If the recent preliminary results released by IC Insights is anything to go by, there have been some movements among the top 20 semiconductor companies of the world during H1-2007. This is best illustrated by the table below.
While the top three — Intel, Samsung and TI, retain their positions, ST and Toshiba have exchanged the next two positions, as have Hynix and TSMC, while Renesas remains at no. 8!
Freescale has taken a big drop from no. 9 to no. 16, while Sony, NXP and NEC gained one place each. Infineon has climbed back up to no. 12, from no. 16, while Qualcomm occupies the no. 13 position, up from no. 17. AMD dropped two positions, from no. 13 to no. 15.
Will the semicon industry see a tight year ahead? As per reports, IC Insights said that there should be a “noticeable seasonal rebound” in overall IC demand beginning in September 2007, which may cause “significant changes” in the top 20 semiconductor ranking in the second half of 2007. Wait and watch this space!
Stoke Inc. is an established player in LTE security, commercial Wi-Fi and LTE enablement, and is already engaged research into small cell signaling issues. It will be displaying a range of solutions for the global telecom industry at the forthcoming Mobile World Congress 2013 in Barcelona, Spain.
Outlook for telecom in 2013
First, I asked Stoke about the outlook for the telecom industry in 2013. According to Dave Williams, CTO, Stoke, 2013 will be the year of LTE globally. Deployments will accelerate worldwide. It is significant that Europe, in particular, has woken up to LTE.
Next, large-scale infrastructure suppliers are experiencing shifts in demand. While operators in the Americas and Japan are high spenders, in Europe there are major vendors whose technology posture is while newer players have become rising stars
Further, Wi-Fi as an ongoing force in the industry – with subscribers accustomed to ‘leaving’ their cellular providers for Wi-Fi options, operator services such as international roaming and rate plans are losing their money-spinning potential. 3G data plan revenues are shrinking because of the superior appeal of Wi-Fi to subscribers. Operators must accommodate this reality in their LTE planning.
Williams added that a trend will be the polarization of the device landscape. The Android’s dream of many device manufacturers with one software interface has faded. We’re seeing a polarized landscape of Samsung/Google versus Apple. RIM is struggling and facing further potential challenges as many of its enterprise contracts approach end of life in 2013. Microsoft may emerge as a player in in the tablet area. Look for some M&A activity from unexpected areas. Also, small cells are seen as the answer to spectrum challenges, but the rollouts will be slow for the next two years as the technology matures.
Finally, driven primarily by the popularity of Apple and Samsung personal devices, BYOD – Bring Your Own Device – to work is a ground-up movement that has taken ID departments and security practitioners by surprise. This is likely to push regulatory measures – especially in the area of security – in the relatively near term. Access providers are under even more threat from the security perspective. It is not all bad, though. For savvy operators, there is the prospect of providing trusted, high quality and easy connections to a large proportion of the estimated 7 billion BYOD users worldwide.
It would be interesting to hear about what are Stoke’s plans for the MWC 2013. Williams said, “At MWC, look for Stoke to announce its new generation LTE mobile border access gateway, new LTE signaling capabilities in its Security eXchange and, on the Wi-Fi eXchange side, a new event access offering in conjunction with an ecosystem of partners.”
Stoke’s Wi-Fi exchange gateway solution
Elaborating on Stoke’s Wi-Fi exchange gateway solution, he said the Wi-Fi eXchange is a gateway application that automatically authenticates Wi-Fi attached subscribers and securely links them to their 3G or LTE cellular network services and/or to the Internet.
Wi-Fi eXchange enables the operators to maximize the benefits of service provider Wi-Fi while limiting traffic loads on the mobile core through dynamic, selective traffic steering. Wi-Fi eXchange is an important catalyst for operators seeking to transition from Wi-Fi as merely RAN congestion relief to Wi-Fi as a new service delivery medium.
On Jan. 23, Stoke announced the newly-available Wi-Fi eXchange gateway that is engaged in multiple commercial service trials uncovering new ways for telecommunications operators to incorporate Wi-Fi as a revenue-supporting service. In a single unit, Wi-Fi eXchange introduces a broad set of extremely flexible Wi-Fi management capabilities previously unavailable to mobile broadband carriers.
Wi-Fi Alliance has been instrumental in driving the evolution of Wi-Fi strategies, providing a forum for Wi-Fi operators, equipment providers and hardware manufacturers to develop industry-wide standards and programs which are critical to mass market adoption. The Passpoint certification program, launched in June 2012, has seen significant industry adoption so far.
