What’s happening with the global semiconductor industry?

April 14, 2010

This is turning out to be quite a week in the global semiconductor industry! First, Intel reported a record Q1, with first-quarter revenue of $10.3 billion. It reported operating income of $3.4 billion and net income of $2.4 billion. Great stuff!

Next, at the Intel Developer Forum in Beijing, China, it outlined plans for a new Atom processor-based SoC. It is codenamed as the Tunnel Creek SoC for IP phones, printers and in-vehicle-infotainment systems for cars. Excellent!

Then, at its 2010 Technology Symposium, TSMC announced that it will skip the 22nm manufacturing process node and move directly to a 20nm technology. In fact, it proposes to enter 20nm risk production in the second half of 2012. Brilliant!

Now, I have a release from Future Horizons that outlines the state of the global semiconductor industry. On the one hand, Future Horizons indicates that semiconductor sales have continued to be very strong. This looks set to continue for the rest of the year, resulting in a 2010 that is massively improved on 2009.

On the other hand, several companies still remain unjustifiably pessimistic and confused about the state of the market. Companies now have an opportunity to dominate the market. Instead they continue to be cautious, undermining their own prospects of making some serious money. Isn’t that confusing for the industry? Or, is it confusing itself?

I also have a report from Accenture titled ‘Flying blind in the semiconductor industry’, which you can read on the PC Semicon Blog.

According to Scott Grant, managing director with Accenture’s Semiconductor Business, the fallout from the global recession, massive fragmenting of the value chain, the rise of a more diverse world economy, and new sales and distribution models have created tough challenges for semiconductor companies when it comes to understanding and predicting demand for their chips and managing their supply chains. This lack of understanding is a dangerous liability in a world characterized by unprecedented volatility and competition.

Oh my, these are clearly mixed signals all over again! Or, is the global semiconductor industry having problems with its ‘place-and-route’ strategies? Just a fiigure of speech!

For one, is the global semicon industry truly flying blind? Scott Grant has given suggestions as to how the challenges can be tackled. He advises semiconductor companies to focus on three priorities: sales force effectiveness, supply chain integration and optimizing their collaborative planning and fulfillment capabilities.

Look, I’m not an expert! There are several questions that need to be asked, and I hope some knowledgeable folks can answer those.

For one, should the global semicon industry continue to revel in ‘inappropriate pessimism’,’ how will it affect its fortunes in the short and long terms? Or, are those strategies, as advised by Accenture, enough to help the industry? Next, why this need to skip process nodes? What happens to those betting on 22nm? Okay, will all of that have some impact on the semiconductor equipment industry in the long term? What’s really happening with the global semiconductor industry?

There is a need to swing back to optimism, folks, as Malcolm Penn of Future Horizons says in his monthly update.

As I’m about to call it a day (or evening or night), comes the news that EDA industry organizations, Accellera and The SPIRIT Consortium, have completed their merger!

Didn’t I tell you at the very beginning that this is turning out to be quite a week in the global semiconductor industry?

The next week promises to be fun, especially in the Indian semiconductor/VLSI/electronics industry! Well, it has to do with microelectronics! You’ll find out soon. 🙂 Keep reading this blog, friends.

  1. Sanjeev
    April 15, 2010 at 4:28 am

    Dear Pradeep,

    I read your blog with interest and excitement. I didn’t stop to write my point of view on “Skipping Strategies” of Semiconductor companies and “Fabrication house”.

    First, it was indeed a great result of Intel. This will certainly boost the morale of the Investors. Good part is that Intel indicated that there was significant sales growth chips going in various kind of application. Probably TI, Analog Device, ST, NXP etc will join in this leauge.

    Fortunately, major companies like Intel, Xilinx, Apple took 28nm yardstick to gain the competative advantage. Its good for indutry. Probably the smaller player may not be interested in due to high mask cost.

    The real challenge would be to address the manufacturing issues like, leakage, transistor variabilities etc.

    TSMC pointed out that they will be using 193nm lithography for 20nm process. Again this may arise the above problems, DFM issues even yield issue. Based on the sales forecast they will probably spend in Extreme Ultra Voilet process.

    EDA companies who started delivering a positive results may again confuse about the further investments in the 20 nm process node.

    Overall it is a confusing situation with lots of mess. But breakthrough consumer products or good semiconductor sales may be an answer for the future of 20nm process node.

    Best regards,
    Student of Executive PGDM @ XIME Bangalore

  2. April 15, 2010 at 5:47 am

    Thanks for the comments, Sanjeev.

    Yeah, it’s a bit messy alright for the moment, but one hopes the semicon industry will emerge even more stronger, post recession.

  3. Abigail
    May 11, 2010 at 3:36 am

    Truly nice story you got here. It would be great to read more concerning that theme. Thank you for sharing such material!

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