Semiconductor Industry Conference
October 15-17, 1984 Hotel Del Coronado P^->il a San Diego, California o 2 r »—oh £:i: I Pui 13 m CD o 1290 Ridder Park Drive San Jose, California 95131 0 (408) 971-9000 3 Telex: 171973 o u < < Sales/Service offices: CD
UNITED KINGDOM GERMANY DATAQUEST UK Limited DATAQUEST GmbH 144/146 New Bond Street In der Schneithohl 17 r London WIY 9FD D-6242 Kronberg 2 United Kingdom West Germany (01) 409-1427 (06173) 6921 Telex: 266195 Telex: 410939
FRANCE JAPAN DATAQUEST SARL DATAQUEST Japan, Ltd. 41, rue Ybry Azabu Heights, Suite 711 92522 Neuilly-sur-Seine Cedex 1-5-10, Roppongi, Minato-ku France Tokyo 106, Japan (01) 758-1240 (03) 582-1441 Tfelex: 630842 Telex: J32768
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© 1984 Dataquest Incorporated • CX^^:^#a Dataquest
1984 SEMICONDUCTOR INDUSTRY CONFERENCE October 14-17, 1984 Hotel Del Coronado San Diego, California SUNDAY, October 14 3:00 p.m. to 7:00 p.m. Registration Registration Area 8:00 p.m. to 9:30 p.m. Cocktails Garden Patio
MONDAY, October 15 7:30 a.m. Buffet Breakfast Ballroom 7:30 a.m. Registration Continues Grand Hall Foyer 9:00 a.m. Welcome Regent Empress Room Howard Z. Bogert Vice President Dataquest Incorporated 9:30 a.m. Semiconductor Outlook—Soft Landing or Hard Regent Empress Room Frederick L. Zieber Senior Vice President Dataquest incorporated 10:00 a.m. The Expanding Universe of Semiconductors Regent Empress Room Chuck Thompson Vice President Director, World Wide IVIarketing l^otorola Semiconductor Sector 10:30 a.m. Coffee Break Regent Empress Room 11:00 a.m. 1984: Before and Beyond Regent Empress Room Jim Riley Senior Vice President Dataquest Incorporated 11:30 a.m. Bipolar Fights Back Regent Empress Room John C. East Vice President Bipolar Division Advanced l^icro Devices 12:15 p.m. Lunch Ballroom 1:45 p.m. Financial Analyst's Session Stuart Room (Presentations by Pru-Bache Staff and Industry Executives) Mini-Conference Sessions (Presentations by Dataquest StafO CAD/CAM and ASICs Regent Empress Room Memory Hanover Room Equipment and Technotogy Windsor Complex 3:00 p.m. Financial Analyst's Session Stuart Room (Presentations by Pru-Bache Staff and Industry Executives) Mini-Conference Sessions (Presentations by Dataquest Staff) Geographic li^nds Windsor Complex Microprocessors Oxford Room User Workshop Regent Empress Room 6:00 p.m. Cocktails Promenade Deck 7:00 p.m. Dinner Ballroom 8:30 p.m. Dinner Speaker Ballroom Economic Outlook—What Will The Election's Impact Be? A. Gary Shilling President A. Gary Shilling and Co., Inc. 9:30 p.m. Informal Discussion and Hosted Refreshments Ballroom (over)
Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, GA 95131 / (408) 971-9000 / Telex 171973 TUESDAY, October 16 7:45 a.m. Buffet Breakfast Ballroom 8:30 a.m. Pervasiveness—The Perspective Revisited Regent Empress Room Charles H. Phipps Vice President, Semiconductor Group Manager, Market Development Texas Instruments Incorporated 9:00 a.m. Systems Design At The Chip Level Regent Empress Room Doug Ritchie Vice President Consumer Specific Products National Semiconductor Corporation 9:30 a.m. Distribution, A New Era Regent Empress Room John Abram Executive Vice President Arrow Electronics 10:00 a.m. Coffee Break Regent Empress Room 10:30 a.m. Servicing High-Performance Systems Designers Regent Empress Room Roger Smullen President and Chief Executive Officer Applied Micro Circuits Corporation 11:00 a.m. Proliferation of Products and Systems in Japan Regent Empress Room Jerry Crowley President and Chief Executive Officer Oki Semiconductor 11:30 a.m. ASICs Come of Age Regent Empress Room Henri Jarrat President and Chief Operating Officer VLSI Technology 12:15 p.m. Lunch Baih lom 1:45 p.m. Applications, The Fuel of Pervasiveness Regent Empress Room Ken McKenzie Associate Director, Semiconductor Group Dataquest Incorporated 2:15 p.m. Highly Integrated Systems Regent Empress Room Jon Cornell Senior Vice President and Sector Executive Harris Semiconductor 2:45 p.m. Fast CMOS: Key to VLSI Pervasiveness Regent Empress Room T. J. Rodgers President Cypress Semiconductor 3:15 p.m. Telecommunications Impact of Semiconductors .Regent Empress Room Marisa Bellisario Managing Director and Chief Executive Officer Italtel Group 4:00 p.m. Industry Athletic Challenge 10 km Course Once again Lane Mason of the SIS staff will host this industry's annual running event. Sign-ups at the registration desk. 6:00 p.m. Cocktails Garden Patio 7:00 p.m. Dinner—Western Barbeque Garden Patio 9:00 p.m. Informal Discussion and Hosted Refreshments Garden Patio
continued on next pag # WEDNESDAY, October 17 7:45 a.m. Buffet Brealdast Ballroom 8:30 a.m. Ideas and the Proliferation of Technology Regent Empress Room Professor Everett M. Rogers Institute for Communications Stanford University Judy Larsen, Ph.D. President Cognos Associates 9:00 a.m. Europe—A Technological Backwater? Regent Empress Room Malcolm Penn Director Dataquest U.K. Ltd. 9:30 a.m. Semiconductor Equipment: Key to Pervasiveness Regent Empress Room Bill Bottoms President Semiconductor Equipment Division Varian Associates 10:00 a.m. Coffee Break Regent Empress Room 10:30 a.m. The Impact of Workstation Proliferation Regent Empress Room Aryeh Finegold President Daisy Systems 11:00 a.m. Service, Software, and Silicon Regent Empress Room Wilfred J. Corrigan President and Chief Executive Officer LSI Logic 11:30 a.m. LSI Growth: 1985-1995 Regent Empress Room Jack Carsten Senior Vice President and General Manager Intel Corporation 12:00 noon Conference Conclusion Regent Empress Room 12:30 p.m. Buffet Luncheon Ballroom Semiconductor Industry Service
Howard Z. Bogert Mr. Bogert is a Vice President of DATAOUEST and Director of its Semiconductor Industry Service. During his 23 years in electronics, he has held management positions in market research, product planning, long-range planning, research and development, and engineering. Most recently, he was a Divisional Vice President of Engineering for Rockwell International. Earlier, he was Director of MOS Development for Siliconix, and Manager of Design for AMI. Mr. Bogert holds a B.S. degree In Electrical Engineering from Stanford University, an M.S. degree from the University of Maryland, and an M.B.A. degree from the University of Santa Clara.
Kenneth V. McKenzie Mr. McKenzie is Associate Director of DATAQUEST's Semiconductor Industry Service. He is responsible for all research activities on semiconductors and related publications. His other duties include internal data processing coordination for the Semiconductor Industry Service and research into specific end-user markets. During Mr, McKenzie's 14 years in the electronics industry, he has held management positions in both design engineering and marketing. His most recent position was as Marketing Manager at ZIlog, Inc. Prior to that, Mr. McKenzie was Marketing Manager for 8-blt microprocessors at Intel Corporation.
James F. Riley Mr. Riley is a Senior Vice President of DATAQUEST. Previously, he was President of SIgnetics, a subsidiary of Corning Glass Works Incorporated, and of Intersil Incorporated. He has 20 years of experience In the semiconductor Industry, the last nine of which have been with DATAQUEST. Mr. Riley has considerable experience In corporate planning, marketing, and general management. Mr. Riley received a B;S. degree in Business Administration from Lehigh University, where he was elected to Phi Beta Kappa.
Frederick L. Zieber Mr. Zieber is a Senior Vice President of DATAQUEST, a member of Its Executive Committee, and the Director of Its Semiconductor Group. The Semiconductor Group Includes the Semiconductor Industry Service, the European Semiconductor Industry Service, the Japanese Semiconductor Industry Service, and the Semiconductor User Information Service Mr. Zieber has 12 years of experience in market research and consulting to the semiconductor industry, and previously worked in the semiconductor industry for nine years. He has experience in processing, designing, manufacturing, and testing integrated circuits and discrete devices. He holds two patents in semiconductor processing. Mr. Zieber has a B.S. degree In Electrical Engineering from Stanford University and an M.B.A. degree from the Graduate School of Business at Stanford University.
Lane iVIason Mr. Mason is a Senior Industry Analyst for DATAQUEST's Semiconductor Industry Service. He has been with DATAQUEST for five years, during which time he has gained Increased responsibility for coverage of MOS memory markets and company analyses, as well as general research support. Mr. Mason has worked for Hughes Aircraft and Raychem Corporation. He has a B.S. degree in Physics from the California Institute of Technology, and has done graduate work at U.C.L.A. in the Department of Economics.
(over) Robert E. IVIcGeary Mr. McGeary is a Senior Industry Analyst for DATAQUEST's Semiconductor Industry Service. Prior to joining DATAQUEST, he was Product Marketing Manager at Applied Materials, Inc., where he managed the worldwide product marketing activities for the Dry Etch Division and managed product support for European dry etch business. Previously, he worked as Product Marketing Manager at GCA Corporation/IC Systems Group, as Accelerator Physicist at Lawrence Berkeley Laboratories, as a Nuclear Engineer at Mare Island Naval Shipyard, and as a Reactor Operator at the University of Washington. He received B.S. degrees in Physics and Mathematics from the University of Washington and an M.B.A. degree from St. Mary's College.
Andy Prophet Mr. Prophet is a Senior Industry Analyst for DATAQUEST's Semiconductor Industry Service. He is responsible for analyzing the application-specific market environment and future technology trends. Prior to joining DATAQUEST, he was Market Segment Manager for Synertek, Inc., and was responsible for major account marketing strategies for its customers. Previously, Mr. Prophet was CAD Director, Product Line Manager, and Circuit Design Manager at American Microsystems, Inc., and Teledyne. He has a B.S.E.E. degree from Illinois Institute of Technology, an M.S.E.E. degree from San Jose State University, and an M.B.A. degree from the University of Santa Clara.
IVIel Thomsen Mr. Thomsen is a Senior Industry Analyst for DATAQUEST's Semiconductor Industry Service. He is responsible for analyzing the market environment and future technology trends for microprocessors, microperipherals, and microcontrollers. Prior to joining DATAQUEST, he was Product Marketing Manager for Aehr Test Systems and was responsible for marketing dynamic burn-in systems used for reliability testing of digital integrated circuits. Mr. Thomsen has also held positions as a Product Marketing Manager and as Field Applications Engineer at Zilog, Inc., as Senior Design Engineer at Heathkit, and as Design Engineer at Magnavox, Inc., and at Sylvania Systems Division. He has a B.S.E.E. degree from the University of Michigan and an M.S.E.E. degree from Purdue University.
Gall Kelton-Fogg Ms. Kelton-Fogg is an Industry Analyst for DATAQUEST's Semiconductor Industry Service. Her area of responsibility is the end-use segmentation of semiconductor consumption, including application, geographical, and distribution analysis. Ms. Kelton-Fogg has worked in technology assessment, market research, and consulting for five years. Prior to joining DATAQUEST, she was with SRI International and the University of California, San Francisco. She has B.S. and M.S. degrees in Scientific Journalism from the University of Wisconsin-Madison.
Thomas E. Holland Mr. Holland is a Research Analyst for DATAQUEST's Semiconductor Industry Service. For the past three years, Mr. Holland has been active in research in the linear, discrete, and optoelectronic semiconductor markets. Prior to joining DATAQUEST, he was Director of Research at Technical Operations (West), where he directed company- and DOD-sponsored research and development. He also served as a consultant to the Director of Defense Research and Engineering on classified DOD programs. As a staff physicist at the Los Alamos Scientific Laboratory, he conducted basic research in detonation and shock phenomenology. He received B.S. and M.S. degrees in Mathematics and Physics from the University of Alabama. Barbara Van Ms. Van is a Research Analyst for DATAQUEST's Semiconductor Industry Service. She is responsible for computer data bases in semiconductor consumption, market share analysis, and company financial analysis. Prior to joining DATAQUEST, she worked in a research capacity for a marketing research firm. Ms. Van has a B.A. degree in Commerce from the University of Santa Clara.
Arden DeVincenzi Ms. DeVincenzi is a Research Analyst for DATAQUEST's Semiconductor Industry Service. Her responsibilities include research and analysis of the semiconductor industry with respect to equipment and materials. Prior to joining DATAQUEST, she worked in a computer systems marketing group where she maintained a nationwide distribution network, developed and coordinated marketing programs, and provided technical assistance on IBM, NCR, and Honeywell systems Ms. DeVincenzi received a B.S. degree in Marketing and Finance from California Polytechnic State University, San Luis Obispo
Katy Guill Ms. Guill is a Research Associate with the Semiconductor Group. While at DATAQUEST, she has worked on projects including worldwide semiconductor forecasts, economic models, and development of computer data bases. Currently, she assists Mr. Mason in the memory market area and provides general research support, Ms. Guill received a B.S. degree in Business Administration from California Polytechnic State University, San Luis Obispo.
Janet M. Rey Ms. Rey is a Research Associate for DATAQUEST's Semiconductor Industry Service. She assists in researching microprocessors, microperipherals, and microcontrollers. She has worked for Intel Corporation and Atari, Incorporated. Ms Rey received a B.S. degree in Business Administration from San Jose State University.
Anthea C. Stratigos Ms. Stratigos is a Research Associate for DATAQUEST's Semiconductor Industry Service. Before joining DATAQUEST, she was an Information Developer for IBM Corporation, where she documented and supported software development and products for IBM's mainframe systems Ms Stratigo has a B.S. degree in Communication from Stanford University ^wm Dataquest 1290 Ridder Park Drive / San Jose, CA 95131 (408) 971-9000 Telex: 171973 (:::a Dataquest
Dataquest
SEMICONDUCTOR INDUSTRY CONFERENCE EVALUATION QUESTIONNAIRE San Diego, California October 15-17, 1984
Thank you for attending our Semiconductor Industry Conference. Would you please assist us in planning our next conference by completing and returning this questionnaire?
1. Please rate each presentation on a scale of 1 to 10 (where 10 is highest in terms of your approval):
CONTENT DELIVERY COMMENTS (1 to 10) (1 to 10) (Use reverse side if necessary)
Zleber, Industry Outlook Thompson, Expanding Universe Riley, Before and Beyond East, Bipolar Ptiipps, Pervasiveness Perspective Ritchie, Systems Chip Design Abram, A New Era Smullen, Servicing Systems Crowley, Proliferation in Japan Jarrat, ASICs Come of Age McKenzie, Applications Cornell, Integrated Systems Rodgers, Fast CMOS BellisarIo, Telecommunications Rogers and Larsen, Ideas Penn, European Backwater Bottoms, Equipment Pervasiveness Finegold, Workstation Impact Corrigan, Service and Silicon Carsten, LSI Growth
2. Mini-conference Evaluation. Please rate the meetings you attended on a scale of 1 to 10 (where 10 is highest in terms of your approval):
CONTENT DELIVERY COMMENTS (1 to 10) (1 to 10) (Use reverse side if necessary)
CAD/CAM and ASIC Equipment and Technology Memory Microprocessors
(over)
Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 2. Mini-conference Evaluation (Continued).