The last decade heralded a dramatic transformation in supply chain dynamics, driven by the complexity challenge of staying on the More Moore curve. On the demand side, the high cost of fabs persuaded almost all integrated device manufacturers (IDMs) to use foundries for their leading-edge wafer supply.
The ever-increasing process complexity and its negative impact on manufacturing yields forced the adoption of sophisticated foundry-specific design-for manufacturing (DFM) techniques, effectively committing new chip designs to a single foundry and process.
At the same time, the industry adopted a much more cautious lagging rather than leading demand approach to new capacity expansion, resulting in under-supply and shortages in leading-edge wafer fab capacity. To make matters worse, the traditional oxide-based planar transistor started to misbehave at the 130nm node, as manifested by low yields and higher than anticipated power dissipation, especially when the transistors were supposed to be off, with no increase in performance, heralding the introduction of new process techniques (e.g., high-k metal gates).
Even before these structural changes have been fully digested, supply chain dynamics have been further disrupted by the prospective transition to 450mm wafer processing, to extreme ultra violet (EUV) lithography, and from planar to vertical transistor design.
Since the start of the industry, adding more IC functionality while simultaneously decreasing power consumption and increasing switching speed—a technique fundamentally known as Moore’s Law—has been achieved by simply making the transistor structure smaller. This worked virtually faultlessly down to the 130nm node when quite unexpectedly things did not work as planned. Power went up, speed did not improve and process yields collapsed. Simple scaling no longer worked, and new IC design techniques were needed.
While every attempt was made to prolong the life of the classic planar transistor structure, out went the polysilicon/silicon dioxide gate; although this transition was far from plain sailing, in came high-k metal gates spanning 65nm-28nm nodes. Just as the high-k metal gate structure gained industry-wide consensus at 28nm, it too ran out of steam at the 22nm-16nm nodes, forcing the introduction of more complex vertical versus planar transistor design and making the IC design even more process-dependent (i.e., foundry-dependent). Dual foundry sourcing, already impractical for the majority of semiconductor firms, will only get worse as line widths continue to shrink. Read more…
Rekha Raghu, Strategic Program Manager, Intel, Software and Services Group, discussed some reference architecture (RA) case studies. Intel Cloud Builders program is a reference architecture (RA) — a starting point from where to build and optimize cloud infrastructure.
The RA Development Process takes anywhere from two to three weeks. It involves exploration, planning, integration, testing and development. The RA is said to be:
* Detailed know-how guides.
* Practical guidance for building and enhancing cloud infrastructure.
* Best-known methods learned through hands-on lab work.
RA case study # 1 – efficient power management
Data center power management involves monitor and control server power, and later, manage and co-ordinate at data center level. Dynamic power management is on the server, rack, and data center levels.
Power management use cases help to save money via real time monitoring, optimized workloads and energy reduction. They allow scaling farther via power guard rail and optimization of rack density. They also help prepare for the worst in terms of disaster recovery/business continuity.
Intel also presented a power management RA overview as well as an implementation view. The monitoring, reporting and analysis provides insight into energy use and efficiency, as well as CO2 emissions. Rack density optimization and power guard rail enables more servers deployed per rack. It improves the opex cost of power delivery per system. It also extends the capex data center investment with increased node deployments.
As for disaster recovery/business continuity, there is policy based power throttling per node to bring the data center back to life more quickly and safely. The next step involves inlet temperature monitoring and response based on thermal events (already available in Intel Intelligent Power Node Manager).
Workload-power optimization identifies optimal power reduction without performance impact. Customized analysis is required as each workload draws power differently.
RA case study # 2 – enhanced cloud security
If one looks at the trends in security in the enterprise, there are shifts in types of attacks. The platform is now as a target, not just software. Stealth and control are taken as objectives.
There are increased compliance concerns. HIPPA, Payment Card Industry (PCI), etc., require security enforcement and auditing. Changes in architectures require new protections as well. These include Virtualization and multi-tenancy, third party dependencies, and location identification.
Trustable compute pools usage models lead to compliance and trust in the cloud. Compliance in the cloud involves multi-tenancy that could complicate compliance. There is need for software trust despite physical abstraction. Also, compliance requires effective reporting. There is a need to enforce VM migration based on security policy.
