pseudo Static

OPackage

Variety

Conventional N-MOS

/High Speed \Higti Density

D Conventional C-MOS

(Low Power)

Hi-CMOS

Full Cover Both Merits N-MOS & C-MOS

/H igh Speed \ High Density

\Low Power /

0 HITACHI 22


HI-CMOS TECHNOLOGY

1978 Development of Hi-CMOS Tectinology Applied Higfi Speed 4K SRAM: HM6147

] 979 Development of 16K SRAM: HM6116 Defacto Industry Standard (Ua^j^r-d.-)

1985 Mass-Production of 64K SRAM: HM6264 Development of 256K SRAM: HM62256

Diversification of tlie Products

for

23 0 HITACHI

T ^ Ua^

HISTORY OF C-MOS EVOLUTION 1975

-1 1 L 1980

iiiLec I I ret

0 HITACHI

glCITM HTCH

n

1985 I I I

in MH

mn

Sim

T Kin tin

im Iusi nu

2SM WSI IltM

in IMI1I ItK

tin UU1 tiiS

tinr HKT i.tbi

UK imu

rsiiit

jw : in I mm I Eritn I

=c-'v.-.v.-; • in \ rstm

MI li etm tun

— - • t - ^ ' -MR

Eirtik

2*


GENERALTREND OF PACKAGE

as C3 a»

4 0 -

2 0 -

0 HITACHI

OTHERS LCC PGA

PLASTIC DIP

X

1 HERMETIC

'80 '82 '84 '86 '88 '90 - 25 -

J •

PLASTIC

Surface Mount Package

(SOURCE)DATAQUEST,INC.

PLASTIC SURFACE MOUNT PACKAGE

r SYMBOL

NAME

OUTLINE

APPLICATION

PLCC PLASTIC LEADED CHIP CARRIER

^ ^

J BEND

MAINFRAME PERSONAL

COMPUTER TERMINAL

etc.

S O P SMALL OUTLINE PACKAGE

^ ^ ^

GULL WING

PORTABLE COMPUTER

PORTABLE TERMINAL

etc.

FPP ] FLAT PLASTIC PACKAGE

GULL WING

PORTABLE COMPUTER

PORTABLE TERMINAL

etc. ^ ©HITACHI

26

23


FUTURE TREND OF MOS MEMORY

Trend of High Density

Diversification of Memory Products

Trend of System on Chip

0 HITACHI - 27 -

TECHNOLOGY TREND (DRAM)

0 HITACHI 28 (SOURCE)HITACHI,LTD.

- 24


DIVERSIFICATION OF MEMORY PRODUCTS ^ /2v fyiPO.

DRAM

SRAM

EPROM

Mask ROM

1=0

P A S T

0 HITACHI

1 1

ORAM

PSRAM

SRAM

NVRAM

EEPROM EPROM

QTPROM

Mask ROM

oo

NOW

e CO ^->

c « o

c«

oo

09 L . .

0 3

•

' s CO

(/> OS

es

0 3

OS

CQ CJ

0 3

' 1 DRAM

PSRAM

SRAM

NVRAM

EEPROM

EPROM

OTPROM

Mask ROM

FUTURE

29

EEPROM NEW TYPE MEMORY: EEPROM

Electrically Erasable & Programmable Read Only Memory

Free From Battery Maintenance

On Board Reprogrammability'

0 HITACHI

D

C-MOS SRAM With

Battery Backed

New Generation of EEPROM Density 16 l t ^64K Chip Erase-*Byte Erase 2 Power Supply-^Single 5V Address & Data Latched Advanced Data Protection High Reliability

3n -

- 25 -


BUILT-IN MEIVIORY IN A SINGLE CHIP CPU Muit i Chip MPU

C-KOS EPROM HN21CS4

C-MOS MPU HD6301

Built-in

Single Chip CPU Memories on Chip

Mask ROM -^ EPROM -^ EEPROM on Chip on Chip on Chip

^

31

EPROM on Chip MPU HD63701

0 HrTACHI

TREND OF SYSTEM-ON-CHIP

Sirs tern System-on-Chip

Sifstem Single-Chip CPU

System

,^^J Multi-Chip MPU N,. ._ /S js t tn I

P r o c e s s o r : Hardware Logic

©HITACHI 32

26


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- 5 -


Dataquest

.£.X2:ET)(::>U D a t a q u e s t

A FRESi LOOK AT JAPAN AND ASIA

Eugene J. Flath Executive Vice President

Intel International

Mr. Flath is Executive Vice President of Intel International and a Director of Intel Japan K.K. He is responsible for expanding the Japanese and Pacific Basin marketplaces. Mr. Flath's career at Intel has been primarily in the manufacturing and development areas. He has been Assistant General Manager of the Components Group, President of Intel Magnetics, and Director of Manufacturing. For the past two and one-half years he has, represented Intel on the Board of Directors of the Semiconductor Research Corporation and has served as chairman of that group. Prior to joining Intel, he was a Product Line Manager at Fairchild Semiconductor Corporation. Mr. Flath has a B.S. degree in Electrical Engineering from the University of Wisconsin and an M.S. degree in Electrical Engirieering from the University of New Hampshire. He is a member of the Institute of Electrical and Electronic Engineers.




