ICSOC Workshop (Chengdu) Guest Speech

Dr. Jeremy WangAsia Pacific Executive Director, FSA

August 16, 2005

Overview

About the FSA

The superiority of the fabless business model

The global semiconductor environment

Challenging the successful innovation model

Future trends

FSA MISSION

Accelerate the growth and increase the return on invested capital of the global fabless business model by promoting an environment for innovation.

Provide a platform for meaningful global collaboration between fabless companies and their partners

Identify and articulate opportunities and challenges to enable solutions

Provide members with research, resources, publications and survey information

Promote the fabless business model

A Global Community of Leaders

500 corporate members worldwide

Jimmy S.M. Lee ISSI

KY HoATI

Richard ChangASE

Chia Song Hwee Chartered

David FrenchCirrus Logic

Sanjay JhaQualcomm

Bob BaileyPMC-Sierra

Jensen HuangNVIDIA

Robert TsaoUMC

Wim RoelandtsXilinx

Dwight DeckerConexant

Dr. Nicky LuEtron

Dr. Chintay ShihSpecial Advisor

Ming Kai TsaiMediaTek

Woody Yang Silicon7

Dr. Morris ChangTSMC

Foundry Seat

Special DirectorSpecial Director Director Emeritus

Foundry Seat

EDA SeatJodi Shelton

Executive DirectorFSA

IDM Seat

FSA’s BOARD

Back-end Seat

Fabless Seat

Foundry Seat

Fabless SeatFabless Seat

Fabless Seat

Fabless Seat Fabless Seat Fabless SeatFabless Seat

Fabless Seat

Fabless Seat

Fabless Seat Fabless Seat

12 Fabless, 3 Foundry, 1 IDM, 1 EDA, 1 Backend, 1 FSA = 19 total 1 Director Emeritus, 2 Special Directors

Almost 500 corporate members worldwide

FSA BOD Members

Dr. Jackson Hu

UMC

Jim SetoATI

Technologies

Rick CassidyTSMC North

America

David French

Cirrus Logic

Sanjay JhaQualcomm

Vahid ManianBroadcom

Corporation

Aart de GeusSynopsys, Inc.

Dennis SegersMatrix

Semiconductor

Dwight DeckerConexant

Ron TortenAgilent

Technologies

Colin HarrisPMC-Sierra,

Inc.

Jodi Shelton Ron BoydFreescale

Semiconductor

Gina GloskiFormerly with

FyreStorm, Inc.

Jeorge HurtarteTranSwitch Corporation

Michael RekucChartered

Dr. Tien WuASE, Inc.

EDA/IPDesign ServicesFoundry Partners

Wafer Fabs

Testing and subsystems

Photomask

Packaging Assembly

OEM and ODM Customers

FABLESS INFRASTRUCTURE/ECOSYSTEM

Over 1,100 Fabless Semiconductor Cos

Almost 500 corporate members worldwide

The Global Fabless Model1,300+ Fabless Companies Worldwide

Growth of global membership—nearly 500 global members!

North America600

Europe150

China & Taiwan

500Israel100

Fabless Leaders The Fabless “Billion-Dollar Club”

Rank Billion-Dollar Club Companies2004 CY Revenue

($000)

1 QUALCOMM (QCT Division) $3,224,000

2 Broadcom $2,400,610

3 ATI Technologies $2,140,871

4 NVIDIA Corporation $2,010,033

5 SanDisk Corporation $1,777,055

6 Xilinx, Inc. $1,588,700

7 MediaTek Incorporation $1,252,470

8 Marvell Semiconductor, Inc. $1,224,580

9 Altera $1,016,364

In 2004, nine fabless companies achieved $1B+ in sales.

Source: FSA

ASIA-PACIFIC LEADERSHIP COUNCIL

ChairmanDr. Nicky Lu

Etron

Ming Kai TsaiMediaTek

H.P. LinFaraday

Gordon GauHoltek

Chou-Chye Huang

Sunplus

Wen-Chi ChenVIA

Dr. Chintay ShihSpecial Advisor

Dr. Woodward Yang

Silicon7

Qin-Sheng Wang Huada Electronic Design Co., Ltd.

Dr. Dr. Zhonghan

(John) DengVimicro

K.C. ShihGlobal Unichip

Dr. Shaojun WeiDatang

MicroelectronicTechnology, Co.

Ltd.

EUROPEAN LEADERSHIP COUNCIL

David BaillieCambridge

Semiconductor

David MilneWolfson

Microelectronics

Roland PudelkoDialog

Semiconductor

John HodgsonCambridge

Silicon Radio

Svenn Tore LarsenNordic Semiconductor

Anthony SethillFrontier Silicon

The Superiority of the Fabless ModelFabless vs. Overall Semi Revenue

Fabless companies have a higher gross margin thanIDMs (47.3%vs 44.5%)

Fabless companies have significantly higher R&D expenditurethan IDMs 23.7% vs.15.2% ofsales

Fabless CAGR=22% vs.

