Comprehensive Innovation Management for Semiconductor Firms: Leading Practices, Capabilities and Tools by Joe Dury and Devin Bedwell

VIEWPOINTS ON INNOVATION A PUBLICATION Executive Summary

Semiconductor companies In 2009, Kalypso published a white paper are committed to consistently titled Semiconductor Product Lifecycle deliver meaningful growth Management: Industry Adoption, from innovation — a promise Benefits, and The Road Ahead. The few are prepared to deliver. paper highlighted the growing trend of leading semiconductor companies Without a clear innovation using Product Lifecycle Management strategy and roadmap, these (PLM) tools – specifically product data companies, and those held management (PDM) – to accelerate accountable for their results, product development, improve product Comprehensive Management Innovation Semiconductor for Firms are doomed to fail. quality, and reduce costs. Early adopters of PLM/PDM technology in the industry This paper reviews some of the leading saw development cost reductions of practices and enhanced tools that up to 40%, coupled with improved top companies in the semiconductor methods to efficiently support product industry use to stay ahead in an teams. In the years since that paper industry where comprehensive was published, leading semiconductor innovation management is companies have adopted a suite of becoming a critical requirement. more sophisticated processes, tools, and practices to cover the full innovation ON INNOVATION ON

process and get new products to the market faster and cheaper while delivering on growth targets. VIEWPOINTS

2 • • • including: capabilities, innovation This will require aspecific set of enhanced flexibility. manufacturing and efficient product introductions, emphasis designpass on first success, move beyond PDM and place more all semiconductor firms now must innovation results transformation, of tomorrow. To achieve true complexity of semiconductor products the new technology and increasing sufficient to drive innovation with and processes in place today are not but for companies, most the tools Innovation progress has good, been early in the design cycle and to identify and fix problems specifications, and requirements development teams with customer to align and engineering capabilities Customer management requirements demand customer and strategy and development teams with corporate tools and practices to unite engineering Portfolio and pipeline management development and innovation process model that supports all phases of the record capabilities with aproduct data goes beyond existing product data A development product record that the company on apath towards enhancement start initiatives, but on pressing cost-saving and margin- These improvements not only deliver Development (R&D) investments. maximized return on Research and costs, improved product quality, and approach include reduced development Benefits of this more comprehensive comprehensive innovation management. 3 VIEWPOINTS ON INNOVATION Comprehensive Innovation Management for Semiconductor Firms Pr 90NM 1 introduced are products new as complexity increasing design the shows 1 Figure Complexity 1Design Figure technologies is the key to future success. capabilities and to new products support The ability to scale these processes and with the latest technological trends. of technical capacity and capability to keep up licensing mechanisms, and the right balance (IP)Property organic growth processes or manufacturing and design locations, Intellectual have established innovation processes, global must Companies requirements. resource introduction schedules and more intensive tighter product with complex more getting to manage innovation today, but chips are companies have tools and processes in place innovation Semiconductor execution. and agile and quick-footed, with afocus on semiconductor companies need to remain In order to stay ahead in the market, in an Increasingly Complex Industry Collaboration and ChallengesScale INCREA

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190 design for a28nm System on aChip (SOC) is development library, generation, IP and chip spread across the globe. The cost of the engineers now require over 200 engineers over 150 blocks, and design teams with 50 contain 15 –30 application blocks now have on new process nodes. Products that used to Game Squeeze Out All But A Few, Forbes Magazine AFew, Forbes But All Out Squeeze Game 2 accessible by all teams and all locations. and interdependent design tracking that is enable globally managed processes, changes, to environments communication and sharing to be integrated with instantaneous information and New Product Introduction (NPI) tools need Disparate Computer-aided Design (CAD), PLM, launch. customer timely and profitable a successful but tape-out, also asuccessful, scale to new technologies and ensure not just must have efficient design processes that can cost and complexity, semiconductor companies the socket to acompetitor. To deal with rising life of the new product, and can even displace delay product launches, reduce the revenue technologies. Multiple re-spins and design flaws in-market lifespans to pay for the new to minimize time to market and maximize transistor and cell count -reinforce the need Rising design costs -driven by increases in node technology each new over $350 million USD, and that will rise with Kay, Roger (2012, March 16), Rising Stakes In Semiconductor (2012,Kay, Roger 16), Semiconductor March In Stakes Rising