A FIRST LOOK AT JAPAN AND THE PACIFIC BASIN

Eugene Flath

A few months ago when Mr Norrett aslced me to speak at this conference, I had just been appointed to my present job. At the time my head was filled with the new challenge and opportunity. Now three months later I find that my learning rate is accelerating with each week that passes.

While not yet an instant expert on Pacif Basin Business, I can, share with you my initial impression of the changing market conditions. Coupled with some observations on the United States and the Japanese based manufacturers.

Twenty-five years ago the market place was served by a rapidly growing United States Semiconductor Industry. Markets were local and only a few large International companies exported Semiconductors to the rest of the world.

Those were the days of protected home markets and where your competitors were just a few miles down the road.

But then market started to change. (Fig.1)

PURCHASING PATTERNS CHANGE

A few years ago we began to see the shift of manufacturing from the United States, Europe and even to some extent Japan to the low labor cost markets of the Pacific Basin.

At first this was a duty drawback operation. All of the supplies and technology came from the home country.

This gradually shifted to a business in which some of the material is purchased locally. Today most, if not all, the material is purchased from "local" suppliers.

This should not have been a surprise to any one. Since it was no secret that the price of everything is lower in Hong Kong or S.E. Asia than anywhere else in the world.

- 1 -


Neither should it Ise a surprise that a region where cheap labor was the prime attraction should evolve into a principal purchasing location.

During the past few years we see an accelerating trend of major and minor corporations to open purchasing offices here in the Pacific Basin.

The strategy is clear. Place a buyer as close to the source of supply and the point of use as possible.

The effect of this shift in purchasing locations and patterns is to erode more quickly the price difference between geographic locations of the world.

In'the absence of governmental interference there will be a deterioration of the protected home market. The price of a product in Hong Kong will quickly IDecome the price of the product in Los Angeles or Tolcyo. The differences will he slight related only non-market factors, such as transportation, duty and some special local service.

The concept of offering a low price in one market to protect the home market price. When an extra product is available will have the effect of setting a new world price buyers of the world will quickly react to that news. Their response will be to purchase the product where it is availalbe, or more likely request that same low price at home. Certainly this pressure will be more intense in the commodity product area, memory and some low end microprocessor circuits., But the entire market will feel this change.

The question is: How will we, the Semiconductor manufacturer react to this changing market.

To answer this question let us first look at the characteristics of these suppliers.

THE PARTICIPANTS

Let us begin by contrasting the evolution of the United States and Japanese Semiconductor manufactuers.

- 2 -

Dataquest Incorporated, A Subsidiary of AC . Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

In the United States Pioneering Days (Figure 2) the early participants were large, very well financed, vertically-integrated companies. They were already in the electronics business and they had large Research Staffs. As the first devices came out of the laboratory stage they found applications in the companies broad product line.

However, Semiconductor never really loecame the majoir business units, and as a result we entered the transition period in the early 1950's.

Now the integrated circuit had been invented and the business changed, (figure 3), The customers were not only other large companies but also the smaller start-ups as well. At the same time we saw in the United States the beginning of the Start-up fever that was to sweep the electronics industry over the next few years.

The major commercial producers, now are small to mid sized companies as the larger slower moving companies dropped out.

The pattern was set for the future.

Today (figure 4) the merchant suppliers are all tiny to mid sized. Ranging in size from startups with zero revenue to the largest with revenue of just over $5 billion.

The larger electronics companies all have semiconductor facilities - some of which are very large. Their production, however, is all directed internally.

The important point is that each of the merchant companies relies very heavily on its Semiconductor Revenues for its continued burvival as a company.

Contrast this picture with the Japanese Semiconductor manufacturers history.

The pioneers were very much like the early United States companies. Large, vertically integrated, well financed with a large internal market. (Figure 5)

This is where the similarity ends.

- 3 -


Today the Japanese merchant manufactuers look very much like they did several years ago, (Figure 6). While there are more players there are only very few start-ups that could be considered not vetically integrated.

In effect, each of the merchant suppliers is in many other businesses, and the merchant market revenues represent less than 10% of their Electronics business.

