Global Semiconductor Alliance SURVIVING UNDER CURRENT MARKET CONDITIONS RISK MANAGEMENT IN THE SEMICONDUCTOR SUPPLY CHAIN FAKING IT: WHY COUNTERFEITING IS THE SYMPTOM, NOT THE DISEASE ACCELERATING TECHNOLOGY EVOLUTION THROUGH PROCESS OUTSOURCING SEMICONDUCTOR EQUIPMENT SERVICE SUPPLY CHAIN—ANTICIPATING THE UPTURN Supply Chain Innovation: Responding to Dynamic Challenges Vol.16 No.3 Sept. 2009 Published by GSA $60 (U.S.) 1 A Powerful Platform for Amazing Performance Performance. To get it right, you need a foundry with an Open Innovation Platform™ and process technologies that provides the flexibility to expertly choreograph your success. To get it right, you need TSMC. Whether your designs are built on mainstream or highly advanced processes, TSMC ensures your products achieve maximum value and performance. Product Differentiation. Increased functionality and better system performance drive product value. So you need a foundry partner who keeps your products at their innovative best. TSMC’s robust platform provides the options you need to increase functionality, maximize system performance and ultimately differentiate your products. Faster Time-to-Market. Early market entry means more product revenue. TSMC’s DFM-driven design initiatives, libraries and IP programs, together with leading EDA suppliers and manufacturing data-driven PDKs, shorten your yield ramp. That gets you to market in a fraction of the time it takes your competition. Investment Optimization. Every design is an investment. Function integration and die size reduction help drive your margins. It’s simple, but not easy. We continuously improve our process technologies so you get your designs produced right the first time. Because that’s what it takes to choreograph a technical and business success. Find out how TSMC can drive your most important innovations with a powerful platform to create amazing performance. Visit www.tsmc.com Copyright 2008 Taiwan Semiconductor Manufacturing Company Ltd. All rights reserved. Open Innovation Platform™ is a trademark of TSMC. ARTICLES CONTENTS 2 Surviving under Current Market Conditions Ron Das, President and Chief Executive Offi cer, Siliconaire Inc. ACCELERATE THE 6 Risk Management in the Semiconductor Supply Chain GROWTH AND Santhosh Kumar M, Client Partner, Bristlecone Inc. INCREASE THE 10 Faking It: Why Counterfeiting is the Symptom, Not the Disease Frank Cavallaro, Chief Executive Offi cer, Converge RETURN ON 14 Accelerating Technology Evolution through Process Outsourcing INVESTED CAPITAL Jim Mello, Vice President, Sales and Marketing, Entrepix Inc. OF THE GLOBAL 18 Semiconductor Equipment Service Supply Chain—Anticipating the Upturn John Nunes, Vice President, Strategic Consulting, MCA Solutions Inc. SEMICONDUCTOR 22 Improving ASIC Design Schedule Estimates INDUSTRY BY Bob Eisenstadt, Principal Engineer, Alchip Technologies Inc. Jim Bailey, Chief Operating Offi cer, Alchip Technologies Inc. FOSTERING A MORE 26 Axing the Hockey Stick EFFECTIVE FABLESS John La Bouff, Senior Manager, Deloitte Consulting LLP ECOSYSTEM 30 Hardware Intrinsic Security: Better Security, Lower Cost and Faster Time-to- Market THROUGH Pim Tuyls, Chief Technology Offi cer and Founder, Intrinsic-ID COLLABORATION, 32 DFM: Coming into Its Own Michael Buehler-Garcia, Director, Marketing, Calibre Design Solutions, Mentor Graphics Corp. INTEGRATION AND 34 Test Chip Collaboration Validates That Virtually Maskless SOCs Are Now Practical INNOVATION. Aki Fujimura, Chief Executive Offi cer, D2S Inc., Managing Sponsor of the eBeam Initiative Moazzem Hossain, Chief Executive Offi cer, Fastrack Design, Member of the eBeam Initiative Bob Smith, Vice President, Marketing, Magma Design Automation, Member of the eBeam Initiative ▪ Address the 36 Part 2 of 4: Bankruptcy: Crisis for Some, Opportunity for Others challenges and Michael Cooley, Partner, Gardere Wynne Sewell LLP enable industry-wide solutions within the supply chain, including intellectual IN EVERY ISSUE property (IP), electronic design 4 Semiconductor Member News automation 8 Foundry Focus (EDA)/design, wafer 12 Back-End Alley manufacturing, test and packaging 16 Supply Chain Chronicles ▪ Provide a platform 20 Global Market Trends for meaningful 24 Industry Refl ections global collaboration 28 Global Insights ▪ Identify and 38 Private Showing articulate market opportunities 39 Innovator Spotlight ▪ Encourage and support INTERESTED IN CONTRIBUTING TO THE GSA FORUM? entrepreneurship To contribute an article or submit product or company announcements, contact: Chelsea Boone, Managing Editor, [email protected]. To advertise, contact: Monica Dominguez, Advertising Executive, [email protected]. ▪ Provide members with comprehensive FOR MORE INFORMATION CONTACT and unique market Lisa Tafoya, VP, Global