Posted on 09/28/2003 10:34:52 AM PDT by nwrep
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SAN JOSE, Calif. — A panel session at the Custom Integrated Circuits Conference here Tuesday (Sept. 23) debated the implications for U.S. design engineers of IC design outsourcing.
Panelists offered free-market platitudes, candid warnings, reassuring economic generalizations and some incisive observations that may help individual designers find a foothold on what promises to be a slippery slope for the profession in the coming years.
Rakesh Kumar, president of operations-outsourcing venture TCX Inc. (Poway, Calif.) said the U.S. has a long history of outsourcing its key industries, including the steel and automotive businesses. He noted that the electronics industry has followed suit, outsourcing the vast majority of packaging, assembly and test.
"Every industry has done this," Kumar said. "The only difference is at what point the outsourcing curve turns over — at 20 percent, 50 percent or 100 percent of the U.S. capacity." The question is not whether the U.S. will outsource chip design, but whether it will retain some design capability or send out everything, Kumar said.
Kumar posed three questions for the panel: Is chip design outsourcing inevitable? What role will it leave for the US? and What can an individual engineer do about it?
Ann Lee Saxenian, professor of political science at the University of California Berkeley and an author on the subject of economic globalization, documented a substantial flight of the electronics industry from the U.S. She said the U.S. share of the global semiconductor market would drop to 30 percent by 2010, while the Asia-Pacific share would rise to 35 percent and Japan's declined to 20 percent.
In contrast to the overall figures, she noted, 40 percent of all fabless semiconductor revenue flowed into Silicon Valley companies in 2002.
Saxenian described the redistribution of the industry not as outsourcing but as a new global division of labor. In this new order, a once monolithic industry is disaggregating, with individual tasks migrating to locations that can perform them most productively.
Seen in this light, she said, the U.S. would likely retain dominance in IC architectural design, in investment into the semiconductor industry and in design of chip manufacturing equipment and EDA tools.
Ed Ross, president of TSMC USA, charted the competitive landscape in the Chinese, Taiwan and U.S. semiconductor markets. Contrary to most U.S. executives, Ross said Taiwan and China have collectively become a hotbed of design activity. "There are about 350 design houses in Taiwan today, and 500 in mainland China," he said. "Many of these are small, but not all of them. And some are very sophisticated."
Right mix
China in particular had the right mix of advantages to prosper rapidly, he added. "The industry receives heavy government investment in China," Ross said, "and benefits from a very strong local market. But on the minus side, China currently suffers a critical lack of experienced managers, and their continued lack of effective legal protection for intellectual property could become a serious limitation."
On balance, Ross said, China would mature as a design community more rapidly than Taiwan "for one simple reason. They are importing a lot of managers from Taiwan who have already been through the experience." If there is a dark cloud looming over the Chinese industry, Ross said, it is that the huge fab building campaign could lead to global overcapacity by 2005 or 2006.
Werner Goertz, vice president at outsourcing megastore Wipro Technologies (Bangalore, India,) added a different perspective. On a macroeconomic scale, Goertz said design outsourcing was a nonissue. He showed data indicating that the total number of jobs projected to leave the U.S. from outsourcing by 2005 — about 3 million — would be only slightly larger than the number of jobs lost through normal operations in the U.S. in the boom year of 1997.
Further, Goertz said productivity increases from outsourcing enriched U.S.-based companies that outsourced design work. Hence, in a trickle-down view of engineering economics, the job loss benefited the U.S. engineers.
Geortz counseled engineers to effectively run for high ground, or move their careers away from basic design and into architectural design or design management — tasks least likely to be outsourced.
Behrooz Abdi, a vice president heavily involved in mixed-signal design at Motorola, said outsourcing is not just about lower salaries. He said the underlying problems were that productivity growth had outpaced demand, and that companies had lost their differentiation. This has forced faster time to market and lower development costs as a substitute for successful new products.
Abdi agreed that the best path for individual engineers and for companies was to innovate at the systems level rather than trying to differentiate themselves on the basis of chip or circuit design.
Gloomier view
Brian Fitzgerald, chief executive of the small design services house ChipWrights (Boston) was pessimistic.
"I think design outsourcing is necessary to a small company in order to compete," Fitzgerald said, "but in the long term I think it is bad for the country." Fitzgerald said he is continually approached by offshore design shops offering to work "three to five times cheaper than we can do it here.'' The more outsourcing, the more global competition is lowering engineering salaries and career opportunities in the U.S.