2 . 4 VIEWPOINTS ON INNOVATION Comprehensive Innovation Management for Semiconductor Firms manufacturing, wafer probe, and test locations final external and internal foundries, external manufacturing, Internal marketing teams. and the globe working in concert with global sales test, and production engineering teams across reliability, product, applications, with along teams, design software and hardware several met, typical semiconductor require efforts NPI that global and regional customer needs are greater.collaboration been never has To ensure The need for visibility and constant performance. with customer needs and their own financial product portfolio enables maximum alignment that customers want. Better visibility to the are being used to develop the right products market lifespan is ensuring that resources Equally important to execution NPI and in- Despite the challenges that the industry faces faces industry that challenges the the Despite quality. product compress development schedules, and improve can lower development costs, increase reuse, IP collaboration is essential to the process NPI and in-house tools, and processes. Efficient platforms, Automation/CAD Design systems, test and reliability teams each use their own quicklyparts to the end customers. Product, tools, vendors and engineering teams to get need instant visibility into qualified processes, collaboration throughout the NPI process. process. collaboration NPI throughout the portfolio decisions, and to increase global increasing complexity,handle the manage design industry with enhanced practices and tools to maintain an innovative edge in acomplex can companies today, semiconductor leading 5 VIEWPOINTS ON INNOVATION Comprehensive Innovation Management for Semiconductor Firms processes and tools designed to enable challenging. Companies enhanced very is with with technologies ranging from 20nm to 90nm Producing and taping out high quality designs price company. for the and ultimately aloss in market share and stock in angry customers and third developers, party re-spins and low production yields. This resulted flagship processor because of multiple design recently had to delay the launch of their company semiconductor One requirements. and increase the final release and qualification yields which drive up cost, decrease profitability first pass designs also produce unacceptable products, frustrating customers. Low quality costs and lengthen the time-to-market for new kit updates massively increase development new product. Design re-spins and software costs, and maximizes the revenue life of a minimizes time to market and development product solutions. Asuccessful first pass design for new Integrated Circuit (IC) designs and possess arelentless focus on first pass success The most successful semiconductor companies 1 three leading practices. same basic priorities to overcome challenges. industry priorities These can summarized be in semiconductor all industry have enhanced tools and capabilities built around improving the new introduction product practices, processes and tools. We have found that leaders in the At Kalypso, we an suggest innovation results transformation approach, by supported leading for Innovation Leading Practices New Three . First Pass Design Success improve the quality of their designs, leading to dramatically collaboration and innovation teams, customers, and the market. Executives on current information from engineering teams need to make quick decisions based Senior managers in development and NPI to respond to an evolving industry landscape. are met, and changes are made quickly enough requirements customer correctly, allocated are that both the monetary and human resources and future projects to be launched -ensures from perspectives two -current resource load execution. Looking at the development pipeline projectsNPI in all phases from ideation to semiconductor companies have visibility into have to do more with less. Executives at leading constantly companies resources, semiconductor With expanding product portfolios and limited Introductions 2 margins. product increased development costs, faster time-to-market, and higher first pass design success, lower overall . Efficient New Product 6 VIEWPOINTS ON INNOVATION Comprehensive Innovation Management for Semiconductor Firms companies can quickly adapt to natural semiconductor Leading introductions. robust manufacturing plan for new product testing demands require aflexible and technology, packaging technology, and Continuing wafer in process advancements Flexibility 3 tools. portfolio information available through collaborative makers have comprehensive and current minimized. This can only happen when decision being developed while organizational waste is data ensures that the right products are This alignment of resources to strategy and improvements. quality teams further engineering to enable product data should be easily accessed for quality and quality Detailed benchmarks. reliability and assess the readiness of product development available for executives to review in order to and technology reliability data should also be processes and success rates. Summary product improve new product selection and refineNPI from prior product development projects to past projects, and should use benchmarks also need traceability into both future and .

