Exar serving high-growth areas with innovative value-added solutions

Louis DiNardo.

Exar Corp., established 1971, is headquartered in Fremont, USA, and has design centers in Silicon Valley and Hangzhou, China. Louis DiNardo, president and CEO, Exar, said that the company’s strategic model is to serve high-growth markets with innovative value-added solutions. He was speaking at the ongoing 13th Globalpress Electronics Summit in Santa Cruz, USA.

Exar offers solutions that includes high performance analog-mixed signal as well as data management solutions. Its current market focus is on networking and storage, industrial and embedded systems, and communications infrastructure. It is focusing on power management products, connectivity products and data management solutions.

Power management products include those for analog power management such as switching regulators, switching controllers, linear regulators, supervisory controllers, etc, For programmable power, Exar focuses on multiple output synchronous buck controllers.

Some of the products include POWER, the Exar Programmable PowerSuite 5.0. Recently, Calceda has been powering servers with the PowerXR technology.

For data compression and security, Exar is offering hardware acceleration and software solutions meant for compression and decompression, acceleration, encryption and decryption. There are high growth markets supporting social networking, industrial Internet and financial technology as well.

Exar’s Panther I is a first generation compression/security engine with the PCIe interface. The Panther II is a second generation compression and security engine with PCIe and FPGA interface.

III-V high mobility semiconductors for advanced CMOS apps

Clement Merckling, IMEC, Belgium, presented on the epitaxial growth and in-situ passivation requirements for III-V high mobility semiconductors for advanced CMOS applications at the Semicon Europa in Dresden, Germany.

The motivations for III-V MOS transistors include higher electron carrier mobility (@ low-field), more efficient source injection, smaller energy bandgap, VDD scaling, band engineering capabilities, lower temperature processing, high-K gate first process possible and 3D compatible architecture.

IMEC III-V EPI.

The International Technology Roadmap for Semiconductors (ITRS) believes in Ge and III-V. IMEC epi + in-situ oxide ‘tool park’ involves MBE (molecular beam epitaxy) and MOVPE (metalorganic vapour phase epitaxy) III-V growth techniques. The III-V EPI is clustered with in-situ oxide capabilities.

The AIXTRON Crius 300mm looks at III-V selective epitaxial growth (III-As and III-P). The AMAT/RIBER III-V logic cluster 300mm looks at the III-V selective epitaxial growth (III-As and III-P), in-situ surface analysis, handled by RIBER ISA 300, and oxide (ALD and MBE) chambers in-situ. The RIBER MBE 49 cluster 200mm looks at the III-V solid source epitaxy (III-As and III-Sb) oxide chamber in-situ.

Main issues and challenges
Main issues for III-V integration include III-V integration on Si platform. There are all sorts of crystalline defects. Next, gate stack formation on MOS. It is much more difficult to passivate interfaces. Smaller bandgap, means, an increased Ioff due to band-to-band-tunneling.

Challenges with III-V heteroepitaxy on Si include Lattice mismatch, anti-phase boundaries (APB), mismatch stress relaxation and related defects such as dislocations at interface, and extended defects (threading arms, SFs). There are other defects caused at isolation interfaces, such as twins, stacking faults, facets, etc. Finally, there is interdiffusion at heterogeneous interfaces.

However, it is possible to achieve high quality heteroepitaxy by direct epitaxy using metamorphic buffer and defect confinement and wafers bonding. Strain relaxed buffer (SRB) is among the options for III-V materials integration at imec.

There can be InGaAs metamorphic buffer, with the MBE growth of low defect density and device quality III-V heterostructure using a suitable metamorphic buffer. Or, there can be III-Sb on Si by SS-MBE, that provides a route to relax III-V.

Defect confinement is possible via ‘necking effect’. The selective area growth (SAG) of III-V compounds via MOVPE (or CBE ?) means the defects are trapped at trench edges. The other way is dislocation trapping in narrow STI trenches for aspect ratio >2. There is low defect density material in the upper part of the trench.

Elimination of APBs for on-axis Si (001), Si recess engineering, is possible either via rounded-Ge surface or V-grooved surface. In the rounded-Ge surface, step creation is done by surface engineering of a Ge seed layer. Double steps on a Ge surface are more stable and easy to form with a lower thermal budget than on Si.