ASSUMPTIONS

First: The dramatic growth of this industry in the past will continue to attract new participants. (Fig.7)

Second: In order to serve the expanding market of the Pacific Basin, there will be an effective shift in manufacturing to the Region.

IMPLICATIONS

The next entrants into the business will have to be very well financed. Since they must face three high hurdles to their staying power.

First. Cost of Entry.

Twelve years ago a silicon plant cost less than $10 million for plant and equipment. The potential output was 30,000, 3 inch wafers per month. The product, very sophisticated for its time was a 4K DRAM. (FiIgure 8).

Technical labor, new college graduate cost $12,000 per year.

Compare that to a typical new plant brought on stream in 1984. The factory is now capable of producing 20,000 6 inch wafers per month, an increase of 3 times in silicon area produced. The plant cost, however, has increased 10 times to j ust under $100 million.

- 4 -

Dataquesf Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

The product also is more sophisticated and the process more complicated. It is now a 256K DRAM on 1.5 micron design rules.

That new college graduate is one of the real bargains. His starting wage has increased only 3 times to a little under $30,000/year.

If we look at the Revenue produced for that investment, we find that the revenue per wafer has increased only slightly faster than the silicon area. Most of the improvements in density have been off set by the continued decline in Average Selling Price per function.

This effect is most dramatic in the commodity product areas, like the DRAM. The large number of efficient prodducers drive the cost and price of the product down at nearly the same rate.

Therefore as the technnology gets more complex the capital cost per incremental dollar of revenue has tsecome higher. Today the ratio is almost one to one. That is, each new Revenue dollar per year costs one new capital dollar.

This makes the base capital cost high for the new startup.

But what of the manufacturer with captive line who wants to recover some of the big investment by entering the merchant market.

The market growth is still tempting. (Fig. 9.)

And look at the growth of the MOS market. Almost 50% of the total market growth. '83 to '84 canme from just 7 companies in one market only. (Figure 10.)

The second hurdle - what product to chose?

a) Proprietary Product line - a unique new circuit type -good profit but a long investment - first product -development than market development.

- 5 -


b) A commodity. Memory is the biggest market. It requires little market development, entry can only be made at the highest technical levels. Representing an investment of many hundreds of man months. It is the single most price competitive market.

c) Aquire a technology and or product. License a proprietary design. This method is the quickest to the market. It can be expensive as license fees and technology purchase arrangements can be expensive.

There is now more of a push toward this third alternative. Driven by two factors. 1) The simple economics favor this as the least risky. 2) Changes in governmental position that more and more support the intellectual proprietry rights accross national boundaries.

The third hurdle. Why do I want to stay in a business like this.

The market is at best uncertain. (Figure 11). While the average growth rate has been 20 % over the last 5 years. It has been made up of three flat years and two years of rapid growth.

The lookings numbers in the U.S. are a good example of how dependent the new entrant is on timing.

FUTURE TRENDS

Recognizing that the above factors have a large impact on the established as well as the startup supplier. What will occur in the industry?

RecognizinIg that the customers base is growing most rapidly in the Pacific Basin, I believe that there will be greater emphasis on the type of partnership that have started forming in the past few years. (Figure 12)

These relationships will he aimed at more effectively supporting the customer base by extending product lines and duplicating sources of supply.

- 6 -


In period of rapid growth these extended networks will assure the customer a continued source of supply.

The second more obvious implication, those manufacturers who can not keep up and be truely efficient produces will fall by the way side. I expect several withdrawals from the commercial market over the next several years. These will come from both the independents and the vertically integrated companies.

The independents will either fail outright or become engineering boutiques. While the vertically integrated companies will gradually return to a captive status.

Third we will continue to see startups in the Pacific Bagin if for no other reason than to satisfy some national goals.

These are fairly safe predictions. The real question is who will be the survivals.

- 7 -


SEMICONDUCTOR MANUFACTURING

•PURCHASING TRENDS OGEOGRAHIC SHIFT OIMRACTON MANUFACTURING

•MANUFACTURING TRENDS OSUPPLIERS COME AND GO OCOMPARATIVE HISTORY OCOST OF ENTRY OSTART UPS

•FUTURE . ' U OALTERNATE STRATEGIES

^ ' S f J> OWHO WILL SURVIVE

C^CJ ' ' c^'^^l^'^ \ i ^

UNITED STATES SEMICONDUCTORS MANUFACTURES

PIONEER DAYS (PRE 1955)

•LARGE-WELL FINANCED, VERTICALLY INTEGRATED

•RESEARCH FOCUS

•SEMICONDUCTORS WERE A NICHE BUSINESS

Fin . 2

- 8 -

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 RIdder ParK Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973


TRANSmON PERIOD (1955-1970)