Improved Manufacturing Manufacturing Improved destroyed. Some of these companies were completely or wafer fabrication partially plants Several large semiconductor companies had assembly, suppliers component and testing, final manufacturing, wafer semiconductor for in Japan severely disrupted the supply chain 2011The tsunami Tohoku and earthquake prepared. not can wreak havoc on companies that are changes, and supply chain disruptions that disasters, regulatory changes, labor cost files/FINAL_JAPAN_spreadsheet.pdf 3 custom systems and manual processes. comprehensive and data, management of global collaboration, asingle source of product flexibility requires tools and processes to enable supply to meet customer demand. This kind of to quickly reallocate capacity and maintain criteria able qualification were customer their into incorporated already plan manufacturing The companies that had aflexible factories were eventually reopened. damaged and qualified were equipment deadlines were missed as new factories and customer orders. Customer shipments and manufacturing locations and suppliers to fill months while they scrambled to qualify new unable to meet customer demand for http://www.semi.org/en/sites/semi.org/files/

3 . 7 VIEWPOINTS ON INNOVATION Comprehensive Innovation Management for Semiconductor Firms Innovation Transformation Results Tools and Drive Processes Enhanced 2: Figure flexibility. manufacturing and introductions, product success, efficient design PDM and placing more emphasis on first pass transformation from comes moving beyond of the industry, true innovation results complexities and challenges new the given shop orders, and bill of materials. However, single, centralized data record for part numbers, semiconductor industry. These tools provided a to be sufficient to drive innovation in the on managing the product data record used and capabilities. Basic tools PLM/PDM focused companies must adopt new enhanced tools semiconductor management capabilities, move towards more comprehensive innovation In order to support these leading practices and Leading Practices Support to Enhanced Tools Capabilities and

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8 VIEWPOINTS ON INNOVATION Comprehensive Innovation Management for Semiconductor Firms processes and launch programs, as well as development management for product Capabilities Strategic Framework Capabilities PLM Record Product Development 3Semiconductor Figure ofset PLM capabilities throughout the innovation shown process, in Figure 3below. record beyond goes basic data product management capabilities abroad and supports include bill numbers, part of materials, and shop The development orders. product widely adopted tools basic PLM/PDM for data product management that systems chain processes throughout the development process. Semiconductor companies have to strategic support design, data management, development, software and supply capability The first is an enhanced development product record and technical infrastructure The Development Product Record So Design Capab Componen Design Co & Qu Design ft ware Re Management alit quiremen Produc Produc D Wo y ll evelo As t/ abor rk Materi su t benc t Po ili St ra pmen atio ts ti ra nc rt es h a t e n egy and foli ls Management t o Management enable program enable Enhanced Capabilities and Tools to Support Leading Practices Ro admaps Spec Managmen So ft As BO ifi ware set ca Da MC ti En on ta Ma Code Founda gine t s Te Id St chni er eation & Re ra nagement in Fa E-te sour As te g ChangeManagement Pa ti ca b/ sembly & gi onfigur on ckagin Foundr st l In ce Compl c Capab Mgmt al Id Management fr Capab ea Management as g ation Managmen Ca ia y tr nce &Reg uc p ili within asingle PLM solution to address these and ideation processes. This can either be done mapping, and support for idea management solutions enable product and technology road advanced management. More portfolio product abili ti ili ture es Qu ti Probe &Te Reliabili es Prog ti alifi es ulato ra ca ty ms ti t ry