In V-grooved surface, (111) surface is obtained either by KOH or TMAH wet etching. Growth inside a pre-defined Si {111} enclosure promote initial III-V nucleation uniformity.

The ‘necking effect’ approach presents its own challenges. One, perpendicular view, where there is efficient defect necking effect with side wall and parallel view, which allows viewing high defect density.

Highlights of Union Budget 2012-13

Here are some of the highlights from the Union Budget 2012, tabled in the Indian Parliament this morning by Pranab Mukherjee, Union Minister of Finance.

* National Manufacturing Policy announced with the objective of raising, within a decade, the share of manufacturing in GDP to 25 percent and creating of 10 crore jobs.
* Proposal to extend the sunset date for setting up power sector undertakings by one year for claiming 100 percent deduction of profits for 10 years.
* Proposal to tax all services except those in the negative list comprising of 17 heads.
* Basic customs duty proposed to be enhanced for certain categories of completely built units of large cars/MUVs/SUVs.
* Excise duty on large cars also proposed to be enhanced.
* Relief proposed to be extended to sectors such as steel, textiles, branded readymade garments, low-cost medical devices, labour-intensive sectors producing items of mass consumption and matches produced by semi-mechanised units.
* Concessions and exemptions proposed for encouraging the consumption of energy-saving devices, plant and equipment needed for solar thermal projects.
* Concession from basic customs duty and special CVD being extended to certain items imported for manufacture for hybrid or electric vehicle and battery packs for such vehicles.
* Exemption limit for the general category of individual taxpayers proposed to be enhanced from Rs. 1,80,000 to  Rs. 2,00,000 giving tax relief of Rs. 2,000.
* Full exemption from basic customs duty on LCD and LED TV panels, and parts of memory card for mobile phones.
* Customs duty on warning systems/track upgrade equipment for railways reduced from 10 percent to 7.5 percent.
* Our MSME sector is fertile ground for the production of low-cost medical devices. In order to provide impetus to this sector, I propose to reduce basic customs duty to 2.5 percent with concessional CVD of 6 percent on specified parts, components and raw materials for the manufacture of some disposables and instruments. Full exemption from basic customs duty and CVD is also being extended to specified raw materials for the manufacture of coronary stents and heart valves. These concessions would be subject to actual user condition.
* To promote investment in R&D, it is proposed to extend the weighted deduction of 200 per cent for R&D expenditure in an in-house facility beyond March 31, 2012 for a further period of five years.
* Kisan Credit Card (KCC) is an effective instrument for making agricultural credit available to the farmers. KCC scheme will be modified to make KCC a smart card which could be used at ATMs.

SanDisk’s iNAND Extreme family of embedded eMMC storage devices for high-end mobile and tablets

SanDisk Corp.’s embedded storage is in most of all top computing device brands. It recently launched the iNAND Extreme family of embedded eMMC storage devices for high-end mobile and tablets.

Gadi Ben-Gad, product marketing manager, SanDisk.

Gadi Ben-Gad, product marketing manager for SanDisk, said: “This very high performance line of iNAND products joins the existing iNAND and iNAND Ultra lines, which are very successful in the mobile, tablet and consumer electronics markets. The first generation of these products (iNAND Extreme) will be sampling in a few weeks.

“iNAND Extreme products offer up to 50MB/s write and 80MB/s read sequential performance and very high random performance designed for the next generation of high-end mobile and tablet devices. SanDisk continues to monitor market trends and requirements and diversifying the embedded offering in the market, to answer to the different requirements of the different mobile, tablet and consumer electronics segments.”

So, how will SanDisk play a strong role in these areas? According to Ben-Gad, SanDisk works closely with a broad and diverse set of mobile and tablet OEMs. The company also works very closely with the majority of the leading mobile chipset vendors and standardization bodies in the mobile/tablet ecosystem to ensure optimal integration and technological support.

He added: “SanDisk is a fully vertically integrated company with substantial expertise in NAND flash technology, system technology and product design with years of experience in designing embedded and removable mobile storage devices. SanDisk is very well-positioned to understand, develop and support the future storage requirements in mobile, tablet and consumer electronics devices.”

