Transcript Document
The Changing Business Model in IC Design House Jeremy Wang, Asia Pacific Executive Director, FSA 亞太區執行長 全球IC設計與委外代工協會 Agenda Review of the Fabless Semiconductor Association Status of the Global Fabless Segment Regional Fabless Company Progress Trends Creating Opportunities for Asia Summary About the FSA History: Established in ‘94 to achieve a more optimal balance between wafer supply and demand Today: Improve growth and increase the return on invested capital of the global fabless business model through a conducive environment for innovation. Provide a platform for meaningful global collaboration between fabless companies, their partners and among partners; Identify, debate and discuss business and technical issues and a focused effort to impact solutions to certain challenges Provide members with timely research, resources, publications and survey information Promote the fabless business model Why Fabless Works Technology Supply Capital Effectiveness Gain the benefits of process technology ownership with minimal investment Fab Independence: Able to migrate quickly to the most effective process technologies Multiple sourcing improves response to volatile changes in demand Access best in class supply chain advances Effective use of capital for R&D High return on assets (ROA) Enables increased focus driving improved business execution Fabless business model benefits from more effective capacity utilization FSA Spurs EcoSystem Development Photomask Foundry Partners EDA/IP Design Services Over 200 Fabless Semi Companies OEM and ODM Customers Testing and Subsystems Packaging Assembly FSA Global Strategy Benefits for Global Members Collaboratively identify and address industry challenges Education, networking and partnership events Global Industry Leadership Visibility Plug into an existing infrastructure of best practices and global leadership network Business and technical tools and solutions Access to comprehensive data, surveys and resources The Global Voice Membership Growth The FSA has grown 10x since its inception in 1994 Nine of the ten largest fabless companies worldwide are FSA members Taiwan fabless leaders are members of the FSA Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Company QUALCOMM (QCT Division) NVIDIA Corporation Broadcom ATI Technologies Xilinx, Inc. MediaTek Incorporation SanDisk Corporation Altera Marvell Semiconductor, Inc. Conexant Systems VIA Technologies, Inc. QLogic Corporation Silicon Integrated Systems (SiS) Adaptec, Inc. Stock Exchange NASDAQ NASDAQ NASDAQ NASDAQ NASDAQ Taiwan NASDAQ NASDAQ NASDAQ NASDAQ Taiwan NASDAQ Taiwan NASDAQ Ticker QCOM NVDA BRCM ATYT XLNX 2454 SNDK ALTR MRVL CNXT 2388 QLGC 2363 ADPT 2001 (CY) Revenue ($000) $1,393,778 $1,371,400 $961,821 $945,660 $1,149,101 $450,758 $366,301 $839,376 $288,795 $847,056 $992,320 $358,000 $292,559 $422,065 2002 (CY) 2003 (CY) Revenue Revenue ($000) ($000) $1,941,366 $2,466,331 $1,909,447 $1,822,945 $1,082,948 $1,610,095 $1,093,704 $1,510,992 $1,123,961 $1,299,900 $865,235 $1,115,931 $541,273 $1,079,801 $711,684 $827,207 $505,285 $819,762 $625,103 $633,100 $736,496 $597,664 $411,066 $516,200 = FSA member $462,046 $490,331 FSA $410,599 Source: $437,200 A Global Community of Leaders Dr. Chin Wu ALi Jensen Huang NVidia Jimmy S.M. Lee ISSI Bob Bailey PMC Sierra Dwight Decker Conexant Sanjay Jha Qualcomm Woody Yang Silicon7 Ming Kai Tsai MediaTek Wim Roelandts Xilinx David French Cirrus Logic Chia Song Hwee Chartered Over 450 corporate members worldwide Dr. Morris Chang TSMC Richard Chang ASE Robert Tsao UMC KY Ho ATI Dr. Nicky Lu Etron Leadership Council Members Chairman Dr. Nicky Lu Etron Ming Kai Tsai MediaTek Gordon Gau Holtek Chou-Chye Huang Sunplus Japanese Delegate Dr. Chin Wu ALi Wen-Chi Chen VIA H.P. Lin Faraday Dr. Woodward Yang Silicon7 Korean Delegate Chinese Delegate The Need