•VERTICAL COMPANIES WITHDREW FROM THE MARKET

•MERCHANTS OSMALLTOMIDSIZE OREVENUE MOSTLY FROM SEMICONDUCTORS

•SOME SPECIALFTY START UPS

Fig. 3


CURRENT (POST 1970)

•VERTICAL COMPANIES-CAPTIVE ONLY

•MERCHANTS OTINY TO MID SIZE OREVENUE MOSTLY FROM SEMICONDUCTORS

• NUMEROUS SPECIALITY START UPS

• FOREIGN START UPS OLARGE-VERTICALLY INTEGRATED OWELL ESTABLISHED

Fici. 4

- 9 -

Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 96131 / <408) 971-9000 / Telex 171973

JAPAN SEMICONDUCTORS MANUFACTURES

PIONEERS (PRE 1975)

•VERTICALLY INTEGRATED OUVRGE-WELL FINANCED OMOST HAD RESEARCH PROGRAMS OINTERNAL MARKET-LARGE

•VERY FEW FOREIGN COMPANIES

Fig. 5

JAPAN SEMICONDUCTOR MANUFACTURES

CURRENT (POST 1975)

•VERTICALLY INTEGRATED OLARGE COMPANIES BECOME STRONGER

•START UPS OMID TO SMALL SIZE-VERTICALLY INTEGRATED OFOCUSED EXTERNAL MARKET OA FEW MORE FOREIGN COMPANIES/JOINT VENTURES OVERY FEW SEMICONDUCTOR ONLY SUBSIDIARIES

Fi r . 6

- 10 -


ASSUMPTIONS

F I R S T : THE DRAMATIC GROWTH OF THE MARKET WILL ATTRACT NEW PARTICIPANTS.

SECOND: MANUFACTURING CAPACITY WILL INCREASE IN THE PACIFIC BASIN.

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CX)ST OF ENTRY

CAPACITY DENSrTY COST

PLANT EQUIPMENT TOTAL

ENGINEER

1972

30,000/3" 5|j

$4.0 M 5.0 M

$9.0 M $11.000/YR

1984

20,000/6" 1.5|j

$40.0 M 55.0 M

$95.0 M $28.000/YR

INCREASE

3x 11 X

10.5 X t 2.5 X

Fig. 8

- 11 -


WORLDWIDE SEMICONDUCTOR MARKET (PER DATAQUEST)

I960 1965 1970 1975 1980

Fig. 9

INCREASE IN DIGITAL MOS SALES IN 1984 ($M) IB

900

800-

700-

400

0 - ^ NEC HFTACHI IfJTEL FLUrfSU TOSHIBA Tl AMD

Fig. 10

5c!ura: -OQ

- 12 -

Dataquesf Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

''r ''-SEMICONDUCTOR FLASH REPORT

FOR U.S MARKET 1.7

1.6

1.5

14-

1.3-

^2•

03 1.1 3

1.0 •

0 .9-

0.8 •

0 7

0.6 •

a: ;

m""^ \r

ry

0.5 ' n I I I I I I I I > I I 11 I [ I M N I [ I I I I I I 1 I I I I I I r I [ I I I I u I I I I 1 I I I ] I I I I n 1 I I I J «Bff -»61- I S e r - ^ j 1989- 4864-

dJ-f 1^ BOOK-TO-BILL RATIO ^ f

Fig. 11

CONCLUSIONS

•MOST EXPANSION OF NEW CAPACrrY WILL BE IN PACIFIC BASIN.

^PARTNERSHIPS WILL CONTINUE TO DEVELOP OPRODUCT LINE ESTABLISHMENT OCUSTOMER SUPPORT

>WITHDRAWALS FROM THE BUSINESS ^ i , /.? o i -f)^'' WILL ACCELERATE.

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p ^f^-rnxr^^ /ly^

Fig. 12

- 13 -

Dataquest Incorporated, A Subsidiary of A.C Nielsen Company /1290 RIdder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973

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SUMMARY OF CONFERENCE

Osamu Ohtake Manager of Research


Mr. Ohtake is the Tokyo-based Manager of Research for Dataquest's Japanese Semiconductor Industry Service and is responsible for strategic research on technologies, markets, products, and manufacturers. In addition, he manages the Japanese Semiconductor Industry Service capacity data base. Prior to joining Dataquest, Mr. Ohtake worked for 10 years as a reporter, and most recently as Components Group Manager, for Dempa Shinbun, a daily electronics industry newspaper published in Japan. In this capacity, he managed the collection and analysis of information on semiconductor markets, pricing, research and development, market shares, and company personnel and management. He has authored reports on the Japanese VLSI project and on semiconductor materials and equipment markets. A native Japanese, Kr. Ohtake is a graduate of Tokyo Denki University, specializing in coiranunications.




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