Chips and Change How Crisis Reshapes the

Clair Brown and Greg Linden

The MIT Press Cambridge, Massachusetts London, England 6 2009 Massachusetts Institute of Technology

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Library of Congress Cataloging-in-Publication Data

Brown, Clair, 1946– Chips and change : how crisis reshapes the semiconductor industry / Clair Brown and Greg Linden. p. cm. Includes bibliographical references and index. ISBN 978-0-262-01346-8 (hbk. : alk. paper) 1. Semiconductor industry— Management. 2. Business cycles. I. Linden, Greg, 1959 II. Title. HD9696.S42B76 2009 338.40762138152dc22 2009007072

10987654321 Index

Accellera, 73 Antitrust laws Acer, 179 Japanese sued on, 22 Actions (firm), 186, 187 relaxing of (US), 20 Advantest, 167 Apple Computer, 92, 162 Agere, 51, 89, 90, 154 Applications Agilent, 154, 156, 157 increased number of, 67 Alcatel, 182 and expansion, 81 Alliances, 146–48, 168, 209 shift on, 63 Common Platform Alliance, 104, Application-specific integrated circuits 147, 148, 168, 195 (ASICs), 21–22 with firms from industrializing coun- and Toshiba design centers, 169 tries, 193 Applied Materials, 167 Taiwanese firms in, 179 ARC International, 70, 71 Altera, 52, 150 ARM Ltd., 70, 71, 72, 75 AMD, 24 ASE Group, 45, 185 in China, 185 ASET, 168, 196, 232n.64 in Common Platform, 148 Asia. See also China; India; Japan; and EUV development, 100 South Korea; India design center of, 88 economic liberalization of, 85 vs. Intel, 144, 160 government support for semiconduc- layoffs in, 107 tor industry in, 213–14 process development ended in, new rivals in, 165 146 ASICs (application-specific integrated spin-off from, 5, 154, 198 circuits), 21–22 American Community Survey (ACS), and Toshiba design centers, 169 engineer-earnings data from, 110, ASM International, 167 115 ASMC, 184 Amkor, 45, 185 ASM Lithography (ASML), 97, 167 Analog chips, 42, 149, 158 Assembly stage of production, 10, 12, Analog Devices, 88, 90, 149, 150 44–45 Analog vs. digital circuits, 67 Association for Superadvanced Antidumping laws, Japanese sued on, Electronics Technologies (ASET), 22 147 242 Index

ATI, 89, 150, 152, 163, 179 and economic crisis (2008 et seq.), Atmel, 89 197 Avago, 51, 52, 156, 157 engineer capability in, 170, 171, 172, 173, 185 Baldrige, Malcolm, quoted, 15 fab investment in, 56, 58 Bangalore, India, 85, 86, 88–89, 128, in future, 212 172, 190, 192–93 global integration of, 194 Barrett, Craig, 211 government support in, 37, 213–14 Benchmarking, 19 higher education in, 174–77 foundries used in, 49 investment in, 164, 202 Berkeley Sloan Semiconductor Pro- liberalization of chip market by, 82 gram, 13 loss of competitive advantage to, 207 Berkeley transistor simulation model loss of industry leadership to, 165 (BSIM), 46 manufacturing in, 92 Brain circulation, global. See Global market demand for engineers in, 124 brain circulation as new fear replacing Japan, 5 Brazil, and future, 212 start-ups in, 186, 189, 191 BREW (binary runtime environment and Taiwan, 181–82 for wireless), 162 US engineering PhDs to students Britain (United Kingdom) from, 125 and consumer multimedia, 169 and return home for career, 128 restructuring in, 152, 154 See also International comparisons Broadcom, 32, 52, 86, 88, 90, 138 China Resources Semico, 187 BSIM (Berkeley transistor simulation Chip design, 40 model), 46 automation and separation of, 46, 66 Business model, needed with technol- in China, 185–88 ogy, 213 functional integration in, 61–62 Buy-outs, private equity, 152–57, 209 and hardware-software co-design, 66 in India, 190–91 , 67, 73, 74, international comparison on (number 91 of designers), 171, 172–73 Canon, 97, 152, 153 and lithography, 101 Career paths, for semiconductor pro- in low-cost locations, 84–92, 94 fessionals, 119–23 for manufacturing, 101 CDMA (code division multiple access) miniaturization in, 9–10, 45, 64 technology, 160, 161 limit of (0.032 micron), 168, 195 CEC Huada, 186, 187 stages of, 64 Ceva, 70 in Taiwan, 179, 181 Chang, Morris, 48 ‘‘Chipless’’ firms, 71 Chang, Richard, 49, 182–83 Circuit simulation system, SPICE, 46 Chartered Semiconductor (foundry), Cisco Systems, 32, 92, 152, 153 48, 51, 139, 140, 147 ‘‘Clean room,’’ 40 China, 182–89, 194–95, 196–97 CMOS (complementary metal-oxide benefit for consumers in, 6 semiconductor), 9, 209–10, 212 cooperation with US leaders in, 193 Code division multiple access design centers in, 87 (CDMA) technology, 160, 161 Index 243