CONTENT DELIVERY COMMENTS Geographic Trends User Worl 3. Would you like more mini-conferences at next year's SIS Conference? Yes No 4. At our next industry conference, would you prefer more or less of the following types of speakers? MORE LESS DATAOUEST Speakers Speakers from Large Semiconductor Companies Speakers from Small Semiconductor Companies Speakers from Semiconductor Users Speakers from Semiconductor Equipment and Materials Suppliers Speakers from Distributors Speakers from the Financial Community 5. Please suggest other types of speakers you might like to hear. 6. How would you rate the conference facilities (1 to 10)? Location Guest Rooms Meals Meeting Rooms Recreational Facilities 7. Topics that would be of interest to you for the next Semiconductor conference: 8. Comments: 9. Your primary interest in the semiconductor industry is as a: Manufacturer Service Vendor User Financial Analyst Other (Please Specify) Name and Company (optional) Dataquest SEMICONDUCTOR INDUSTRY CONFERENCE October 15 through 17, 1984 San Diego, California List of Attendees Taizo Abe Shinko Electric Industries Company, Ltd. John Abram Arrow Electronics Irv Abzug IBM Corporation Harriet Abzug Jet Advani IBM Corporation Edgar Anderson Messerschmitt-Boelkow-Blohm GmbH Shelley Anderson Bank of the West Giuseppe Anerdi Fiat Semelco Alex Au Vitelic Corporation Erick Ayers Motorola Inc Willi Bacher Dimos AG Bob Ball SAI-SEMI Specialists Juan Bardina Atcor Corporation Patricia Bardina lann Barron INMOS Corporation John Baskett Panatech Semiconductor Larry Baxter Dexter Corporation-Hysol Division Pete Bejarano Trilogy Systems Terry Bell Micro Component Technology Dr. Albert Belle Isle Custom Silicon, Inc. Marisa Bellisario Italtel Telematica Carol Bender Dataquest Incorporated Giarmi Bertolini Italtel Telematica Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Max Bertolino-Zan Ing. C. Olivetti &C., S.p.A. Prakash Bhalerao Digital Equipment Corporation Jacques Biais Rhone-Poulenc Robert Bickers Atcor Corporation John Birkner Monolithic Memories Anthony Blenk Mutual of New York Randy Block Storm, Block & Associates Abe Bluestone Teradyne, Inc. Betty Bluford Dataquest Incorporated Howard Bogert Dataquest Incorporated Carol Bogert Dmitry Bosky Security Pacific Capital Corporation G. William Bothwel1 Northern Telecom, Ltd Patricia Bothwel1 Northern Telecom, Ltd Timothy Bottoms Bank of America Wi 11 iam Bottoms Varian Associates Thomas Bowman Applied Materials. Inc. Ken Brabitz Digital Equipment Corporation Del Brand ITT Semiconductors Julie Brand Kathy Braun Western Digital Corporation Holger Bree Messerschmi tt-Boelkow-Blohm GmbH Alan Brigish Videolog George Bristol Prudential-Bache Securities Donald Brooks Fairchild Camera & Instrument Teresa Brooks Corporation Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 C. "Kip" Brown MOS Electronics Corporation (MOSEL) Neill Brownstein Bessemer Venture Partners Stan Bruederle Dataquest Incorporated Joan Bui lock Indium Corporation' of America Robert Bullock Indium Corporation of America Ron Butler Teradyne, Inc. Josh Camba Interlek, Inc. Miriam Camba Franco Carnevali Telettra S.p A. Jack Carsten Intel Corporation Wade Chang ERSO/ITRI Dennis Chant Plessey Solid State Sen Chen Air Products Adam Chowaniec Commodore International, Ltd. Jack Christy Mitsubishi Electric Corporation Lee Chu Mostek Corporation Vic Chuidian Interlek, Inc. Joanne Chuidian E. Dennis Col bourne Northern Telecom Electronics, Ltd, Peyton Cole Fairchild Camera & Instrument Corporat ion Tom Col 1 ins Tandem Computers, Inc. Susan Col 1 ins Perry Constantine LSI Logic Corporation Tito Conti Ing. C. Olivetti & C , S.p.A. Jon Cornel 1 Harris Semiconductor Mary Cornel 1 Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Wilford Corrigan LSI Logic Corporation Sigrun Corrigan Gary Cowles Datapoint Corporation Patricia Cox Dataquest Incorporated Wi 11iam Creamer Bank of America Herbert Criscito RCA Corporation Jerry Crowley Oki Semiconductor Nancie Crowley Bill Cruizkshank Shinko Electric America Donna Cruizkshank John Cummings Electric Power Research Institute Joseph Curry Semiconductor Microelectronics Internalional A. C. D'Augustine INMOS Corporation Colman Daniel Hami1ton/Avnet Peter Danna Philip A. Hunt Chemical Corporation Lorraine Danna Edward Day Motorola, Inc. Ardan DeVincenzi Dataquest Incorporated Michael Denick IBM Corporal ion Edward Desmond IBM Corporation Mark Desrosiers IBM Corporal ion Bea Destin Dataquest Incorporated Daniel Devine Temescal Tom Dexel Dataquest Incorporated Stephen Dexter Sears Investment Management Company Dr. Vir Dhaka Micromos Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Henry Dieselman Perkin-Elmer Corporation James Diller Sierra Semiconductor Corporation June Diller John Dishman AT&T Bell Laboratories Hubert Dohman Monsanto Electronic Material Company Martha Dohman Richard Douglas Data General Corporaton William Douglass AMP, Inc. Emi 1io Dragoni Italtel Telematica Phi 11ip Drayer Enviroiimental Processing, Inc. Richard Dressier Mostek Corporation Kevin Driscol 1 Digital Equipment Corporation Roger Dunbar Arthur Young Sc Company John East Advanced Micro Devices, Inc. Robert Eckelmann United States Department of Commerce Ola Eckholm LM Ericsson Corporation Oliver Edwards Motorola, Inc. Jeffrey Ehr1ich General Electric Company Mahmoud Elhamamsy AT&T Information Systems Mark ElIsberry Holt, Inc. Richard Engli sh Hitachi America, Ltd. Aldo Enrici AT&T Information Systems Wi11lam Everden Mullard. Ltd J im Favier Philip A Hunt Chemical Corporation Beverly Feldman Digital Equipment Corporation Aryeh Finegold Daisy Systems Corporation Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Doug Finke Intel Corporation Frank Florence Dataquest Incorporated Karen Foley Dataquest Incorporated Pete Fowler INMOS Corporation Linda Fredericks Harris Semiconductor Werner Freiesleben Wacker Siltronic Corporation Harvey Frye Eaton Corporation Brian FulImer Datapoint Corporation Orlando Gal legos Zytrex Corporation Penny Gal legos Dataquest Incorporated Antonio Garcia Interlek, Inc. Carolyn Garcia David Garni tz First National Bank of Boston Tom Get linger Prudential-Bache Securities Jerry Gibbs ZyMOS Corporation Kenneth Giles Bipolar Integrated Technology, Inc Sara Giles Bipolar Integrated Technology, Inc Marshall Gingold AT&T Bell Laboratories Gene Goebel Shipley Company, Inc J im Goldey AT&T Bell Laboratories Jeanne Goldey Bob Gonzalez Motorola, Inc Oliver Goold GBL/Goold Electronics Corporation Michael Graff Harris Corporation Milton Graimatt, III Lex Service, Inc. Alan Grebene Microlinear Corporation Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 RIdder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Rupert Grimm BA Investment Management Corporation Wendy Grossmen Monsanto Electronic Material Company Katy Guill Dataquest Incorporated Paul Gupta Inters!1, Inc. Dave Guzeman ZyMOS Corporation Sardar Haddad Mostek Corporation Bernard Hadley Stack GnbH Erick Hagmann Fairchild Camera & Instrument Corporation Iza HalIberg Dataquest Incorporated Brendan Halpin IDA Ireland S. Ham Tristar Semiconductor, Inc. Donald Hamman Teradyne, Inc. Fred Haney Investors in Industry Barbara Haney Mike Hankal Dataquest Incorporated J. Harris Acrian, Inc. Basil Harrison IBM Corporation Paul Hart Hughes Aircraft Companv Dan Hauer S-MOS Systems, Inc. John Hayn McDonnell Douglas Microelectronics John Height ley INMOS Corporation Joseph Hei tz Telic-Alcatel Tom Hendrickson VHSIC Technology Corporation Anna Henery Investors in Industry Carl Hildebrand Perkin-Elmer Corporation Gail Hildebrand Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Jay Hoag Citibank John Hodgson VHSIC Technology Corporation Bob Hoffman IBiA Corporation Adrian Hohn LTX Corporation Michael Hollabaugh International Microelectronic Products Debbie Hollabaugh Charles Holt Xerox Corporation Jennifer Hughes Ketchum Public Relations Annmarie Ihle IBM Corporal ion Elizabeth Isaacs Monsanto Electronic Material Company John Jackson Dataquest Incorporated Richard Jacobs AT&T Bell Laboratories Richard Jacobs Schweber Electronics, Inc. Henri Jarrat VLSI Teclmology, Inc. Frank Jelenko NEC Electronics USA, Inc. Bob Jenkins Motorola, Inc. Carolee Jenkins Carl Johnson .Zilog, Inc. Dwight Johnson Eastman Kodak Company Dave Jones Interlek, Inc Eric Jones Bank of the West Hisao Kanamaru Hitachi, Ltd. Bert Kehren Mostek Corporation Anthony Keig Union Carbide Corporation James Kelley NEC Electronics USA. Inc. Gail Kelton-Fogg Dataquest Incorporated Dafaquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 G. Mart Kernahan Exiiios Semiconductor Corporation Elaine Kernahan Jerry Kiachian Intersi1, Inc. Gary Kibblewhite LEX Corporation Marshall Kidd General Electric Trust Investment Charles Kimball Morgan Guaranty Trust Marilyn Kissel Signetics Corporation Richard Klein Prudentia1-Bache Securities Richard Konrad Synertek, Inc. Abe Kosakowsky SAI-SEMI Specialists Andrew Koshar Japan Electronics Bureau C. V. Kovac Rockwell International Corporation Fran Krch GTE Microcircuits Dan Krupka AT&T Bell Laboratories Robert Kuhling Calma Company Hans Kurner ESEC USA Inc. Burt Lancaster Air Products Sc Chemicals, Inc. Terry Lancaster DuPont Pension Fund Dr. Judy Larsen Cognos Associates Richard Lawry Atcor Corporation Christine Lawry George LeCrenn Hoya Corporation, Electronics Division Bob Lee Aetna Life and Casualty Dorma Lee Sang Lee Tristar Semiconductor, Inc. Een Yearp Lee Yong Lee Hyxmdai Electronics America Dataquest Incorporated, A Subsidiary of A.C Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Mike Leibowitz Quality Automation, Inc. Robert Lenz RCA Corporation Kenneth Levy KLA Instruments, Inc Gloria Levy Edward Linde IBM Corporation Bob Lipp California Devices, Inc. C. Fred Little Interconics Betsy Little Jay Litus, Jr. Toshiba America, Inc. Herschel Loomis Naval Postgraduate School Alan Louwerse ZyMOS Corporation Ron Love 1 and Department of Trade and Industry Paul Lovett Air Products & Chemicals, Inc. Anne Lovett Toby Mack National Electronic Distributors Association Azmat Maiik Mitsubishi Electronics America, Inc Joe Marcello Interiek, Inc. Betty Marcello Dieter Marenbach Western Digital Corporation Bernard Marren Western Microtechnology Harry Marshal 1 J H. Whitney & Company Randy Marshal 1 Raytheon Corporation Jaime Martin California Devices, Inc. Jim Mart in Capital Research Company Diane Martin Lane Mason Dataquest Incorporated Peter Masucci Digital Equipment Corporation Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 John Matlock S.E.H. .America Gunter Matthai Robert Bosch CtaibH Paula Matthai James McElwee Security Pacific Capital Corporation Robert McGeary Dataquest Incorporated Ken McKenzie Dataquest Incorporated Debra McKenzie Cameron McPhail Scottish Development Agency D. A. Mehta AT&T Bell Laboratories Vern Meissner Wacker Siltronic Corporation Dolores Meissner Patricia Me laugh Bank of New York John Mel gal vis IBM Corporation Arthur Midi 1i Wells Electronics, Inc Graham Mi 1ler LTX Corporation Norman Mi 1ler Microlinear Corporation Ralph Mi Her TRW, Inc. Thomas Mino AT&T Technologies, Inc. Alicia Morehouse Dataquest Incorporated Rick Morrison AT&T Technologies, Inc Jack Murphy Philip A Hiuit Chemical Corporation Satoshi Nagata Mitsui High-Tek, Inc. Thomas Nelson Union Carbide Corporation Ed Neubauer NEC Electronics USA, Inc. Jean Paul Neuville Sagem James Newcomb Dataquest Incorporated Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Chr i s Newham Fairchild Camera & Instrument Corporation Jack NiIsson Hewlett-Packard Company Gene Norreit Dataquest Incorporated Mark Norwood Intel Corporation Bill O"Byrne Honeywe11, Inc. Dan 0'Nei11 Adler & Company Mary Olsson Dataquest Incorporated Jack Ordway Vitelic Corporation Richard Orri11 IBM Corporation Drew Osterman International CMOS Technology Jean Page Dataquest Incorporated Giovanni Pagliosa Honeywell ISI, S.p.A. Robert Palmer Mostek Corporation Dennis Parker INMOS Corporation Gerald Parker IBM Corporation Michael Pawlik Fairchild Camera & Instrument Corporation Malcolm Penn Dataquest Incorporated Gill Penn Randall Peters Texas Instruments, Inc. James Peterson Silicon Systems, Inc. Richard Petritz INMOS Corporation Grace Petritz Larry Phi 11ips Lehman Management Company Charles Phipps Texas Instruments, Inc. Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Martin Plotkin Fairchild Camera & Instrument Corporation Kathryn Plumb First Interstate Bank James Poitras General Electric Company Tom Popek Zilog, Inc. Skip Powers XTAR Electronics, Inc. Nand Prasad Interlek, Inc. Walter Price Rosenberg Capital Management Andrew Procassini Hyundai Electronics America Timothy Propeck Monolithic Memories Andy Prophet Dataquest Incorporated Christine Ragoucy Dieli Gerald Ramsey AT&T Technologies, Inc. John Raszcewski I^ Corporation Paul Reagan GCA Corporation N. Damodar Reddy Modular Semiconductor, Inc. Daniel Reeves Eaton Corporation Janet Rey Dataquest Incorporated Thomas Reynolds Sierra Semiconductor Corporation Maryanne Reynolds Donald Richard Atari Corporation J im Riley Dataquest Incorporated Douglas Ritchie National Semiconductor Corporation George Robertson Interlek, Inc. Peter Roche Data General Corporaton T. J Rodgers Cypress Semiconductor Corporation Kathleen Rodgers Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Everett Rogers Stanford University Enzo Rognoni Ing. C. Olivetti & C, S.p.A. Geoff Rowett LTX Corporation Dave Royse IBM Corporation Robert Rusnack IBM Corporation Malcolm Russ Wacker Siltronic Corporation A. Graham Sadler Northern Telecom Electronics, Ltd. Frank Semnann Dataquest Incorporated Nancy Samnann Bi 11 Sams Assisted Technology Judy Sanchez Bank of America Richard Santi11i RCA Corporation Robert Santos Hewlett-Packard Company Midge Santos Edwin Sauve' First Interstate Bank Dick Schaeffer The Wall Street Journal Tom Schauf Dynamit Nobel Silicon, Inc. John Scholes Thorn-EMI John Schumacher J. C. Schumacher Company Susan Scibetta Dataquest Incorporated E. Weston Seaman IBM Corporation Betsy Seaman Frank Seestrora Pitney Bowes, Inc. Joaim Seestrom Monte Seiters Northern Telecom, Ltd. Jerry Shames Burroughs Corporation John Shea LSI Logic Corporation Flor Shea Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Alan Shepherd Ferranti Electronics Limited Edith Shepherd C. T. Shih ERSO/ITRI A. Gary Shilling A. Gary Shilling and Company, Inc. Sei Shohara Xerox Corporation Art Sidorsky standard Microsystems Corporation Robert Silco VLSI Technology, Inc. Dorothy SiIco Thoma s S i ngman Union Carbide Corporation Brian Sjolseth IBM Corporation James Smith Harris Corporation Stratton Smith Teradyne, Inc. Roger Smullen Applied Micro Circuits Corporation Moo-Youl Sohn Samsung Semiconductor & Telecommiuiicat ions Company, Ltd. Chaney Steinman Ketchum Public Relations John Stewart GCA Corporation Anthea Stratigos Dataquest Incorporated Rahul Sud Lattice Semiconductor Corporation Michael Swaluk Pitney Bowes, Inc Lynn Swaluk Frank Swiatowiec Trilogy Systems Dave Sylvester San Jose Mercury News Kimio Takemori Suwa Seiko Sha Hiroo Taniguchi Mitsubishi Electronics America. Inc Sheridan Tatsuno Dataquest Incorporated Lloyd Taylor Coiranodore International, Ltd. Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Wallace Tchon Xicor, Inc. James Tempesta Bank of America Chuck Thompson Motorola Semiconductor, Inc. Wanda Thompson Mel Thornsen Dataquest Incorporated M W. Thurlow Smith Industries Lou Tieber Interlek, Inc Jack TiIs SAI-SEMI Specialists Jim Townsend Toshiba America, Inc. Mario Tripputi Italtel Telematica Mentor Tseng ERSO/ITRI Lowel1 Turri ff Cypress Semiconductor Corporation Barbara Van Dataquest Incorporated Joe Van Poppelen National Semiconductor Corporation James Van Tassel NCR Corporation Robert Vosika Micro Component Technology W Scott Walker Hughes Aircraft Company Cassie Walker Jan Waluk Megatest Corporation Dominique Waluk James Wei Sharp Electronics Corporation Michael Weisberg Prudentlal-Bache Securities Jeff Wellington First National Bank of Boston Gunnar Wetlesen W & W Enterprises Mary Ellen Wetlesen Rick Whittington Prudential-Bache Securities Col in Wiggins Exxon Corporation Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 William Wiley First Interstate Bank Ray WiIfinger IBM Corporation Mildred Wi Ifinger Walter Willett Union Carbide Corporation Jack Wi Ison Business Week Otis Wolkins GTE Microcircuits N. Wood Lex Service, Inc. J. Michael Worfolk Lex Service, Inc. John Wunner Varian Corporation, Exitron Division K. K. Yawata NEC Electronics USA, Inc. Richard Yeung Capital Research Company Paula Yeiuig Phil Young The Hibernia Bank Cynthia Young Sam Yoxuig Exel Microelectronics, Inc. Jonathan Yu Applied Microcircuits Corporation Tony Yu United Microelectronics Corporation Aldo Zana Italtel Telematica Robert Zanotti Aerospatlale John Zeigler General Electric Company Steve Zelencik Advanced Micro Devices, Inc. Harriet Zelencik Frederick Zieber Dataquest Incorporated Libbe Zieber Bi11 Zubenko DuPont Pension Fund John Zucker Mitsubishi Electronics America, Inc. Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 (:|K\ Dataquest Dataquest SEMICONDUCTOR INDUSTRY CONFERENCE October 15 through 17, 1984 San Diego, California List of Attendees A. Gary Shilling and Company, Inc. A. Gary Shilling, President AMP, Inc William Douglass, New Business Development AT&T Bell Laboratories John Dishman, Head, Technology Planning Department Marshall Gingold, Member of Technical staff Jim Goldey, Director Jeanne Goldey Richard Jacobs, Director, VLSI Design Laboratory Dan Krupka, Department Head D. A. Mehta, Director, Silicon Processing AT&T Information Systems Mahmoud Elhamamsy, District Manager Aldo Enrici, Assistant Manager AT&T Technologies, Inc Thomas Mino, Manager, Engineering Rick Morrison, Business Systems Specialist Gerald Ramsey, Material Management Manager Acrian, Inc. J. Harris, President & Chief Executive Officer Adler & Company Dau O'Neill, Associate Advanced Micro Devices. Inc John East, Vice President, Bipolar Division Steve Zelencik, Senior Vice President Sales & Marketing Harriet Zelencik Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Aerospatiale Robert Zanotti Aetna Life and Casualty Bob Lee, Investment Officer Donna Lee Air Products & Chemicals, Inc. Sen Chen, Marketing Manager Burt Lancaster, Semiconductor Industry Manager Paul Lovett, Corporate Planner Anne Lovett Applied Materials, Inc Thomas Bowman, Director, Strategic Marketing Applied Micro Circuits Corporation Roger Smullen, President &c. Chief Executive Officer Jonathan Yu, Chief Operating Officer Arrow Electronics John Abram, Executive Vice President Arthur Yoxmg & Company Roger Dunbar, Partner Assisted Technology Bill Sams, Vice President, Marketing & Sales Atari Corporation Donald Richard, Vice President Atcor Corporation Juan Bardina, Vice President Patricia Bardina Robert Bickers, President & Chief Operating Officer Richard Lawry, Director Christine Lawry BA Investment Management Corporation Rupert GriitHn, Vice President Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Bank of America Timothy Bottoms, Group Vice President, High Technology William Creamer, Vice President, High Technology Judy Sanchez, Vice President, Corporate Banking James Tempesta, Assistant Vice President, High Technology Bank of New York Patricia Melaugh, Investment Officer Bank of the West Shelley Anderson, Vice President Eric Jones, Corporate Banking Officer Bessemer Venture Partners Neill Brownstein, Partner Bipolar Integrated Technology, Inc Kenneth Giles, Vice President of Finance Sara Giles Burroughs Corporation Jerry Shames, General Manager, CEPO Business Week Jack Wi Ison California Devices, Inc, Bob Lipp, Chief Technical Officer Jaime Martin. Strategic Marketing Manager Calma Company Robert Kuhling, Director Marketing & Market Development Capital Research Company Jim Martin, Senior Vice President Diane Martin Richard Yeung, Vice President Paula Yeung Citibank Jay Hoag, Senior Research Officer Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Cognos Associates Dr. Judy Larsen, President Commodore International, Ltd. Adam Chowaniec, Vice President, Technology Lloyd Taylor, Assistant Vice President of Technology Custom Silicon, Inc. Dr. Albert Belle Isle, President Cypress Semiconductor Corporation T. J. Rodgers, President Kathleen Rodgers Lowell Turriff, Vice President Sales & Marketing Daisy Systems Corporation Aryeh Finegold, President Data General Corporation Richard Douglas, Product Manager Peter Roche, Senior Marketing Specialist Datapoint Corporation Gary Cowles, Senior Manager, Electronic Corporate Contracts Brian Fullmer, Director, Purchasing Dataquest Incorporated Carol Bender, Marketing Support Representative