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li ti es 9 VIEWPOINTS ON INNOVATION Comprehensive Innovation Management for Semiconductor Firms to aproduct and manage changes to that used to logically link all information related functionality for this product record can be semiconductor product record. The PLM system and this comprises the main seen as the foundation for an effective Capabilities Management Data well as improve the quality of the IP/design. reduce time to market and design timelines as drastically can This groups. organizations or if that originates IP from various cross-functional reusable owners IP to support the design, even relationshipsthe the linkages to enable and access to the correct version of and IP builds that may be re-used in adesign. PLM facilitates engineer to quickly gain access to existing IP manage also IP enables adesign manager or to technology. capabilities Leveraging PLM protection of purchased and invented and re-use both management enables IP platforms. EDA/CAD across form digital cross-functional teams to work together in dispersed, geographically collaboration enables the development process. The design throughout changes linkages and the record of system to features and design teams, providing a a user to link customer requirements in the allow will capabilities design The requirements. product specific of decomposition to the extend with basic customer needs definition and Capabilities Design solution. Management) Pipeline and (Portfolio portfolio needs or awith amore specialized PPM of aPLM solution start Enhanced Capabilities and Tools to Support Leading Practices are often integral, but often omitted, component way to manage source code, which is an Capabilities Software tied to critical processes and tasks. plans, and quality inspections that are production schedules, test reports, sourcing definitions, design specifications, technical and suppliers. It includes requirements, partners, employees, chain customers, of version of the truth across the global value information over time, providing asingle development process and an important part of Supply Chain Capabilities be corrected via the software stack. vice versa. Today, many bugs IC or issues can in the design IC that impact the software, and around how to control changes or requirements commonality, intersection points, or guidance financial impact when companies do not have of and IC software. This is critical given the PLM is avehicle for bridging the disciplines two issues identified during testing or in production. a much more powerful way to resolve design them offers solution PLM their management in find that integrating bug tracking and issue that embracecompanies practices leading Additionally, semiconductor many demands. meet the customer needs and the profitability the versioning and revision control required to of the hardware IC with the software, and integration requires This kit. reference design a through firmware or as embedded solutions software have now companies semiconductor of acomprehensive PLM solution. Many give companies a are integral to 10 VIEWPOINTS ON INNOVATION Comprehensive Innovation Management for Semiconductor Firms capabilities that PLM tools can offer. cannot take full advantage of the innovative companies semiconductor priorities, new and through changing business environments processes built around maintaining these tools is amust. Without intelligent business and evolving and expanding PLM capabilities to maintaining the development product record acquisitions and divestures, more due diligence installation. firms As grow and change through innovation one-time a than rather initiative tools must be viewed as atransformational The development product record and PLM time. over integrates capabilities new additional available platform, and create aroadmap that to definestrategy a based on a commercially the best approach to aPLM implementation is all at once. Rather, most companies find that implemented never almost are components in acomprehensive PLM solution, these Given the varied facets of each component specifications. product existing to changes and an efficient way to communicate timely of collaborating on new product launches and test engineering teams need asecure way subcontractors means that the design, product, functions at PAT (Probe, Assembly &Test) the backend operations of test and assembly and operations foundry Outsourcing system. almost always be considered amulti-enterprise it relates to the semiconductor industry, should as particularly comprehensive PLM, a solution. Enhanced Capabilities and Tools to Support Leading Practices repository and adatabase client with includingin-house asimple spreadsheet they were using developed systems record.product Like many companies, to implement PLM with adevelopment a transformational initiative, choosing company A STUDYCASE tool adaption. tool PLM and development record product order requirements aresult as of their time reduction in validations of change in development and costs a50% cycle This company has a15% seen reduction for all and product development data. There is asinglepartners. source of truth and manufacturingcontractors, with all external suppliers, foundries, integrates and teams, development that includes all groups product and now have arobust enterprise solution comprehensive PLM tools and they dataProduct was migrated to new manufacturing partners. suppliers, foundries, contractors, and efficiently collaborate with external record,product they had no way to tool or process to manage the a web interface. With no standardized $2.5B fabless$2.5B semiconductor recently embraced PLM as