Common Platform Alliance, 104, 147, Consumer markets 148, 168, 195 challenges of, 81–84 Common Power Format (CPF), 74 shift to, 63, 75, 77–81 Competitive advantage Consumer price squeeze, crisis of. See business plan plus technology needed Crisis of consumer prize squeeze for, 213 Cooperative efforts and strategy, 74, changes in, 2, 3 75, 99–100, 104, 106, 208–209 crises as influencing (global), 13 drawbacks of, 209 for developing countries, 166 Cooperative venture, 35 difficulty in building, 137 Cores, 69. See also Design cores as fleeting, 36 Cost reduction, through low-cost in fabless sector, 52 locations, 84 and management of complexity, Crises of semiconductor industry, 1–5 74 impacts of, 199–203 from offshore investment, 94 incremental approaches in response in process knowledge, 45 to, 13 recession as threatening to erode, interconnections among, 199 198 lessons learned from, 212–14 and reduction of trade barriers, 82 modes of response to, 203–208 shifting of (global), 36, 164, 202 strategies in response to, 203–204 and software expertise, 65 cooperation, 205, 208–209 (see strategies for also Cooperative efforts and capabilities of firm, 157–59 strategy) product-level barriers, 159–61 offshoring, 84–91, 204, 205, 208 relationships with other firms, 161– (see also Outsourcing) 62 positioning, 205, 208 struggle for, 13 restructuring, 205, 152, 154–57, theories on shift of, 165–166 (see 209 also Large-market pull theory; ‘‘Crisis,’’ 2 Manufacturing-pull theory) Crisis of competitive advantage lost to and wafer size, 42 Japan (first crisis), 2, 15–18, 36– Competitive advantage, loss of. See 37 Crisis of competitive advantage and eighth crisis, 165 lost to Japan impacts of, 200 Competitive Semiconductor response of US, 18–22, 204, 205 Manufacturing (CSM) program, reversal of fortunes, 22–27 19 stumbles by Japan, 27–31 Complementary metal-oxide Crisis of fabrication costs (second semiconductor (CMOS), 9, 209– crisis), 2, 39–44, 58–59 10, 212 and chip design, 61 Computer-aided design (CAD), 67 and fabless-foundry model, 44–54 Consolidation, and fabrication costs, and fabrication as capital intensive, 39 57 Consortia, 146–48 and fab site selection factors, 57–58 Consumer(s), 6, 203 and global shift of manufacturing, Consumer gap, 210 54–58 244 Index

Crisis of fabrication costs (second Crisis of talent search (sixth crisis), 2, crisis) (cont.) 107–108, 134 impacts of, 200 and employer requirements, 109, job loss in, 58 123 response mode to, 204–205 and foreign graduate students, 118– and unit costs vs. fixed costs of 19, 124–29, 207 building, 41 from Taiwan, 125, 125–26, 181 Crisis of design costs (third crisis), 2, and high-innovation vs. high- 61–63, 74–75 commitment system, 122–23 and challenges of complexity, 63–68, impacts of, 201 74 and opposing sides of marketplace, and cooperative efforts, 74, 75 108 impacts of, 200 response mode to, 205, 206–207 response mode to, 205–206 and US labor market for engineers, and reusable design cores, 68–72, 109–10, 123–24 74–75 age-earnings profiles by education, and system-level design approaches, 115–18 72–74 career paths for semiconductor Crisis of consumer price squeeze professionals, 119–23 (fourth crisis), 2, 77, 93–94 employment and earnings in, 108, from corporate-to-consumer market 110–15, 131, 132 shift, 63, 75, 77–81 and H-1B visas, 129–34 and challenges of consumer mar- Crisis of low returns and high risk kets, 81–84 (seventh crisis), 2, 137, 162–64 and engineering abroad vs. in US, and high-performing chip firms, 92–93 148–52 impacts of, 200 high-volume fabs made improbable response mode to, 205–206 by, 44 designing in low-cost locations, 84– impacts of, 201 92 and price of talent, 135 Crisis of limits to Moore’s Law R&D as factor in, 42, 144–46 (fifth crisis), 2, 95–96, 105– alliances and consortia as response, 106 146–48 and evolution of optical lithography, response mode to, 205, 207 97–99, 105 (see also Lithography) restructuring (spin-offs and private and fabless-foundry model, 202 equity buy-outs), 152–57 hunt for postoptical solutions, 99– return on assets (ROA) measured, 101 138–44 impacts of, 200 and strategies for competitive advan- and photolithography, 96–97 tage, 157 response mode to, 205, 206 through capabilities of firms, 157– design of manufacturing, 101– 59 104 through product-level barriers, and rising fabrication cost, 39 159–61 and virtual re-integration of fabless through relationships with other and foundry, 104–105 firms, 161–62 Index 245