Intel-VMware-HyTrust enables trusted compute pools. The outcome is that data integrity is secure and there is no compliance violation.
Intel Trusted Execution Technology (TXT) enforces platform control. It allows greater control of launch stack and enables isolation in boot process. It also complements runtime protections, and reduces support and remediation costs. Hardware based trust provides verification useful in compliance.
HyTrust appliance enforces policy. It is a virtual appliance that provides unified access control, policy enforcement, and audit-quality logging for the administration of virtual infrastructure.
Intel provides solutions to pro-actively control and audit virtualized data centers.
Following the announcement of the EDA360 last week, I managed to get in touch with Jaswinder Ahuja, corporate vice president and managing director, Cadence Design Systems (I) Pvt Ltd. We discussed a variety of topics such as why the EDA industry is at the crossroads, EDA360 unplugged, the integrators vs. creators concept, the IP stack and the road ahead for EDA360.
First, why is the EDA industry at the crossroads?
“Semiconductor companies are being asked by system companies to provide the hardware platform as well as the software that will run on that particular platform. That is the trend that Cadence is seeing today, and that is what is discussed in the EDA360 manifesto,” he added.
EDA is at crossroads because EDA companies can no longer provide the tools only for IP integration and silicon realization like they have been doing all these years. EDA now has to encompass SOC realization (including bare metal software) and then move towards system realization, which includes mechanical/board design, he noted.
EDA360 and its key features
Ahuja said that EDA360 represents System Realization, the development of a complete hardware/software platform ready for applications development; SoC Realization, the creation of a single SoC including hardware-dependent software; and Silicon Realization, which includes complex digital, analog, and mixed-signal designs.
The traditional approach to system development starts with the hardware, and appends the software and the applications later. With application-driven System Realization, designers start by envisioning the applications that will run on the system, define requirements, and then work their way down to hardware and software IP creation and integration. This flow requires some new and expanded capabilities.
Part of system realization is project management. EDA360 reaches beyond engineering teams to help customers meet project and business objectives.
Key features of EDA360 include:
The four chapters of the EDA360 manifesto take a look at:
The EDA360 vision paper says: “Today, systems and semiconductor companies are undergoing a disruptive transformation so profound that even the best-known companies will be impacted. The EDA industry now stands at a crossroads where it also must change in order to continue as a successful, independent business. Without that change, EDA will become a fragmented industry offering suboptimal, poorly targeted solutions that fail to solve customer problems. As a result, the huge leap forward provided by the electronics revolution will come to a standstill. The result? A squandered opportunity for technology innovation, and a diminished contribution by the electronics industry to re-build the global economy.”
You can download the vision paper from eda360.com, if you like!
The vision paper is essentially looking at where EDA should be heading over the next five years. The four chapters of the EDA360 are:
* EDA360 enables silicon realization.
Why is the EDA industry at crossroads?
The EDA industry to date has only served the needs of creators. It has almost completely ignored integrators, who need a different set of tools and capabilities. How can the EDA360 go about achieving this?
When one says that the EDA industry has so far only served the needs of the creators, It is only a reflection of the evolution of the industry. The fundamental manner in which electronic design is being done is now changing. While it is shifting, it also takes a while to understand the entire paradigm. The industry is also moving toward IP re-use, etc., — those are all the shifts.
The industry is now said to be looking at a new paradigm: integration ready IP. What the vision paper does: it takes the industry to where it is heading and tells this is what’s needed. This is what the integrators will need in the future.
Here is an Outlook 2010 report on the global semiconductor industry, as well as the EDA industry, and a look at what lies ahead for India.
Lip-Bu Tan, president and CEO, Cadence Design Systems Inc., who was recently in India during the CDNLive event, is of the opinion that the global semiconductor industry is undergoing some significant changes that will further place new demands on the EDA providers.
Semicon industry trends
Speaking on the current trends in the global semiconductor industry, he said: “Semiconductor companies are becoming more focused on their core competencies, and are increasingly collaborating on a global basis. They are prioritizing capital efficiency, and they are looking for help in containing the costs of both hardware and software development.”
With the emphasis on profitability, one trend that will continue to occur is consolidation. Semiconductor companies are consolidating in order to scale existing businesses, to grow by complementing existing product lines and to focus on strategic, differentiated or market-leading areas, and of course, to save costs.