Finally, I must thank Ms. Jody Privette Young, LymanPR, for making this happen.

LTE will see larger deployments, higher volumes than WiMAX!

Craig Miller, VP, Marketing & Business Development, Sequans Communications.

Late last month, I had the pleasure of attending a Maravedis seminar on 4Ggear: Equipment market update and chipset trends. It also included a market perspective from Sequans Communications, presented by Craig Miller, VP, Marketing & Business Development. This post will highlight Craig’s presentation. Maravedis’ post will follow thereafter.

4G trends: Device volumes and devices
During 2010, WiMAX device shipments are on pace to triple vs. 2009. The volume is well balanced in 2010. Key growth drivers include handset adoption, deployments in India as well as continued growth in US, Japan, SE Asia, and the MEA.

As for 4G devices, in the beginning (ca. 2006-2008), the device shipments were dominated by fixed broadband CPE. Today, the device ‘mix’ is shifting toward mobile broadband devices, netbooks and mass-market multimode handsets. Tomorrow, we shall witness more mass-market handsets, plus mobile Internet devices (MIDs) and other CE devices, as well as the emergence of M2M applications.

According to Miller, mass market prices are here now, enabled by low cost, high-integration chipsets.

Xilinx to build next-gen FPGAs on 28nm high-k metal gate

Xilinx intros world’s first ultra-high-end FPGA based on 28nm high-k metal gate.

Xilinx Inc. has announced the foundation for a next-generation of Xilinx programmable platforms that will give system designers FPGAs that consume half the power at twice the capacity than previously possible for addressing the Programmable Imperative.

Xilinx’s architecture for next-generation FPGA products will be built on 28nm high-k metal gate (HKMG), high-performance, low-power process at TSMC and Samsung.

According to Suresh  Menon, vice president, product development, Programmable Platforms Development, features of the next-generation FPGAs include:

* Reducing total power consumption enables customers to meet system integration and high-performance targets within their power budgets.
* Scalable unified architecture reduces customers’ investment developing and deploying products.
* Xilinx maximizes the value of 28nm with high-performance, low-power process to accelerate platforms for addressing the programmable imperative.

He highlighted some industry challenges. These include the decline ASICs — with development costs, risk and complexity, and time to market being 2x per node, leading to ASIC starts being 50 percent less per node and the ASIC business at -5 percent per year. The ASSP business model is also challenged. While it has grown at 22 percent CAGR from 2004-2009, the operating margins have declined by 27 percent, thus making tier 2 unsustainable.

Menon cited some examples addressing the programmable imperative — wireless communications, wired communications, industrial scientific and medical (ISM), automotive, consumer, and aerospace and defense.

Lower power initiatives are universal. The challenge is to lower the total power consumption, This has to be achieved without giving up on performance or differentiation. Some examples include: green base stations to reduce carbon footprint, eco-friendly server complexes and communication hubs, automotive power restricted environment, and size, weight, and power requirements in defense.

Consumer demand is also driving network bandwidth. A challenge would be enable 1Terabit switch fabric and 400+Gbps line cards. This could been addressed by providing support for 1+Tbps full-duplex bandwidth for high-end switch fabric, enabling high-performance, non-blocking capability with flexibility to integrate QoS security, etc., and extending support for 40G, 100G, 200G, and 400G line cards.

Menon said, “We are delivering lower power through technology innovation, enabling the lowest power, high performance FPGA.”  This is being done as follows:

* Reduce static power consumption by 50 percent.
– 28nm high-K metal gate high-performance, low power process reduces static power compared to 28nm high performance process.
* Lower dynamic power consumption using architectural innovations.
– Transistor choice and multi-gate oxide techniques reduce dynamic power consumption despite trends.
* Enable additional 20 percent power reduction using advanced tool innovations.
– Clock gating technology.
– Fifth generation partial reconfiguration.

Highest efficiency Si solar cells realised with n-Si — Prof. Weber, Fraunhofer ISE

Prof. Eicke R. Weber, director, Fraunhofer ISE, Germany, will be delivering the opening keynote at the inauguration of the SOLARCON India 2009 and India Semiconductor Association (ISA) PV Conclave next Monday in Hyderabad.