Crisis of new global competition Developing countries (eighth crisis), 2, 165–66, 194– competitive advantage for, 166 95 and economic crisis (2008 et seq.), and engineer capabilities across 197 countries, 170–74 graduate degrees for students from, in China, 185 118 in India, 191–92 low-cost special products for, 94 and higher education across coun- market demand for engineers in, 124 tries, 174–77 Development alliances. See Alliances impacts of, 201 DFM (design for manufacturing), 102, industry responses to, 193–94, 198 104, 105–106 large-market pull theory on, 169–70, Die, 10–12, 40 177, 196 Digital vs. analog circuits, 67 and China, 182–89 Digital signal processors (DSPs), 22 and India, 189–93 DiLisio, Charles, quoted, 77 and Taiwan, 177–82 cited, 63n.5 manufacturing-pull theory on, 165, Doering, Robert, quoted, 39 166–69, 195 Dongbu, 48 response mode to, 205, 207 Dot-com bust (2000 et seq.), 114, 121 Crolles II, 147 Double patterning, 98 CSMC, 184 DRAM (dynamic random-access Customer base, shift in, 63, 75, 77– memory), 7, 16–17, 25–26 81 and China, 193 and internal fabrication, 50 Dainippon Screen, 167 Japanese success in, 16, 20, 27–29, Datang Microelectronics, 187 196 Datang Telecom Technology, 37, large-scale facilities for, 41 183 and market fragmentation, 83 DEC, 121 and Samsung, 23 Defense Science Board, US, 17 and Taiwan, 178, 179, 193 Dell, 12, 32, 139, 152, 153 TI sells operation for, 22 Department of Commerce, US, 13 US firms exit from, 20 Department of Energy, US and EUV technology, 99 Earnings, of US engineers, 110–15 Department of Labor, US, 13 Eastern Europe, economic Design of chips. See Chip design liberalization of, 85 Design cores, 205–206, 209 EDA. See Electronic design reusable, 68–72 automation Design for manufacturing (DFM), Education 102, 104, 105–106 engineers’ age-profile by, 115–18 Design productivity, challenging need engineers’ returns to, 118–19 for, 63–68 of foreign students in US graduate Design productivity gap, 61, 67, programs, 118–19, 124–29, 207 210 importance of, 198, 210 Design R&D, 168–69 international comparison of higher Design reuse, 69–72 education, 174–77 246 Index

‘‘Electron beam direct-write,’’ 100 in US on H-1B visas, 129–34, 134 Electronic design automation (EDA), US labor market for, 109–10 12, 46, 67, 206 age earnings profiles by education, and foundry process data, 104 115–18 large fixed costs of, 91 career paths for semiconductor and lithography, 103 professionals, 119–23 sales of (international comparison), employment and earnings, 108, 173 110–15 and SOC, 205 outlook in, 123–24 and students in India or China vs. returns to education, 118–19 US, 175 in US vs. offshore, 92 Electronic System Level (ESL) tools, Entrepreneurship, Japanese, 33 73 Equipment firms, 168 Elite, 180 ESL (Electronic System Level) tools, Elpida Memory, 25, 26, 27, 30, 107, 73 147, 154, 155, 183 Etron, 180 Employment and earnings of US European chip companies, and global engineers, 108, 110–15, 131, 132 brain circulation, 134 (see also Crisis of talent search) European Union Encryption, export limits on high-commitment system in, 122 technology for, 86 and STMicroelectronics, 37 Engineers, 203 tariff reductions by, 82 capabilities of across countries, 170– Extreme ultraviolet (EUV) lithogra- 74 phy, 99–100, 105 in China, 185 in design for manufacturing, 105– Fab, 12. See also Fabrication 106 Fabbed (fab) firms fab, 120 in China, 183–85 in India, 191–92 among high-performers, 149 low-cost, 166 R&D ratio of, 145 multinationals attract away from in ROA study, 140, 142–43 local firms, 193 in Taiwan, 178 need for, 67 Fab construction, international and hiring of at lower cost, 69 comparison of, 171, 172 need to retain, 198 Fabless and design services, in at offshore locations, 85–86 Taiwan, 178 in India, 85 Fabless firms, 22, 31, 47 for physical design, 66 in China, 186–88, 196–97 in semiconductor industry vs. other and design for manufacturing, 101– industries, 111, 112–13 104 shortage of, 107–108 and foundries, 179 and offshore investment, 84 among high-performers, 149 and opposing sides of marketplace, R&D-to-sales ratios of, 144–45 108 in ROA study, 140, 142–43 software, 65–66, 111 in Taiwan, 179–81, 196–97, and system-level design, 73, 75 202 Index 247