"One of my engineers comes to me and says he has to have a 10 percent raise. I know he's good, but I also know I could get maybe five times more work done for the same money I'm paying him now. So what am I going to do?" Fitzgerlad asked. ''The more we cut away at the incentives for people in the U.S. to take up engineering careers, the more we undermine out ability to innovate."
The panel's consensus was that IC design outsourcing is inevitable, and probably irreversible. The U.S. will be left with product specification for the domestic market, architectural design and investment from venture capital firms. All individual engineers can do in the face of a flood of outsourced design work is to flee to the relative safety of system architecture, or target highly individual analog or RF design talents.
They can also cling to the hope that the water stops rising, panlists said.
- or any 'hard science' for that matter - because it gives one a good starting point from which to win technical debates on FR?
IBM Challenges Taiwan's Chip Makers
Big Blue continues to increase its contract chip-making business.Sumner Lemon, IDG News Service
Thursday, April 17, 2003The competitive threat to Taiwan's contract chip makers was supposed to come from Shanghai, not East Fishkill, New York.
The rise of Chinese chip makers, like Semiconductor Manufacturing International (SMIC) and Grace Semiconductor Manufacturing, was expected by some observers to mark the beginning of a shift in the center of contract chip making from Taiwan to China. But that was before IBM began an aggressive expansion of its own contract chip-making business.
Contract chip makers, commonly called foundries, produce chips for companies, such as Via Technologies and Nvidia, among many others, that don't have their own chip fabrication plants (fabs).
The business is dominated today by two Taiwanese companies, Taiwan Semiconductor Manufacturing (TSMC) and United Microelectronics (UMC), which together are expected to account for 63 percent of the total foundry market in 2003, according to an estimate by Salomon Smith Barney. TSMC alone will account for 44 percent of the market, it said.
Changing Business Plan
IBM's push to expand its foundry business comes as the contract chip-making business is changing. The industry is showing signs of segmenting into two layers: one comprised of companies that produce chips in volume using older chip-making technologies and another consisting of companies able to produce high-end chips using cutting-edge processes and materials.
One reason for the change in the dynamics of the foundry industry is the increasing cost of designing chips for the latest generations of chip-making technology, said Morris Chang, the chairman of TSMC and an executive often credited with developing the foundry business model.
"The number of new customers has drastically decreased in each new generation [of chip-making technology]," Chang said, noting that chip designers want to be confident that the increased investments required to design chips for the latest process technologies will pay off.
"It's a new game," he said. "It's a situation that clearly favors the leaders."
Leading the Way
IBM is one of those leaders, having led the push into many high-end chip production technologies, and will increasingly compete against TSMC for high-end foundry business while Chinese foundries compete for business at the low end of the market, Chang said.
"IBM have always had the best [chip-making] processes," said Martin Kidgell , the Asia-Pacific managing director of National Semiconductor, which uses TSMC to manufacture digital processors. "They want to come out and play and be a much bigger fish in this pond. I see that as competition for TSMC and UMC."
IBM has already made inroads into the high-end foundry business, signing a deal with Nvidia to manufacture its next generation of
In addition to Nvidia, IBM has signed deals with Qualcomm and Xilinx, one of UMC's major customers, to manufacture chips under contract. IBM has also signed an agreement to jointly develop next-generation process technologies with Advanced Micro Devices. That deal ended a similar agreement between AMD and UMC and has raised questions about whether the two companies would move ahead with plans to build a joint-venture fab in Singapore.
Under Pressure<
IBM's stepped-up foundry efforts will put pressure on TSMC and UMC thanks to the company's manufacturing prowess with advanced chip-making technologies, but Big Blue isn't likely to threaten their dominance of the foundry business anytime soon.
"It's not automatic that you would necessarily leap to the lowest available geometry," Kidgell said, referring to process technologies that are used to make chips. "What we're all looking for is the most cost-effective manufacturers in the volume sweet spot. I can see that, like in any industry, there will be people leading with the technology but they won't necessarily be the volume manufacturers."
Moreover, IBM will have to adopt the shorter manufacturing lead times and increased flexibility that are required of contract chip makers.