Thanks to ISA’s help, I was able to get into a conversation with him, where he elaborated on the capabilities of n-type solar cells, how the solar PV industry is dealing with recession, and well, lessons to learn for India.

Why n-type is better than p-type solar cells?
Researchers at Fraunhofer Institute for Solar Energy Systems ISE have developed new methods and cell concepts for the manufacture of n-type silicon solar cells. What are the capabilities of n-type silicon solar cells that makes them better than p-type?

Prof. Weber said: “The main challenge in the operation of a solar cell is to collect the minority carriers created by sun illumination. Silicon solar cells are commonly made from p-type silicon, mainly because the carrier mobility of the minority carriers, electrons for p-Si, is higher than that of holes, the minority carriers in n-type Si.

“However, if contamination plays a role, which is especially the case for highest-efficiency cells, n-type silicon has distinct advantages because metal atoms like to form electrically active pairs with acceptor dopants that degrade performance.

In n-type silicon are donor dopants instead of the acceptor dopants in p-Si, so that carrier lifetime is better than in p-type Si. This can more than compensate the disadvantage of lower minority carrier mobility. Therefore, highest efficiency Si solar cells are usually realised with n-Si.”

Fraunhofer CSE has also opened a new PV module lab for research, development, testing and evaluation of new materials and production processes for photovoltaic solar modules with the aim to increase module energy yield, reduce cost, and extend module durability.

There is a Fraunhofer CSE in Boston and a Fraunhofer ISE in Freiburg. At the CSE in Boston, it is just starting with the process to establish such a new testing facility. However, this facility is already in place at the Fraunhofer ISE in Freiburg.

How can solar makers turn around?
Solar manufacturers are said to be already losing money this year and the capacity utilization is 27.9 percent. Also, the days of inventory are currently 122, up from 71 days in 2008. If they continue to add new capacity, things will only worsen, exasperating the recession, it can get difficult for them to turn this around.

Prof. Weber said that right now, there is already again a shortage in the module market.

“In Germany, we will see in 2010 at least a 10 percent decrease of the feed-in rate for new systems, so that after the substantial price drops in the first half of 2009 the second half of 2009 offered an unusually lucrative opportunity for the installation of PV systems.

“It remains to be seen whether this market pull will be carried into 2010. On the two-three year time scale the key question will be when the US market really starts, at best by offering in selected staters a lucrative feed-in rate.

“I am convinced, if this demonstrates quick market penetration as we experienced in Germany it will quickly spread throughout the USA, generating a PV market much larger than the German market as the US enjoys many high-sunshine regions in the South.

Lessons for India
Obviously, there are lessons to learn for the Indian solar/PV industry.

As per Prof. Eicke Weber, the key issue for increasing the PV market is to create attractive options for investors.

“In grid-connected systems this can be best done by attractive feed-in rates that have to be tailored for the respective region, and should offer 8-12 percent annual return from the produced PV electricity.”

In off-grid systems, the state might offer investment or tax incentives to allow the creation of lucrative investment opportunities, he added.

Top 5 high growth markets driving (semicon?) recovery, and top 10 hot and emerging technology platforms

Today, I received two wonderful reports — one, highlighting the top 5 high growth markets driving (semiconductor) recovery, and two, the top 10 hot and emerging technology platforms well poised to profoundly impact manifold sectors across the globe while offering potential high RoI for investors!

First, semiconductors! Semico Research has come up with a report that highlights the top 5 high growth segments driving growth and recovery in the semiconductor segment. For the record, 2009 is likely to see the global semiconductor industry decline by 12.5 percent. The top 5 segments according to Semico Research are:

* Netbooks

* Portable navigation devices (PNDs)

* Digital TVs

* DVD recorders

* Video game consoles

Hey, there really seems to be a lot of light at the end of the tunnel for the consumer electronics industry!