Fabless-foundry model, 4, 32–33, 44– Freescale, 31, 86, 88, 90, 147, 149, 54, 58, 103–104, 202, 209 154, 157, 163, 166, 226n.35 and lithography, 95–96 Fujitsu, 16, 21, 30, 35, 154, 155 in Taiwan, 169 China design centers of, 90 virtual re-integration of, 104 foundry services of, 49 Fabless Semiconductor Association and SMIC, 183 (now Global Semiconductor spin-off chip division of, 154 Alliance), 32, 58 Functional integration, in chip design, Fab-lite strategy, 50, 59 61–62 Fabrication, 10, 12, 40 Future of semiconductor industry, change in predicted, 101 209–12 in China, 182–85 CMOS process in, 9 Galapagos market, Japan as, 29 and ‘‘design for manufacturing,’’ GDSII (Graphic Data System II) data 102 format, 46 and design productivity gap, 61, 67 General Electric Company Ltd., and India, 190, 196 Marconi Devices division of, 154 and leakage problem, 68 Gigafab, 41 offshoring of, 85, 204, 208 Global brain circulation, 6, 35–36, rising costs of, 202, 209 134, 195, 202–203 Fabrication costs, crisis of. See Crisis and foreign students in US, 129 of fabrication costs as opportunity and threat, 203 Fab Solutions, 35 as response to talent crisis, 206–207 Fairchild Semiconductor, 18, 156 and Taiwan, 181 Faraday Technology, 70, 71 Global competition, 82 Ferranti Semiconductors, 154 Global dynamism, in semiconductor Financial crisis (2008 and after), 5, industry, 6 197. See also Recession of 2008 et GlobalFoundries, 146 seq. Globalization, 13 Firmware, 64 Global Semiconductor Alliance (GSA) Foreign students, in US graduate database, 52, 53, 186 engineering programs, 118–19, Global shift of manufacturing, 54–58 124–29, 207 Google, 34 Foundries (independent contract Government support for semiconduc- manufacturers for microchips), 39 tor industry, 1, 5, 37, 214 Chinese, 183 in Asia, 213–14 dedicated (pure-play) business model, China, 37, 213–14 48 Japan, 15–16, 35, 37, 202, 212, and design cores, 72 213–14 and fabless companies, 158 South Korea, 23, 202 future of, 211 Taiwan, 37, 202, 213–214 R&D ratio of, 145 and complexities of semiconductor in ROA study, 140, 142 industry, 13 in Taiwan, 177, 178 in European Union, 37 Foundry-fabless model. See Fabless- and future, 212 foundry model, 104 and global competition, 3 248 Index

Government support for semiconduc- as spin-off, 155 tor industry (cont.) with STMicroelectronics, 185 for new entrants, 166 Hynix-ST memory fab, 193 for US semiconductor industry, 19– Hyundai, 155 20, 37 and EUV technology, 99–100 IBM and SEMATECH, 20 and chip manufacturing, 152 and X-ray lithography, 99 and Common Platform Alliance, Grace, 184 104, 147, 148, 211 Green energy technologies, 214 downsizing programs of, 121 GSM standard, 162 and DRAM, 22 foundry consortium led by, 104 Haier, 182 foundry services of, 48, 49 Hejian, 184 as high-performer, 153 Hewlett-Packard, 51, 152, 153, 154, and H-1B visas, 132, 133 156, 180 Indian design centers of, 88 High-commitment system, 122 and Intel, 21, 160 High-Definition Multimedia Interface Japan demands technology transfer (HDMI), 160–61 from, 16 High-innovation system, US resource layoffs in, 107 management system as, 122 in ROA study, 139, 140 ‘‘High-k dielectric gates,’’ 68 as SEMATECH member, 148 High-performing chip firms, 148–52 and statistical design, 103 High-tech workers, 6 and technology gap (Japan), 20 and value chain, 12 and X-ray lithography, 99 , 180 IBM, Japan, 147 HiSilicon, 186, 187 IEEE (Institute of Electrical and Hitachi, 16, 18, 25, 30, 34, 147, 154– Electronic Engineers), 13, 129 55, 155, 161 Imagination Technologies, 70, 71 Home market sales, and Japan, 38 IMEC (Interuniversities Home substitution index, 29–30, 38 Microelectronic Center), 147, 168 of Japan, 30 Immersion lithography. See H-1B visas, 129–34, 134 Lithography Huahong IC, 187 Immigration policies, US, 129, 198 HuaHong-NEC, 48, 184, 185, 186 Independent contract manufacturers Huawei, 182 (foundries) for microchips, 39 Human resource management, high- Independent spin-out model, 35 innovation vs. high-commitment Independent start-up model, 33–34 system of, 122 India, 189–93, 194–95, 196 Hutcheson, Dan, quoted, 95 Bangalore, 85, 86, 88–89, 128, 172, cited, 168 190, 192–93 Hynix Semiconductor (formerly benefit for consumers in, 6 Hyundai Semiconductor), 24, 25, cooperation with US leaders in, 193 26, 177 design centers in, 86–87, 88–89, 92 and buyout, 156 design subsidiaries in, 194 DRAM fab of, 41 design teams in, 85 Index 249