for a Global Voice We are at a critical point in the semiconductor industry facing serious challenges. An industry in transition: Fabless/hybrid model is the future business methodology for all but a few players…this in turn… Creates serious challenges: A dominant outsourcing model will put a significant strain on the foundries, combined with the challenges of transitions to more advanced technologies. The FSA seeks to identify solutions: A global unified voice is necessary to reduce industry barriers. Partnerships are more vital than ever at every point in the supply/design chain. Now a Global Model Fabless Companies by Geography Regional Company Distribution China 7% Others Europe Canada <1% 10% 4% India 1% Israel 4% Japan 1% Korea 2% U.S. 56% Malaysia <1% Taiwan 15% Singapore <1% Approximately 1,000 Fabless Companies Worldwide Source: FSA Now a Global Model CY2003 Public Company Revenues Regional Public Company Revenue Distribution Japan 2% Canada China <1% 2% Europe 2% Taiwan 18% 2003 Total Revenue United States 76% $24.2B Source: FSA Fabless Leaders Top Public Company Revenues Company Exchange Ticker CY Q1 2004 Revenue ($000) 1 QUALCOMM (QCT Division) NASDAQ QCOM $711,257 2 Broadcom NASDAQ BRCM $573,406 3 NVIDIA Corporation NASDAQ NVDA $471,905 4 ATI Technologies NASDAQ ATYT $463,337 5 Xilinx, Inc. NASDAQ XLNX $403,380 6 SanDisk Corporation NASDAQ SNDK $386,930 7 MediaTek Inc. Taiwan 2454 $285,120 8 Marvell Semiconductor NASDAQ MRVL $269,577 9 Conexant Systems NASDAQ CNXT $243,781 Altera NASDAQ ALTR $242,908 10 Note: CYQ2’04 revenue will be available in early August Source: FSA Fabless Leaders Market Capitalization Company Exchange Ticker April 2004 Market Cap ($000) 1 Broadcom NASDAQ BRCM $13,131,781 2 Xilinx, Inc. NASDAQ XLNX $12,387,111 3 Altera NASDAQ ALTR $8,155,664 4 MediaTek Inc. Taiwan 2454 $5,886,103 5 Marvell Semiconductor NASDAQ MRVL $5,818,844 6 SanDisk Corporation NASDAQ SNDK $4,337,329 7 NVIDIA Corporation NASDAQ NVDA $3,774,831 8 ATI Technologies NASDAQ ATYT $3,650,075 9 Silicon Laboratories NASDAQ SLAB $2,615,217 10 QLogic Corporation NASDAQ QLGC $2,524,277 Source: FSA Fabless Funding Trends 2003 Investment Focus VCs primarily attracted to the Wireless, Networking and Consumer markets Wireline 5% Consumer 20% Other 12% Industrial 1% Medical 1% Wireless 27% Telecom 3% Security 1% PC 5% Networking 25% Fabless Funding Trends Dollars/Deals by Quarter $3,000 156 Deals $2.6B Total 162 Deals $2.5B Total $2,500 $748.3 $493.3 $2,000 ($M) $561.7 $1,500 109 Deals $1.6B Total 135 Deals $1.6B Total $344.0 483.6 $927.0 $468.1 92 Deals to Date $299.8 $1,000 $394.9 $589.7 $429.5 $500 $767.7 $335.4 $954.8 $511.4 $0 $154.1 2000 2001 Q1 2002 Q2 Q3 $423.4 $560.1 2003 2004 Q4 Regional Report - EMEA Leaders in Europe Company 2003 (CY) Revenue ($000) End Market Melexis NV $168,231 Auto, PC, Consumer Dialog Semi $117,017 Wireless, Auto, Industrial CSR $67,622 Wireless Wolfson Micro $75,735 Consumer Audio, Digital Imaging, Comm Imagination Tech $34,790 Graphics, Audio CML Micro $22,023 Communications Nordic VLSI $16,435 Communications $16,045 Networking, Data Comm, Internet Appliances $3,190 Video Comm. 2003 (CY) Revenue ($000) End Market $130,054 Internet Appl, Telecom AudioCodes $44,228 Digital Telephony Metalink $14,943 Telecom, Networking SwitchCore AB IndigoVision Company Leaders in Israel M-Systems Regional Report - Taiwan A Surging Segment of the Industry Taiwan Fabless Revenue $7,000 58% $4,000 29% $3,000 29% System company abundance Quick follower design capability 40% 29% 21% 80% $1,000 $0 60% $4,490 6% 50% 29% 21% 10% 0% 1997 1998 1999 2000 2001 2002 2003 40% 30% 20% $1,457 $1,113 $3,588 $3,491 $2,363 Now focused on greater valueadded offerings Gig Ethernet Wireless LAN Cellular 50% $3,491 $3,588 $2,363 $5,780 70% 55% 60% $4,490 55% 58% $5,780 70% 67% $5,000 67% Second in worldwide fabless