On netbooks, I think Intel needs to be given most, if not, all of the credit. Here’s what iSuppli has to say in its fast facts for Intel’s Q3 results:

* Intel also capitalized on the continued rise in demand for netbook PCs. The company dominates the netbook microprocessor market with its Atom chip. iSuppli predicts global netbook shipments will rise to 22.2 million units in 2009, up 68.5 percent from 13.2 million in 2008.

* While Atom represents only a small share of Intel’s total revenue, its profitability is disproportionately high. “Netbook microprocessors are a high-margin product because they utlilize old technology,” said Matthew Wilkins, principal analyst, compute platforms, for iSuppli. “The Atom is based on the old Pentium M microprocessor and uses a mature manufacturing process. Because of this, Intel is getting very high yields and an extremely high margin on the Atom.”

On PNDs, SatNav has recently introduced a Bluetooth enabled multifunction PND. Also, In-Stat reports that the worldwide unit shipments for PNDs will reach approximately 56 million units in 2012.

However, iSuppli has just sent out a story to me, saying that PNDs have now entered a period of slowing growth, spurring companies throughout the supply chain to re-evaluate their business models. Interesting!

As for digital TVs, according to DisplaySearch, developed markets are starting 2009 with strong growth and emerging markets are transitioning from CRT to LCD TVs faster than expected. However, plasma (PDP) TV is expected to fall about 2 percent Y/Y to 14.1 million in 2009 after strong 28 percent growth in 2008. As per iSuppli, OLED-TV revenue will likely rise by a factor of 240 by 2015—but still remain a niche. Let’s see!

DisplaySearch’s total global TV forecast is 200.4 million units in 2009, down 3 percent Y/Y, the first decline in total shipments in recent memory as the global recession and rising unemployment continue to take a toll on demand. However, the slowdown will be temporary as the worldwide economy emerges from recession and new markets enter the initial stages of the flat panel and digital TV transition.

Among DVDs, Samsung has introduced its first internal Blu-ray disc combo drive with BD-R and 8X BD-ROM read speed. Also, Flex-DVD is the latest technology in the DVD replication industry. This single layer format has the same capacity of a DVD-5 (4.7GB for standard size and 1.1GB for 3″ Mini DVD), but is half the thickness of the standard DVD.

Video game consoles — I find it quite interesting! It has been reported that the only products to see a decline in unit shipments in the second quarter were handheld video games, video game consoles, etc. Watch this market segment!

Now, to the top 10 hot and emerging technologies! According to a report from Frost & Sullivan, these are:

* Nanomaterials

* Flexible electronics

* Advanced batteries and energy storage

* Smart materials

* Green IT

* CIGS solar

* 3D integration

* Autonomous systems

* White biotech

* Lasers

Flex-DVD, above, is a great example of flexible electronics. Green IT — although a much abused term, it has certainly been on the top of the charts for quite some time now. Battery technologies and energy storage — yes, certainly. There are rightful places for CIGS solar — a point also made by Dr. Robert Castellano of The Information Network — and smart materials, as well as lasers and white biotech.

Well, what do you think folks? Do you agree with these top 5 and top 10 lists?

How semicon firms can achieve high performance — Part II

Friends, as promised, here is the second part of the discussion I had with Accenture’s Scott Grant, based on Accenture’s recent study: Managing Through Challenging Times!

4. Reducing the time to cash for new products.
When companies industrialize the market concept, and they procure design win opportunities, we tend to see critical components involved with this: a) maintaining relationships of requirements from market analysis through final manufacturing build plan; b) leaders who use consistent lifecycle management of a product development flow; and c) IP management with integrated roadmap portfolio capabilities.

“Firms at times are not able to convert concepts to cash quickly. The process to integrate them has several gaps including innovation lifecycles, conversion of R&D concepts to volume products, and ability to optimize the engineering capacity constraints within their P&Ls.”

Product lifecycle management, portfolio & market analytics, and engineer skills/human resource management help to address these gaps. Portfolio management and roadmap planning process are a must. When done, semiconductor companies will be able to map quickly with the customers and the market insights.

5. Sharpening customer focus through more in-depth and accurate customer insight.
Most firms won’t survive if they are unable to gain rapid adoption of their product offering. From our experience, high performing companies build detailed customer usage-models and insight into end-device markets early in their R&D process.