He added: “The trend towards “fab lite” continued in 2009. AMD spun off GlobalFoundries, its Dresden, Germany fabrication facility, and the parent company of GlobalFoundries, based in Abu Dhabi, announced its intention to acquire Chartered Semiconductor. It appears that if this trend continues, there will be fewer integrated device manufacturers (IDMs) and fewer semiconductor manufacturers in the future, as fab costs for advanced processes soar.
“Globalization is another trend that will accelerate as economies become more interdependent. It can aid recovery, given that stimulus packages can be expected to uplift most major economies. Today, the best growth prospects appear to be in the developing countries.
“Success at globalization requires some new thinking. Companies must think “locally” in places they operate, taking advantage of local supply chains, markets, partners, and engineering talent. Cost optimization is a likely consequence of moving some operations offshore, but if it’s the only motivation, companies are likely to be disappointed. It is important that the business strategy drives globalization, not the other way around.
“Beyond consolidation and globalization, as I indicated earlier, collaboration may also continue to pick up speed. The design challenges at 45nm and below will shape the semiconductor ecosystem in 2010 and beyond. Technical challenges include process variability, signal integrity, design for manufacturability, timing closure, analog/mixed-signal circuitry, and low-power design. Solutions will require extensive collaboration between EDA, silicon IP, semiconductor, and foundry companies – no single company can do it all.
Global re-optimization of industry
Quite interesting, that Tan mentioned industry consolidation. Will there be further consolidations within the industry?
According to him, we have seen consolidation within the semiconductor industry in 2009 and it has been global in nature. What is occurring is a kind of global re-optimization of the industry. IC design, manufacturing, test, packaging, and product assembly are taking place in many different parts of the world, with multiple companies and geographically dispersed teams.
“Although, I think, we may see further consolidation in the coming year; beyond that, I can’t speculate on who will participate or when that will happen.”
Semicon industry outlook for 2010!
How is the outlook for 2010 going to shape up now that some signs of recovery have appeared?
Lip-Bu Tan said that according to the Semiconductor Industry Association (SIA), after a decline of over 11 percent in 2009 as compared to 2008, the semiconductor industry is projected to grow by over 10 percent in 2010 and 8.4 percent in 2011.
“While an economic recovery is inevitable, and may already be taking shape, customers still remain cautious in their optimism. They are keeping a tight rein on research and development budgets. This is consistent with what we have seen with other downturns, and we expect the EDA industry recovery to lag a quarter or two behind the semiconductor industry.”
How is the global PV industry reacting to oversupply conditions? Dr. Henning Wicht — Senior Director and Principal Analyst, iSuppli Corp., and Stefan de Haan — Senior Analyst, Photovoltaics, iSuppli, have attempted to answer a whole lot of questions and provided an outlook on the global solar photovoltaics industry.
Propelled by exaggerated growth expectations in the past and further boosted by weakening demand due to the global economic downturn, the PV industry has blundered into a situation of critical oversupply becoming evident on all nodes of the solar value chain.
According to Dr. Wicht, last October, all prices of wafers and modules were up, and nobody had foreseen a dramatic drop. It happened indeed, because many people believed in the industry consensus.
Recent findings — June 09
1. Polysilicon supply will enforce further price drops in 2010
2. You will see mounting inventories – due to mounting inventories, module production in 2009 will be ~25 percent smaller than expected.
3, Module price decline will continue, but 2009 is slower already
4. Global PV installations, though in good shape, wont exceed 4GW in 2009.
PV market update — key findings
- Oversupply situation is getting worse
- Significant price drops expected through 2010: $40/kg or less
- Winners will be determined by cost structures
- Inventory levels climb to three times that of Q2-2008
- Production cuts and review of business model in 2009
- Prices continue to drop, but decline will slow down at the end of 2009: $2.2-2.3/W end 2009
PV system demand
- Global installations 2009: 4GW to be installed this year
- Revenue decline of 35 percent compared to 2008 — since we have a price decline and volume decline
The solar industry will continue to change, said Dr. Wicht. “Oversupply situation is not the end of the industry. It will pass relatively soon. Suppliers and supplier structures will change. Once dynamics change, the prices will change as well.”
According to Stefan de Haan, polysilicon price peaked in 2008. Due to the changing dynamics of supply and demand, we forecast prices will drop significantly soon after 2008. What we see today is indeed this picture. Prices have dropped even further down. Spot prices are in the range of $70-90 per kilogram. It is likely to continue.