revenue 80% $6,000 $2,000 $M USD) YoY Growth 30% Source: IEK/ITRI (March 2004) Regional Report - Taiwan Major Taiwan Fabless Companies Company 2003 Sales ($000) Products $1,115,931 Consumer/ Optical Storage VIA Technologies $597,664 PC Chipsets Sunplus $325,349 Consumer NovaTek $319,706 LCD Driver Peripherals Realtek $272,005 Networking ALi Corporation $191,082 Consumer/ PC Chipsets Elite Semiconductor Memory Technology $156,358 Memory ELAN Microelectronics $135,354 Consumer MediaTek Fabless Industry Trends System-level knowledge is a must for success Software becoming an increasingly important part of the fabless offerings Accelerating shift to 300mm Accelerating scale of leading-edge manufacturing and process technology The Tail that Wags the Global Semiconductor Industry The Great China Debate Utopia Soon Significant Impact Over Time “By 2007…10% of world’s entire wafer capacity will be located in China, up from 4% today.” —iSuppli “China accounts for only 2.4% of world capacity. By 2005 it will move to 3.1%.” —Dataquest China's cell phone subscribers will double over the next five years from a base of nearly 207M customers, a CAGR of more than 10% during the next five years. –InStat/MDR According to Semiconductor Reporter--China reported that a government agency has overcounted badly the number of cell phones in use in China. China’s Role in the Global Semiconductor Industry The Customer — a Huge Silicon Consumer The Manufacturing Ally A Huge Reservoir of Design Talent Potential Design Partner or Competitor China—As The Customer Large potential market base China accounted for approximately 18% of global semiconductor consumption in 2003. China used $25 billion in microchips in 2003 Consumer Demand 1.3 billion consumers Domestic demand for television sets exceeds 30 million units per year with 380 million TVs installed. Yearly demand for PCs in China is expected to grow by more than 17% over the next three years. Domestic Chinese cell phone manufacturing is forecast to reach 140 million in 2005. China—The Manufacturing Ally Planned Groundbreakings/Openings ‘04 Foundry Name Location Fab Type Singapore 300mm foundry Wuxi 150mm Shanghai 200mm foundry Suzhou 200mm foundry Shenzhen GaAs fab STMicroelectronics TBD, China 200mm Centry Semi/Fab 1 Shenzhen 150mm ASMC/Fab 3 Shanghai 30k,200mm Keysi-STL S/C Mfg Shenyang 6k,150mm ON Semiconductor Leshan 8k,150mm JiLin 20k,150mm SinoMOS S/C Ningbo 30k,150mm SMIC/Fab 4 Beijing 15k,300mm China 27k, 150mm Chartered/Fab 7 CSMC/Fab 2 Shanghai Hua Hong NEC/Fab 2 He Jian/Fab 2 Bayton/Shenzhen Bayton Philips JiLin S/C/NA Ultimiate Semi/Fab 1 Strong/High Likelihood of Groundbreaking or Upgrade Possible Likelihood of Groundbreaking or Upgrade New Openings Source: Strategic Marketing Associates China—The Manufacturing Ally “WTO membership will bring China into [compliance] with normal global business practices.” —Chris Chang, SMIC Grace Semiconductor CSMC Commodity Flash, DRAMs, SRAMs SMIC Hua Hong NEC (HHNEC) CMOS Logic, Flash, SRAM, SDRAM Logic, mixedsignal, RF, LCD Drivers 25K/month by end of 2003 10k 4”/11k 5”/6k 6-inch/month Fab conversion— 300mm 5um down to 0.8um Expanding to 0.35um Foreign investment, domestic investment and future IPO Received $67M to expand 6-inch capabilities 45K/month by end of 2003 30K/month by end of 2003 300mm fab in Bejing in 2004 Next fab 300mm Foreign investment, domestic investment and IPO 3/04 Foreign investment, domestic investment and future IPO Regional Report—China Semiconductor demands in China are serviced by 6-inch wafer suppliers building 0.30 to 2.0-micron technology… Q1 2003 Technology Migration 70% 60% Wafer Size Production by Feature Size 8-inch wafers 3, 4, 5-inch wafers 6-inch wafers 50% 40% 30% 48% 20% 42% 10% Feature Size (Micron) 5.00 3.00 1.50 0.80 0.60 0.45 0.35 0.15 0.25 10% 0% Source: iSuppli Advantages