and economic crisis (2008 et seq.), Indian design centers of, 86, 88 197 internal fabrication in, 50 engineer capabilities in, 170, 171, layoffs in, 107 172, 173, 191–92 and market for personal computer engineers’ low pay in, 118–19 chips, 204 fab location unsuccessful in, 169 and microprocessors, 7, 21 in future, 212 and Moore, 9 global integration of, 194 processor-centric strategies of, 25, higher education in, 174–77 31 H-1B visa users from, 130 and process variability, 102–103 investment in, 202 as quasi-monopoly, 21 loss of competitive advantage and R&D investment of, 163, 195 industry leadership to, 165, 207 R&D ratio of, 144, 145 market demand for engineers in, 124 R&D-to-sales ratio of, 146 as new fear replacing Japan, 5 repositioning led by, 36 US engineering PhDs to students revenue and market share of, 24 from, 125 in ROA study, 138, 139, 140 and return home for career, 128 sales by region for, 31 See also International comparisons as SEMATECH member, 148 Infineon, 24, 31, 147, 148, 154, 155, and Silicon Valley, 85 163, 183 and solutions for power leakage, 68 and Qimonda, 25, 154 stock buybacks of, 146 Infosys, 130 Intellectual property Institute of Electrical and Electronic and Chinese environment, 185–86 Engineers (IEEE), 13, 129 and Chinese government’s support of Integrated firms, 44, 45, 104 firms, 189 in Europe, 58 competitive advantage through, 159 vs. fabless rivals, 95–96, 195 and designing at low-cost locations, fabs of, 42, 59 84, 93 R&D-to-sales ratios of, 144 in China, 87 in Taiwan, 178 international comparison on strength as vertically integrated, 47, 51, 154 of, 172 in Japan, 28 SMIC (China) sued over, 183 Intel, 18, 20, 22, 81, 143–44 software as, 21 in ASET, 147 and vertical integration, 47 ‘‘atom’’ processes from, 194 International comparisons and brand awareness, 159 in engineer capabilities, 170–74 in China, 185 in fabless revenue, 53 de facto standard controlled by, 160 in higher education, 174–77 and EUV technology, 99–100 by region ‘‘flash memory’’ fab of, 41 capital spending by semiconductor and 450-mm. wafer fabs, 42 companies, 28 general-purpose chips from, 82 EDA industry revenues, 173 among high-performers, 149, 150 fabrication capacity, 55, 56, 57 and H-1B visas, 130, 132, 133 International Sematech Manufacturing in IMEC, 147 Initiative (ISMI), 148 250 Index

International Solid-State Circuits restructuring in, 155 Conference (ISSCC), 176–77 and start-ups, 32–36, 191 Internet, and evolution of and 300-mm fabs, 56 semiconductor markets, 77, 80–81 See also International comparisons Intersil, 154, 156 Interuniversities Microelectronics KLA-Tencor, 167 Center (IMEC), 147, 168 Korea. See South Korea IP blocks, 69 Ito, Satoru, quoted, 137 Labor market for engineers, US, 109– Ittiam, 191 10, 123–24 age-earnings profiles by education, Japan 115–18 China design centers opened by, 87 career paths for semiconductor consolidation in, 211 professionals, 119–23 in crisis of competitive advantage, employment and earnings in, 108, 15–18, 36–37 110–15, 131, 132 and horizontal and vertical and H-1B visas, 129–34, 134 cooperation, 16, 20 LAM Research, 167 response of US, 18–22 Large-market pull theory, 165, 169– reversal of fortunes, 22–27 70, 177, 196 stumbles of, 27–31 and China, 182–89 and domestic market, 28–30, 33, 196 and India, 189–93 personal computers in, 28 and Taiwan, 177–82 early fabless start-up support from, Lifetime employment 47 in Japan, 35–36, 121 EDA industry revenue for, 173 in US semiconductor industry, 121 engineer capabilities in, 170, 171, Linear Technology, 149, 150, 158, 172, 173 163 and engineer graduate training, 125 Linewidth, 10 in EUV technology, 100 and complexity of design, 61, 64, 65 fab capacity reduction in, 54 and cost of fabs, 12, 42 fabless companies scarce in, 33 and number of memory cells per chip in future, 211 size, 16 and global brain circulation, 134 and process variation, 103 government support for, 15–16, 35, shrinking of, 67, 96, 98, 209–10 37, 202, 212, 213–14 and limit for CMOS processes, 210 high-commitment system in, 122 Lithography, 39, 40, 96–97, 105 higher education in, 174–77 computational, 98 and home market sales, 38 and design, 101 India and China as replacing, 5 extreme ultraviolet (EUV), 99–100, investment commitments in, 164 105 and joint research, 147 immersion, 100, 105 layoffs in, 121 nano-print, 100 and leadership crisis, 204 optical, 97–99, 105 lifetime employment in, 35–36, 121 and Ultratech, 222n.3 vs. new Asian competitors, 195 X-ray, 99 Index 251