“We also forecasted on the price. Demand will settle in somewhere at the 3GW range for crystalline modules. At that level, you’ll have suppliers at $2.5, $2.8 per W.”
So, the scenario is: price is likely to be in the $2.5 per W range for crystalline modules in 2009. What we see now in the market is that prices are already at $2.7 per W. Q-Cells, for instance, had warned on July 14 that Q2 was not as good as they had expected in Q1.
Market in next 12-14 months
Toucing on the PV market update, Stefan de Haan said: “What iSuppli’s model had predicted last year has now become reality. The PV markets shifted from supply-constrained to demand-constrained — and that’s a fact — in 2009. Companies were forced to react to oversupply situation. There were severe production cuts and unutilized capacity.”
These effects are reflected in iSuppli’s models.
* Rreal production’ vs. ‘production roadmap’
* Key element to anticipate short-term strategy changes
* Inventory level analysis
As the mismatch of demand and supply is worsening, so companies are forced to react to this. They not only delayed or cancelled their long term expansion plans, but also significantly reduced their current capacity utilization and really cut back on actual production.
To reflect these strategy shifts in our models, we distinguish between the ‘real production’ vs. ‘production roadmap’.
“The fundamental question we ask is: how likely is that companies will achieve what they plan. If supply and demand become severely disconnected, we also have to consider short-term strategy changes to forecast real production,” he added.
Current production indicates a PV modules oversupply of over 6GW — which will result in $12 billion spent only in building actual module inventory. This number is not possible as the industry will literally go bankrupt with that level of investment.
How much inventory can the industry afford?
The level of 30-50 days of inventories has been standard during Q1-08. Now, in Q4-08, inventories are growing enormously. Only First Solar has managed to maintain a level of less than 30 days inventory (28 days) during Q1-09.
“When you compare First Solar and Solon, the picture becomes really dramatic. When you look at Solon’s inventory amounted to $237mn compared to revenues of $50 million — or 427 days of inventory. Solon was first module producer who dramatically cut back its production. It now disposed of annual capacity of 500MW, but only produced 18MW of modules in Q109,” he said.
Many other module suppliers, very similar to Solon, do not have sufficient resources to invest in further inventory. Their cash flow in Q1 is already negative.
In comparable industries it is a rule of thumb that companies cannot afford to exceed inventory levels by three to four times than what the market needs. If you take 28 days inventory of First Solar, many companies, are approaching 120 days or even exceeding that limit.
For the short term forecast, iSuppli tried to determine how strongly the industry should react to current environment. In the module level, we will still see many decisions to scale back output in next quarter.
Polysilicon demand-supply balance
In 2009, solar polysilicon production will grow to 14GW, up from 6.5GW in 2008. The supply will be more than doubling this year. Crystalline cell production will be growing only moderately, from 5.8GW in 2008 to 7GW in 2009.
The polysilicon shortage has already ended last year. At that time, supply and demand were really balanced. We wil see a polysilicon oversupply of almost 100 percent in 2009.
The polysilicon industry reacts to market changes with less flexibility than cell and module producers. The investments are very high, ramp rates are long, and so, it is not so easy to build up polysilicon production facility. The whole industry is just slow in its movements than other parts of the PV supply chain. Another reason for worsening mismatch is that the silicon consumption per W has also decreased faster than previously expected.
July 2009 — polysilicon price projection
Prices peaked in 2008 — $350-500 per kg. However, it is clear that since Oct. 2008, prices dropped dramatically. In May 2009, spot average was around $100 per kg. Right now, we are already below $80 and the decline will continue.
Regarding the building oversupply, prices will soon drop to production cost levels. That’s how price is built in an oversupply scenario. Companies will do everything to clear their excess production, There will be only room for small margin for best in class producers. In 2010, perhaps, earlier, we may see spot price of $40 per kg.
Module demand-supply balance
Oversupply had already started to build up in 2008. In 2009, 5.8GW of crystalline modules will be produced and 1.7GW of thin film modules will be produced. This gives 7.5GW in total. However, the total installations are 3.9GW, and not more than 4GW. This translates into a module oversupply of about 90 percent this year.
These numbers already include short-term production cuts. They are already heavily discounted. For every module that will be produced in 2009, almost 1 additional module will go into inventory. Companies react to this and adjust their current outputs and long term plans.
Q-Cells slowed down expansion in Malaysia. Sun Power delayed rampup in the Philippines and Malaysia. Moser Baer also delayed its rampup of the new thin film factory.