11 VIEWPOINTS ON INNOVATION Comprehensive Innovation Management for Semiconductor Firms • • • success innovation make aclosed loop cycle that promotes business strategy. Three processes align new investments product with PPM tools help semiconductor companies and access to the right data. transparency pipeline with happen to business strategy, and this can only must be able to tie development work To drive growth, leadership teams are working on winning or losing projects. market, and they won’t know if their teams be confident that products will win in the can’t companies potential projects, these and the expected return and ranking of a clear picture of innovation investments “Am Ibuilding the right things?” Without right?” They should actually ask themselves, ask themselves, “Am Ibuilding things process. Semiconductor companies often to drive the new product development innovation strategy with business strategy use of PPM process and tools to align The second enhanced capability is the Management Pipeline & Portfolio and reaction to the front end of innovation Product Portfolio Management links market need projects. development enables strategy ensures Management that Portfolio Project promising with ideas. pipeline the Early Phase Portfolio Management fills (See Figure 4). Figure (See Enhanced Capabilities and Tools to Support Leading Practices potential success. with the projects that have the highest market success to efficiently link resources and requirements, proposals, ideas, product updates. These tools allow executives to track resources allocations, and regular data intelligent plans, investment informed execution, phase-gate scalable provide help companies have processes and tools that into critical projects. Leading semiconductor mix, efficiently reuseIP, and allocate resources to make informed decisions on investment into development activities which allows them Companies that embrace PPM gain visibility Management Portfolio Phase Early 4 Figure INNOVATI RE ONS WA , G T OV OF E

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E L F B L I E X 12 VIEWPOINTS ON INNOVATION Comprehensive Innovation Management for Semiconductor Firms project phase review efficiency. time, and a30% improvement in 20% improvement in NPI release Thisprojects. company realized a visibility to company priorities and increased and resources innovation deploymentis better of limited customer priorities. The result and initiatives strategy corporate areprojects now aligned to all decision makers. Development through adefined process visible to or link to strategy are now approved previously had no executive approval developmentprocess, that projects portfolio pipelinephase-gate supporting solution with aclear With new PPM processes and a the of needs their customers. the strategy of the company or of how those fit projects into and funding regardless for projects, managers would resources get often chain. outspoken The most middle no ownership or clear decision management was splintered with development and pipeline Product decisions. portfolio struggling with poor new product companysemiconductor A STUDYCASE $1B division of aglobal fabless Enhanced Capabilities and Tools to Support Leading Practices was was the foundation for successful product development of these technologies as Transparency into the software. and packaging roadmaps, and test technologies fab manufacturing nodes, assembly and on enabling technologies, such as wafer $53 Billion 2012, spent industry semiconductor the technologies. enabling manage PPM tools also help companies semiconductor effective The most 4 to match their product strategy. plan merger and acquisitions or divestitures the monetary impact of product lines and PPM tools help executives value and appraise of certain product lines for strategic reasons. additional product lines, or divest themselves determine if they need to develop or acquire must be able to appraise product lines and addition,In semiconductor companies products to be developed in the pipeline. development is critical in enabling the right Source: IC Insights IC Source: 4 on research and development In In

