Driving Semiconductor Industry Optimization From. Walden C. Rhines. CHAIRMAN & CEO Mentor Graphics Corporation

Transcription

1 Driving Semiconductor Industry Optimization From U.S.-Taiwan-China Relationships Walden C. Rhines CHAIRMAN & CEO Mentor Graphics Corporation

2 U.S.-Taiwan-China Semiconductor Optimization Growing the total semiconductor market Efficiencies in the design of products Increasing the pool of innovators From litigation to cross-licensing 2

3 U.S.-Taiwan-China Semiconductor Optimization Growing the total semiconductor market Efficiencies in the design of products Increasing the pool of innovators From litigation to cross-licensing 3

4 Multi-Year Compound Growth Rate of the Semiconductor Industry is Decreasing 80% Transistors Produced Semiconductor Revenue Compound Annual Growth Rate (CAGR) % 70% 60% 50% 40% 30% 20% 10% 0% 49 Years 45 Years 40 Years 35 Years Transistors 30 Years Semiconductor Revenue 25 Years 20 Years 18 Years 15 Years 10 Years 5 Years Source: Transistors Produced SIA, Semiconductor Revenue VLSI Research 4

5 Integrated Circuit Unit Growth is Strong While Unit Prices are Flat 35,000,000 (Q to Q3-2004) ,000, K Units 25,000,000 20,000,000 15,000,000 IC Unit Prices $ ASP 10,000,000 5,000,000 - Q177 Q178 Source: SIA Blue Book Market Data Q179 Q180 Q181 Q182 Q183 Q184 Q185 Q186 5 Integrated Circuits (#K) Q187 Q188 Q189 Q190 Q191 Q192 Q193 Integrated Circuit ($ ASP) IC Unit Volume Q194 Q195 Q196 Q197 Q198 Q199 Q100 Q101 Q102 Q103 Q

6 300 mm Fab Capacity Staged and Waiting for Demand in 2002 Fabs Completed to date and in volume production Companies with fabs ready to ramp up production Announced/In process Count WSM at Full Capacity 224,500 56, ,000 -to- 245,000 Others ,000 -to- 300,000 Total Production Fabs ,500 -to- 825,500 R&D/Pilot 7 Source: VLSI Research & Mentor Graphics 6

7 Semiconductor Integrated Circuit Revenue is Near an All-time High Level $60,000,000 $50,000, Inventory Driven Up-cycle 2004 Unit Driven Up-cycle $ K Revenue $40,000,000 $30,000, Shortage Driven Up-cycle 78% $20,000,000 $10,000,000 Difference from Q3/00 All Time High.. 4% Difference from Q3/01 Low % $- Q1/90 Q1/91 Q1/92 Q1/93 Q1/94 Q1/95 Q1/96 Q1/97 Q1/98 Q1/99 Q1/00 Q1/01 Q1/02 Q1/03 Q1/04 Source: SIA Blue Book Market Data Integrated Circuits ($K) 7

8 Unit Volume Growing Faster than Revenue, Driven by Consumer and Wireless 30,000,000 25,000, High ASP due to Shortage Units High, ASP Rising Late 19% ,000,000 15,000,000 10,000, ,000,000 0 Q190 Q290 Q390 Q490 Q191 Q291 Q391 Q491 Q192 Q292 Q392 Q492 Q193 Q293 Q393 Q493 Q194 Q294 Q394 Q494 Q195 Q295 Q395 Q495 Q196 Q296 Q396 Q496 Q197 Q297 Q397 Q497 Q198 Q298 Q398 Q498 Q199 Q299 Q399 Q499 Q100 Q200 Q300 Q400 Q101 Q201 Q301 Q401 Q102 Q202 Q302 Q402 Q103 Q203 Q303 Q403 Q104 Q204 Q304 Units (# 000) ASP ($) 2000 Unit & ASP Both Peak IC Chip Units IC Chip ASP Source: SIA Blue Book Market Data 8

9 As Unit Prices Stabilize, Semiconductor Revenue Growth Should Increase 1,000,000,000 Semiconductor Units (#K) Semiconductor Revenue ($K *) Semiconductor Unit Prices ($*) $ K Revenue (2003 Dollars) & K Units 100,000,000 10,000,000 1,000, * Note: Adjusted for Inflation Source: SIA, Federal Reserve Bank Units Unit Price * Revenue $ Unit Price (2003 Dollars)

10 Semiconductor Driven by Consumer Oriented End-Markets 100% 80% 60% 40% World Semiconductor Consumption by End-Market 1% 6% 15% 8% 6% 78% 82% 2% 8% 8% 15% 16% 11% 16% Military / Aerospace Industrial Electronics Wired Communications Automotive Electronics Consumer Electronics Wireless Communications 20% 46% 42% Data processing / Computer 0% Source: Gartner/Dataquest