Betty Bluford, Administrative Assistant Howard Bogert, Vice President & . Director, Semiconductor Industry Service Carol Bogert Stan Bruederle, Vice President Sc Director, Semiconductor User Industry Service Patricia Cox, Research Analyst Ardan DeVincenzi, Research Analyst Bea Destin, Secretary Tom Dexel, Marketing Manager Frank Florence, Marketing Manager Karen Foley, Project Manager Penny Gal legos. Research Librarian Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Dataquest Incorporated Katy Guill, Research Associate Iza Hallberg. Research Analyst Mike Hankal, Associate Director, Financial Services Program John Jackson, Marketing Manager Gail Kelton-Fogg, Industry Analyst Lane Mason, Senior Industry Analyst Robert McGeary, Senior Industry Analyst Ken McKenzie, Associate Director Debra McKenzie Alicia Morehouse, Client Care Coordinator James Newcomb, Vice President & Director, CAD/CAM Industry Service Gene Norrett, Vice President & Director, Japanese Semiconductor Industry Service Mary Olsson, Research Analyst Jean Page, Industry Analyst Malcolm Penn, Vice President & Director European Semiconductory Industry Service Gill Penn Andy Prophet, Senior Industy Analyst Janet Rey, Research Associate Jim Riley, Senior Vice President, Seminconductor Industry Service Frank Sammann, Senior Vice President, Sales Nancy Sammann Susan Scibetta, Consultant Anthea Stratigos, Research Associate Sheridan Tatsuno, Research Analyst Mel Thomsen, Senior Industry Analyst Barbara Van, Research Analyst Frederick Zieber, Senior Vice President, Semiconductor Group Libbe Zieber Department of Trade and Industry Dr Ron Love 1 and Dexter Corporation—Hysol Division Larry Baxter, International Marketing Manager Diel i Christine Ragoucy Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Digital Equipment Corporation Prakash Bhalerao, Custom Engineering Group Manager Ken Brabitz, Planning Manager, LSI Group Kevin Driscoll, Controller, Finance Manager Beverly Feldman, Product Manager Peter Masucci, Marketing Manager Dimos AG Willi Bacher, President DuPont Pension Fund Terry Lancaster, Vice President Bill Zubenko, Security Analyst Dynami t Nobel Silicon, Inc Tom Schauf, Marketing Manager ERSO/ITRI Wade Chang, Marketing Manager C. T. Shih, Design Manager Mentor Tseng, Marketing Planner ESEC USA, Inc Hans Kurner. Vice President Eastman Kodak Company Dwight Johnson, Program Manager, Electronic Design Eaton Corporation Harvey Frye, Director, Sales Administration & National Accounts Daniel Reeves, District Sales Manager, Southern California Electric Power Research Institute John Cunanings, Director, Renewable Resource Systems Department Environmental Processing, Inc Phillip Drayer, President & Chief Operating Officer Exel Microelectronics, Inc. Sam Young, Director of Marketing Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Exmos Semiconductor Corporation G. Mart Kernahan, Chairman of the Board Elaine Kernahan Exxon Corporation Colin Wiggins, Portfolio Manager Fairchild Camera & Instrument Donald Brooks, Executive Vice President Corporation Teresa Brooks Peyton Cole, Strategic Communications Manager, NAS Erick Hagmann, Strategic Marketing Manager Chris Newham, Strategic Plarming Manager, NAS Michael Pawlik, Marketing Manager Martin Plotkin, Marketing Director Ferranti Electronics Limited Alan Shepherd, Managing Director Edith Shepherd Fiat Semelco Giuseppe Anerdi, Purchasing Manager First Interstate Bank Kathryn Plumb, Assistant Vice President Edwin Sauve', Vice President Wi11iam Wiley, Vice President and Manager First National Bank of Boston David Garnitz, Loan Officer Jeff Wellington, Loan Officer GBL/Goold Electronics Corporation Oliver Goold, President GCA Corporation Paul Reagan, Senior Vice President John Stewart, Vice President, Integrated Circuits Systems Group GTE Microcircui ts Fran Krch, Manager, Strategic Planning Otis Wolkins, President Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 General Electric Company Jeffrey Ehrlich, Manager, Product Application Technology James Poitras, Manager, Business Development John Zeigler, Contracting Agent General Electric Trust Investment Marshall Kidd, Manager, Technical Analysis Hami1ton/Avnet Colman Daniel, Vice President Harris Corporation Jon Cornell, Senior Vice President & Sector Executive Mary Cornel 1 Linda Fredericks, Director of Marketing Communicat ions Michael Graff, Vice President, Marketing, Semiconductor Division James Smith, Vice President Hewlett-Packard Company Jack Nilsson, Marketing Engineer Robert Santos, Product Marketing Manager Midge Santos Hitachi America, Ltd. Richard English, Senior Area Manager Hi tachi, Ltd Hisao Kanamaru, Department Manager, Marketing Sc Planning Department Holt, Inc Mark Ellsberry, Director of Marketing Honeywell ISI, Spa. Giovanni Pagliosa Honejnurel 1 , Inc . Bill O'Byrne, Commodity Manager Hoya Corporation, George LeCreim, Marketing Manager Electronics Division Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Hughes Aircraft Company Paul Hart, Manager, Custom LSI Procurement W. Scott Walker, Group Vice President & Manager, Solid State- Products Division Cassie Walker Hyundai Electronics America Yong Lee, Vice President, General Manager, Semiconductor Operations Andrew Procassini, Vice President, Market ing IBM Corporation Irv Abzug, Vice President & Director, Corporate Component Procurement Harriet Abzug Jet Advani, Advisory Engineer Michael Denick, Manager, New Products Office Edward Desmond, Manager, Industrial Engineering Services Mark Desrosiers, Staff Programmer Basil Harrison, Advisory Engineer Bob Hoffman, Senior Buyer Annmarie Ihle, Buyer Edward Linde, Senior Engineer John Melgalvis, Industrial Engineer Richard Orrill, Senior Engineer Gerald Parker, Program Manager, Process Technology John Raszcewski, Advisory Engineer Dave Royse, Analyst Robert Rusnack, Advisory Enginee'- E. Weston Seaman, Manager, New Products Cost Engineering Betsey Seaman Brian Sjolseth, Advisor Plaimer Ray Wilfinger, Prograun Manager Mildred Wilfinger IDA Ireland Brendan Halpin, Regional Director Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 RIdder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 INMOS Corporation larui Barron, Chief Strategic Officer A. C. D'Augustine, Vice President, Marketing Pete Fowler, Marketing Manager John Heightley, Chief Operating Officer Dennis Parker, Group Controller Richard Petritz, Chairman Grace Petritz ITT Semiconductors Del Brand, Director of Marketing & Sales Julie Brand Indium Corporation of America Robert Bullock, Senior Vice Presiden' Joan Bui lock Ing. C. 01ivetti & C., S.p.A. Max Be r t o1i no-Zan Tito Conti, Director of Quality, Corporate Staff Enzo Rognoni Intel Corporation Jack Carsten, Senior Vice President & General Manager Doug Finke, Product Marketing Engineer Mark Norwood, Components, Strategic staff Manager Interconics C. Fred Little, Market Development Manager Betsy Little Interlek, Inc. Josh Camba, Senior Vice President, Finance Miriam Ceunba Vic Chuidian. President & Chief Executive Officer Joanne Chuidian Antonio Garcia, Chairman of the Board Carolyn Garcia Dave Jones, Vice President, Test International Division Joe Marcello, Special Assistant to Chairman for Corporate Development Betty Marcello Nand Prasad, Executive Vice President George Robertson, Vice President, Sales Lou Tieber, Vice President, Sales Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 International CMOS Technology Drew Osterman, President International Microelectronic Michael Hollabaugh, Marketing Manager Products Debbie Hollabaugh Intersi1, Inc. Paul Gupta, Vice President, Operations Jerry Kiachian, Vice President, Applicat ions Investors in Industry Fred Haney, Principal Barbara Haney Anna Henery, Principal Italtel Telematica Marisa Bellisario, President Gianni Bertolini, Director of Corporate Procurement Emilio Dragoni, Manager Mario Tripputi, Manager Aldo Zana, Director of External Relations J C. Schumacher Company John Schumacher, President J. H. Whitney & Company Harry Marshall, Partner Japan Electronics Bureau Andrew Koshar KLA Instruments, Inc. Kenneth Levy, President Gloria Levy Ketchum Public Relations Jennifer Hughes Chaney Steinman, Vice President & Director of Research LM Ericsson Corporation Ola Eckholm, Chief Component Engineer Dataquest Incorporated, A Subsidiary of AC. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 LSI Logic Corporation Perry Constantine, Vice President, North America Marketing Wilford Corrigan, President Sigriui Corrigan John Shea, Director, Military Technology Flor Shea LTX Corporation Adrian Hohn, Vice President Graham Mi 1ler, President Geoff Rowett, Vice President, European Operat ions Lattice Semiconductor Corporation Rahul Sud, President & Chief Executive Officer Lehman Management Company Larry Phillips, .Analyst Lex Service, Inc. Milton Grannatt, III, Vice President Planning-Supplier Development Gary Kibblewhite, Planning Manager N. Wood J. Michael Worfolk, Vice President, Business Development MOS Electronics Corporation (MOSEL) C. "Kip" Broym, Director, Custom Circui ts McDonnell Douglas Microelectronics John Hayn, Manager of Applications Engineering Megatest Corporation Jan Waluk, Sales Manager, Major Accounts Dominique Waluk Messerschmitt-Boelkow-Blohm GmbH Edgar Anderson, Manager, Marketing Sc Sales, Electronics Products Holger Bree Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Micro Component Technology Terry Bell, General Manager, Test Systems Division Robert Vosika, Vice President Microlinear Corporation Alan Grebene, President Norman Miller, Executive Vice President Micromos Dr. Vir Dhaka, Chairman & Chief Executive Officer Mitsubishi Electric Corporation Jack Christy, Regional Sales Manager Mitsubishi Electronics America, Inc Azmat Malik, Product Marketing Manager Hiroo Taniguchi, Executive Vice President Sc General Manager John Zucker, National Sales Director Mitsui High-Tek, Inc Satoshi Nagata, Director & Executive Planner Modular Semiconductor, Inc N. Damodar Reddy, President Monolithic Memories John Birkner, Manager of PALs, Product Planning Department Timothy Propeck, Vice President, Market ing Monsanto Electronic Material Company Hubert Dohman, Vict President, Quality Assurance Martha Dohman Wendy Grossmen, Technical Analyst Elizabeth Isaacs, Manager, Product Educat ion Morgan Guaranty Trust Charles Kimball, Vice President Investment Research Department Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Mostek Corporation Lee Chu, Director, Industry Marketing Sadar Haddad, Strategy Analyst Bert Kehren, Director, Strategic Planning Robert Palmer, Executive Vice President, Semiconductor Operations Motorola Semiconductor, Inc Chuck Thompson, Vice President & Director, Worldwide Marketing Wanda Thompson Motorola, Inc, Erick Ayers, Assistant Strategic Manager Edward Day, Strategic Planning Manager Oliver Edwards, Manager, Marketing Planning Bob Gonzalez, Japanese Analyst Bob Jenkins, Vice President Carolee Jenkins Mullard, Ltd. William Everden, Divisional Director, Industrial Division Mutual of New York Anthony Blenk, Technology Analyst NCR Corporation James Van Tassel, Vice President Microelectronics Division NEC Electronics USA. Inc Frank Jelenko, Vice President, Marketing James Kelley, Vice President, Technology Center Ed Neubauer, Vice President, Marketing & Sales K. K. Yawata, President National Electronic Distributors Toby Mack, Executive Vice President Associat ion National Semiconductor Corporation Douglas Ritchie, Vice President, Consumer Specific Products Joe Van Poppelen, Vice President Market ing Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Naval Postgraduate School Herschel Loomis, Electrical Engineer Northern Telecom Electronics, Ltd. E. Dennis Colbourne, Assistant Vice President, Semiconductor Operations A. Graham Sadler, Vice President, Semiconductor Operations Northern Telecom, Ltd. G. Wi1liam Bothwel1, Director, Materials and Purchasing Patricia Bothwel1 Monte Seifers, Director, Semiconductor Sales Oki Semiconductor Jerry Crowley, President &c Chief Executive Officer Nancie Crowley Panatech Semiconductor John Baskett, President Perkin-Elmer Corporation Henry Dieselman, Manager, Plarming Carl Hildebrand, Vice President, Sales Service, Semiconductor Equipment Group Gail Hildebrand Philip A. Hunt Chemical Corporation Peter Danna, Vice President, New Business Lorraine Danna Jim Favier, Vice President, Microelectronics Jack Murphy, Director of Sales Pitney Bowes, Inc. Frank Seestrom, Director, Programs Joann Seestrom Michael Swaluk, Manager, Electronic Support Lynn Swaluk Plessey Solid State Dennis Chant, President Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Prudential-Bache Securities George Bristol, Managing Director Tom Gettinger, Research Analyst Richard Klein, Vice President Michael Weisberg, Director of Technology Research Rick Whittington, Vice President Quality Automation, Inc. Mike Leibowitz, President RCA Corporation Herbert Criscito, Vice President, Marketing Robert Lenz, Administrator, Sales Analysis Richard Santilli, Vice President. Market Development Raytheon Corporation Randy Marshall, Director, International Marketing Rhone-Poulenc Jacques Biais, Manager, Electronic Materials Group Robert Bosch GmbH Gunter Matthai, Manager, Technology Plarming Paula Matthai Rockwell International Corporation C. V -Kovac, Vice President, Key Accoiuits Rosenberg Capital Management Walter Price, Partner S-MOS Systems, Inc. Dan Hauer, President S.E.H. America John Matlock, Vice President, Technology SAI-SEMI Specialists Bob Ball, Vice President, Marketing Abe Kosakowsky, Marketing Manager Jack Tils, Semiconductor Marketing Manager Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Sag em Jean Paul Neuville Samsung Semiconductor & Moo-Youl Sohn, Planning Manager Telecommiuii cat ions Company, Ltd. San Jose Mercury News Dave Sylvester, Business Writer Schweber Electronics, Inc Richard Jacobs, Director of Strategic Plaiuiing Scottish Development Agency Cameron McPhai1, Development Sears Investment Management Company Stephen Dexter, Investment Analyst Security Pacific Capital Corporation Dmitry Bosky, Investment Officier James McElwee, Vice President Semiconductor Microelectronics Joseph Curry, Consultant Internallonal Sharp Electronics Corporation James Wei, National Marketing Manager Shinko Electric America Bill Cruizkshank, Executive Vice President Donna Cruizkshank Shinko Electric Industries Taizo Abe, Director, Engineering Company, Ltd. Department Shipley Company, Inc Gene Goebel, Director of Sales Microelectronic Products Sierra Semiconductor Corporation James Diller, President June Diller Thomas Reynolds, Vice President, Marketing Sc Sales Maryanne Reynolds Dataquest incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Signetics Corporation Marilyn Kissel, Senior Financial Analyst Silicon Systems, Inc. James Peterson, Director of Marketing Smith Industries M. W. Thurlow stack GmbH Bernard Hadley, Managing Director standard Microsystems Corporation Art Sidorsky, Executive Vice President Stanford University Everett Rogers, Professor-Institute for Coranuni cat i ons storm. Block Suwa Seiko Sha Kimio Takemori Synertek, Inc Richard Konrad, Vice President, Marketing & Sales Telic-Alcatel Joseph Heitz, Engineer, Purchasing Department TRW. Inc Ralph Miller, Vice President & General Manager Tandem Computers, Inc Tom Collins, Development Engineering Manager Susan Col 1 ins Telettra S.p.A Franco Carnevali Teme seal Daniel Devine, Director of Marketing Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Teradyne, Inc. Abe Bluestone, Product Manager Ron Butler, Purchasing Manager Donald Hamman, Controller Stratton Smith, Director of Purchasing Texas Instruments, Inc. Randall Peters, Manager Strategic Planning Charles Phipps, Vice President, Semiconductor Group The Hihernia Bank Phil Yoimg, Senior Vice President Cynthia Young The Wall Street Journal Dick Schaeffer, Technology Editor Thorn-EMl John Scholes, Corporate Planning Execut ive Toshiba America, Inc Jay Litus, Jr., Director of Marketing Jim Townsend, Strategic Marketing Manager Trilogy Systems Pete Bejarano, Director Frank Swiatowiec, Director Tristar Semiconductor, Inc S. Ham, Vice President, Chief of Staff Sang Lee, President Een Yearp Lee Union Carbide Corporation Anthony Keig, Business Research Manager Thomas Nelson, Manager, Electronics AppIicat ions Thomas Singman, Manager, Marketing P1ann i ng Walter Willett, Manager, On Site Sales United Microelectronics Corporation Tony Yu, Manager, U.S. Operations United States Department of Commerce Robert Eckelmann, Industry Analyst Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 United Technologies Corporation Richard Dressier, Deputy Director, Financial Planning & Analysis VHSIC Technology Corporation Tom Hendrickson, President John Hodgson, Vice President VLSI Technology, Inc Henri Jarrat, President & Chief Executive Officer Robert Silco, Director, Corporate Market ing Dorothy SiIco Varian Associates William Bottoms, President Varian Corporation, John Wunner, Marketing Manager Exitron Division Videolog Alan Brigish, President Vitelic Corporation Alex Au, President & Chief Executive Off icer Jack Ordway, Vice President, Marketing & Sales W & W Enterprises Gunnar Wetlesen, President Mary Ellen Wetlesen Wacker Siltronic Corporation Werner Freiesleben, President Vern Meissner, Director of Marketing Dolores Meissner Malcolm Russ, Executive Vice President Wells Electronics, Inc Arthur Midili, President Western Digital Corporation Kathy Braun, Director, Storage Management Marketing Dieter Marenbach, Strategic Planner Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Western Microtechnology Bernard Marren, President & Director XTAR Electronics, Inc Skip Powers, Chief Executive Officer Xerox Corporation Charles Holt, Vice President Sei Shohara, Manager, Technical Staff Xicor, Inc Wallace Tchon, Vice President strategic Planning Zilog, Inc. Carl Johnson, Manager, Technical Marketing Tom Popek, Senior Vice President & General Manager, Components Division ZyMOS Corporation Jerry Gibbs, Marketing Director Dave Guzeman, Vice President, Marketing & Sales . Alan Louwerse, Executive Vice President Zytrex Corporation Orlando Gal legos. Senior Director of Market ing Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 RIdder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 :^T^Datac|iiest CT^v^^'"*' E>ataquest CLIENT SEMICONDUCTOR INDUSTRY SERVICE ADC Corporation California First Bank AMI-Austria Calma Company AT&T Canon, Inc. AT&T Bell Laboratories Chase Manhattan Bank AT&T Conununications Churchill international AT&T Consumer Products Cii Honeywell Bull AT&T Resource Management Con^uter Sciences Corporation AT&T Technologies, Inc. Crocker Bank (The) Accutest Custom Microelectronics Assembly, Inc. Adler & Co. D.G.S.I. Advanced Micro Devices, Inc. D.I.E.L.I. Aerospatiale DWS Deutschen Gesellschaft fur Wertpapiersparen Air Products and Chemicals, Inc. Daleco Research & Development, Inc. American Microsystems, Inc. Data General Corporation Analog Devices BV Datapoint Corporation Ando Electric Co., Ltd. Department of industry UK Applied Intelligent Systems, Inc. Dexter Corporation/Hysol Division Applied Materials, inc. Digital Equipment Corporation Applied Micro Circuits Corporation DOW Chemical Arrow Electronics, Inc. Dynamit Nobel Silicon, Inc. Arthur Andersen & Company E.I. DuPont de Nemours & Co., Inc. Arthur Young & Company BRSO Asahi Chemical Industry Co., Ltd. Eastunan Kodak Company Assisted Technology, Inc. Eaton Corporation Atari, Incorporated Electric Power Research institute (EPRI) BMC Industries, Inc. Electronics Industry Association of Japan BSR International Emerson Electric Co. BULL Transac Environmental Processing Bank of America Ericsson Information Systems AB Banlc of California Eurotechnique Bank of the West Exel Microelectronics, inc. Banque Nationale de Paris Pairchild Camera & Instrument Co. Borg Warner Chemicals Fairchild Semiconducteur Europe S.A. British Technology Group Fairchild Memory Test Systems Burroughs Corporation Fairchild Research CIN Industrial Finance Ltd. Fairchild Semiconductor CIT-Alcatel Fairchild Test Systems Group CMOS Technology, Inc. Fairchild/Schlumberger California Devices, Inc. Ferranti Computer Systems, Ltd. Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Ferranti Electronics, Ltd. investors in industry Finalco Investors in industry Group PLC First Interstate Bank of California Itau Technologia S.A. First Interstate Bank of Oregon J. H. Whitney & Co. Japan Electronics Bureau First Interstate Capital Inc. Jardine Flemings, Ltd. First National Bank of Boston Kaiser Electronics Four-Phase Systems, Inc. Kanematsu-Gosho (USA) Fujitsu Microelectronics, Inc. LSI Logic Corporation Fujitsu Limited LTX Corporation GCA Corporation La Telephonie Industrtelle et GTE Microcircuits Commerciale (Telic) Landmarks Group (The) GTE-Network Systems, Inc. Lattice Semiconductors GenRad, Inc. Lex Service, inc. General Electric Company Linear Technology Corp. General Electric Company, Ltd. LOS Alamos National Laboratories General Instrument Corporation MBB GmbH General Instruments International, Ltd. Marconi Electronic Devices, Ltd. General Motors Corporation Matra Harris Semiconducteurs Gold Star Semiconductor, Ltd. Matrix Partners, L.P. Gould/Biomation Inc. Mayfield Fund Harris Corporation McDonnell Douglas Microelectronics Hewlett-Packard Company Hitachi America, Ltd. Megatest Corporation Hitachi Electronic Components Europe GmbH Merrill, Pickard, Anderson & Eyre Hitachi, Ltd. Micro Component Technology, Inc. Holt, Inc. Micro Power Systems, Inc. Honeywell, Inc. Microelectronic Marin Hoya Corporation, Electronics Division Microelectronics Technology Company Hughes Aircraft Company Micromos, inc. IBM Compec Ministerio de Industria Y Energia IBM Corporation Mitsubishi Corporation IBM France Mitsubishi Electric Corporation IBM Japan, Ltd. Mitsubishi Electronics America, Inc. IBM Oesterreich Miyazaki Oki Electric Industry Co., Ltd. IBM UK, Ltd. Modern Electrosystems, Inc. ICG Electronics Enterprises Modular Semiconductor, Inc. IDA Ireland Monolithic Memories, Inc. ITT Advanced Technology Center Monsanto Electric Materials Company ITT Europe Mosley Management Corporation ITT Intermetall GmbH Mostek Corporation ITT Semiconductors Mostek Japan K.K. Idemitsu Petrochemical Co., Ltd. Motorola Semiconductor Europe Imperial Chemical Industry (ICI) Motorola, Inc. Indium Corporation of America Mullard, Ltd. Ing. C. Olivetti & C, S.p.A. Murray Electronics PLC Inmos Corporation NCR Corporation Inmos, Ltd. NEC Corporation Institutional Venture Partners NEC Electronics USA, Inc. Integrated Device Technology Narumi China Corporation Intel Corporation National Bureau of Standards Intel International Corp. S.A. National Economic Development Office (NEIXD) InterWest Partners National Semiconductor Corporation Interlek. Inc. Nissan Motor Co., Ltd. International Microelectronic Products, Inc. Northern Telecom, Ltd. Intersil, Inc. Oak Management Corporation Targetronix Oki Electric industry Co., Ltd. Tegal Corporation Oki Semiconductor, Inc. Tektronix, inc. Oxcal Venture Corp. Telefunkeh Electronic GmbH Oxford Venture Corp. Temescal Perkin-Elmer Corporation Teradyne, Inc. Philip A. Hunt Chemical Corporation Texas Instruments, Inc. Philips International BV The Ericsson Corporation Pioneer-Standard Electronics, inc. Thomson CSP Pitney Bowes, Inc. Thomson EFCIS Plessey Semiconductors Ltd. Thorn-EMI Plessey Solid.State Toshiba America, Inc. Prime Capital Management Co., Inc. Toshiba Corporation QCAD Toshiba Europe (I.E.) GmbH Quality Automation Toshiba Semiconductor (USA), Inc. Quasel, Inc. Tristar Semiconductor, inc. Qume Corporation U.S. Departiment of Commerce RCA Corporation UTI Instruments Company RTC la Radiotechnique-Compdec Union Bank Raytheon Data Systems Union Carbide Corporation Rhone Poulenc,Siltec Union Trust Company of Maryland Ricoh Systems, inc. Union Venture Corporation Robert Bosch GmbH United Micro^electronics Corp. Rockwell International Corporation United Technologies Corporation S.A.M.E.S., Ltd. Unitrode Corporation S.E.H. America, Inc. VLSI Technology, Inc. S A Matra Varian Associates SAI-SEMI Specialists Vitelic Corporation SEEQ Technology, Inc. Wacker Chemitronic GmbH SGS Semiconductor Corporation Wacker Siltronic Corporation SGS-ATES Weitek STACK GmbH Western Digital Corporation STC Semiconductors Ltd. Wyle Laboratories Sagem XTAR Electronics, Inc. Scottish Development Agency Xerox Corporation Security Pacific Capital Corp. Xicor, Incorporated Sharp Electronics Corporation Yamada Seisakusho Co., Ltd. Shin-Etsu Handotai Co., Ltd. Zilog, Inc. Shinko Electric Industries Co., Ltd. ZyMOS Corporation Siemens AG Zytrex Corporation Siemens Corporation Sierra Semiconductor Corp. Signetics Corporation 06/28/84 Solid State Scientific, Inc. Sony Corporation Standard Microsystems Corporation Stet Societa Finanziaria Telefonica S.p.A. Supertex, Inc. Suwa Seikosha Co., Ltd. Synertek, Inc. TRW Active Components Tachibana Co., Ltd. Takeda Riken, Ltd. Takeda Systems, Inc. Tandem Computers, Inc. Dataquest Dataquest SEMICONDUCTOR INDUSTRY CONFERENCE SPEAKERS Frederick L. Zieber Chuck Thompson Senior Vice President Vice President Dataquest Incorporated Director, World Wide Mktg. Motorola Semi Sector Jim Riley John C. East Senior Vice President Vice President Dataquest Incorporated Bipolar Division Advanced Micro Devices Charles H. Phipps A. Gary Shilling Vice President, Semiconductor Group President Manager, Market Development A. Gary Schilling & Co. Texas Instruments Incorporated Doug Ritchie John Abram Vice President Executive Vice President Consumer Specific Products Arrow Electronics National Semiconductor Corp. Roger Smullen Jerry Crowley President and CEO President and CEO Applied Micro Circuits Corp. Oki Seiconductor Henri Jarrat Ken McKenzie President Associate Director Chief Operating Officer Semiconductor Group VLSI Technology Dataquest Incorporated Jon Cornell T. J. Rodgers Senior Vice President President and Sector Executive Cypress Semiconductor Harris Semiconductor Professor Everett M. Rogers Marisa Bellisario Institute for Communications Managing Director, and Stanford University Chief Executive Officer Italtel Group Judy Larsen, Ph. D. Malcolm Penn President Director Cognos Associated Dataquest U. K. Ltd. Bill Bottoms Aryeh Finegold President President Semiconductor Equipment Division Daisy Systems Varian Associates Wilfred J. Corrigan Jack Carsten President and CEO Senior Vice President LSI Logic and General Manager Intel Corporation Dataquest incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive /San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Dataquest SEMICONDUCTOR OUTLOOK—SOFT LANDING OR HARD Frederick L. Zieber Senior Vice President and Director of the Semiconductor Group Dataquest Incorporated Mr. Zieber is a Senior Vice President of DATAQUEST Incorporated, a member of its Executive Committee, and the Director of its Semiconductor Group. He has 13 years of experience in market research and consulting to the semiconductor industry, and previously had 9 years of experience working in the semiconductor industry. He has experience in integrated circuit and discrete device processing, design, manufacture, and testing. He holds two patents in semiconductor processing. Mr. Zieber has a B.S. degree in Electrical Engineering from Stanford University, and an M.B.A. degree from the Graduate School of Business at Stanford university. Dataquest Incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 SEMICONDUCTOR OUTLOOK SOFT LANDING OR HARD The last nine years it has fallen upon me to present the DATAQUEST forecast of semiconductor demand. Our forecasting has not always been perfect, (those who live by the crystal ball learn to eat ground glass sooner or later), but our record has generally been excellent. I believe this year is the most difficult situation I have faced. There has been some dark clouds on the horizon that have moved perceptively closer. Lets look at what's been happening recently. For the last two years semiconductor output has increased tremendously. This chart gives semiconductor shipments into the United States, by quarter, for 1983 and 1984. Two years ago at this conference we forecast that demand would pick up strongly by April 1983. That is exactly what happened. Since then shipments have grown at a tremendous rate. Currently shipments are nearly double the rate of the first quarter of 1983. This unprecedented rate of growth over the last year and a half was spurred by the economy and Other market factors. Demand was extremely strong. More recently, order rates have been declining. With shipments increasing, the book-to-bill ratio has been falling steadily and inexorably all year long. Although this chart was made several weeks ago, we expected the book-to-bill ratio for September to be less than one. This is what's happened. For the last three months, shipments have exceeded orders. Any of us who have been in the industry long enough have seen this pattern before, usually as the prelude to a full-fledged, extremely painful, industry recession. What is the outlook of the rest Of 1984 in 1985? Let's look at what is happening at the semiconductor users. Very recently, over the past two or three months, there has been a rapid inventory build up. This is nowhere near the magnitude of 1980 or 1974, but excess inventory is excess inventory. Users of semiconductors have seen a slower rate of increase in their own orders. The euphoric expectations of earlier in the year have come face to face with a less buoyant economy and reality. Most systems companies are facing the future with lower expectations than they had several months earlier. This affects their order rates for semiconductors. Semiconductor usage rates are not as expected, the future usage rates are lower, and increasing inventories mandate adjustment of order rates. Additionally, there has been several disasters among systems companies. There has been a tremendous increase in new companies in many market areas each with high expectations of major market share. It is inevitable that the - 1 - C, 1984 .Dataquest.Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A SubsIdIary or A.c: NIeTsen CoTnpany /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 attrition rate of companies will be high, and it will probably get higher. Naturally, all this affects the availability of components. Semiconductors suddenly are much more easily obtained. Furthermore, component lead times have been decreasing rapidly. Prices are weakening. With this scenario, why order? At the semiconductor manufacturer a related scenario is unfolding. There has been a tremendous increase in capacity in the semiconductor industry over the last several quarters. Much more than generally expected. In the past, when we have come out of a period of excess capacity, increases in semiconductor shipments have been extremely rapid for two quarters. We have had quarter to quarter increases in double digits in excess of ten percent, for six quarters. Clearly the semiconductor industry has been doing something different this time around. We believe part of the reason has been a major increase in the number of shifts operated at wafer fabrication facilities. Facilities and equipment utilization is higher than ever before. At the same time, manufacturers are experiencing level or declining bookings. Lead time for products have been going down, and pressure on prices has been getting worse. This has an all too familiar ring to it. But don't panic. We do not believe we are entering a recession. However, DATAQUEST believes that we have entered a period of adjustment where the excesses of the recent past will be brought into line. This adjustment is a normal process. Usually, we see it when the U.S. economy is entering a recession. This time, I think, we have a different scenario: the adjustment, the excess, this process is occuring even though the economy is not in a recession and real demand for semiconductors, unit demand, is still growing. For those of you who haven't been in the industry as long as I have, this has happened before. It happened to a certain extent in 1978 and to a much greater extent in 1967. It has happened for individual product lines from time to time. What is this process? Basically it is the process whereby prices, production, inventories, and demand are brought into line. It goes like this; rapidly increasing semiconductor shipments lead to a build up in semiconductor inventory at the systems level. This inventory can be parts, in devices that are embedded in sytems, at distributors, or elsewhere. When this happens, semiconductor users, particuliary if their expectations have been lowered, adjust their semiconductor order rates down. They do this to bring inventory down or to stop it from growing. Thus semiconductor manufacturers see bookings decline. But shipments continue to rise (in the early stages), and semiconductor lead times come back. The backlogs of the semiconductor manufacturers go down. The inevitable price pressure increases, prices weaken. Now, when lead times come back, the users don't have to order so far in advance. And being rational people, noticing that prices are weakening, they tend to hold orders off. Bookings drop even more. Sometimes, a lot more. - 2 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 The semiconductor industry reacts. Increases in shipments of semiconductors begins to slow. In a recession, this can continue for quite a while. But as long as the economy is stable and growing unit demand for semiconductors will also grow. (In this case we are speaking about real usage, not inventory building). Therefore, eventually, bookings will begin to rise. This is the process. Right now we are at Number Five. Critical to this process is the state of economy. Tonight we have a talk by Gary Shilling on the economy. Not being an economist, I will defer to him, but I do wish to make a few observations concerning DATAQUEST's assumptions on the economy, because they affect our forecast. First of all, we believe the economy is slowing. Recently the index of leading indicators has been mixed, housing starts have been down, and retail sales have been down, and these events generally presage a slow down of the economy. On the other hand, we don't believe a recession is imminent. A recession is often the result of the tighting of the money supply to cool an overheated economy. While we have a strong economy, we don't have an overheated one at this time. Two of the things that are generally in evidence prior to an economic downturn are a strong jump in the prime rate and a decline in the real money supply. This chart shows what happened in the twelve months prior to the last three recessions. I think it is interesting to note that for each of these the increase in consumer prices was as high or higher than the prime rate during that period. In 1984 just the opposite is true. We have high interest rates and relatively minor increases in consumer prices. Simply put; there is no reason to dump the economy. Therefore, we operate under the assumptions that economic growth may slow but a recession will not occur. But, we are faced with reality: The process described earlier. A book-to-bill under one, is a matter of concern. The book-to-bill ratio can be much much lower. This chart gives the book-to-bill ratio for Texas Instruments (simply because it was available) and for the SIA in 1980. Since the TI ratio is for the whole company, we estimated what the semiconductor industry book-to-bill probably was in 1970 and 1974. For three months they were around 0.5 or lower. Personally, I can remember individual months when the book-to-bill ratio for individual companies was as low as 0.2, other people can remember negative book-to-bills: that is, when the cancellations of old orders exceeded new orders. We believe that real demand is still growing. The economy is in a phase with capital spending by industry increasing. Capital spending is the prime driving force of semiconductor demand. increasing industrial production leads to industry increasing capacity. This is done, in part, through the purchase and use of computers, workstations, industrial automation, instrumentation, etc. In combination with the increasing pervasiveness of semiconductors in (electronic) capital equipment of all types, the increasing capital expenditures of industry provides strong and growing demand for semiconductors. Industry spending plans for next year show big increases. DATAQUEST follows a large proportion of the electronics industry. Business is good. - 3 - C 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 This is the good news: Although we are going through a process of adjustment, we are doing so in a period of increasing semiconductor demand. We believe United States semiconductor consumption will be approximately twelve and a half billion dollars in 1984. It will be nearly fifteen and a half billion dollars in 1985. This is a level more than double semiconductor consumption of two years ago. The increase in United States semiconductor consumption this year is truly awesome an for industry the size of the semiconductor industry. Given the momentum of a fast start in 1983, consumption in 1984 is expected to be 49% above that of last year. This is led by integrated circuits, with growth of over 50%, but there has been tremendous growth as well in the discrete and optical electronic segments. In 1985 we expect growth to be considerably slower. But 24% growth is a good year. Next year's growth sounds better than it is in reality, because of the rate at which the industry will enter the year. Nevertheless, our forecast is more optimistic than those of several companies and the Semiconductor Industry Association. Where we differ is primarily in our beliefs of the growth of real demand, and in the effects of price attrition on the market in terms of dollars. Prices are extremely difficult to forecast. They will go down over the next year, but how much is much more difficult to assertain. We believe that the publicity of falling prices of dynamic RAMs has led to a certain amount of exageration with respect to all other semiconductor products, where price attrition is expected to be considerably less. Additionally, prices will not be given a downward push from a falling economy. It is too easy to be too pessimistic. Let's look at what's happened in terms of quartely changes in shipments into the U.S. semiconductor market. If you look at where we are right now we see the major quarter to quarter increases in shipments beginning with the second quarter of 1983. The seasonality of the industry, with weaker first and third quarters, is much in evidence here. There has been some long term decline, but only of a minor amount, in the rate of shipments. From now on, we expect a rapid drop in the quarter to quarter increases in semiconductor shipments as we work through the process described earlier. Once that is done, semiconductor consumption and shipments in dollars will resume a more rapid rate of increase. We are looking for a much less bouyant period for the industry in the next few quarters with a rapidly improving situation in the second half of 1985. I might point out, that this makes no assumption on the economy for 1986. What happens then is very difficult to foretell. We expect U.S. semiconductor consumption for the third quarter to be approximately 3.26 billion dollars, as shown on this chart. One year from now we expect it to be 3.9 billion dollars or an increase of about 20 percent. That growth pales only in comparison with what we have seen over the last year and a half. Even during this period of adjustment the strong long term demand for semiconductors will ease the difficulties. - 4 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 I would like to speak a little bit about that long term outlook. More will be covered in other speeches during this conference. Back at the first conference we held, we had a chart on average price per function for IC's and we have updated that yearly. This year, we updated the chart itself to make it a little more visible. I might point out that on the left is a logrhythmic scale. Prices have been dropping regularily at 30 to 35 percent a year ever since 1962. It is interesting to note that there was a slowdown during the period of 1978 through 1980, but since that time average prices have been going down at a fairly rapid pace. This is the engine that ultimately feeds long term demand. Its not going to stop. New markets and increased pervasiveness will come from the greater cost/performance of semiconductors. This is basic economic elasticity. Why does the future look so bright? Look at some comparisons between current technology and future technology, the very near term future. Virtually all of the semiconductor devices now produced are 3-micron minimum dimensions or greater. We are just beginning to see new devices manufactured with 2-micron minimum dimensions. I might point out that the assumptions here are realitively crude and they are here simply to make the comparison between now and a few years in the future. Don't compare tihese with your own costs, density, yields, and so on. We know wafer sizes are going to increase. To a certain extent, processing costs will increase with size. We have assumed a modest increase in chip size