The challenge many find is that without this baseline of understanding it is difficult to convert concepts into cash once the end-product is delivered to the market.

Many of the insights are available from Point of Sale trends, which can help a semicon firm exist at either an OEM (PC, handset, etc.) or distributor. High performers have enhanced the relationship with their work collaborators and customers to gain access to this data. They also build a “Trusted Advisor” relationship where they build scenarios for each end market to better predict what their end-customer may desire in features or functions.

It is difficult for a semicon firm to know how a product will be used. It is really the beginning of gaining insight into utilization, the consumer, and what usage model should be employed. So a semicon firm should study carefully how things can be used in the market. User behavior is crucial. If companies don’t understand that, they may be missing out.

6. Pursuing alliances to share the cost burden of new product development.
The point here is to make sure that semiconductor companies are taking a strategic view and look at the right places to pursue alliances. There’s a lot of impact in pursuing alliances. When semicon companies do this, they can absolutely share the burdens, but it can impact the operating model.

Other recommendations for the industry
What are the other recommendations that Accenture have for the semiconductor industry going forward?

Grant recommends the industry to focus on achieving high performance business results. Those include sustained leadership in various financial metrics such as return to shareholders, profits, and revenue growth.

“Recognize and adapt to the reality that we are now living in a multi-polar world. This is a world in which a growing number of emerging countries and economies are becoming more financially powerful, competitive and relevant in competing against the traditionally more developed parts of the world such as North America, Asia and Europe. This means there are a multitude of growing business opportunities in these emerging nations for semiconductor companies to capitalize on.

“Proactively invest during a recession rather than pull back investments and just wait until the economy pulls out of this down cycle. History has shown that those companies that invest the most perform better in the years after the market recovers.”

Companies repeating mistakes?
Now, these recessions always have a bad habit of occuring cyclically! Therefore, why do semiconductor (and other) companies tend to repeat those same mistakes again and again?

According to Grant, one reason is they tend to indiscriminately and rapidly cut costs without thinking more strategically and carefully about what costs to cut. “They tend to lay off workers who they need when the market recovers, but they can’t hire them back because those employees have moved on with their careers. These semiconductor companies don’t think hard enough about what employees and assets they will need when the market recovers.”

Layoffs? What about design and development?
Finally, are layoffs the only solution to combat recession? What happens to design and development?

Grant agrees that layoffs are absolutely not the only solution to combat recession. Investing in core competencies is crucial, and spending less time and effort on non-core capabilities is important.

“Employee morale tends to fall within design and development during a recession because they see some of their colleagues lose their jobs and they take on more work. And they lose more control of what work they are assigned to do. And they’re less secure about their job security.

“But, much of this can be alleviated by giving employees a chance to share their ideas and concerns at regularly scheduled Town Hall meetings, to communicate with them regularly and candidly, and to focus them on achieving high performance business results.”

CONCLUDED

How semicon firms can achieve high performance by simplifying business!

Engineers in the global semiconductor industry have typically have had considerable control of their work. Processes are pretty straightforward, sequential, and logical — and satisfying for an honest day’s work.

However, due to the ongoing global economic downturn, many of these engineers are rapidly losing control of more of their professional lives. Caught like the rest of the world in a recession, they are losing more control of what work they are assigned to do, how they do it, in what sequence, by when and with whom.

Given these inter-related problems, many semiconductor companies need to make rapid and fundamental changes in their business operations, strategies and workforce management practices to emerge from this downturn, and for year beyond, as high performers.

Once this recession ends, these people will be entering a market with a different landscape than the market that existed when the downturn began. They need to figure out how to restart their businesses, regain their footing and connect to a new purpose.

They need to address the so-called ‘soft’ aspects of business, such as the engineers who design chips and how they feel. It’s time for them to pay more attention to the little things that may seem innocuous but are actually central to achieving high performance.

Thanks to Charlie Hartley, Accenture, US, I was able to get hold of Accenture’s recent study: Managing Through Challenging Times!! Quite an interesting read!

Naturally, it led to a conversation with Scott Grant, Executive Global Lead of Accenture’s Semiconductor Operating Unit (see image here), who led the research and analysis of this new Accenture report released now about these issues and recommended solutions.