vs. Disadvantages Disadvantages Advantages IP protection limited Immature design skills—no product, system or architectural talent Lack of management Lack of 3rd party IP No technology roadmap Quality issues Lack of IP-rich content Older technology Lack of high gate count design expertise Inability to keep pace with the market Immature VC market & no IPO market Proximity to end markets— 24% CAGR Ecosystem developing—end mkts, mfg., design, test, assembly and human capital Government tax incentives Reduction in VAT Tax free and then 50% reduction Training bases Duty-free treatment for material imports for fabs Free land and infrastructure assistance The Shift to 300mm Enormous Capacity Ramp 300mm Fab Status Max. Wafers/Mo. (000) 500 400 300 200 100 0 Online Constr/Equip Planned Source: Strategic Marketing Associates, 2004 Foundry Capex Foundries Doubling 2004 Capex Capex by the chip industry for new tools, plants, property and other long-lived assets will grow 42% in 2004, while capital spending by foundries will double Strategic Marketing Associates (SMA) expects foundry investment at $9.9B represents 23% of the total $43B, more than double last year's amount. • Largest amount ever spent by foundries, both as a percentage of total spending and in absolute terms Slightly more than $4B will be spent to add 0.13um capacity and almost as much will be spent to add 90nm capacity. TSMC, UMC and Chartered are focusing mainly on 90nm capacity, primarily in their 300-mm fabs. Source: SMA Foundry Capex Foundries Doubling 2004 Capex Altogether, Chinese foundries will increase capacity by 64%, adding 140,000 in equivalent 200-mm wafer capacity. SMIC will account for 60% of added capacity, not only by continuing to ramp its fabs in Shanghai and ramping its recently acquired Motorola fab in Tianjin, but also by finishing its Fab 7 in Beijing, China's first 300-mm facility. Six more foundry fabs to come on line in 2005, four of which will be 300mm. Those six fabs could add as much as 250,000 equivalent 200mm wafers in monthly capacity to the foundry industry, possibly fueling the next round of overcapacity early next year. Source: SMA 2004 Foundry Capex Rankings Pure-play & IDMs 2004 (E) Capex ($B) Rank Company Pure-play or IDM 1 UMC* Pure-play $2.1 2 TSMC Pure-play $2.0 3 SMIC Pure-play $1.95 4 TI IDM $1.3 5 NEC Group Pure-play $1.2 6 IBM Micro IDM $0.9 7 Grace Pure-play $0.8 8 Chartered** Pure-play $0.7 9 ProMOS IDM $0.6 10 DongbuAnam Pure-play $0.6 Sources: iSuppli, IC Insights *UMC includes revenues from UMCj **Chartered includes revenues from SMP Fabless Industry Challenges Increasingly complex supply chain Aggressive product, process and packaging roadmaps—developed independently Escalating product development costs Accelerating scale of leading-edge manufacturing and process technology An Industry Challenged Cost Per Design by Technology $ 25 $ 20 $13M $ 10 $ 05 Design costs are rising from $2M for designs at 0.35-micron to more than $13M at 0.09-micron. $17M $11M $ 15 $6M $8M $9M $2M Hardware Validation Design & Verification Synthesis + Place & Route Masks & Wafers 0.065µ 0.09µ 0.13µ 0.15µ 0.18µ 0.25µ $ 00 0.35µ Total Development Costs ($M) Escalating Cost of Chip Design These costs assume that much of the design and verification can be done in low labor-rate geographies. Today, design and verification of complex ICs is now running at 80% of total design cost. Summary The fabless model is now considered the future of the semiconductor industry The FSA is The Global Voice for this critical industry segment Difficult technology transitions and increasing product development complexity challenge our members Taiwan/China are uniquely positioned to take advantage of certain industry trends and challenges Thank you! 王智立博士 亞太區執行長 e-mail: [email protected] 全球IC設計與委外代工協會 Fabless Semiconductor Association (FSA)