and a fairly a significant increase in yields. Yields do appear to be going up rapidly throughout the industry. This is the first time I have seen yields rise during a period of rapidly increasing shipments. We have made a gross assumption of chip cost to final product cost and kept it the same. Because of the higher density and larger chip size there can be over 3 1/2 times as many transistors, gates, bits, etc., on the chip. And this means ultimately that the cost for a particular function is going to decline precipitously. I find it interesting that this great engine of cost reduction that we have in this industry will give us more than a four to one improvement in the next few years. The semiconductor industry is a long way from being mature and, therefore, the market for semiconductor is a long way from being mature. The industry is providing systems engineers with some tremendous changes. Changes in t±e industry are occuring faster now than they ever have. We are experiencing rapidly increasing density, rapidly improving yield, automation of processing, rapidly decreasing costs (per function), a tremendous variety of new architectures for processors, many new types of products, and rapidly improved performance - in terms of speed, power, and so on - for those products. Never before has the engineer who applies semiconductors to applications had so many new tools to improve their products. They are facing rapid major increases in system capabilities in terms of cost performance. - 5 - C 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 unfortunately this is increasing the applications lag for the industry. Systems engineers are already far behind in taking advantage of the products that are available to them today, and its apt to get worse in the future. Last year we asked a simple question: If you use a 100 chips in a system, and each chip has a million transistors, what kind of system do you make with 100 million transistors? Nobody knows I Yet that is the microelectronic capability of the very immediate future. We have some confidance that people will answer these questions. The capabilities and costs will be translated into ever expanding markets for electronics and semiconductors. We believe that by 1989 the worldwide semiconductor industry will be 64 billion dollars, or more than twice the size it is today. That translates into more than 19 percent compound annual growth even though there is a modest recession built into those assumptions. This won't happen however unless you make it happen. Currently we are entering a period where business is going to be more difficult than it has been. Its time for all of us to roll up our sleeves and get the job done. And its time for all of us to face reality. There is a strong message here for everyone in this room. Semiconductor companies have to get products out the door that their customers can easily apply. The industry's ability to take advantage of its processing capability - in terms of density, cost, speed, and so on - is abyssnal. Execution stinks. Engineers need to learn to complete projects with the speed that they write resume's, count stock options, and change jobs. Venture capitalists should understand that added value rests more in design and application, not in yet another fab. Growth is there only if we make it happen. Let me conclude by stating again how we see the industry outlook. Although demand is continuing to grow, we will experience several difficult months as we go through a process of adjustment of inventories and recent excesses. After that more rapid growth is expected to resume. Long term, the high growth of the industry will continue. Pervasiveness has just begun I - 6 - C 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 • SEMICONDUCTOR OUTLOOK Soft Landing or Hard Frederick L. Zleber Dataquest Incorporated October 15, 1984 - 7 - C 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 U.S. SEMICONDUCTOR CONSUMPTION Billions of Dollars S3.43 S3.26 $3.08 S2.70 $2.51 $2.19 S1.97 S1.67 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1983 1984 BOOK/BILL RATIO 1984 1.6 1.4 - 1.2 - 1.0 0.8 JAN FEB MAR APR MAY JUN JUL AUG SEP - 8 - © 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 mBmmmmamfimmi^ AT THE SEMICONDUCTORS USERS mmnaammmammmmmmmmmmiimmmmmmtaiammmmemimmmmmm^meim • RAPID RECENT INVENTORY BUILDUP • SLOWER RATE OF INCREASE IN ORDERS • LOWER EXPECTATIONS • A FEW DISASTERS • AVAILABILITY OF COMPONENTS • DECREASING LEAD TIMES AT THE SEMICONDUCTOR MANUFACTURERS IN iMH.uiwi«WBWMeaMJj.m»Lu • RAPID INCREASE IN CAPACITY • DECLINING BOOKINGS • DECREASING LEAD TIMES • PRICE PRESSURE - 9 - © 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 am WHAT'S HAPPENING? • WE HAVE ENTERED A PERIOD OF ADJUSTMENT WHERE EXCESSES WILL BE BROUGHT INTO LINE. • EVEN THOUGH: -THE ECONOMY IS NOT IN RECESSION -REAL DEMAND IS GROWING IT HAS HAPPENED BEFORE! THE PROCESS 1. INCREASING SHIPMENTS LEAD TO INVENTORY BUILDUP. 2. USERS ADJUST ORDER RATES, INVENTORIES. 3. BOOKINGS DROP. 4. LEADTIMES, BACKLOGS. PRICES DECLINE. 6. BOOKINGS DROP MORE. 6. SHIPMENTS SLOW. 7. REAL UNIT DEMAND CONTINUES TO INCREASE. 8. BOOKINGS RISE. - 10 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 BwwwwH—II I im IWLI wnww—wiiBi THE ECONOMY • LEADING INDICATORS - MIXED • HOUSING STARTS - DOWN • RETAIL SALES - DOWN - 11 - C 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 THE YEAR BEFORE A RECESSION CONSUMER MONEY PRIME RATE PRICES SUPPLY 1970 6.6 TO 8.5 % 6.3% DOWN 1974 5.8 TO S.e% 12.0% DOWN 1980 11.6 TO 15.3% 15.8% DOWN 1984 10.9 TO 12.8% 4.0% UP - 12 - C 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 BOOK TO BILL RATIO TI SIA Q4 1970 0.71 0.48 EST. Q4 1974 0.68 0.45 EST. Q3 1980 1.00 0.77 EST mmimmmimmmwmmKirmmmiim ESTIMATED U.S. SEMICONDUCTOR CONSUMPTION (Millions of Dollars) 1S83 1984 1885 DISCRETE DEVICES $1,423 S 1,954 S 2.218 INTEGRATED CIRCUITS 6.914 10.511 13.214 TOTAL 88,337 S 12.465 $15,432 - 13 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 ESTIMATED CHANGE IN U.S. SEMICONDUCTOR CONSUMPTION Percent Change bU 92.02 50 A$.3% 40 37.3^ 30 25.7% 24.n 20 13.5? 10 DISCRETE IC TOTAL DISCRETE IC TOTAL 1983 to 1984 1984 to 1985 mmmmmmmmmKKtimamiKmmimmmmmimmmmmKmammmmmKmimmmmimmm MM ESTIMATED QUARTERLY U.S. SEMICONDUCTOR CONSUMPTION (Millions of Dollars} 1983 Q1 Q2 Q3 Q4 DISCRETE DEVICES S 294 $ 342 S 371 S 416 INTEGRATED QRCUTTS 1,382 1,626 1.816 2.090 TOTAL SI.676 $1,968 $2,187 $2,506 1984 Q1 02 Q3 Q4 DISCRETE DEVICES $ 442 $ 491 $ 501 $ 520 IhfTEGRATED CIRCUITS _2_^60 _2.586 2,760 2.905 TOTAL $2,702 $3,077 $356? $"3,425 - 14 - 6 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 ESTIMATED QUARTERLY CHANGE IN U.S. SEMICONDUCTOR CONSUMPTION Percent Change 20 17.4^ 4.6% 1?) 13.9% 11.U 10 7.8? b.iiZ 5 2.23! A Q1 Q2 Q3 Q4 Q1 Q2 Q3 1883 1984 ESTIMATED QUARTERLY U.S. SEMICONDUCTOR CONSUMPTION aauBuii^jagma MBOBaOBBO (Millions of Dollars) 1984 Q1 02 Q3 04 DISCRETE DEVICES S 442 $ 491 S 501 S 520 INTEGRATED QRCUITS 2,260 2,586 2.760 2,905 TOTAL S2,702 $3,077 $3,261 $3,425 1985 01 02 03 04 DISCRETE DEVICES S 529 $ 549 $ 558 $ 582 INTEGRATED CIRCUITS 3,026 _3,195 3,343 3,650 TOTAL $3T555 $3774'4 $3i9dl $4.'23"2 - 15 - C 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 ESTIMATED QUARTERLY CHANGE IN U.S. SEMICONDUCTOR CONSUMPTION Percent Change 15 13.92 10 7 ft^ 8.5^ 6.0% . «o. «? -ir Q.Va, •J.tiH. H.£.f, Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1984 " 1985 - 16 - C 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 AVERAGE PRICE PER FUNCTION (ICs) (Miilicents) 1,000 100 10 74 76 78 79 80 81 82 83 84 COST MODEL CURRENT FUTURE MINIMUM DIMENSION 3 MICRONS 2 MICRONS WAFER SIZE 4 INCH 6 INCH PROCESSING COST S140 $220 CHP SIZE (MILS SQUARE} 200 250 YELD 30% 50 ? CHP COST TO PRODUCT COST 4X 4X - 17 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 iwni«MEUiMiiui.« COST MODEL mKR«!H<*nnnmH*nnnHPnnRm! CURRENT FUTURE GOOD DIE 100 200 DIE COST $1.43 S1.10 FINISHED PRODUCT COST S5.60 $4.40 TRANSISTORS PER DE (OOO's) 60 211 COST PER TRANSISTOR 9.3mc 2.1m TECHNOLOGY HAS A LONG, LONG WAY TO GO • DENSITY • CMOS • YIELD • EPROM. EEPROM • PROCESSING • CAD • COST • ASIC'S • ARCHITECTURE • PERFORMANCE NO SLOWDOWN - 18 - C 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 WMWngnHHBKMPV mmmmimamaf APPLICATIONS LAG mmmmmammKmmtm uufMumiLihULHi • WORSE THAN EVER. • WHAT TO DO WITH 100 MILLION TRANSISTORS? WORLD SEMICONDUCTOR CONSUMPTION Billions of Dollars 70 63.9 60 49.9 50 41.1 40 37.2 32.6 30 26.6 20 10 1984 1985 1886 1987 1988 1989 - 19 - C 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 • SHORT TERM -TWO DIFFICULT QUARTERS -IMPROVEMENT THEREAFTER • 1985--24.1% GROWTH • 1989--$63.9 BILLION • 5 YEAR CAG--19.3% - 20 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 (::)aDataquest Dataquest THIS PRESENTATION WAS NOT AVAILABLE AT PUBLICATION TIME. IF A COPY IS MADE AVAILABLE TO DATAQUEST, WE WILL MAIL IT DIRECTLY TO YOU FOLLOWING THE CONFERENCE. Dataquest Incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Dataquest Dataquest THE EXPANDING UNIVERSE OF SEMICONDUCTORS Charles E. Thompson Senior Vice President Director of World Marketing Motorola Semiconductor Products Sector Mr. Thompson is Senior Vice President and Director of World Marketing for Motorola's Semiconductor Products Sector. Previously, he held positions as Marketing Manager, Materiel Manager, and Manager, Information Systems, in Motorola's Semiconductor Group. Mr. Thompson also spent 18 years at General Electric Company in Product Planning and Marketing, as a Corporate Consultant on computers, and in Computer Applications. He received a B.S. degree in Mathematics from the University of Washington. Dataquest Incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Dataquest Dataquest THIS PRESENTATION WAS NOT AVAILABLE AT PUBLICATION TIME. IF A COPY IS MADE AVAILABLE TO DATAQUEST, WE WILL MAIL IT DIRECTLY TO YOU FOLLOWING THE CONFERENCE. Dataquest incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 .i^^:^ I ^:;:;a Dataquest Dataquest 1984: BEFORE AND BEYOND James F. Riley Senior Vice President Dataquest Incorporated Mr. Riley is a Senior Vice President of DATAQUEST. Previously, he was President of Signetics and President of Intersil Incorporated. He has 20 years of experience in the semiconductor industry, the last nine of which have been with DATAQUEST. Mr. Riley has considerable experience in corporate planning, marketing, and general management. He received a B.S. degree in Business Administration from Lehigh University, where he was elected to Phi Beta Kappa. Dataquest Incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 1984 BEFORE AND BEYOND The DATAQUEST Semiconductor Group has been following the semiconductor industry for ten years. Today I want to look back 10 years and forward 10 years. (Slide 1) We present the challenge, "Where should semiconductor executives focus their attention in the next ten years?" The benefits of answering the questions this challenge raises lie in the process of answering them as much as in the answers themselves. (Slide 2) This speech has three parts: • Data for 1974 through 1994—A quantitative discussion of the industry including our projections for 1994 • A look at the semiconductor industry in 1994 • A presentation of some of the questions you should be considering, and some suggestions for formulating the answers. You've probably already noticed that t±e questions are not printed in the speech in your binder. We included some sheets for your notes and comments. (Slide 3) Let's look at the semiconductor market, from both a product and geographic point of view. Then I will touch briefly on the developments in technology, the industry's major suppliers, and the users. (Slide 4) In 1974 the worldwide semiconductor industry totaled $5.4 billion dollars. This year we estimate worldwide semiconductor consumption at $25.8 billion, and by 1994, we project a worldwide semiconductor market Of $175.5 billion. 1974 through 1983 showed a compound annual growth rate of 14.8 percent, and we project a compound annual growth rate of 22.6 percent for the next ten years. (Slide 5) - 1 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Let's look now at ICs, discretes, and opto devices. In 1974 we were still living in a discrete world. Fifty percent of all semiconductor devices were discrete. This year we estimate that 79 percent of semiconductor consumption will be ICs. By 1994 we will be living in an almost totally integrated world, with ICs representing about 91 percent of semiconductor consumption. Perhaps the most amazing part of this forecast is that, although discretes go from 50 percent down to 4 percent of the total, we still expect the discrete market to continue to grow in absolute dollars at around 6 to 7 percent per year. (Slide 6) If we turn to integrated circuits and look at the market by major product group, you can see that microprocessors accounted for a mere 2 percent of the IC market in 1974. Logic, at 56 percent, made up more than half the market. In 1984, logic accounts for only 30 percent of the market, while the microprocessor share has increased to 14 percent. By 1994, microprocessors will account for 27 percent of the market. Memory, which represented only 16 percent of the IC market in 1974, is expected to grow steadily to 39 percent by 1994. Although we expect linear devices to grow in absolute dollars, our estimates show that linear devices will account for a progressively smaller percentage of the total IC market although growing at 14 percent per year. (Slide 7) Another important aspect of the IC market is the split between standard and application-specific devices. As this chart shows, we expect the ASIC market share to grow from 1 percent in 1974 to 27 percent in 1994. These estimates include both merchant and captive production. (Slide 8) Let's turn now to consumption by geographic region. These three pie charts clearly show the growth in the Rest of World segment and the decline in European consumption as a percentage of the total. (Slide 9) This is the picture when we look at semiconductor market share by origin of manufacturer. (That means that if a U.S. company manufactures the product, it is counted as U.S. market share even if it is not actually manufactured in the United States.) As you can see, we anticipate substantial growth in the Japanese market share and a decline in the market share of European companies. Resolution of the 11% grey area between the U.S. and Japan is still an open question. (Slide 10) Let us now look at technology developments. (Slide 11) - 2 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 All DATAQUEST clients are familiar with this chart, although you've never seen it projected out this far. If the trend we have been plotting continues, the price per function will be down to 0.7 millicents by 1994. (Slide 12) Of course, one of the main reasons that the price per function has declined so rapidly, is that over the years we have crammed more and more functions onto a single chip. This slide shows the increase in complexity over the period in question. From 20 thousand transistors in a 4K static RAM in 1974, we are projecting the possibility of a 16 megabit dynamic RAM by 1994 that will contain a staggering 17 million transistors. (Slide 13) This slide shows wafer starts by line width for the period 1974 through 1994. In 1974, the vast majority of wafer starts (95 percent) were in geometries greater than 6 microns. This year we are seeing the very beginning of sub-micron geometries, but devices with greater than 5-micron geometries still account for 34 percent of the wafer starts. By 1994, the majority of devices (40 percent) will be 1 to 2-micron-devices, and sub-micron geometries will account for as much as 25 percent of the market. (Slide 14) As geometries get smaller, wafers get larger. The majority of devices were produced on 3-inch wafers in 1974. This year we are seeing the majority produced on 4-inch wafers although the trend to 5- and 6-inch wafers is gaining momentum. By 1994, we expect 6-inch wafers to predominate, although there will still be substantial production in 4- and 5-inch wafers. (Slide 15) We are at the threshold of important changes in packaging technology. In 1974 surface-mount devices accounted for less than 1 percent of the merchant IC market. Today they account for about 5 percent of the merchant market; by 1994, we expect to see as many as 50 percent of all ICs shipped as surface-mount devices. (Slide 16) Let's move now from the devices being supplied to the companies supplying them. (Slide 17) These were the top ten suppliers of ICs in 1974: eight U.S. companies and two Japanese companies. (Slide 18) - 3 - © 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 The final data are not in for 1984, but this was the picture in 1983. Five of the top ten were U.S. companies, four were Japanese, and one was European. (Slide 19) We don't usually make projections for individual companies, but one prediction we can make: The top ten companies in 1994 will be those companies that have successfully addressed the questions that I will be presenting at the end Of this speech. (Slide 20) In 1974, we identified 86 merchant semiconductor manufacturers and 36 captives. Today there are more than 180 merchant suppliers and 60 captives. Both these numbers could double by 1994. The problem in 1994 will be defining merchant or captive—or even semiconductor manufacturers. Captive suppliers are selling on the merchant market; government-sponsored research agencies are making commercial commitments; and array companies are proliferating with fabrication capability ranging from 60 to 100 percent. (Slide 21) This chart shows our estimates of capital expenditures by semiconductor manufacturers in Japan and the United States. As the chart shows, Japanese expenditures consistently exceed U.S. expenditures as a percentage of revenues. The chart also clearly demonstrates how much capital expenditures as a percentage of revenue have increased since 1974. (Slide 22) This slide shows part of the reason why those capital expenditures have climbed so high. In 1974, the cost for starting a wafer fab was $5 million. Today it is of the order of $100 million. By 1994, it could easily be $200 million or more. (Slide 23) This slide shows the equipment demand behind those costs. It also clearly demonstrates the equipment technology trends over the years 1974 through 1994: from contact aligners to X-ray steppers, from wet to dry chemistry, and from zero automation to full automation. (Slide 24) Despite the high cost of entry, there seems to be no slowing in the number of people willing to start new semiconductor companies. This slide, which is taken from a recent DATAQUEST newsletter, shows the number of semiconductor start-ups over time. 1983 was a record year with 16 start-ups in the United States, and although 1984 is not yet over, the record has been broken—18. (Slide 25) Let's turn now from the people who sell the devices to the people who use them. (Slide 26) - 4 - © 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.G. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 The number of semiconductor users has grown dramatically over time. These estimates show the number of semiconductor purchasing locations growing from 25,000 in 1974 to 500,000 in 1994. Pervasiveness, which is the theme of this conference, is the main reason for this explosive growth. (Slide 27) EDP has the largest end-use market share. Telecom is the fastest growing. (Slide 28) This slide shows our estimates of the cumulative number of semiconductor design workstations in use through 1994. 