Accenture’s report has seven suggestions or recommendations.

1. Divesting the business of unproductive assets.
2. Infusing a higher degree of operational excellence into the business.
3. Maintaining morale and energy in the workforce, especially in the key area of innovation.
4. Reducing the time to cash for new products.
5. Sharpening customer focus through more in-depth and accurate customer insight.
6. Pursuing alliances to share the cost burden of new product development.
7. Acquiring key assets.

Let’s take a look at those, one by one!

1. Divesting the business of unproductive assets.
From Accenture’s perspective, it has become evident during the past few years that among the top 20 semiconductor a growing number are fabless. That trend will continue in the future mainly because fabless companies have more competitive cost structures than semiconductor manufacturing companies that incur such high fixed-asset costs for their operations. Accenture’s clients (customers) are seeking to understand the business operating model that best fits their desired position in the market. Our assessment leads to having a leaner product portfolio.

The first thing we look at is true cost at length. Traditionally, industry looks at cost per wafer metrics. Accenture studies what the hidden costs are. We look at Total Cost to Land including NPI re-spin costs, complete organization costs, advanced manufacturing process costs, plus the traditional material and labor costs. The goal is to find a fair comparison with an external manufacturing model that presents key improvement opportunities.

We also look for an integrated roadmap for manufacturing, design technology and intellectual property (IP). There are opportunities to better use IP investments across both leading products and derivatives, resulting in reduced cost in product ramp/readiness. To divest of unproductive assets, high performing firms build an accurate and balanced cost baseline for comparison.

In addition, we also look at strategic sourcing. Semiconductor companies often ask how they can lower costs. Sometimes this has the adverse affect within material quality. Strategic sourcing is an important factor to balance both sides of this equation. We suggest that our clients compare costs objectively against their peer groups and external suppliers. Many times we see lower direct material costs through use of external manufacturing models, because of the manufacturing supplier’s economies of scale.

2. Infusing a higher degree of operational excellence into the business.
Traditionally, semiconductor companies were all about operational excellence. In the late 90s and early 2000s, the industry was about R&D excellence. Now, we see operational excellence in terms of sales and marketing — with the amount of feet on the ground, the amount of time invested per design wins. Accenture strives to understand how companies better integrate sales operations into the manufacturing and production operation process.

Given the focus on external manufacturing, operational excellence is now being applied to the IP Ecosystem. IP management is critical for the current industry landscape. Semiconductor companies need to have a compelling argument to differentiate their IP. IP management and external management have been the crux of the strategy. Companies see the design importance growing. They see the change in their clients’ requests towards a focus on sales operation and the IP ecosystem.

We see a few shifts in sales opeations. Many of Accenture’s clients are challenged when they take emerging products into certain regional and local markets. One key challenge is the ability to maintain consistency in quoting, contracting and ordering. The other challenge is training and investing in sales. Sales is being asked to do more. They seem to spend 45 percent of their time in non-sales activities such as administrative tasks. However, they need to spend much more of their total time than that on sales activities and have others do more of the administration.

When Accenture examines the sales cycles of semiconductor companies, we tend to see limited performance metrics that follow. These companies tend to adhere to regional sales models — and the complexity arises regarding how to be consistent with quoting, contracting and ordering.

3. Maintaining morale and energy in the workforce, especially in the key area of innovation.
One of the key decisions during a downturn is workforce reduction. For those employees remaining with the companies after reductions, it’s key for these companies to re-enforce their connection to the new strategy, and how can they re-adjust from a training perspective to prepare such employees for innovation.

Investing in innovation is a huge priority. The transition Accenture sees in workforce reduction includes engineers feeling a loss of control. To maintain moral and energy, semiconductor executives need to continue to communicate strategic objectives to all employees.

Sometimes amid the change, a semiconductor company needs to ask whether it has thought beyond the change event (portfolio, workforce or facility reductions) and also focused on the complete organizational transition. This is a process of communication — to help employees reconnect with their companies. Getting employees to understand, adapt and connect to the new direction takes a lot longer, and it also impacts productivity. Yet it must be emphasized.

Part II continues tomorrow. Stay tuned, folks!