Stefan de Haan said: “There are many cancellations that are happening now. We will see a decrease in oversupply in the following years. The next three quarters will still be tough for the module suppliers.”
Module price projection
* Total c-Si module production in 2009: 6.79GW
* Total c-Si module demand in 2009: 2.50GW
* Oversupply: 132 percent
* Pure play (module manufacturers) — production 1.37GW, cost $2.41 per W.
* Integrated cell and module manufacturers — production 2.64GW, cost $2.38 per W.
* Integrated wafer, cell and module manufacturers — production 1.60GW, cost $2.16 per W.
* Integrated p-Si wager cell and module manufacturers — production 0.19GW, cost $1.88 per W.
In 2009, c-Si price will reach $2.3 per W. Cost will determine the price. Prices will drop further until the end of this year, but not as rapidly as at Q1.
Last November, iSuppli had predicted that prices will drop from $4 per W to $2.5 per W until the end of 2009. It has now corrected this and expects prices to be $2.3 per W. Production costs have dropped, and hence the reason for this adjustment.
Margins get compressed!
In current environments, margins get compressed along the entire supply chain. Significant price drops have completely eaten up margins of the cell and module producers. Module producers are passing their pressure on. Wafer manufacturers can still maintain very small margins.
“Polysilicon production for incumbent producers is still better, but the situation will worsen in the next year. Winners and losers on module level are not so easy to identify any more, Stefan de Haan added.
When will demand pick up again?
According to Dr, Henning Wicht, total installations in 2009 are expected to be 3.9GW, which is less than 2008, which was 5.5GW. “This installation will again grow in the years ahead. The year-to-year growth will be good, but all of this has to be balanced against supply. We analyzed the regions, which make 80-90 percent of the total installations. The solar industry is changing its mood rapidly.”
Installations in major regions — well, there are no big surprises! The leading regions are: Germany, Italy, Spain, California (USA), France, Greece, Japan, Bulgaria, Czech Republic, and the RoW.
The total capacity in March 2009 was 3,546 MW; which is estimated for June 2009 at 3,922 MW. By 2013, it should be 25,900MW. Also, Italy is probably being stronger than we expected, and Spain is lesser. California is growing faster than expected earlier.
PV installations by market segment
Dr. Wicht said: “Looking at the global annual PV installations by market segment. The market today is dominated by the European countries, mainly Germany. The German market is mainly a rooftop market. We have residential and commercial roofs, which provide 90 percent of the installations in Germany.”
In future, ground installations will pick up. This is mainly due to the US and the potential of China, and the new entrants, who will definitely address this segment, more than the others.
Outlook — short term
In the short term, credits for solar installations remain tight.
* Bankers do not see light at the end of the tunnel.
- Interbank lending is nearly zero.
- Solar installations compete against numerous other investments.
* Despite excellent investment conditions, no installation boom to come.
- Limited cash and credit available.
* Economic downturn has not yet impacted solar investments in Germany.
- Increasing RoI compensates for economic uncertainty
- Private investors can access loan programs
Dr. Wicht said: “The short-term picture is dominated by tight credits! A panel of bankers clearly indicated that they love solar, but don’t have the money right now. They have clear expectations on their solar RoI. Now, the portfolio for solar is already booked. So, there’s no need for bankers to invest much more than what we have seen.”
For instance, in Italy, conditions are very good, but lenders do not accept thin film. Thin film does not have long term experience like crystalline. With crystalline, they already meet their RoI expectations due to lower module prices.
Solar installations are still in good shape. The economic downturn has not yet impacted the solar investments in Germany. Rooftops — commercial and residential are in good shape. They are likely to achieve the same levels as last year.
Outlook — mid-term
In the mid term, there are exciting times ahead as the big wave of solar is rising.
* RoW is preparing large solar programs.
- Australia will invest in 1GW; China and India. India is also likely to concretize its plans.
* Every month, new several 100MW announcements are being made in US, especially, California, Nevada. The US is picking up in solar.
* In Europe, the Desertec Group — Euro 400bn to develop solar plants in North Africa
- Lead by Munchner Ruck (Munich Re), Siemens, Deutsche Bank and RWE
- Big credit to solar (all technologies)
- Equal to equal discussions with uranium, fossil energy providers
The priority will be on solar power plants, but we are certain there is space for solar, PV and PV concentrated installations.