Research, GSA Forum Executive Editor, [email protected] ▪ GSA ▪ intelligence 12400 Coit Road, Suite 650, Dallas, TX 75251 ▪ phone 888.322.5195 ▪ fax 972.239.2292 MISSION AND VISION STATEMENT Surviving under Current Market Conditions Ron Das, President and Chief Executive Officer, Siliconaire Inc. he unique strategy of outsourcing—the act of engaging external then gave rise to a new group of design service companies. Initially, Tresources to accomplish certain goals—has been increasingly semiconductor companies outsourced only segments of their design used by managers of successful corporations. Th ere are two fl ow activities such as place and routing. But during the next scenarios that push companies towards outsourcing. First, as an downturn, design service companies became an integral part of industry matures, there is the natural growth of a support ecosystem, semiconductor companies’ product design fl ows, and, eventually, and product manufacturers depend more and more on this ecosystem critical intellectual property (IP) and block design activities were to stay competitive. Secondly, companies tend to build their internal outsourced. resources at a rapid pace during strong business growth, and then Some current-generation fabless companies have started go through the unwanted and painful process of reduction in force outsourcing the entire process: design, productization and during slow times. manufacturing. Th ese companies market their products and hold Th e semiconductor industry has seen these two scenarios play out ownership of their products’ IP, and the actual design and manufacture over the last three decades, further contributing to the maturation of product is outsourced. However, many executives are still reluctant process. It has experienced exuberant growth of the worldwide towards outsourcing for fear they will lose control if they do not keep “supplier” ecosystem. By establishing themselves as strong core these operations in-house. competency centers, suppliers have enforced an increasing dependence Business dynamics in the fabless sector have changed drastically of the product supplier on this ecosystem. Th e semiconductor in recent years and have become even more daunting during the industry has also gone through several economic cycles of successive current economic downturn. Gone are the days when the venture boom and bust. All these events have made semiconductor companies capital community created strong investment momentum for more dependent on outsourcing for critical resources and core semiconductor start-ups and the rate of initial public off erings competencies. (IPOs) was high, giving investors excellent returns. Now, investment Each economic slowdown has opened the door for a new, critical in semiconductor start-ups is much more limited, and market part of the business process to be outsourced by semiconductor environments are not encouraging to IPOs. Most of the recent exits companies. It fi rst started with integrated, vertical companies having have been via acquisitions/mergers. everything under one roof. During the fi rst major downturn, the In this business environment, it is extremely critical to keep notion of outsourcing wafer processing to a pure-play foundry to fi xed costs low and use variable cost structures wherever possible— augment capacity took shape. Even industry leaders who publicly especially for functions that do not directly contribute to a company’s proclaimed “real men have fabs” started using foundries to manage core competency. It is important to understand that similar to the the cyclical nature of their business. It is easy to forget how industry’s adaptation of the fabless business model, which allowed resistant the industry was to outsourcing the most critical step in companies to become more cost-eff ective and competitive during manufacturing—wafer processing. But in time, newly established previous downturns, a similar adaptation of an extreme fabless semiconductor companies did not even plan to build or own any business model (without a fab and a full in-house operation team) fabs, thus giving birth to the fabless era. would make companies even more cost-eff ective and competitive Th e development of electronic design automation (EDA) tools during the current downturn. 2 During the early stages of product development, operations A new business model is now emerging in which a semiconductor personnel are not fully utilized, yet their expertise and experience are operations contractor off ers the same services using a customer- needed in making critical product planning and product defi nition owned tooling (COT) approach wherein semiconductor customers decisions. Even during productization (post-design) the utilization can procure their products