1984's number will include some IBM PC-based engineering terminals. By 1994, however, we expect to see a significant change in the use, performance, and appearance of the PC as we view it today and therefore, our projections for the 1994 number will include some of these low-cost systems. (Slide 29) I'd like to take a moment now to review some of the DATAQUEST Semiconductor Group statistics. Back in 1974, there were just two people—Fred Zieber and me. Today we have 46 people worldwide, and that doesn't count the support staff who are part of DATAQUEST's corporate organization. If you project the same compound growth rate for the next ten years, we will have 1,058 employees by 1994. Of course if we, like you, concentrate our efforts on increasing yields, we may get that much productivity without quite that many people. We need a bigger staff these days because our client base has grown to over 450. By 1994, it could be as high as 5,000 and we will still be able to say that our clients manufacture more than 90 percent of the semiconductors sold on the merchant market. If you use the same kind of growth rates on our revenue estimates, we will be looking for $60 million by 1994—please budget accordingly. We started the Semiconductor Group in the heart of Silicon Valley. Today, we also have research offices in London and Japan. It's hard to say where we will go next, but we will be on hand to follow the semiconductor industry wherever it goes. (Slide 30) I want to take all those statistics we've just covered and build a picture of 1994. (Slide 31) - 5 - © 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 1994—The Market (Slide 32) 10 Tiroes Larger ASIC Impact U.S./Japan Struggle Subsidized ROW Entry Super Niches New Applications Market Driven Blurring of National Boundaries 1994—Manufacturing (Slide 33) Mixed Bipolar/MOS High Technology/Low Differentation $0.5 billion Sales from Standard Fab—going to $1 billion Wafer Subcontracting Full Automation 7 days/week, 24 hours/day 1 Week Turnaround New Packaging Technology 1994—The Users (Slide 34) New Companies/New Markets (10 PC markets will emerge) New Countries Will Emerge as Users (e.g., Israel, Australia, South Africa) All Survivors Will Design Their Own ASICs—Key to Survival - 6 - © 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 "On-line" to Multiple ASIC Vendors Design Technology Available Multi-nationally Hardware like Software Less Economy o£ Scale (Cheap ASICs open equipment markets to all) Grow by a Factor o£ 3 Uses Of Semiconductors in 1994 (Slide 35) Neither DATAQUEST or anybody else has ever been able to invent enough applications to justify the markets that eventually will occur. There are sure to be additions to this list. Some Ideas: • Voice I/O for Computers • Dedicated Computers - weather forecasting - geological survey - logic and circuit simulation • Vision, Touch, (Taste?) (Smell?) Analysis • Vision Systems for Robots • Medical Advances: - artificial limbs - diagnostic tools • Digital Signal Processing - 7 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Blur ing (Slide 36) Analog/Dig ital MOS/Bipolar Computer/Calculator Computer/Communications Supplier/Customer IC Designers/Systems Designers - 250,000 systems designers - 3,000 digital designers - 300 linear designers Other Factors to Consider in 1994 (Slide 37) • Gallium Arsenide • Fiber Optics • Organic Semiconductors • Superlattices • Wafer-scale Integration It certainly is a very exciting picture, and if you want to be part of it, these are some of the questions you must ask yourself today. (Slide 38) QUESTIONS TO BE PRESENTED AT THE CONFERENCE, - 8 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 RIdder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 • B^:$t^^Ji^^^:^^i^<^i^^VVii^^^^?^d^i^^ !Lv>:^C^«rti'^^^^ii^^^^^ ' K^f^l^i^i^^^d^tyc^f^^fi^ i^n:n:r^^ l^.-k^ WUiL: -wV^^. Miw-Ji. - 9 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 3. 1984--BEFORE AND BEYOND • DATA 1974-1994 • A VIEW OF 1994 • THE QUESTIONS 4. g!gaag8WiawwwtaMrego»tgw3)tMe^^ DATA 1974-1994 I • THE MARKET • TECHNOLOGY • SUPPLIERS • USERS - 10 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 5. ESTIMATED WORLDWIDE SEMICONDUCTOR MARKET Billions of Dollars 200 SI 75.5 150 100 S64.0 50 S25.8 S11.1 $5.4 1974 1379 1984 1989 1994 ESTIMATED WORLDWIDE SEMICONDUCTOR MARKET IC - DISCRETE - OPTO Percent 100 80 60 40 20 i •I I 1974 1979 1984 1989 1994 TOTAL IS5. 4B iS11.1 B $25.8B I$64.0B S175.5B EZ2 IC • DISCRETE m OPTO Source: DATAQUEST - 11 - C 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 7. ESTIMATED WORLDWIDE INTEGRATED CIRCUIT MARKET BY MAJOR PRODUCT GROUP Percent 100 60 60 40 20 ^ M ^ 1974 1879 1984 1989 a199 4 TOTAL $2.58 S7.1B S20.2B S55.4B S160.4S E2 MP ED MEMORY • LOGIC ^ LINEAR 8. ESTIMATED APPLICATION-SPECIRC VS. STANDARD INTEGRATED CIRCUITS Percent (EXCLUDES ROM AND PROM} 100 80 60 40 20 1974 1979 1984 1969 1199 4 0 ASIC D STANDARD Source: DATAQUEST - 12 - © 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 9. ESTIMATED SEMICONDUCTOR CONSUMPTION BY REGION 1974 [~] UNITED STATES [x] EURore O JWrtN H KM 1S84 1994 10. ESTIMATED GEOGRAPHIC SEMICONDUCTOR MARKET SHARE BY ORIGIN OF MANUFACTURER 1974 |~| UNITED STATtS [Tj ilMOK n < U 1984 1994 Source: DATAQUEST - 13 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 11. riIyrIjj^' -| • -lIyjjrtj^^fcjgipftiiyqrti DATA 1974-1994 • THE MARKET |« TECHNOLOGY • SUPPLIERS • USERS 12. ESTIMATED AVERAGE PRICE PER FUNCTION (ICs) 12 z - x^ u111 _i s 10 z i p - 3 u. 1.0 1 1 t 1 I I I t I 1 1 es 85 » 87 88 89 90 91 92 93 94 YEAR Sourca: DATAQUEST - 14 - © 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 13. «KKJJJ!KS5iSs=!5i5!;Si«K" ESTIMATED DEVICE COMPLEXITY NUMBER OF YEAR DEVICE TRANSISTORS 1974 4K SRAM 20.000 1979 64K DRAM 150.000 1984 1Mb ROM 1.200,000 1989 4Mb DRAM 4.500.000 1994 16Mb DRAM 17.000,000 14. WAFER STARTS BY LINE WIDTH 100% BELOW 1 MICRON w tt Ul 1-2 MICRONS u. 50H - < 3-6 MICRONS 6 MICRONS AND UP 1974 1984 1994 Source: DATAQUEST - 15 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 15. WAFER SIZE 3" 4" 6" 16. ESTIMATED SURFACE-MOUNT PACKAGES AS A PERCENTAGE OF ICs Percent 100 80 60 50^ 40 20 < n ^^ 1 —• \ \ 1974 1984 1994 Source: DATAQUEST - 16 - © 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 17. flp-a^y*iOftawnffaywrtoft<^yw^^ DATA 1974-1994 • THE MARKET • TECHNOLOGY l^« SUPPLIERS • USERS 18. ^MSsggsgggsRsngiisgKiwaeicMgi ttM'saasxx^iaiirssxstX'XtsaxxxTXfsri'^^ 1974 TOP TEN MERCHANT IC SUPPLIERS TEXAS INSTRUMENTS FAIRCHILD NATIONAL MOTOROLA SIGNETICS INTEL RCA NEC AMI HITACHI Source: DATAQUEST - 17 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.G. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 19. 1983 TOP TEN MERCHANT 10 SUPPLIERS TEXAS INSTRUMENTS NEC MOTOROLA HITACHI NATIONAL INTEL PHILIPS/SIGNETICS FUJITSU* TOSHIBA' •HEii'EliTr^rt^rTS AMD- Source: DATAQUEST 20. tmiiitimmaSSaisamiMu^^ - 18 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 21. ^SS!S!;S«!Si;!SSKK!???'^KSKSSSStS5^5^;SSaK^ ESTIMATED NUMBER OF COMPANIES 1974 1984 1994 MERCHANT 86 180 360+ CAPTIVE 36 60+ 120+ TOTAL 122 240+ 480+ 22. ESTIMATED CAPITAL EXPENDITURES AS A PERCENT OF REVENUE Percent of Revenue 50 40 30 20 10 1374 1979 1984 1989 1994 • U.S. D JAPAN Source: DATAQUEST - 19 - e 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 23. «K:SBS3iffl!iiiSXK»;i«SilBIHISS:I!»i8lie8ii;Si8S^ WAFER FAB TURNKEY COST 1974 $ 5 MILLION 1984 $100 MILLION 1994 $200 MILLION 24. TYPICAL CONTENT OF A WAFER FAB 1974 • CONTACT ALIGNERS • WET CHEMISTRY • NO AUTOMATION 1984 • WAFER STEPPERS • DRY ETCH • ION IMPLANT • SOME CAM (COMPUTER-AIDED MANAGEMENT) 1994 • X-RAY WAFER STEPPERS • DRY ETCH • ION IMPLANT • CLASS 1 WAFER ENVIRONMENTS • IN-LINE PROCESSING • FULL AUTOMATION Source: DATAQUEST - 20 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 25. HISTORY OF SEMICONDUCTOR START-UPS Some*: DXTAOUEST 26, I" A" T'.rjLL L 'ffii'^ TC!TC^ffJ1fyi^^ • THE MARKET • TECHNOLOGY • SUPPLIERS ^ • USERS - 21 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 27. 4i8I!i!SS3J!iJU8aKSS!;»»K»:X»!Sii;ISS%Si2%SSSS^XI^3{S«:;s»Si9S;»^ GROWING USER BASE 1994 1984 1974 25.000 USERS 150,000 USERS 500,000 USERS 28. END USE DEDP 1974 H GOVERNIVIENT U AUTOMOTIVE O CONSUMER H TELECOM M INDUSTRIAL 1984 1994 Source: DATAQUEST - 22 - © 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 29. '•^»HjtKi.i(*',*»*".»':'^x»'e'( • •».,('.-'( '•:'lt*)»«'.i'. ',.«*•<:.(!*.-....i' ^-.-..'..•' .:y**iMif-::^' \^',:Y:'..' «...'•«• :^"':'x. .. > V,.. ..'»*'. •.' ••, ,•' . ••'f •% '• ' •<••- »: •.-Xsie-i ESTIMATED NUMBER OF ENGINEERING WORKSTATIONS IC WORKSTATIONS 1974 < 1.000 1984 4.000 1994 250.000 30. DATAQUEST SEMICONDUCTOR GROUP 1974-1994 1974 1984 1994 PEOPLE 2 46 500 SERVICES 1 4 5.000 CLIENTS 2 450 5.000 REVENUES 0 $5 MILLION $60 MILLION LOCATIONS 1 3 9 - 23 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.G. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 31. C; ?^V^*<^:^i5*fe;Hillillliilliirirw^iiliririgfiiMiiiiiiJii: r n F^I?^-'^" ^^^'d' ^ 32. :3i:i;iiaxa;Sia;«5S»*-;va"^^;i5;£:«:if'M»?-:a«:a!;-vi-:: i;.;;"C5.;:;:35T:i;:'v*i • 10 TIMES LARGER • ASIC IMPACT • U.S./JAPAN STRUGGLE • SUBSIDIZED ROW ENTRY • SUPER NICHES • NEW APPLICATIONS • MARKET DRIVEN • BLURRING OF NATIONAL BOUNDARIES - 24 - © 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 33. zsfspsssessscsx 1994--MANUFACTURING • MIXED BIPOLAR/MOS • HIGH TECHNOLOGY/LOW DIFFERENTATION • $0.5 BILLION SALES FROM STANDARD FAB--GOING TO $1 BILLION • WAFER SUBCONTRACTING • FULL AUTOMATION • 7 DAYS/WEEK. 24 HOURS/DAY • 1 WEEK TURNAROUND • NEW PACKAGING TECHNOLOGY 34. frt^:jgj:;r>-V/i*JiKT^jj^'R^^^ :1','; ••^:>:^i;^"5ii^.*ii;"^iS"iS5iSJ^?rT;.'l:'?:^!:;' •'• hii^i^Ci'^^^^—J^^iiJ^^^^^^^t^'^r-i.-i^:^^''^^^;'^'-^^ 1994--THE USERS • NEW COMPANIES/NEW MARKETS • NEW COUNTRIES WILL EMERGE AS USERS • ALL SURVIVORS WILL DESIGN THEIR OWN ASICs-- KEY TO SURVIVAL • "ON-LINE" TO MULTIPLE ASIC VENDORS • DESIGN TECHNOLOGY AVAILABLE MULTI-NATIONALLY • HARDWARE LIKE SOFTWARE • LESS ECONOMY OF SCALE • GROW BY A FACTOR OF 3 - 25 - e 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, GA 95131 / (408) 971-9000 / Telex 171973 USES OF SEMICONDUCTORS IN 1994 «KkSiH8SSiiiH;SSi88!iH!S«S!SSS^^ NEITHER DATAQUEST OR ANYBODY ELSE HAS EVER BEEN ABLE TO INVENT ENOUGH APPLICATIONS TO JUSTIFY THE MARKETS THAT EVENTUALLY WILL OCCUR. THERE ARE SURE TO BE ADDITIONS TO THIS LIST. SOME IDEAS • VOICE I/O FOR COMPUTERS • DEDICATED COMPUTERS • VISION. TOUCH, (TASTE?) (SMELL?) ANALYSIS • VISION SYSTEMS FOR ROBOTS • MEDICAL ADVANCES • DIGITAL SIGNAL PROCESSING 36, BLURRINQ • ANALOG/DIGITAL • MOS/BIPOLAR • COMPUTER/CALCULATOR • COMPUTER/COMMUNICATIONS • SUPPLIER/CUSTOMER • 10 DESIGNERS/SYSTEMS DESIGNERS - 26 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 37. ri' 'in I ii'I fr irn i i i irri\nLjv;L~rTir''r'rrT~rry^»'K>y°'*iw'r>'»''ftT^^ OTHER FACTORS--1994 • GALLIUM ARSENIDE • FIBER OPTICS • ORGANIC SEMICONDUCTORS • SUPERLATTICES • WAFER-SCALE INTEGRATION 38. iCt'j'^iyiX^-^i Sr^;^* - 27 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 OUESOilONS - 28 - e 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 QUE^IONS - 29 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.G. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 QUESTIONS - 30 - © 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 QUESTIONS - 31 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 OUESEIONS - 32 - e 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 OUE^IONS - 33 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 QUESEIONS - 34 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 QUESTIONS - 35 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 QUEsilONS - 36 - e 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 IP QUESTIONS - 37 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 TBI OUESgBlONS - 38 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 (:::aDataquest Dataquest BIPOLAR FIGHTS BACK John C. East Vice President—Bipolar Division Advanced Micro Devices, Inc. Mr. East has been Vice President of the Bipolar Division of Advanced Micro Devices, Inc., since 1982. Previously, he was Operations Manager of Digital Integrated Circuits at Raytheon Semiconductor. He has also held various positions in engineering, marketing, and production at Fairchild Semiconductor. Mr. East received a B.S. degree in Electrical Engineering and an M.B.A. degree in Production Management, both from the University of California at Berkeley. Dataquest Incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 few -f^^' ^^E^^iSf i^. ^~: :^-^--=^^.^. ^i^:^; . ,- : ^=^5^:-: 4^^7i^-^^^*^J:.' :^"^S]F^.-^.r^5;-, 'jjr-;.-- • '- >l^.^. .-^V.'T 'r'^V .*^',- -. '-- i^** .-• !*.^*^-r=' > -i >4 ^^*^. ^ f - ji,-." •.;.:...-...- —;:..;* . "=.;; •^%.'_ ' .v-.T-'.^?.. .-. ' •im •^ui;-^- Back •-?? w ¥ 3«. HI^^I 4. AbUlty te Comblw ^ ^ - "^ All in a Single Grcutf -1 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Density (Number of Gatei) 3000 6000 Gates Gatss Density -^^^ - 2 - Dataquest Incorporated, A Subsidiary of A.G. Nielsen Company /1290 Ridder Park Drive / San Jose. CA 95131 / (408) 971-9000 / Telex 171973 ^Alll nu G|3SIAI? -^ '^^^^^fL -. .^i* Fei'foiiiihi9 Flinc tl ons- Tttst^ Cidsldfift' Be Done Well a Few Yecrrs^ Ago* • Hfgtr Speed Bit Mapped Graphfcr » Hfgfr Speed Local Networking • High Speed Data Acquistion • High* Speed Accelerators • High Speed, Medium Cost C.P.U. - 3 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 >^,^'1^-"^ 'J^.i'^.^^;.'-!.;y^ •-••«?'?• v'--*i^*r^:^?\.1?^--"-" • if ^^^^^S'W^^ -^^tEv-TlWraft^CUj J i fju fiiRMr Mk tcftri. •- '• .'t ^^^^ ^^^ ni»tjrtwt;wte»rjaiyiga*if>.CJiioa ^ ^-s^^^^^p^X'R^OWw-BlpatarR^dbBtaE^, -T'i'te - r " - HIsloilcrtly' Ifot^ Pttthsd Ifi9 TschnoloQjf wFnffttm^MOS Manufacturers - 4 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Processes sncT BcftraT Hfeltl Bipolar Is Fasten :^;;:' $ -.; -^*^' CTrcnits CerrrSoirretfaT^Bt^ Replaced by CMOST - 5 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 TodavALMdhia LMdlrtflEdgi Edge of Entras infai • ©Crinlojy RlK-ef-tfM- Edg» MI ti'^f^S^. ."^^^. BtporsF Pil^i^i ...... jivf- i-.'-4 i-'rf-t •»•• -1 j > ::.-^-"- ^'.a-^^ii'^^^-VJ^? - ., ^-vj'^ •r,'^wefr^ -Ij - 6 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 1^-j- m HiidlidlifTgf STgnaf SWI117 WTttioot' - 7 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 ^''^mv 21 hiu5 Experftincifa DTniriilaflfii^/^ Refams Rir Scaling Due t BTpoli - 8 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 1 >• G«t«forC1MOS.i MIeron CaewlH«g if wW- ^ Also Domlnare Bipolar ^ M> ;;; to Vawing Powvr Los to V^Ing Bipolar Hai Lowor Vswing Prrvesthe Gapauitarrcg Best WTrrs BrpoTar - 9 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 1985 Time PWy l^s^r^i^^s SIdt Isototloir Sub Mt&fun Csoinvtrtatt • 10-15 N.S. Procvsaor Cycles (Single Pipelined) - 10 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 - 11 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 RIdder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 •*—.»-- (l^aDataquest Dataquest SEMICONDUCTOR INDUSTRY SERVICE MINI-CONFERENCES Monday, October 15, 1984 1:45 p.m. to 4:00 p.m. This year, for the first time, the Semiconductor Industry Service is presenting hour-long mini-conferences. These mini- conferences will feature presentations by the DATAQUEST staff followed by informal discussion periods. The User Workshop will follow the format used in past years. The workshop leader will make a short presentation at the beginning, but is mainly there to guide the discussion among the industry participants. The objective of these sessions Is to provide an Informal forum where Interested conference attendees can focus on key Industry Issues and discuss them In greater depth than Is possible during the larger sessions. MINI-CONFERENCE SESSIONS 1:45 p.m. CAD/CAM and ASICs—Regent Empress Room Jim Newcomb, Director, CAD/CAM Industry Service Andy Propliet, Senior Industry Analyst, Semiconductor Industry Service The fortunes of the CAD/CAIVI industry and the ASIC (Application Specific Integrated Circuit) segment of the Semiconductor Industry are inextricably linked. The EDA (Electronic Design Automation) segment of CAD/CAIVI provides the design technology for creating new ASIC designs: gate arrays, standard cells, and custom ICs. Advances in ASIC technology. In turn, drive EDA workstation product Innovations. Together they form a powerful synergistic relationship that will have a profound Impact on the semiconductor industry. Memory—Hanover Room Lane Mason, Senior Industry Analyst, Semiconductor Industry Service The semiconductor memory market constitutes more than 35 percent of integrated circuit revenues. After 2-1/2 years of extraordinary growth, this market is poised to undergo a dramatic transformation in technology, circuit diversity, and values to the user. This seminar will provide: • Memory market overview and status—-1984 • Trends in supplier base, technology, packaging, and price outlook Equipment and Technology—Windsor Complex Robert McGeary, Senior industry Analyst, Semiconductor industry Service Gene Norrett, Director, Japanese Semiconductor industry Service Arden DeVincenzi, Researcli Analyst, Semiconductor industry Service Semiconductor equipment drives the technological revolution in the Semiconductor Industry. The Equipment and Technology session will cover three topics: factory automation, worldwide joint ventures, and worldwide capital spending. Each topic will be introduced by a 5-minute overview, followed by a 30-minute discussion workshop. The session will end with three 10-minute recaps. (over) Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 MINI-CONFERENCE SESSIONS (Continued) 3:00 p.m. Microprocessors—Oxford Room Met Thomsen, Senior Industry Analyst, Semiconductor Industry Service Jan Rey, Research Associate, Semiconductor Industry Service This session will briefly review the microprocessor market during the first half of 1984 and will then analyze the outlook for 32-bit microprocessors. Various forecasts for this market vary by as much as 10:1 for shipments of this product family. This session will address this discrepancy and present market data for some expected applications for these high-performance microprocessors. User Workshop—Regent Empress Room Stan Bruederie, Director, Semiconductor User Information Service Jean Page, Industry Analyst, Semiconductor User Information Service Mary Olsson, Research Analyst, Semiconductor User Information Service Participants in the User Workshop will exchange views on surface-mounted packaging, just-in-time delivery, and buying semiconductors in Japan. The objective of the workshop will be to examine the potential cost savings against the realities of implementation. Geographic Trends—Windsor Complex Malcolm Penn, Director, European Semiconductor Industry Service Sheridan Tatsuno, Research Analyst, Japanese Semiconductor Industry Service The World of Semiconductors is becoming increasingly global. This session will deal with trends in the three major geographic segments of the world market with emphasis on Europe and Japan rather than on the United States. Since the spring of 1984, the U.S. semiconductor market has experienced a slowdown in bookings while the European market is still experiencing bookings and billings that remain at feverish levels. In August, the European book-to-bill ratio Stood at 1.37 compared with 1.00 in the United States. In 1984, DATAQUEST has predicted that European consumption will grow at an explosive 55 percent, compared with 18 percent the previous year. The Japanese semiconductor industry is becoming increasingly global as a result of shifting economic and political trends. This session will examine the opening of Japanese manufacturing plants and design centers in the United States and Europe as well as the proliferation of joint ventures and licensing agreements by Japanese companies. ECONOMIC OUTLOOK-- WHAT WILL THE ELECTION'S IMPACT BE? A. Gary Shilling President Gary Shilling & Co., inc. Dr. Shilling is President of A. Gary Shilling & Company, Inc., economic consultants to a number of financial institutions and industrial corporations. Previously, Dr. Shilling was Senior Vice President and Chief Economist of White, Weld & Co., Inc. His earlier experience included setting up the Economics Department at Merrill Lynch, Pierce, Fenner & Smith. Prior to that time, he was with Standard Oil Co. of New Jersey, where he was in charge of U.S. and Canadian economic analysis and forecasting. Dr. Shilling received his A.B. degree, magna cum laude, from Amherst College, where he was also elected to Phi Beta Kappa. He also received M.A. and Ph.D. degrees in Economics from Stanford University. Dataquest Incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Dataquest THIS PRESENTATION WAS NOT AVAILABLE AT PUBLICATION TIME. IF A COPY IS MADE AVAILABLE TO DATAQUEST, WE WILL MAIL IT DIRECTLY TO YOU FOLLOWING THE CONFERENCE. Dataquest Incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 .C[Efe^T^ Dataquest Dataquest PERVASIVENESS—THE PERSPECTIVE REVISITED Charles H. Phipps Vice President, Market Development Semiconductor Group Texas Instruments Incorporated Mr. Phipps is Vice President of Market Development in the Semiconductor Group of Texas Instruments Incorporated. Previously, he was responsible for the Corporate Office of Strategic Development at TI. Earlier, he was involved in the development of TI's integrated circuit business, initially as Marketing Manager, and then as Department Manager for MOS and Memories. Before joining Texas Instruments, he was a staff engineer for Military Engineering at Motorola, and a member of the Test Engineering Prograuns at General Electric. Mr. Phipps received a B.S. degree in Electrical Engineering from Case Institute of Technology and an M.B.A. degree from Harvard University. Dataquest Incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.G. Nielsen Company / 1290 Ridder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 ABSTRACT PERVASIVENESS - THE PERSPECTIVE REVISITED Twenty years ago, integrated circuits were identified by P. E. Haggerty as revolutionary departure from prior electronic components. This development promised to remove the barriers to widespread applications of electronics, not only to industry, but to society as a whole. The term he used to describe this potential was "pervasiveness".