Inflection Research » LSI

Next Gen Semi Design (part 9) – Risks

semanticzen — Mon, 02 Jun 2008 00:23:26 +0000

In the last post two posts on semiconductor design I reviewed the risks to Altera and Xilinx due to competition from other platforms, existing competitors, and new entrants. Here I’ll review the risks from reliance on the communication sector (which may finally be a strength for the first time since early 2000) and from ASIC vendors.

Competition from Structured ASICS and ASSP’s

In March 2006, LSI Logic, the first vendor to create a structured ASIC, closed its RapidChip division exiting the structured ASIC business. This was a blow to the EDA vendors who haven’t seen significant growth since the 2001 downturn and have struggled to gain a foothold in the FPGA industry. By shuttering its structured ASIC division LSI conceded that customers are moving to FPGA’s for new products as it is much faster and more economical to initially design a Xilinx (or Altera) FPGA and migrate to the same vendor’s structured ASIC in volume, than design using LSI’s ASIC-based process.

In 2001, Altera introduced their HardCopy® structured ASIC platform and they are now a leader in the structured ASIC market. Altera has a straightforward migration path from FPGA to structured ASIC. They maintain compatibility with the FPGA architecture, but reduce the die size by removing the configuration circuitry, programmable routing, and programmability for logic and memory with fixed wired interconnect. Xilinx has a similar product called EasyPath®.

Reliance on Communications Sector

In 2000, over 80% of PLDs went into communications related equipment. Today that number is just under 50% of sales and steadily dropping. Since 2000 the growth in PLDs for communications end products has significantly trailed other end markets.

In fact, if the growth in the communication sector picks up, like we think it will in 2010 or 2011, this could be a major boost to the PLD market. The other end market segments like storage, industrial, and consumer electronics should continue to see strong growth over the next decade.

Top Semiconductor Companies

semanticzen — Wed, 14 May 2008 04:19:38 +0000

In conjunction with the micro-chunking of my paper on the next generation of semiconductor design I’ve compiled a list of the top semiconductor companies based on their market capitalization at the end of 2007.

I have not included vertically integrated companies like: Samsung, Toshiba, IBM, Hitachi, Sharp, Philips/NXP, etc. I’ve also excluded companies not listed in the West like: Renesas, Hynix, and Freescale. Based on how poor the memory market has been and typically is I’m not sure Renesas and Hynix would make the list and Freescale’s market share has been dropping so they would not be in the top 20.

Size	2007 Results	Symbol	Mkt Cap	Revenue	Profits	Industry Segment
1	Intel	INTC	113	37.3	6.3	Processors
2	Taiwan Semiconductor	TSM	45.5	9.7	3.9	Fab
3	Texas Instraments	TXN	41	13.7	2.6	Analog & DSP
4	Applied Materials	AMAT	24.2	9.7	1.7	Assemby & Test
5	Freescale Semiconductor	(private)	16.5	5.7	n/a	Semiconductor Devices
6	MEMC Electronics Materials	WFR	14.9	1.8	0.6	Assemby & Test
7	Nvidia	NVDA	13.5	3.8	0.7	Graphics
8	Broadcom	BRCM	12.5	3.7	0.4	Networking
9	STMicroeletronics	STM	11	9.9	0.8	Semiconductor Devices
10	ASML Holdings	ASML	11	4.5	0.8	Assemby & Test
11	Analog Devices	ADI	8.3	2.6	0.55	Analog
12	KLA-Tencor	KLAC	7.9	2.8	0.5	Assemby & Test
13	United Microeletronics	UMC	7.7	3.4	1	Fab
14	Infineon	IFX	7.3	10.2	-0.5	Semiconductor Devices
15	Sandisk	SNDK	6.4	3.8	0.1	Memory
16	Marvell Technology	MRVL	6.4	2.7	-2	Semiconductor Devices
17	Maxim	MXIM	6.4	1.7	0.5	Analog
18	Xilinx	XLNX	6.2	1.8	0.4	Programmable Devices
19	Linear Technology	LLTC	6.2	1.1	0.4	Analog
20	Microchip Technology	MCHP	6.2	1	0.3	Processors
21	Altera	ALTR	5.9	1.3	0.3	Programmable Devices
22	LAM Research	LRCX	5.4	2.4	0.6	Assemby & Test
23	Micron	MU	4.9	5.7	-0.7	Memory
24	National Semiconductor	NSM	4.9	1.9	0.3	Analog
25	Advantest	ATE	4.8	2	0.3	Assemby & Test
26	Advanced Semiconductor	ASX	4.5	3.1	0.6	Packaging & Testing
27	Siliconware Precision	SPIL	4	1.8	0.4	Packaging & Testing
28	AMD	AMD	3.9	6	-2	Processors
29	Novellus Systems	NVLS	2.9	1.7	0.2	Assemby & Test
30	Intersil	ISIL	2.9	0.7	0.1	Analog
31	LSI	LSI	2.8	2.4	-0.4	ASIC
32	ARM Holdings	ARMHY	2.8	0.5	0.1	Processors

Next Generation of Semiconductor Design (part 1)

semanticzen — Mon, 12 May 2008 02:36:26 +0000

I recently finished a paper on investment opportunities in the next generation of semiconductor design and how it favors Xilinx, Altera, and to a lesser extent Microchip. Since this is a blog I will micro-chunk the papers content over several posts. The thesis of this paper is that semiconductor design will be based more around an integrated design and manufacturing platform than the historical approach of cobbling together various vendors’ offerings based on best of breed research. Similar to how IT departments have consolidated around only a handful of vendors semiconductor designers are consolidating around the major vendors’ platforms.

Since the bursting of the .com and telecom bubbles in 2000 the technology infrastructure market has evolved from a high growth industry into the cash cow phase. Winners such as Cisco, EMC, and Xilinx have tremendous free cash flow. While losers like 3Com and LSI are struggling to survive. With technology products especially there is little value purchasing second tier products so the leading companies only grow stronger until the next major secular inflection point. New startups are reduced to only attack market niches. For digital semiconductor chips as well as IP networking and storage the next secular inflection point is probably a decade or more in the future.

In this paper (and subsequent blogs) I will explain how the structure of the semiconductor market is going vertical due to the dramatic increase in semiconductor complexity requiring semiconductor design integration and how this favors the two leading FPGA (Field Programmable Gate Array) companies. The next generation semiconductor products will be designed using Xilinx and Altera‘s platforms.

A major acceleration in growth of the FPGA market should occur in 2010 based on several factors listed below. The two companies that control approximately 85% of the FPGA (Field Programmable Gate Array) market are positioned to exploit this inflection point in growth.

When 65nm devices go mainstream
- FPGA’s as SoC (for embedded systems), especially with ARM and MIPS soft-core processors
- The continued acceleration of FPGA’s stealing market share from ASICs and ASSPs
FPGA’s in new markets
- x86 servers and PCs
- Industrial & Automotive
- Consumer devices
Beginning of construction for the next generation communication network driven by
- The communication equipment is nearly half of the FPGA end market
- The glut of dark fiber from the .com bubble will be in use
- The explosion of true mobility due to 802.11n, WiMax, LTE, etc
- The explosion of interactive TV (through high definition video over IP) enabled by fiber to the home
- The virtualization of the data center, including desktops
The end of the global slowdown, re-invigorating world-wide growth of capital goods products, which are increasingly designed with digital devices like FPGAs