Low-cost locations, designing in, Moore, Gordon, 9, 47, 97 84 Moore’s Law, 3, 9–10, 13, 61, 95, Low-power design, 68, 74 105 LSI Logic, 21, 50, 52, 89, 90 and advances in lithography technol- Lucent, 51, 154, 182 ogy, 40 Lyman, Kevin, quoted, 107 end of, 5 failure of cooperation vs. limits of Magna Chip Semiconductor, 48, 155, physics, 106 156 and future, 210 Malaysia, 58, 194 and manufacturing capability, Manufacturing, global shift of, 54–58. 67 See also Fabrication and R&D expenses, 146 Manufacturing-pull theory, 165, 166– and technological advances, 80 69, 195 Moore’s Law, limits of. See Crisis of Market(s), shifting of from corporate limits to Moore’s Law to consumer, 63, 75, 77–81. See MOS (metal-oxide–semiconductor) also Crisis of consumer price process, 46 squeeze Moschip, 191 Market fragmentation, 82–83 Mosel-Vitelic, 179 Marvell, 52, 89 Mostek, 18, 62 Matsushita (renamed Panasonic), 34, Motorola, 4, 18, 22 139, 147, 148, 161 China design center of, 87 Maxim Integrated Products, 86, 89, China fab of, 87 149, 150, 158 and Chinese government, 184–85 Mead, Carver, 47 and chip manufacturing, 152 Media Tek, 52, 180 in EUV project, 100 MegaChips, 33, 34 Freescale from, 147, 154, 166, Megafabs, 41 226n.35 (see also Freescale) future of, 211 and H-1B visas, 132, 133 Megafactories, 56 Indian design center of, 86 Memory, semiconductors for, 7 layoffs of, 121 , 67, 71, 73, 91 and ON Semiconductor, 156 Metal-oxide–semiconductor (MOS) in ROA study, 139, 140 process, 46 Six Sigma quality program of, 19 Microchips, 1. See also Semiconductor and SMIC, 49 industry and Solomon Systech, 186 , 150 Multichip module, 62–63 Micron Technology, 22, 25, 26, 27, Multinational companies 50, 88, 148 in China, 184–85 Microprocessors, 7 and Chinese or Indian engineering Microsoft, in ROA study, 139, 140, graduates, 175, 189 142 and global brain circulation, 134 MIPS Technologies, 70, 71 for India, 128 Mitel, 154 in India, 190–91 Mitsubishi Electric, 25, 30, 154–55, vs. local rivals for engineers, 193 155, 179 Mu Solutions, 34 252 Index

Nanoelectronics Research Initiative Packaging firms (NRI), 210 in China, 185 Nano-imprint. See Lithography in Taiwan, 178 Nanotechnologies, 210 Panasonic. See Matsushita Nanya Technology, 25, 26, 44, 179 Personal computer (PC) market, 79– National Academy of Sciences Report 80. See also Crisis of consumer (2007) on lack of new talent, 107 price squeeze National Semiconductor, 18, 88, 107, Phase shifting, 98 149 Philips Semiconductors, 4, 18, 31, 90, strategic missteps of, 213 153 NEC, 17, 18, 21, 30, 31, 90, 139, and chip manufacturing, 152 148, 154, 155 and HDMI, 161 and Chinese government, 184–85 and NXP, 154, 155, 157, 166 (see Elpida from, 25 also NXP) Chinese joint ventures with, 172, ROA of, 140 182, 185 in SEMATECH, 148 Network effects, 160 and Taiwan, 178 Nikon, 97, 167 Phison, 1880 Nokia, 139, 152, 153, 159, 180 Photolithography. See Lithography Nova Tek, 180 ‘‘Platforms,’’ application-specific, 83 Novellus Systems, 167 Play Station 3 game console, 81 Nvidia, 32, 52, 88, 138, 162 Plaza Accord (1985), 19–20 NXP, 24, 69, 87, 90, 154, 155, 157, Plessey (UK chip firm), 154 166 Portal-Player, 91, 162 Positioning strategy, 205, 208 Obama administration, technology Semiconductor, 25, 26, 44, sector supported by, 211 179 Offshoring strategy, 84–91, 204, 205, Power leakage, 67–68, 95 208 (see also Outsourcing) Prestowitz, Clyde, 20 Oki, 179 Printed circuit board (PCB), vs. single ‘‘One Laptop Per Child’’ notebook, 94 chip, 62 ON Semiconductor, 156 Private equity, and 2008 credit Open Core Protocol International meltdown, 163 Partnership, 72 Private equity buyouts, 152–57, 209. Open SystemC Initiative (OSCI), 73 See also Venture capital Optical lithography. See Lithography, investments optical Process R&D, 167–68, 196 Optical proximity correction (OPC), Process variability, 102–103 98 Product cycles, shortening of Outsourcing (consumer market), 81–82 of fabrication and assembly and test, ProMOS, 25, 26, 179 44–45 Pure-play foundry model, 48 international, 84–91 to India (venture capitalists’ insis- Qualcomm, 52, 104 tence), 91 and CDMA, 160, 161–62 of manufacturing, 50–51 as high-performer, 150 of physical design, 84 India design center of, 88 Index 253