Overall Semiconductor Growth at 7%

$102B

$213B

$3.6B

$33.2B

$0

$50,000

$100,000

$150,000

$200,000

$250,000

19941995 199619971998 1999200020012002 20032004

($M

)

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

($M

)

Overall Semi RevenueWW Fabless Industry

$0.4

$0.7

$1.9

$2.5 - $3.0

$0.0

$1.0

$2.0

$3.0

0.80um, 6-inch 1990

0.50um, 6/ 8-inch 1994

0.18um, 8-inch 2001

0.13um,300mm 2003

0

150

300

450

600

750

The Rising Cost of Manufacturing

Source: Goldman Sachs

($B

)

% G

row

th In

du

stry

Reven

ue

Fab Cost Growth 7x

Semi Industry Revenue Growth 5x

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

Inte

l

Sam

sung

TI

Renesas

STM

icro

Infi

neon

Toshib

a

NEC

Moto

rola

Mic

ron

Phil

ips

AM

D

Fuji

tsu

IBM

Sony

Hynix

Mats

ushit

a

Sharp

AD

I

Sanyo

Who Can Afford a 300mm Fab?

“ A company must have the long-term endurance for maintaining its technology leadership or risk falling behind foundries.”

Top 20 Semiconductor Companies by 2004 Revenue

($M

)

A company must have revenue $5B - $7B to support 300mm expansion

Source: Goldman Sachs; FSA

A company must have revenue $5B - $7B to support 300mm expansion

Recent Hybrid and Partnership Models

Partnered with TSMC to achieve process alignment for 90-nm

STMicroFreescale

Philips

Partnered with Chartered for 65-nm down to 45-nm technology development

SamsungIBM

Infineon

Takes 50% investment in UMCAMD

Makes 30% investment in UMCInfineon

Announced “capital-efficient” manufacturing strategy”; Halted current plans to build a new fab;

Goal is 50% outsourcing on advanced CMOS processingPhilips

To outsource 40-50%+TI

50+ Foundries Worldwide

The Proliferation of the Foundry

Architecture

Verification

Physical

Validation

Prototype

0

5

10

15

20

25

30

0.35µm 0.25µm 0.18µm 0.13µm 90nm

Cost

($

M)

Cost of Implementing Designs Increasing

Source: IBS (2005)

24

7

16

38

0

5

10

15

20

25

30

35

40

0.35µm 0.25µm 0.18µm 0.13µm 90nm

Pro

bab

lility

of

Desi

gn

s n

ot

Op

era

tin

g

as

Exp

ect

ed

Probability of Re-spin Increasing

Source: IBS (2005)

Design Composition (Typical)

HEAD COUNT WITHIN DESIGN TEAMSIS INCREASING RAPIDLY

0.18µm (5M gates)

0.13µm (10M gates)

90nm (20M gates)

65nm* (40M gates)

Design engineeringhead count 

EDA toolexp

Design engineeringhead count

EDA toolexp

Design engineeringhead count

EDA toolexp

Design engineeringhead count

EDA toolexp

No. % % No. % % No. % % No. % %

Architecture & project mgmt

3 10.0 2.0 8 13.3 3.0 29 20.4 4.0 66 21.2 ?

Specification to RTL 3 10.0 3.0 9 15.0 5.0 26 18.3 7.0 58 18.7 ?

Functional verification

13 43.3 52.0 22 36.7 50.0 42 29.6 47.0 88 28.4 ?

Physical design 9 30.0 42.0 16 26.7 39.0 28 19.7 36.0 58 18.5 ?

Post-GDSII 2 6.7 1.0 5 8.3 3.0 17 12.0 6.0 41 13.2 ?

Subtotal hardware 30 100.0 100.0 60 100.0 100.0 142 100.0 100.0 311 100.0 ?

Software 18 37.5 54 47.4 170 54.5 390 55.6

TOTAL 48 100.0 114 100.0 312 100.0 701 100.0

* Estimate

Standard Setting is the key

PC (Intel), Multimedia, DVD (Media Tek), Wi-Fi (WAPI), Wimax, 3G (Qualcomm), Digital TV,

Leverage collaboration and integration of supply chain partners into a cohesive unit--designers, EDA and IP vendors & foundries

SiP vs. SOC (Hybrid model)

Heterogeneous Integration for SiP

3rd party IPs for SOC

Consumer and communication applications

System and software knowledge

Future Trends & Challenges

Thank you!

Dr. Jeremy Wang王智立博士Asia Pacific Executive Director

e-mail: jwang@fsa.org

全球 IC設計與委外代工協會 FSA (Fabless Semiconductor Association )

www.fsa.org