11 Taiwan Has Been Leading the Consumer Growth Markets Foundry Services Mask ROM IC Packaging Notebook OEM LCD Monitor CD-R CD-RW DVD PC Camera Ethernet Card HUB ADSL Modem Wireless LAN (WLAN) Analog Modem 71.0% 48.0% 30.4% 49.0% 39.2% 83.3% 70.3% 74.5% 58.0% 66.0% 74.8% 59.6% 60.0% 41.7% * Note: Adjusted for Inflation Source: Taiwan Ministry of Economic Affairs,

12 China & Taiwan Dominate Motherboard Production PC Desktop Motherboard Production 10, % 9,000 Production - $ Millions 8,000 7,000 6,000 5,000 4,000 3,000 71% 72% 75% 80% 60% 40% Global Share 2,000 20% 1, % China/Hong Kong Taiwan All Other WW Share Source: Gartner/Dataquest,

13 China/Taiwan Dominate the Graphics Card Industry Graphics Cards 10, % Production - $ Millions 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 77% 77% 78% 80% 60% 40% 20% Global Share 1, China/Hong Kong Taiwan All Others WW Share 0% Source: Gartner/Dataquest,

14 China/Taiwan Leading in Notebook Production PC Notebook Computers (Subsystems) 40, % 35,000 Production - $ Millions 30,000 25,000 20,000 15,000 10,000 5,000 61% 62% 64% 80% 60% 40% 20% Global Share % China/Hong Kong Taiwan All Others WW Share Source: Gartner/Dataquest,

15 China Leading the Optical Disk Drive Industry Optical Disk Drives 20, % 18,000 Production - $ Millions 16,000 14,000 12,000 10,000 8,000 6,000 39% 41% 44% 80% 60% 40% Global Share 4,000 20% 2, China/Hong Kong Taiwan All Others WW Share 0% Source: Gartner/Dataquest,

16 China/Taiwan Dominate Flat Panel Monitors Flat Panel Monitors 30, % Production - $ Millions 25,000 20,000 15,000 10,000 65% 67% 67% 80% 60% 40% Global Share 5,000 20% China/Hong Kong Taiwan All Others WW Share 0% Source: Gartner/Dataquest,

17 China s Cellular Phone Production % 90% Millions of Cellular Handsets % 33% 80% 70% 60% 50% 40% 30% Percent of Worldwide Share % 10% % Local Chinese Firms Cell Phone Production Worldwide Cell Phone Production Foreign Firms China Cell Phone Production China's Productions Share Source: IC Insights Emerging Markets

18 China/Taiwan Lead in Ink-Jet Printers Ink-Jet Printers 10, % Production - $ Millions 8,000 6,000 4,000 50% 53% 52% 80% 60% 40% Global Share 2,000 20% China/Hong Kong Taiwan All Others WW Share 0% Source: Gartner/Dataquest,

19 China/Taiwan Only a Quarter of the PC Desktop Systems Market PC Desktop Computers (CPU & Memory) 70, % Production - $ Millions 60,000 50,000 40,000 30,000 20,000 10,000 21% 23% 24% 80% 60% 40% 20% Global Share China/Hong Kong Taiwan All Other WW Share 0% Source: Gartner/Dataquest,

20 China/Taiwan Lag in Entry-Level Servers Entry-Level Servers 25, % Production - $ Millions 20,000 15,000 10,000 80% 60% 40% Global Share 5,000 9% 9% 9% 20% China/Hong Kong Taiwan All Others WW Share 0% Source: Gartner/Dataquest,

21 China Growing in 2.5G Digital Cellular (Taiwan not Available) 2.5G Digital Cellular 80, % Production - $ Millions 70,000 60,000 50,000 40,000 30,000 20,000 10,000 20% 38% 39% 80% 60% 40% 20% Global Share China/Hong Kong All Others WW Share 0% Source: Gartner/Dataquest,

22 Manufacturing Labor Not Driving US Semiconductor Cost Cost Structure of US-Based Merchant Producers 1992 vs % 1% 1% 10% 17% 8% 80% 4% 13% 16% 60% 19% 16% Taxes & Other Depreciation Net Income Research & Development Sales, General & Administration 40% 32% 31% Non-Labor Manufacturing 20% 17% 15% 0% Source: Semiconductor Industry Association, 2003 Databook Manufacturing Labor 22

23 Machinery and Equipment Drive Fab Cost 23

24 U.S.-Taiwan-China Semiconductor Optimization Growing the total semiconductor market Efficiencies in the design of products Increasing the pool of innovators From litigation to cross-licensing 24