in ROA study, 138 Russia, and future, 212 and standards, 163 Russian government, 197 Qimonda, 25, 26, 154. See also Infineon Samsung Electronics, 22–23, 24, 25, 166, 177, 197 Rakuten, 34 in ASET, 147 Ralink, 169 in China, 185 Rambus, 70, 71, 83 in Common Platform group, 147 RCA, 178 and DRAM, 26 R&D foundry services of, 49 in chip companies’ home regions, 92 and 450-mm. wafer fabs, 42 and competitive-advantage in IMEC, 147 leadership, 198 internal fabrication in, 50 government support needed for, 211 megafabs at lower cost built by, 163 and manufacturing-pull theory, 166– sales by region for, 31 69 start-up technology acquired by, 53 and need for earnings, 138, 144 and Thine Electronics, 35 and alliances or consortia, 146–48 US investment by, 54 rise in R&D expenses, 144–146 SanDisk, 51, 52, 88, 150, 152 and stock buybacks, 146 Sanyo, 87, 90 new entrants helped by, 166 Sasken, 190, 191 in ratio to sales, 42 Scalise, George, quoted, 165 by semiconductor and electronics Scandinavian countries, and wireless producers, 32 network technology, 169 types of SELETE, 196, 232n.64 design, 168–69 SEMATECH, 20, 148, 196, 232n.64 process, 167–68, 196 ‘‘Semiconductor,’’ 7 weakened commitment to, 164 Semiconductor industry, 1, 3, 6–9, Real estate bubble, in Japan, 27 214 , 180 and consumers, 6 (see also at RealVision, 33 Consumer) Recession of 2008 et seq., 4, 144, crises of, 1–5, 13, 199–209 (see also 163, 197–98, 211 at Crisis) and China, 189 employees in, 110 (see also Crisis of Reference design, 65–66 talent search; Engineers) Renesas Technology, 24, 25, 30, 31, future of, 209–12 90, 107, 148, 155, 163 and global brain circulation, 134 (see Restructuring strategy, 152, 154–57, also Global brain circulation) 209 global dynamism in, 6 Return on assets (ROA), for chip government(s) support of, 3, 5, 37, industry, 138–44 214 (see also Government support Reusable design cores, 68–72, 74–75 for semiconductor industry) Rising costs of dsesign, crisis of. See and labor market mobility, 6 Crisis of design costs learning curve in, 197 Rising costs of fabrication, crisis of. and Moore’s Law, 3, 5, 9–10, 13, See Crisis of fabrication costs 95, 105, 210 (see also Moore’s Rohm, 32 Law) 254 Index

Semiconductor industry (cont.) Solectron, 32 software of increasing importance in, Solomon Systech, 186, 1887 65–66 Sony, 12, 30, 34, 139, 161, 180 strategy cycles of, 5–6 Sony PlayStation 3 game console, 81 value chain in, 10–11 South Korea, 25, 27, 177 Semiconductor Industry Association fab investment in, 54, 55–56 (SIA), 13, 19 government support in, 23, 202 on engineering workforce, 92 higher education in, 174–77 International Technology Roadmap investment commitments in, 164 for Semiconductors of, 67 and leadership crisis, 204 Semiconductor Manufacturing and Qualcomm, 161 International Corporation (SMIC), spread of chip industry to, 6 49, 182–83 US engineering PhDs to students Semiconductor Research Corporation, from, 126 198, 210 See also International comparisons SGS Microelectronica, 152 Spansion, 154 Shanghai BCD, 184 SPICE (Simulation Program with Shanghai Belling, 184 Emphasis), 46 Shougang-NEC, 184, 185 SPIL, 45 , 25, 154, 155, 179 Spin-offs, 152–57 Silan, 187 SPIRIT (Structure for Packaging, Silicon, 7 Integrating, and Re-using IP within raised demand for, 10 Tool flows), 72 ‘‘strained,’’ 68 Spreadtrum, 186, 187 Silicon Image, 70, 71, 160, 161 Standards ‘‘Silicon on insulator,’’ 68 cellular, 161–62 Silicon Integrated Systems (SiS), 51, from China’s government, 188–89 180 competitive advantage through, 159– Silicon Integration Initiative (Si2), 74 60, 161 Silicon Valley, 85 as cooperation efforts, 75, 204, 209 foreign companies in, 169 and design cores, 72 job hoppers in, 120 for design-fabrication interface, 46 Silicon Valley Group (SVG), 97 difficulties in, 209 Silicon Valley model, 34, 202 and ESL, 73 Silicon wafers. See Wafers, silicon and fragmentation, 83 Simulation Program with Integrated and Intel, 160 Circuit Emphasis (SPICE), 46 and low-power design, 74 Singapore, 58, 194 in ROA improvement, 163 SiS (Silicon Integrated Systems), 51, Start-ups 180 and design cores, 72 Si2 (Silicon Integration Initiative), 74 ‘‘fabless’’ firms among, 47, 51, 53– Six Sigma quality program, 19 54 Smart cards, 186 foreign, 169 SMIC, 48, 141, 184, 185 in China, 186, 189, 191 Software, increasing importance of, in India, 191 65–66, 111 and Japan, 191 Index 255

in Taiwan, 181, 188 Taiwan, 26–27, 177–82, 194–95, and market fragmentation, 83 196–97 and outsourcing, 91 chip manufacturing in, 168–69 US and Japan compared on, 32–36 cooperation with US leaders in, Statistical design, 103 193 STATSChipPAC, 45, 185 engineer capability in, 170, 171 STMicroelectronics, 24, 31, 37, 152, fab investment in, 54, 58 211 fabless companies in, 33 in alliances, 163 fabless-systems interactions in, 188 China design center of, 90 foundries in, 39 in Common Platform, 147 vulnerability of, 59 among high-performers, 149, 150 in future, 211–12 with Hynix Semiconductor, 185 higher education in, 174–77 in India, 87 government support in, 37, 202, layoffs in, 107 213–14 and Nokia, 159 integrated producers in, 44 in ROA study, 138 investment commitments in, 164 and 2001 downturn, 152 loss of competitive advantage and winning strategies of, 213 industry leadership to, 165, 207 Stock buybacks, by chip companies, and PhD students in engineering, 146 125–26, 181 ‘‘Strained silicon,’’ 68 spread of chip industry to, 6, 25 Subwavelength lithography, 98, and TI ‘‘LoCosto’’ chip, 194 102 wafer fabrication in, 204 Sunplus, 180 See also International comparisons , 67, 70, 71, 73, 91 Taiwan Semiconductor Manufacturing (SOC), 62–63, Corporation. See TSMC 205 Tariffs on chips, 82 development cost of, 63 Tata, 190, 191 and software programming, 65–66 TCL, 182 System-level design approaches, 72– Technological change, and crises, 73 213 System in package (SIP), 62 Technology, and business model, 213 Systems firms (companies) Technology transfers in China, 188 in China, 182, 193 and high performance, 152, 153 from fabless start-ups, 53 Japanese firms as, 28 Japanese demand for, 16 layoffs by, 121 Testing firms, in Taiwan, 178 and outsourced design services, 92 (TI), 16, 17, 18 and R&D, 145 with Acer, 179 in ROA study, 139, 142, 148–49 application-specific platforms of, and software-hardware integration, 163 158 and cell phone chips, 25–26 in Taiwan, 180 ‘‘LoCosto’’ integrated chip, 194 in value chain, 12 and DRAM, 22 System , 73 among high-performers, 149, 150 256 Index