* Today, we face a future that promises the full blossoming of electronics pervasiveness. This opportunity will provide the potential for the integrated circuits market to continue to grow at a high rate for the next ten years. While semiconductor technology is widely recognized as the driving force creating new electronics markets, it is sometimes overlooked that the semiconductor industry must also adjust to changes affecting its structure and strategies. Four current driving forces identified are: product complexity's impact on investment and timeliness of market entry; manufacturing technology trend to an operatorless environment; customer interface changes due to semicustom products and procurement cycle; amd international competition. The impact of these and other forces create new challenges to be addressed. In closing, the requirements for electronics pervasiveness, as defined twenty years ago, are briefly revisited. •Patrick E. Haggerty, Proceedings of IEEE. December, 1964 - 1 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Dataquest Dataquest SYSTEMS DESIGN AT THE CHIP LEVEL Douglas Ritchie Vice President, Consumer Specific Products Group National Semiconductor Corporation Dr. Ritchie is the vice President of National's Customer Specific Products Group. Previously he worked in management functions at Burroughs Con^jany in San Diego, California. Dr. Ritchie holds a B.S. degree in Physics from Oregon State University and M.A. and Ph.D. degrees in Engineering/Applied Science from the University of California at Davis/Livermore. Dataquest incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 IBTEGRATIBG SILICON ABD SYSTEM DESIGB Douglas Ritchie Vice President, Customer Specific Products Group National Semiconductor Corporation I. Systems house environoment A. The computer-aided-design (CAD) hierarchy B. Challenges the system designer faces 1. Market windows 2. Time-to-market 3. Risk management 4. Technology selection 5. Vendor selection II. Silicon house environment A. The CAD system in the silicon house B. Working with the "CAD Gap" 1. Gate arrays 2. Standard cells 3. workstations III. Risk Management Tools A, The semi-custom technology of gate arrays B. Agreements between systems houses and silicon houses - 1 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Pari< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 SDHMARY OF TEE "CAD GAP" A systems house can develop a vertically integrated CAD system extending down to a multiplicity of silicon modules. The bulk Of the system house CAD system is not in the silicon portion. The silicon vendor is ill-advised to attempt to upward integrate into total CAD hierarchical chip-board-socket- connector-backplane due to highly variable choices made by a wide variety of customers. Therefore, the silicon vendor must look for a transportable "common denominator," Today, this is best seen in the semi- custom gate array module resident on a workstation. This does not ensure a "wall-to-wall systems design," but steps in this direction. The silicon vendor must learn to plug high "technology database" into the systems house CAD system in an effective, unobtrusive way. - 2 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 r • - ^I A TYPICAL HIERARCHICAL SYSTEM OF CAD MODULES SYSTEM MACRO LEVEL SIMULATION i SUBSYSTEM 1 SIIStULATION 1 aOARD SIMULATION [?Ci] .1 IMODULE S)MULATIOH i SILICON OEUICE SIMULATION A SlUCQN DEVICE MICRO LEVEL DESIGN 1, MICRO LEVEL OF CAD SIMULATION SILICON DEVICE DESIGN TEST CIRCUIT DEVELOPMENT MODELS MODULES 1 DEVICE . MODELS PHYSICAL f^ODULES CIRCUIT DEVICE PROCESS MASK LAYOUT DESIGN MODULES GENERATION S National SemiconductDr' - 3 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 SILICON DESIGNER CONCERNS INCLUDE • Flexibility to Move with Evolving Technology • Device and Process • CAD • Ability to Predict the Results Accurately • Consistently with Production Tools • Designer Consistency a National Semiconductor' AN ENGINEER'S PROBLEM —RISK MANAGEMENT- Silicon Vendors Must Learn to be Responsive in Their Role in Helping to Control and Minimize the Risk Inherent in New Product Development Cycles. L2 National Semiconductor' - 4 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 CORPORATE TRENDS THAT AFFECT SILICON RISK MANAGEMENT • More Power Vested in Central Procurement Functions • More Technology Capabilities and Insights Available in Corporate Procurement • Fewer Vendors • Deeper Relationships • "Pairing," Exchange Agreements 2 National Semiconductor THE CAD GAP MACRO LEVEL SYSTEM SIMULATION INTENSIVE PORTION CAD MODULES- DEVICE/MANUFACTURING INTENSIVE PORTION MICRO LEVEL 3 NationaI Semiconductor ^— - 5 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 INCREASING NEED FOR MODULARITY IN CAD • Standards Will Become Important • Allow/Support/Drive Innovation • Allow Proprietary Work but in a Flexible Environment • Allows More "Local Optimization" • EDIF is an Example a National Semiconductor • DESIGN CYCLE TIMES N>Afl 24 - CUSTOM LSI/VLSI CIRCUIT 22 - 20 - 18 - 16 - 14 TIME IN 12 MONTHS 10 8 STANDARD CELL (CUSTOM) 6 4 GATE ARRAY CIRCUIT 2 0 DESIGN 'Approximate times to finish a design to point of mask fabrication. a National Semiconductor ^^-^^—^^^—^^^^^-^^^^— - 6 - Dataquest incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 TECHNOLOGY SELECTION CRITERIA • Level of Technology/Capabilities • Maturity of Technology • Consistency with Design Needs • Service and Support • Availability of Alternate Sourcing • Accessibility of Tools 2 National Semiconductor' J UV/741 TECHNICAL RISKS IN ALTERNATE SOURCING • Differences in Fab Facilities and Manufacturing Equipment • Freedom of Choice • Process details • Hardware • Personnel • Style • High Tech Solutions Increase These in Intensity a National Semiconductor' - 7 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 QUICK TURN AROUND SERVICE (QTA) • Reduces Time to Market • Allows Experimentation in New Product Design • Allows Competitive Tracking During Extended Development Cycles • Risk Management Tool a National Semiconductor' THE COMPETITIVE EDGE IN SILICON 1970'S Speed Density Features Cost 1980's Service Flexibility Tools Time to Market Adaptability to the Design Environment Sa National Semiconductor • - 8 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Dataquest Dataquest DISTRIBUTION, A NEW ERA John S. Abram Executive Vice President Product Marketing and Management Arrow Electronics, Inc. Mr. Abram is Executive Vice President for Product Marketing and Management at Arrow Electronics, Inc. He is also responsible for miscellaneous new ventures such as Canadian operations and semi--custom ic design services. Mr. Abram has more than 20 years of experience in the electronics industry, half of it in manufacturing and half in distribution. Dataquest incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Dataquest THIS PRESENTATION WAS NOT AVAILABLE AT PUBLICATION TIME. IF A COPY IS MADE AVAILABLE TO DATAQUEST, WE WILL MAIL IT DIRECTLY TO YOU FOLLOWING THE CONFERENCE. Dataquest Incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Dataquest SERVICING HIGH PERFORMANCE SYSTEMS DESIGNERS Roger A. Smullen President and Chief Executive Officer Applied Micro Circuits Corporation Mr. Smullen has been President and chief Executive Officer of Applied Micro circuits Corporation since 1982. Previously, he was Senior Vice President of Operations of Intersil Incorporated's semiconductor division; was a co-founder of National Semiconductor; and was a Director of Integrated Circuits at Fairchild Semiconductor. Mr. Smullen has a B.S. degree in Mechanical Engineering from the University of Minnesota. Dataquest Incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 SERVICING THE HIGH PERFORMANCE SYSTEM DESIGNER .^smm^ PERVASIVENESS PROMOTES TRANSITIONS • ASIC's • High Performance • Service Orientation - 1 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 THE LOGIC MARKET MOVING TOWARD SEMICUSTOM $ Billions 8 6 4 2 SourcM: Dataquaal 1984 1988 MackinletM OnesUet O Semicustom ^sSM^tS INEXORABLE TREND TOWARD HIGH PERFORMANCE «•!•««• Operating *p«*4 Computer Syttoms 1,000.000 I960 1«70 iseo 1990 - 2 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen CorTipany /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 THE SEMICUSTOM MARKET MOVING TOWARD HIGH PERFORMANCE $ Billions 3 SIX ^m^n •e«irea«i •••Ka/OfMK* 1984 1988 Data^iMtt MaekMoM OHigh Performance .^G^OIS SERVICE WILL BE KEY *The More High Technology Around Us, The More The Need For Human Touch." John Natobitt ll«gatr«nd« 1M2 ^iSM^m - 3 - Dataquest incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 HIGH PERFORMANCE SYSTEM DESIGNER NEEDS • High Speed Products • Creative Semi-Custom Design Tools • Pleasant Design Environment • Rapid NRE Cycle ^m^^m - 4 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 HIGH SPEED PRODUCTS IHNI) 3O0 SOD 100 High P«rfen«ianc* PrecMSor L«glc Array ^M^^ CREATIVE DESIGN TOOLS Silicon - Lovol Macros SpacIal Logic jm^^m - 5 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 RAPID NRE CYCLE - 6 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 TODAY'S SERVICE SHORTFALL • Narrow Product Unes • Inflexible Design Interfaces • Missed Delivery Commitments • Multiple Contact Points • Limited Macro Libraries • Learn By Doing • Standard Products Orientation .^HM^m - 7 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 BROAD LINE OF HIGH PERFORMANCE PRODUCTS (WHll -t-B«r4«f • • • • > L-' f "A - Swflai •••••> * C - tartai u^ K • • • • • • • > 1000 2000 3000 4000 BOOO 6000 OMMity io«t*«) ,«saD«51(g(g MULTIPLE DESIGN PATHS CiMtenMr I EngkMcrtng I I Workstation I AHCC Froduetlon ^m^i^ - 8 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 CONSISTENT MANUFACTURING PHILOSOPHY • Proven Process Technology • Fully Integrated Capability • Capacity For Quick Turnaround • Advanced Test And Measurement Equipment SINGLE POINT OF CONTACT - 9 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 UNCONSTRAINED MACRO CREATION _^ , ^^ «^^ WM^B • ^*tf 4fl^ 4Mtf *'^ STANDARD I^M • fcj MACRO • •»««»-*« UBRARY *V*^B :sr_ r=r=r- 1 *^ w^tt^m l4*nB^ l**N^^^Bh^B i CUSTOM MACROS .^G^SO - 10 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 SERVICE CULTURE .^I^SO CORPORATE COMMITMENT • Semicustom • Higli Performance • Creative Design Soiutions • Service ^m&m^ - 11 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Teiex 171973 Dataquest Dataquest PROLIFERATION OF PRODUCTS AND SYSTEMS IN JAPAN Jerry R. Crowley President and Chief Executive Officer Oki Semiconductor Mr. Crowley is a Director, President, and the Chief Executive Officer of Oki Semiconductor. He founded Oki in 1978, and was named a director of Oki America, inc., in 1984. Prior to joining Oki, Mr. Crowley was Director of Module products Operations at National Semiconductor Corporation, and prior to that, was Vice President of Marketing at Signetics Corporation. Mr. Crowley received a B.S.E.E. degree from San Diego State University, an M.S.E.E. degree from Arizona State University, and is currently an M.B.A. candidate at San Jose State University. Dataquest incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 PERVASIVENESS: ITS TIME IS HERE NEW SYSTEMS CREATE NEW VLSI OPPORTUNITIES by JERRY R. CROWLEY PRESIDENT AND CHIEF EXECUTIVE OFFICER OKI SEMICONDUCTOR Presented to 1984 Semiconductor Industry Conference Dataquest October 16, 1984 Hotel Del Coronado San Diego, California - 1 - Dataquest incorporated, A Subsidiary of A.C.Nieisen Company /1290 Ridder Pari< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Good morning. On behalf of Oki management, le't me thank Howard Bogert and the Dataquest Semiconductor Industry Service for the invitation to speak about the proliferation of new VLSI devices in the growing Japanese systems market. As a native San Diegan and as an engineering graduate of San Diego State, let me welcome you to "my town." What I'm going to talk about this morning is a fundamental concept: ZQMS. very laJLASi systems currently jmiiex development in JiSLS^R ILlll sipniflcantly drive And £iia££ new VLSI product And process developments There are seven major electronic market segments of importance in the domestic Japanese market. Within each of these market segments, there are ongoing core systems developments. I would like to talk about two of those core systems and the VLSI products that will be needed to make the systems perform to plan. I will draw some general conclusions and implications from the discussion of VSLI product and, finally, offer some suggestions as to how members of this audience might participate in the VLSI development race. 7 IMPORTANT JAPANESE MARKET SEGMENTS ^iZLSlilLS. 21 1. Video 2. Audio 3. Office Automation 4. Computing 5. Communications 6. Factory Automation 7. Automotive Electronics In each of these market segments, there is ongoing work to develop subsystems and applications that will be needed for future domestic Japanese and export markets. Illustrative of in- place funding and development that will result in a pervasive VLSI product proliferation are Computing and Communications. Specifically, under the heading of Computing, the development of the Very Large High-Speed mainframe computer (5th generation) and, in the Communications arena, the I.N.S. (Integrated Network System). - 2 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 XHQ MAJOR SYSTEMS (Figure 3) 1. Very Large High-Speed Mainframe Computer (4th and 5th generations) 2. Integrated Network System (I.N.S.) Massive resources are being applied in Japan to bring these two concepts to reality. Even though there is common importance for the semiconductor manufacturer in their completion, the market forces funding them are different. The race to produce the large mainframe is fundamental to the computing power that Japan will need as a bridge into the age of information; and there is great interest, from a Japanese perspective, in assuring that this computing power be non-IBM dependent. Mote that the 4th and 4.5th generation computers are the classic Von Neuman-based machine and not the "Non-Von Neuman* array processor of the 5th generation project. (Figure 4) The goal of artificial intelligence is to approach the ideal computer. Developments in artificial intelligence utilizing megabit RAMs, gallium arsenide logic circuits and recent breakthroughs in very high speed ECL circuitry are narrowing the gap between human and machine intelligence each year. The result of these Japanese strategic investments can be considered a dramatic achievement towards the age of the information society. VLSI FOR THE 4TH JMJQ 5lfl GENERATION CQMPDTERS (Figure 5) 1. IJLfi 1 megabit BLU. Today we are on the threshold of the commercial emergence of the 256K DRAM. In the future, random access memory of between 1-4 megabits will be needed for the large high-speed mainframe computer contemplated. Process technology will be conventional, MMDS or CMOS. As with many of these needed VLSI products we will talk about, very fine line geometries must be achieved, and this has implications for the many circuits that will require x-ray lithography. 2. Logic for ijifi C£fl At the beginning, one nanosecond or slightly sub-nanosecond ECL logic will suffice for the CPU. As development continues towards speeds approaching 0.4 nanoseconds, new ECL logic designs will emerge. To achieve the targeted goal of 0.2 nanoseconds, logic fabrication will shift from a silicon base towards gallium arsenide. - 3 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 3. Peripheral circuits Peripheral circuitry to support the CPU and memory will be application-specific, produced via the standard cell method at a level of so-called wafer scale integration. CMOS, because of its inherent stability and low power requirements, will be used for fabrication of these devices. 4. Input/Output CMOS will also be used for the I/O circuitry designed by standard cell techniques and wafer scale integration. These products will be full custom; however, the performance characteristics used in the definition of needed functions will, of necessity, be "loose" to achieve reasonably acceptable yields; so perhaps some measure of design standardization will emerge. 5. Data exchanye clrCUltS Data transfer will be accomplished by optical methods. The very high speed circuits used will be implemented in gallium arsenide and later in very fine line geometry silicon. 6. j^Qice reco9nitlon circuits The man-machine interface for this large computer will require some form of voice recognition, probably using the high quality but memory-efficient ADPCM method. These functions will be produced as hybrids, initially, but will ultimately be accomplished on a single chip in silicon. 7. Large-storage memory The data processing capacity of the large system that we have been describing will require a different form of storage memory. This will probably be optically based and may, in fact, be an extension of current laser disk technology. VLSI circuitry in this application will be limited to high speed drivers and controllers implemented in silicon. Let these seven brief descriptions suffice to highlight the importance of this large computer project for all of us in the semiconductor arena. What about I.N.S.? In this case, Japanese policy influentials have reached consensus that, to leverage and add value to information and knowledge, Japan must be one of the first nations to achieve a total digital network communications system. This digital network system - 4 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 will connect office, home, and factory; it will be a fusion of communication and computation. It will have the capability of accumulating and processing and storing information, using telephones, video, facsimile, data terminals. Its general name is I.N.S., and like the large mainframe project, will be supported by digital technology and, most important, VLSI digital technology. VLSI EQ& iNTEt5RATED MISQBL SYSTEM (Figure 6) Potentially the largest market for new VLSI devices is the conversion of Japan's telephone system into the 100% digital integrated communication network system. The VLSI products used to implement the I.N.S. system are predominantly communication oriented. 1. Digital signal processor This large chip (larger than today's standard MPU) will be produced with very fine line width and advanced CMOS technology. The D.S.P. will emulate a very large microprocessor unit whose performance will be dictated by the AT&T standards for speeds as high as 64K bits per second. This core product will require sub- 1 micron geometries to achieve the high speed processing which is needed to send fixed frame information in one contiguous time slot. 2. Standard 32rb4t microprocessor Common to many of the nodes within the home, office, and manufacturing environments will be a standard 32-bit microprocessor. The development of the processor will proceed along many paths; semiconductor manufacturers, mid-sized systems manufacturers, and such giants as IBM and AT&T will all develop proprietary architecture 32-bit machines; yet all will be application software compatible. It is our belief that, as development continues, one or two standard products will emerge and dominate around universal operating systems; it is a good bet that one of these operating systems will be UNIX based. The processor, of course, will be a single chip CMOS device with on-chip cache memory and on-chip memory management. By today's standards, it will be a fairly large chip—almost 12 millimeter x 12 millimeter square, depending on the size of the cache memory. Power consumption will probably be one watt if line geometries are 1 micron or less; 1.5 watts if 1.5 micron geometries are used. 3. Optical interface circuit As fiberoptic cable will be the hard link between subsystems within the I.N.S. scheme for office, factory, and home, it is - 5 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 clear that very high speed optical interface circuitry will be required. Because of the speeds inherent in the system (10-30 giga Hertz) gallium arsenide, rather than silicon processors will be employed in fabrication. At least two standard products will probably emerge, based on speed requirements. A medium production volume very high speed product will be applied in the workplace; a very high unit volume, lower speed product will be produced for the home: information processing speeds in the home environment will be much lower. The high unit volumes will result from connecting all those homes. 