* China will not leave REE business to US and Europeans
Desertec project update
On July 13, 15 industrial members joined the Desertec Interest Group. They made the statement that they want to make the solar power plant to supply 20 percent of the European electricity by 2020 from North Africa.
As for the next step, over the next two years, feasibility studies will be conducted on solar power plants as well as grid connection, and transporting of energy through the whole of Europe.
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!
Those following the EDA industry are well aware that its been an industry in some trouble right through this year.
If you visited EDA Consortium’s web site, this becomes clear. In Q1-08, the global EDA industry revenue for Q1 2008 declined 1.2 percent to $1,350.7 million compared to $1,366.8 million in Q1 2007.
Later, the EDA industry revenue for Q2 2008 declined 3.7 percent to $1357.4 million compared to $1408.8 million in Q2 2007, as reported by the EDA Consortium.
I am still waiting to see how the Q3 results shape up. My guess is, it would be even lower than Q2, unless there are a few surprises!
The EDA market in India, as per the ISA F&S Report 2005, was US$110m. The latest figures are not yet available, though I would believe the Indian EDA industry is likely to do better than the global industry, unless, there have been some slowdown effects here as well.
I had an interesting discussion with Jaswinder Ahuja, Corporate Vice President and Managing Director, Cadence Design Systems (I) Pvt. Ltd and Chairman, India Semiconductor Association (ISA), on the (dipping?) fortunes of the EDA industry lately.
According to Ahuja, 2008 has been a challenging year. The global financial crisis has impacted several industries and the EDA industry was no exception. Due to the overall downturn in the economy, companies are being more cautious and are delaying purchase decisions, a move that is impacting the overall EDA industry.
Coming to the drivers for EDA in India this year, there are a few key ones! First, the design centres have gained expertise and are now doing cutting-edge designs out of India. They have moved up the value chain from doing block-level design to increasingly owning up end-to-end design and design starts.
Second, several Indian design services companies have made significant acquisitions, showing that their businesses have not just taken root, but also flourished. MindTree Consulting’s acquisition of TES PV and Wipro’s acquisition of Oki’s wireless chip design arm are cases in point, added Ahuja.
He said: “The Indian EDA industry has been growing and we will see more technology adoptions and proliferations in India Design Centers. Also, the rapidly growing local market is unfolding new opportunities.”
EDA outlook 2009
Going forward, market pressures and design complexities are just some of the issues design teams face today. Cadence’s customers, for instance, would like to plan in the context of IP selection, run analysis around power, performance and cost perspectives. Design predictability will be a priority, said Ahuja.
The key focus areas for the EDA industry will be new design for manufacturing technologies as designs move to advanced nodes; verification and verification IPs and multicore processing support for EDA flows as a result of increased integration.
Also, SaaS is likely to gain traction as companies are compelled to consider flexible engagement models to access state-of-the art design environments that help design teams reduce risk and cost, yet increase time-to-productivity.
Are there any opportunities for EDA folks in solar? Ahuja disclosed that in a recent poll by ISA, to the question ‘Solar PV has potential in India’, almost 90 percent of respondents replied Agree or Strongly Agree.
With the worldwide focus on alternative energy systems, India has witnessed several companies announcing investments in PV segment. This is good news for the Indian semiconductor ecosystem.
Cadence has a broad portfolio of technologies that addresses the needs of different players in the ecosystem.
Low power initiatives
Low power has always been a key focus area in semiconductors. According to Ahuja, power efficient design is gaining importance across the design chain and EDA companies will have to look closely at ‘green’ technologies.
Energy efficiency at the system and application level for wired and wireless products will be one of the focus areas. Emerging technologies that allow applications and systems developers to evaluate how their programs use power both individually and in a dynamic, multi-application model of the end system will help expand the role of EDA into system-level design.
The Power Forward Initiative (PFI), an industry alliance comprising of companies across the semiconductor design chain will work towards a more systematic, integrated approach to low-power design.
With the new year about to start in less than a week’s time, the impact of the financial crisis will see an increased demand for mid-range product technology as consumers shift spend toward ‘essential’, rather than ‘desirable’ electronic products.
As per Ahuja, globally, semiconductor companies are focusing on their core strengths, consolidating and realigning resources. Across sectors, they will look for systems that marry functionality with cost efficiencies.
“Growth for semiconductor companies will come from energy related and low-power technologies that are able to drive market share shifts,” he noted.