The 3 Faces of Semiconductor

By Rick
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In her blog entry,  “Synopsys Likely to Roll up the EDA Sector” , Sramana Mitra does a great job in summarizing the current state of the EDA industry. She does a particularly nice job of reviewing the moves that Synopsys has made in taking the leadership position in the industry and how its competition have been developing their own strategies on where their companies (and the industry) should evolve. I had some thoughts that I wanted to share that bring a bit of a different perspective.

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It’s interesting to think about where the EDA space is headed and how the rules of natural selection have gotten us to where we are today.  Sramana Mitra does a nice job in summarizing the current state for the EDA leaders. Others can better talk about technology or about how the startup companies made money for a lot of people in the past.

But I think that EDA needs to see that the semiconductor industry today really has three personalities:three-faces

  1. A technology industry driven by innovation and creating the “next cool thing” that will drive the latest products in many different industries. IC products provide the intelligence within the latest innovations across multiple markets; automotive/transportation, A&D, medical devices, consumer products and, of course, high-tech computers, communications and entertainment products.
  2. A manufacturing industry. It’s one of the world’s largest manufacturing segments and puts the latest technologies in the hands of consumers at commodity pricing.
  3. An emerging growth industry. Although it’s been around for generations, the IC domain is very dynamic. Both technology and manufacturing changes allow the market to reinvent itself and bring innovation to different end-user markets. As opposed to industries where there is a finite number of applications for their products, semiconductor companies continually opens doors in new markets.

EDA has been focused primarily on the first two of the semiconductor market personalities—addressing the technology needs of the design teams and the ability to help manufacturing continue to produce products at a nearly impossible scale with cost structures that make those products accessible.

But what did we see when the tough times rolled around?

The manufacturing “factory” personality became dominant. The technology teams were reduced to focus on core products and mandates were delivered to make those products more flexible so that they could have longer lifespans. On the manufacturing side, troubles brought a focus on the supply chain and bottom line, resulting in the common factory response of cut, reduce, eliminate.

What is required is someone that thinks of the market more holistically.

Leaders in this market have to not only be aware of the bottom line, but also be focused on creating new opportunities to grow the top line.  At some point, you can’t cut anymore—but you can always grow if you have the right vision. Companies that “emerge with advantage” from the downturn are those that are working closely with customers in new markets to grow their position, not just cut costs. Synopsys is a perfect example of a company that has a vision to grow its position through working closely with customers, being more critical in the design chain and increasing its offers to be ready for whatever need customers will have. I’ve seen the same with IC companies. While many have spent the past couple of years looking to cut costs, some were working on how to best work with their customers, enable sales and marketing to streamline new opportunities and better bring products to market. Those are the companies that you’ll be hearing good things about in the coming year.

I think this evolution will continue beyond what we know as EDA today and into a more encompassing product design and experience offering. In time, you will see the blending of EDA’s target semiconductor market both down deeper into manufacturing and up into the end market application.

When you design the “brain” (chip), you will also have to design the “body” (application product).

If semiconductors are replacing the steel and wires within transportation systems, doesn’t it make sense that the design of the products also change? Much of that change will start with how to work more closely with the customer, how to capture ideas, how to share the huge amount of information available and how to eliminate the proverbial walls over which each functional discipline has to “throw” their contributions.

EDA companies are already starting down that path today with common database formats (OpenAccess), product portfolios that encompass orders of magnitudes of more diverse offers in multi-domain design, behavioral modeling, embedded software content, simulation, predictive analysis, test, manufacturing preparation and packaging—and with consortia that brings together both design chain and supply chain partners.

EDA is still evolving. They have fire and the wheel. Imagine all that will come next.

Best,

Rick




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