13 VIEWPOINTS ON INNOVATION Comprehensive Innovation Management for Semiconductor Firms • • • • • • • management: requirements With to get higher quality designs out the door faster. and traceable design environment, and are able a createvalidation, collaborative verification and to centrally management tool design, manage requirements a use that Companies performance. and reliability for optimized design meets customer requirements, and is to ensure comprehensive together that the environments, teams, and locations to work these of all management enables requirements disparate tools and engineering teams. Design using each environments, development and forces companies to create multiple design Increasingfor complexity development. management requirements customer called management, sometimes requirements design is capability required third The Management Requirements enable cross functional decision making decision functional cross enable Integrated data and process management can and validation comprisingtest verification physical and simulation emulation, across can enabled be for robust information gathering Comprehensive Design of Experiments (DOE) requirements customer Design outputs are verified to end- are verified and optimized input parameters Interdependent are collectively managed Interdependent modules and processes when developed by multiple teams &tools Complex designs are easily managed, even into asingle platform Disparate tool outputs are integrated Enhanced Capabilities and Tools to Support Leading Practices optimize their design process around them. parameters and allow global design teams to Monte Carlo simulations can identify critical Early visibility into design parameters and quality. and manufacturability, yield, optimize to determine what can be modified to parameters can be modeled and simulated against requirements, the input and process When the entire design flow can be managed manufacturability, quality, and testability. and quality, manufacturability, those outputs can be designed for optimal design centers, or various design revisions - global different outputs, and platforms design - even if those inputs come from disparate inputs multiple design on based outputs critical performance and yield. If designers can model improving improve outputs, customer collaboratively to teams design allowing requirements, customer various parameters management tool can simulate the impact of Figure 5shows how an enhanced requirements Simulation 5 Output Figure systems can be modeled simultaneously. This is only possible if all outputs from all OUTPUT INPUTS SO

INPUTS UTPUTS 14 VIEWPOINTS ON INNOVATION Comprehensive Innovation Management for Semiconductor Firms 5 Ranges Improvement 6Innovation Figure cycle throughout development their are realizing through an integrated approach average improvement the of that companies and quality metrics. substantial improvements in schedule, cost, requirements management have seen and pipeline management, and customer development record, product portfolio the full innovation including process, the for solutions and capabilities managed Leading companies that implement Achieved Benefits Key Design/Product Quality Design/Product Savings Cost Manufacturing Manufacturing Schedules Manufacturing and Product Saved Time Engineering Design IP Re-use IP Productivity Improvements Productivity IMPACT BUSINESS Multi-site Design Projects Design Multi-site Source: Gantry Group Study Group Gantry Source: ......

AVERAGE %IMPROVEMENT Figure 6shows the ranges ...... 5 . 40-45% 40-45% 45-50% 30-35% 20-25% 20-25% 70-75%

These enhanced tools include acomprehensive process,NPI and flexible manufacturing plans. achieve first pass design success, an efficient companies are adopting enhanced tools to help to drive innovation in the future. Leading processes being used today are not sufficient innovation challenges, and the tools and facing real are companies Semiconductor innovation transformation. results tools is the firststep in the future success of their Adopting these leading practices and supporting innovation successes is the best way to start. builds capabilities with the right tools based on thatplan incrementally A smart deficiencies. they can then formulate aplan to correct those companies know what their deficiencies are Once management tools. requirements pipeline management tools, and customer development product record, portfolio and current around of the capabilities assessment We recommend acomprehensive and honest offerings and growth in the marketplace. in the market as judged by their product process, leading companies are staying ahead and process built around the full innovation requirements management tools. With tools pipeline management tools, and customer development product record, portfolio and 15 VIEWPOINTS ON INNOVATION Comprehensive Innovation Management for Semiconductor Firms Follow Kalypso on Twitter to deliver better results from innovation. For more information, visit Kalypso is aglobal innovation consulting firm. We workwith organizations and innovation. can He be reached at lifecycle management (PLM), portfolio and pipeline management (P&PM), strategy and high tech practice. works He with Kalypso clients on solutions in product high tech industries to Kalypso clients. is He amanager in the semiconductor Bedwell Devin industries. can He be reached at pharmaceutical and devices medical semiconductor, electronics, including the Property (IP) Management practice, supporting clients in high technology Joe Dury leads both Kalypso’s Semiconductor practice and Intellectual brings over 15 years of experience in the semiconductor and @KalypsoLP and on Facebook at [email protected] [email protected] Facebook.com/KalypsoLP kalypso.com

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