Texas Instruments (TI) (cont.) TSMC (Taiwan Semiconductor Manu- in IMEC, 147 facturing Corporation), 48–49, Indian design operations of, 86–87, 104–105, 184, 219n.36 88 government support of, 202 internal process development ceased among high-performers, 149, 150 in, 4, 50, 146, 168 in ISMI, 148 layoffs in, 107 R&D of, 195 and new fabs, 56–57 in ROA study, 139, 140 and Nokia, 159 and SMIC, 183 and nonstandard processes, 50 and solutions for power leakage, 68 processor-centric strategies of, 31 and Texas Instruments process vs. Qualcomm, 104 development, 50, 168 R&D-to-sales ratio of, 146 TVs, digital, 82–83 revenue and market share of, 24 in ROA study, 138 Ultratech, 222n.3 sales by region for, 31 Umax, 179 as SEMATECH member, 148 UMC, 48, 50, 51, 140, 148, 151, 168, and SMIC, 183 179 stock buybacks of, 146 Unified Power Format (UPF), 74 winning strategies of, 213 United Kingdom. See Britain Thine Electronics, 33, 35 United States Thomson (French firm), 152, 161 capital spending by semiconductor Tokyo Electron, 167 companies in, 28 Toshiba, 17, 18 critical elements in success of com- ASIC design centers in US of, 169 panies in, 213–14 in China, 90, 185 engineer capabilities in, 170, 171, in Common Platform group, 148 172, 173 and flash chips, 25 fab capacity in, 55, 56, 57, 169 ‘‘flash memory’’ fab of, 41 fab capacity foreign ownership in, and HDMI, 161 54–55 revenue and market share of, 24 fab capacity reduction in, 54 sales by region for, 31 fabless revenue in, 53 SanDisk in partnership with, 51, financial crisis and recession in (2008 151 et seq.), 4, 144, 163, 197–98, 211 and SMIC, 183 and global drain circulation, 198 (see Sony in venture with, 30 also Global brain circulation) and , 179 government support for semiconduc- Tower (foundry), 140 tor industry in, 19–20, 37 TransChip, 53 and EUV technology, 99–100 Transistors, 9–10 and SEMATECH, 20 cost of, 96 and X-ray lithography, 99 electron-microscope photographs of, higher education in, 174–77 (see also 7 Education) increased density of, 61–62, 65 and Japanese competition, 15, 17– and power leakage, 68 18, 25, 36 Trends, in consumer markets, 81 start-ups in (vs. Japan), 32 Index 257

talent crisis in, 107–109, 134–35 Winbond, 179 and foreign graduate students, 118– Wipro, 130, 190, 191 19, 124–29 Wireless networking, 83 and H-1B visa engineers, 129–34 in Scandinavian countries, 169 and labor market for engineers, Workers, high-tech, 6, 12. See also 109–24 Crisis of talent search; Engineers threat to competitive advantage for, World Trade Organization (WTO), 37 198 Information Technology Agreement See also Crises of semiconductor of (1997), 82 industry United States labor market for engi- X-Fab, 48 neers. See Crisis of talent search , 52, 89, 150, 152, 179 US Memories, 20 UTAC, 45 Zilog, 156

Value creation, vs. value capture, 163 Vanguard, 48 Van Houten, Frans, 157 Venture capital investment. See also at Private equity in Japan vs. US, 33 and offshoring, 91 VIA, 180 Vimicro, 186, 187 Virage Logic, 70, 71 Virtual Component Exchange, 72 Virtual Socket Interface Alliance (VSIA), 72 Visas, H-1B, 129–34, 134 VLSI Technology, 21

Wafers, silicon, 10, 11, 40–41 and China, 183, 184 and fabrication costs, 42, 57 in lithography, 40 photolithography (optical lithogra- phy), 96–97 and optical lithography alternatives, 99, 100 and power leakage defenses, 68 by process generation, 43, 205 size of, 40–41, 56, 205 and Taiwan, 202 and yield, 17 WAPI, 188 Wawrzyniak, Rich, quoted, 61