"IBM, as a foundry, they've never been particularly easy to deal with in terms of the flexibility of the way you could place orders with them," Kidgell said. "They traditionally tended to have longer lead times and less ability to move around your schedules as the end customers demanded."
Challenges Ahead
IBM's push to grow its foundry business isn't the only challenge that Taiwan's foundries face. On the low end of the market, the Chinese foundries pose a cost-effective alternative to TSMC and UMC for chips that are sold into the Chinese market. Chinese foundries can reduce manufacturing costs by up to 30 percent, largely due to value-added tariffs that are placed on chips imported into China, Kidgell said.
Intent on making its presence felt in China, TSMC last year filed an application with the Taiwanese government to build a fab in Shanghai.
The lengthy approval process for TSMC's application, now in its eighth month, doesn't mean that the company is sitting on the sidelines while its Chinese rivals carve out an insurmountable lead in China's foundry market. "You've got to build up a few years of experience and trust with these companies because you're staking your future on them," Kidgell said.
Asians countries seem to have this frightening ability to learn from their opponents. The Japanese almost did this in naval aviation in WWII and they beat the U.S. badly in car manufacturing by applying the fields of manufacturing inventory control and quality control -- which they learned from us.
I'm not so concerned about Japan as I am China. China runs over people with tanks, forces sterilization and infanticide on women and employs slave labor.
Constitution of the United States
Gallium Arsenide
Uh..yeah, okay. Arsenic is used as a dopant for gallium based electronics but then the same is true for silicon.
I agree that private investors (e.g., the Hunts) cannot successfully manipulate the market. The IMF is not in the same category.
Yeah, but all that means is that the IMF can do more damage. A free market is a control mechanism and attempting to control a control mechanism that big is foolish and sometimes disastrous.
How many products didn't make it because they weren't adequately explained to the public? Sure CD's and DVD's are obvious, but there were a lot of picture disk technologies that didn't cut it. And does anybody remember four-channel stereo from many years ago? My experience with things tells me that there are clueless salespeople (just like in the Dilbert cartoon) that don't care if they're selling microchips, or potato chips. I wish that the folks who really understood what things are, and how they work, would spend some time figuring out how to make these things work for their customers, or they will just sit on shelves.
Engineers don't have too bad of a public image, but whining because they can't make $100K a year, to people making $30K a year who they expect to buy the products they design is not going to help that image.
But in the case of gallium arsenide, the arsenic is a component of the pure (undoped) crystal.
Oh. I did not know that. So does that mean that after doping, both the p and n regions still have arsenic?
Yes, exactly. GaAs is a III-V compound, it's elements come from the group III and group V columns of the periodic table. The usual silicon dopants Boron, Phosphorous, Arsenic, Antimony just drop in in place of the Galium or Arsenic.
To dope GaAs "P" you use group II - zinc, or for "N" group VI Sulfur, Selenium, or Tellurium.
It was lots of fun making LEDS with GaAs, and GaAsP!
Motorola grows GaAs on silicon
...William Ooms, the Motorola Labs director of materials, device, and energy research, explained that the GaAs lattice constant (5.65 Å) is about 4% larger than silicon's (5.43 Å). This difference makes it difficult to grow high quality GaAs directly on silicon. Instead, the Motorola researchers placed a thin layer (about 50 Å) of strontium titanate (SrTiO3) between the two semiconductors. Strontium titanate's lattice constant falls roughly halfway between GaAs and Si. Moreover, an amorphous layer (10-20 Å thick) forms between Si and SrTiO3. This layer absorbs the lattice mismatch strain between the two materials, allowing the crystalline SrTiO3 to form a normal lattice without distortion from the underlying Si. Because the SrTiO3 layer is very thin, the amorphous interlayer also absorbs the mismatch strain between the SrTiO3 and GaAs layers...
Link here: http://www.thinfilmmfg.com/Noteworthy/Noteworthy01/GaAs20Sept01.htm
What a big memory you have grandma!
I remember being a little skeptical. Silicon is an amphoteric dopant of GaAs (amphoteric - fancy word meaning that it can act as either N or P type dopant depending on whether it substitutes for the galium or arsenic, which in turn depends on crystal growth conditions such as temperature gradients(?) or something like that) GaAs is "poisoned" by oxygen, so depostiting it on an oxide is problematic IMHO.
But what do I know? it's been 25 years since I built LEDs, and I've never been in the high speed GaAs end of the business.
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