25 Cost of Design is Becoming a Major Portion of Total Semiconductor Cost 60 Hardware Design Cost Software Design Cost Design Cost ($Million) micron.25 micron.18 micron.13 micron 90 nm 2 Million Logic Transistors 5 Million Logic Transistors 20 Million Logic Transistors 40 Million Logic Transistors 80 Million Logic Transistors Source: IBS, Analysis of the Relationship Between EDA Expenditures and Competitive Positioning of IC Vendors 25

26 Design Flexibility and Cost are Driving Design Starts to Field Programmable Logic ASIC COT PLDs >100K 30,000 # of Design Starts 25,000 20,000 15,000 10,000 5, Source: Dataquest, ASIC/SOC: Rebuilding After the Storm, 11/19/02 26

27 SoC Design Requires Integration of Disparate Parts 27

28 Pricing Semiconductor Support of Original Design Manufacturers Then Production Commitment Datasheet Application Notes Now Application Engineers Embedded RTOS Firmware Modification Reference Designs Application Software Customization 28

29 Cost-Effective Custom IC Design Requires Raising the Level of Abstraction IP Blocks & Buses CPU Core DSP Core Performance driven HWR RTL RTOS BlueTooth Driver Comp/Enc Driver IR/RS232 Driver BlueTooth Controller Compression IR & & Encryption Engine RS232 3G ENGINE FPGA Functional Differentiation Software Gate Transistor 29

30 Platforms Enable Simplified SoC Design Core Near Peripherals Far Peripherals Customer demands Fast turn-around time Easy access to pre-qualified building blocks Web enabled Design technology Core platforms Big IP Emerging SoC bus standards Embedded software HW/SW co-verification 30

31 And Automation of IP Selection & Integration 31

32 Shift in System/SoC Design Empowers Growing Number of Engineers IP & Platform Creation 5,000+ Designers 100,000+ Designers 32

33 System Cost Reduction Makes New Applications Possible Price/Transistor (adjusted for inflation) Semiconductor Learning Curve 1.00E E E E E E E E E E E E E E E E E E E E E E+20 Source: Mentor Graphics, SIA, Woodrow Federal Reserve Bank Cummulative Transistors Shipped 33

34 U.S.-Taiwan-China Semiconductor Optimization Growing the total semiconductor market Efficiencies in the design of products Increasing the pool of innovators From litigation to cross-licensing 34

35 Increasing the Number of Innovators Increases Innovation 35

36 Increasing the Number of Innovators Increases Innovation 36

37 Geographic Distribution of Electronics Innovators is Changing ENGINEERING GRADUATES 250, , ,000 China Japan South Korea United States United Kingdom Germany Growth Analysis CAGR 1990 to China.. 6.1% Japan % South Korea % United States -0.5% United Kingdom % Germany % 100,000 50, Source: National Science Foundation, Science & Engineering Indicators

38 Design Work Will Be Done Concurrently At Many Locations Digital Designer Divide design into sections Layout sections in parallel Share progress with other designers Digital Designer Master Analog Designer Merge sections back into master design Designer-to-Designer Updates Split & Join RF Designer Simultaneous design on a common database Dynamic update of designer s views Heterogeneous design tool environment 38

39 Manufacturing Yield Improvement Requires Design for Manufacturing DRC Rules Checks design compliance with process rules DFM Rules Define the optimal layout for highest yield Must be implemented in an RET-aware environment 39

40 Design Guidelines vs. Design Rules Designers need to know which design features most affect manufacturing yield Priority Fixes DRC Rule DFM Rule 40

41 Designers Need to Know Effects of Manufacturing Variability Process Models Identify weak post-ret regions Litho Etch CMP Probability of failure ranking Worst Overlay Best Probability to failure report 12% Underdose 8% Underdose 4% Underdose Silicon Validation 41

42 Next Wave of Growth in Number of Designers ~5,000, ~50,000 ~500,000 FPGA Number of Designers ~5,000 Custom IC ASIC Platform-based Design

43 U.S.-Taiwan-China Semiconductor Optimization Growing the total semiconductor market Efficiencies in the design of products Increasing the pool of innovators From litigation to cross-licensing 43

44 The Most Rapid Period of Innovation in History AT & T provides open licensing of transistor patents. Patent-holders not favored in litigation No Federal Circuit dedicated to patent appeals Broad cross-licensing for relatively low fees 44

45 Litigation Slows Innovation and Inhibits Market Growth ITC used for fast track to block import of products violating U.S. patents Extreme cost of litigation favors the wealthy Use of patents to prevent innovative competition Licensing companies buying up patents and demanding fees or threatening litigation 45

46 Business Innovation Occurs Everywhere $17.6B sales stores worldwide 400 million store visitors annually 84,000 employees in 44 countries IKEA Ingvar Kamprad the #1 or #2 wealthiest person in the world 46

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