4. Miciowaye Transmlt/Receiye inteiface I.N.S. will utilize microwave as a complementary information pathway. Critical to digital data capture and transmission will be a high frequency sense amplifier, initially designed as a hybrid but, with increased demand and utilization, produced as a single chip device. Driving long production runs and cost decline will again be the in-home application in Japan. These circuits will operate at a frequency of over 10 giga Hertz and, therefore, will be implemented in gallium arsenide. 5. U^iA encrvption processing ^uut If access to information is to be totally ubiquitous, concerns over the security of data run high. This will force the emergence of a very high-speed data encryption and "decryption" solid-state device. The encryption algorhythm will be on-chip and, in a separate functional area, an EEPROM will be accessible by users who need to personally change the access code. As with many of our other examples, this will be a big chip by today's standards—l/2"Xl/2" or approximately 12 millimeters X 12 millimeters square. Coincidentally, this dimension may well become a standard size for all new microprocessor designs, as well as random logic. 6. Display SJLIH&L controllers The usability of information accumulation in the I.N.S. system will depend upon the evolution of very high resolution flat panel color displays. These displays (LCD or electroluminescent) will be found in all three major environments; office, home, and factory, and for both fixed and portable access nodes. Because of the enormous number of displays projected, the display driver/controllers will become standard products produced in high volume in low-cost CMOS. 7. Protocol control/protocol conversion Along the development pathway towards the merging or emerging of dominant local networic or wide area network protocols, the - 6 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 interface between various system configurationsr architectures and information processing speeds will needr at the very least, sophisticated protocol control and, ideally, protocol conversion functions. HOME COMMUNICATIONS SYSTEM (Figure 7) The Japanese consumer is already looking to purchase these integrated network systems as soon as they become available. As a matter of fact, the prototype systems exist in Japan's Tokyo test market. It is called CAPTAINS, and the resulting proliferation of new, low-cost digitally-designed consumer products are starting to sell rapidly. INDUSTRY COMMUNICATION SYSTEM (Figxire 8) Conversion from hand-written Kanji methods of communication in Japanese space environments is accelerating; and use of facsimile, local area networking, and high-speed digital data transfer from office to office is being pursued by a number of large system companies, as well as the telephone monopoly, Nippon Telephone and Telegraph. EXAMPLE QE. QLl ££LI££ (Figure 9) Just in case you're not convinced that these systems and their associated VLSI devices are imminent, this slide shows some current examples of of wafer scale integration, imaging, and high density memory products. A generation of these chips will evolve that will be network independent, characterized by their high speed and CMOS fabrication. This photograph was produced for my speech to the financial community during March, 1984. £ai£ SIZLS. El PDNCTIQN (Figure 10) In order to give you a perspective, this slide shows the VLSI circuits in comparison to Oki's standard commodity, 64K dynamic random access memory, now celebrating its 4th year of production. The common attributes of these very large-scale devices are that they are: 1. Predominantly CMOS advanced processing (I know the 64K DRAM is N-MOSl) 2. Manufactured in highly automated (human-less) factories 3. Focused on specific applications which will appear in the fourth and fifth generation computers, as well as the digital integrated network system boxes. I stated in my opening comments that I would identify seven important Japanese market segments, discuss two product systems within the communications and computing field and their dependent VLSI devices, and would then draw some general conclusions and implications from these two areas. - 7 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 RIdder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 CONCLDSIONS (Figure 11) From our presentation today, three major conclusions can be reached: 1. The fourth and fifth generation computer development and the massive integrated network system will drive the VLSI process and product design technology in Japan. 2. To be a successful system manufacturer in these two areas, one must possess or have a partner who possesses the ability to create and manufacture, in yolumfif these incredible VLSI semiconductor products. 3. Japanese semiconductor makers believe that these applications are 100% assured and, therefore, their capital investments in technology development and factory automation to achieve them is seen as relatively risic free. Think about that last statement for a moment—particularly if you have the investment decision responsibility for your company. From the position of the United States system manufacturer or semiconductor manufacturer or investor, there are two possible outcomes: 1. With these VLSI products defined, the American semiconductor industry can move to design and mass- manufacture them for export to a large and growing Japanese merchant marketplace. 2. As an alternate course of action, the user, manufacturer, or financier can move towards some partnership arrangement with a Japanese semiconductor manufacturer, thus assuring a low-risk but high probability participation in these extraordinarily interesting arenas. From the view of the Japanese marketplace, it is clear that "Pervasiveness—its time is here.* - 8 - Dataquest incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Pari< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 OKI Figure 1 SEVEN IMPORTANT JAPANESE MARKET SEGMENTS 1. Video 2. Audio 3. Office Automation 4. Computing 5. Communications 6. Factory Automation 7. Automotive Electronics OKI UHtrOKOlTTOII FiguT^e 2 - 9 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 TWO MAJOR SYSTEMS Very Large High-Speed Mainframe Computer (4th and 5th Generations) y^OKI Figure 3 THE IDEAL COMPUTER Pattern 10^' Memory Cells Recognition Voice Human Memory "Software' 128-Bit Recognition • Knowledge Processor + CPU • Language Processor • Reasoning Nervous System/LAN • Recognition • Learning • Inference • Self-Education • Understanding OKI F1gur» 4 - 10 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 VLSI FOR THE 4TH AND 5TH GENERATION COMPUTERS 1 to 4 Megabit RAM Logic for the CPU Peripheral Circuits Input/Output Data Exchange Circuits Voice Recognition Large-Storage Memory v^ OKI •mn^UiiTO* Figure 5 VLSI FOR INTEGRATED NETWORK SYSTEM Digital Signal Processor Standard 32-bit Microprocessor Optical Interface Circuit Microwave Transmit/Receive Interface Data Encryption Processing Unit Display Driver Controllers Protocol Control/Protocol Conversion Vi OKI •iMtfi^hour-rw Figure 6 - 11 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 HOME COMMUNICATIONS SYSTEM 2GHz Modem P«r«on«i Computar * Character And Pattarn Talaphona Accasa Information Syatam ^OKI Figure 7 INDUSTRY COMMUNICATION SYSTEM Horn*-I tatagratad —. — _ V ^^_^^^^_ Mat work Sy«tam ^ _ fi Ovarsaat -J Data i Valufl • I Bank P Addtd I f ^ ^—f / UaiaailJ L_=_=_/ / 'OKI Figure 8 BMR9 - 12 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Figure 9 OKI MEMORY CHIP SIZES BY FUNCTION FUNCTION KH METRIC ENGLISH RELATIVE AREA 64KDRAM MSM37e4A 16J mni2 25,168 mll2 1 •4K0RAM MSM3764 29.8 mm2 45344 mil2 1.8 2S6KOnAM MSM372S6 47.5 nim2 74,000 iliil2 2.9 1 MEGABIT ROM M8M28101 (3^) 210iiim2 324,738 mil2 13 1 MEGABIT ROM MSM28101 (SM) SMinmZ 912380 in«2 36 4 MEGABIT ROM MSM28401(2M) w98 mm* 1,082,500 fli«2 43 4 MEGABIT DEVELOPMENT 4800 mm2 7.422337 inil2 29S STATIC RAM lOIMCf: OKI ICMWONOUCTON NOVnMCNKM OKI •BH CONDUCTOR Figure 10 - 13 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 CONCLUSIONS 4th & 5th Generation Computer Development and Integrated Network System Drive Japan's VLSI 1 Process and Product Design Technology Successful System Manufacturer Must Possess 2 Ability to Create and Manufacture VLSI Semiconductor Products in Volume Japanese Semiconductor Makers Believe These 3 Applications and Their Capital Investments are Risk Free OKI timrONDccraK Figure 11 - 14 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Li:L:£:^ I );;i:a Dataquest Dataquest ASICs COME OF AGE Henri Jarrat President and Chief Operating Officer VLSI Technology Mr. Jarrat has been President and Chief Operating Officer of VLSI Technology, Inc. (VTI) since September 1983. Prior to joining VTI, he was Corporate Vice President and General Manager of the Bipolar Integrated Circuits group of Motorola Inc.'s Semiconductor Products sector. Mr. Jarrat also held several positions in the Electronic Devices Division of Texas Instruments. Mr. Jarrat received a Master's degree in Electrical Engineering and Solid State Physics from the university of Grenoble, France, and an M.B.A. degree from the tjniversity of Dallas. Dataquest Incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 APPLICATION SPECIFIC INTEGRATED CIRCUITS - COME OF AGE - SLIDE 1 TODAY I WOULD LIKE TO OFFER A PROGRESS REPORT ON ONE OF THE MAJOR EMERGING MARKET SEGMENTS IN THE SEMICONDUCTOR INDUSTRY -- APPLICATION SPECIFIC INTEGRATED CIRCUITS. APPLICATION SPECIFIC INTEGRATED CIRCUITS - ASIC - SLIDE 2 SINCE THE TERM APPLICATION SPECIFIC INTEGRATED CIRCUITS WAS COINED BY HOWARD B06ERT OF DATAQUEST ALMOST 2 YEARS AGO, ITS USE TO DESCRIBE THIS MARKET HAS BECOME WIDESPREAD - ALMOST UNIVERSAL. ALTHOUGH THERE ARE MORE TECHNICAL DEFINITIONS OF THE ASIC MARKET, I PREFER THIS ONE, WHICH DEFINES IT IN TERMS OF COMBINED SYSTEM AND VLSI TECHNOLOGIES. THIS SHARING OF TECHNOLOGY TO HEEJ SPECIFIC USER NEEDS IS THE MOST IMPORTANT CHARACTERISTIC OF THE ASIC MARKET. - 1 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 ASIC DESIGN ALTERNATIVES - SLIDE 3 THE ASIC MARKET CAN BE SEGMENTED BY DESIGN TECHNOLOGY ALTERNATIVES. FIRST, INTO TWO PIECES -- SEMICUSTOM AND CUSTOM, DEPENDING ON THE NUMBER OF MANUFACTURING STEPS REQUIRED TO COMPLETE THE CIRCUIT FROM THE POINT OF USER DEFINITION. THE SEMICUSTOM SEGMENT CAN BE FURTHER SUB-DIVIDED INTO SIMPLER PROGRAMMABLE LOGIC DEVICES AND MORE COMPLEX GATE ARRAYS. THE CUSTOM SEGMENT CAN BE PARTITIONED INTO DESIGNS BASED ON STANDARD BUILDING BLOCKS, AND HIGHER DENSITY DESIGNS WHICH HAVE HISTORICALLY BEEN DESCRIBED AS FULL CUSTOM. AS BUILDING BLOCKS AND COMPILER APPROACHES GENERATE CELLS OF HIGHER AND HIGHER DENSITY, WE EXPECT THE DISTINCTION BETWEEN THESE TWO SUB-SEGMENTS TO BLUR. - 2 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 APPLICATION CONSIDERATIONS - SLI,DE A THE BEST ASIC DESIGN ALTERNATIVE DEPENDS ON THE APPLICATIONS NEEDS OF A PARTICULAR SYSTEM.- PROGRAMMABLE LOGIC DEVICES ARE THE EASIEST TO APPLY. THESE USER PROGRAMMABLE DEVICES HAVE FOUND WIDESPREAD APPLICATION IN INTEGRATING SSI AND MSI LOGIC. GATE ARRAYS OFFER A DENSITY IMPROVEMENT OVER PROGRAMMABLE LOGIC THAT CAN BE USED FOR HIGHER LEVELS OF LOGIC INTEGRATION. THE GATE TO PIN RATIO OF MOST GATE ARRAY DEVICES MAKES THEM A GOOD CHOICE FOR APPLICATIONS IN BUS ORIENTED OR I/O INTENSIVE ARCHITECTURES. AS INDICATED EARLIER. THE DISTINCTION BETWEEN STANDARD CELLS AND CUSTOM DESIGN IS BECOMING BLURRED. BOTH FROM A USER AND FROM A VENDOR'S POINT OF VIEW. THESE DESIGN APPROACHES OFFER SUFFICIENT DENSITY TO ALLOW SUBSYSTEMS OR EVEN COMPLETE SYSTEMS TO BE IMPLEMENTED ON A SINGLE CHIP. - 3 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 DESIGN-PRODUCTION COST TRADEOFFS - SLIDE 5 A RELATIVE INDICATION OF THE TRADE OFFS AMONG THESE DESIGN ALTERNATIVES IN BOTH DESIGN TIME AND RELATIVE COST PER GATE IS SHOWN HERE. PROGRAMMABLE LOGIC DEVICES CAN BE DESIGNED MOST QUICKLY, BUT HAVE A RELATIVELY HIGH COST PER GATE COMPARED WITH GATE ARRAYS OR CELL BASED DESIGNS, WHICH TAKE LONGER TO DEVELOP BUT ACHIEVE SUCCESSIVELY LOWER COSTS PER FUNCTION. AS THE OVERLAPS INDICATE, THE CHOICE OF A DESIGN ALTERNATIVE IS NOT ALWAYS CLEARCUT. - 4 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 WORLDWIDE ASIC - SLIDE 6 NO CHARACTERISTIC OF THE ASIC MARKET IS MORE IMPRESSIVE THAN ITS RATE OF GROWTH AND THE SIZE IT IS PROJECTED TO ATTAIN BY THE END OF THE DECADE. AS SHOWN IN THIS DATAQUEST PROJECTION, THE MERCHANT MARKET WILL GROW FROM $651M AT THE BEGINNING OF THIS DECADE TO $11.931M BY 1990. THIS COMPOUND GROWTH RATE OF 38Z IS WELL ABOVE THE 22Z PROJECTED FOR THE SEMICONDUCTOR MARKET AS A WHOLE. THE PROJECTED SIZE OF THE MERCHANT ASIC MARKET IN 1990 IS ROUGHLY THE SAME AS THE TOTAL MERCHANT IC MARKET WAS ONLY THREE YEARS AGO. - 5 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 HOW REALISTIC ARE THESE PROJECTIONS? - SLIDE 7 IF THESE PROJECTIONS ARE CORRECT, ASICS ARE NOT MERELY AN EVOLUTION, BUT A REVOLUTION. IF ANNUAL SALES OF ALMOST $12B ARE ACHIEVED, ANYONE WOULD AGREE THAT ASIC HAS COME OF AGE. BUT HOW REALISTIC ARE THESE PROJECTIONS? IS IT LIKELY THAT A NEW MARKET CAN GROW AT THIS RATE FOR SUCH A PERIOD OF TIME? CAN IT BECOME PERVASIVE ENOUGH TO REACH SUCH A TOTAL SIZE? IN ANSWERING THESE QUESTIONS, IT MAY BE USEFUL TO LOOK AT THE LAST MAJOR ELECTRONICS REVOLUTION AS A PRECEDENT THE MICROPROCESSOR REVOLUTION. - 6 - Dataquest Incorporated, A Subsidiary of A.G. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 WORLDWIDE MICROPROCESSOR MARKET - SLIDE 8 ACCORDING TO DATAOUEST'S HISTORICAL AND PROJECTED FIGURES, THE WORLDWIDE MICROPROCESSOR MARKET WILL GROW FROM $25M IN 1975 TO $55A9M IN 1985, A COMPOUND GROWTH RATE OF 82X OVER THE TEN YEAR PERIOD. AS I WILL TRY TO DEMONSTRATE, THERE ARE MANY STRIKING SIMILARITIES BETWEEN THESE TWO MARKETS -- ENOUGH I BELIEVE, TO MAKE THE PROJECTED ASIC MARKET GROWTH VERY ACHIEVEABLE. - 7 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 HICROPRQCESSOR REVOLUTION - DRIVING FORCES - SLIDE 9 WHAT HAVE BEEN THE DRIVING FORCES BEHIND THE EXPLOSIVE GROWTH OF THE MICROPROCESSOR MARKET? IN THE BEGINNING, THE MICROPROCESSOR MARKET WAS CREATED BY A COMBINATION OF USER NEEDS AND TECHNICAL BREAKTHROUGHS. AS THE MARKET DEVELOPED, WE OBSERVED A PROLIFERATION OF SUPPLIERS AND INCREASING Ef.PHASIS ON DESIGN TOOLS AND CUSTOMER SUPPORT. MARKET GROWTH WAS FUELED BY CONTINUED ENHANCEMENTS OF PRODUCTS AND PROCESS TECHNOLOGY, AND BY THE EVOLUTION OF A CLOSE RELATIONSHIP BETWEEN THE MICROPROCESSOR USER AND THE MICROPROCESSOR VENDOR. IN ORDER TO ESTABLISH WHETHER THE MICROPROCESSOR MARKET IS A MEANINGFUL MODEL FOR THE ASIC MARKET, LET'S LOOK IN MORE DETAIL AT EACH OF THESE DRIVING FORCES AND SEE HOW THEY COMPARE WITH THE FORCES DRIVING THE EVOLUTION OF THE ASIC MARKET. - 8 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 SYSTEMS USER NEEDS - MICROPROCESSOR - SLIDE 10 THE MOST IMPORTANT DRIVING FORCES FOR ANY MARKET ARE THE NEEDS OF THE USER. THE MICROPROCESSOR ADDRESSED A NUMBER OF CRITICAL USER NEEDS. THE PROGRAMABILITY OF THESE DEVICES ALLOWED SYSTEMS ENGINEERS TO QUICKLY CREATE NEW PRODUCT CONCEPTS, AND BRING THEM TO MARKET, WHILE AT THE SAME TIME IMPROVING THE PRICE AND PERFORMANCE OF THE END PRODUCT. SINCE THE MICROPROCESSOR TENDED TO REDUCE THE TOTAL COMPONENT COUNT IN SYSTEMS OF EQUIVALENT COMPLEXITY, MICROPROCESSORS TENDED TO IMPROVE THE RELIABILITY OF ELECTRONICS SYSTEMS. BECAUSE THE SOFTWARE WRITTEN FOR EACH APPLICATION EMBODIED USER-PROPRIETARY SYSTEMS KNOWLEDGE, MICROPROCESSOR BASED PRODUCTS COULD BE READILY DIFFERENTIATED FROM COMPETITION AND PRODUCTS COULD BE MARKETED ON THE BASIS OF THEIR DISTINCTIVE FEATURES. SYSTEMS ENGINEERS BECAME INVOLVED IN ADAPTING INTEGRATED CIRCUITS TO FIT PARTICULAR APPLICATIONS. - 9 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 SYSTEMS USER NEEDS - MICROPROCESSORS/ASIC - SLIDE 11 IN COMPARING THESE USER NEEDS WITH THOSE ADDRESSED BY THE ASIC MARKET, HE FIND A STRIKING NUMBER OF SIMILARITIES. ASIC PRODUCTS ADDRESS BOTH THE NEED TO SHORTEN PRODUCT DEVELOPMENT AND TO IMPROVE PRICE AND PERFORMANCE. LIKE THE MICROPROCESSOR, ASICS ALSO TEND TO DECREASE THE TOTAL NUMBER OF INTEGRATED CIRCUITS IN A SYSTEM, THEREBY INCREASING RELIABILITY. AS FOR DISTINCTIVE COMPETENCE, ASICS ALLOW SYSTEMS ENGINEERS TO CREATE UNIQUE INTEGRATED CIRCUIT BUILDING BLOCKS THAT CAN HELP THEIR COMPANIES TO DIFFERENTIATE THEIR HARDWARE PRODUCTS FROM THOSE OF THEIR COMPETITORS. NOT ONLY CAN THIS PROVIDE PRODUCT PRICE AND PERFORMANCE ADVANTAGES IN THE MARKETPLACE, BASED ON PRODUCT FEATURES, BUT IT ALSO PROTECTS PROPRIETARY IDEAS SINCE THE ASIC CIRCUITS USED TO IMPLEMENT THEM ARE NOT READILY COPIED. - 10 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 MINDSET STORY - SLIDES 12A - 12H AS AN EXAMPLE OF HOW ASICS CAN BE USED TO MEET SYSTEM USER NEEDS, LET'S LOOK AT A RECENT EXAMPLE. - 11 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, GA 95131 / (408) 971-9000 / Telex 171973 THE CHALLENGE -- SLIDE 12A ABOUT 15 MONTHS AGO MINDSET, THEN A NEWLY-FORKED CORPORATION, FACED A CHALLENGE. THEY HAD SOKE EXCELLENT IDEAS FOR BRINGING A COMPLETELY NEW LEVEL OF GRAPHICS PERFORMANCE TO THE PERSONAL COMPUTER ENVIRONMENT BUT THE COMPLEXITY OF THE HARDWARE NECESSARY TO IMPLEMENT THESE IDEAS WAS FAR BEYOND THE PACKAGING AND COST CONSTRAINTS OF THIS MARKETPLACE. JOINT DESIGN TEAM - SLIDE 12B WHEN WE BROUGHT THAT CHALLENGE TO VTI, THE RECOMMENDED SOLUTION WAS A JOINT DESIGN TEAM CONSISTING OF TWO ENGINEERS FROM VTI, EXPERIENCED IN IC DESIGN. AND THREE ENGINEERS FROM MINDSET WHO THROUGHLY UNDERSTOOD THE NEW SYSTEMS CONCEPTS FOR GRAPHICS PROCESSING THAT MINDSET WANTED TO IMPLEMENT. - 12 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 DOUG AT WORKSTATION - SLIDE 12C TO THIS JOINT EFFORT, VTI CONTRIBUTED ITS PROPRIETARY IC DESIGN TECHNOLOGY. COMPUTER CONTROLLED DIFFUSION FURNACES - SLIDE 12D AND ITS WAFER PROCESSING TECHNOLOGY, WHILE MINDSET CONTRIBUTED TO ITS UNDERSTANDING OF THE SYSTEM HARDWARE AND SOFTWARE. THE RESULTS WERE IMPRESSIVE. BUS TIMING ARBITRATOR - SLIDE 12E THE FIRST FRUITS OF THIS JOINT EFFORT WAS A BUS-TIMING ARBITRATOR TO CONTROL MEMORY ACCESS BETWEEN THE 8086 PROCESSOR USED THE SYSTEM AND GRAPHICS PROCESSOR WHICH PROVIDED HIGH PERFORMANCE GRAPHICS. - 13 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 PC GRAPHICS CONTROLLER CHIP -- SLIDE 12F THE SECOND CHIP WAS A MICRO PROGRAMMED GRAPHICS CONTROLLER WHICH IMPLEMENTED IN HARDWARE HAD VLSI SPEED. FUNCTIONS PREVIOUSLY ACCOMPLISHED THROUGH SOFTWARE. BOTH CHIPS WERE COMPLETED IN APPROXIMATELY 5 MONTHS BY THE JOINT DESIGN TEAM AND BOTH WORKED THE 1ST TIME. - 14 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 THE SOLUTION - SLIDE 12G THE RESULT WAS THAT TWO CHIPS THAT REPLACED ^50 INTEGRATED CIRCUITS SHOWN ON THESE FOUR WIRE WRAPPED BREAD BOARDS. AS A RESULT, MIND'SET WAS ABLE TO IMPLEMENT ALL OF THE FEATURES IN THEIR PROTOTYPE SYSTEM IN A BOX THAT MET THEIR COST AND PACKAGING GOALS. GRAPHICS - SLIDE 12H UNFORTUNATELY, A STATIC PRESENTATION OF THIS TYPE CANNOT DEMONSTRATE A 100-1 SPEED IMPROVEMENT IN GRAPHICS PERFROMANCE, THAT THE MINDSET APPROACH OFFERS OVER CONVENTIONAL SOFTWARE BASED APPROACHES TO PERSONAL COMPUTER GRAPHICS. - 15 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 SYSTEMS USER NEEDS -- SLIDE 13 HOW DID APPLICATION SPECIFIC IC'S DO IN MEETING THE SYSTEMS USER NEED WE DEFINED EARLIER? IN TERMS OF TIME TO MARKET, THE MINDSET PRODUCT WENT TO MARKET ON TIME. THE SYSTEM WAS INTRODUCED LESS THAN A YEAR AFTER THE IC DESIGN PROJECT STARTED. WE'VE ALREADY TALKED ABOUT THE IMPROVEMENTS THAT MINDSET ACHIEVED IN PRICE AND PERFORMANCE OF THEIR COMPUTER OVER CONVENTIONAL APPROACHES. MORE IMPORTANTLY, THROUGH THESE TWO APPLICATION SPECIFIC CIRCUITS, MINDSET HAS BEEN ABLE TO ACHIEVE A DISTINCTIVE COMPETENCE AT THE HARDWARE LEVEL OVER ITS COMPETITION. THE MINDSET COMPUTER IS FAR MORE RELIABLE THAN ONE INCORPORATING ^150 IC'S FOR THE SAME PRODUCT AND THE MINDSET SYSTEMS CONCEPT IS PROTECTED FROM COPYING THROUGH THEIR PROPRIETARY CIRCUITS. - 16 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 WELLINGTON STORY -- SLIDE 16A - 15C THIS EXAMPLE ILLUSTRATES THE POWER OF APPLICATION SPECIFIC INTEGRATED CIRCUITS TO INCORPORATE AN ENTIRE SYSTEM ON A SINGLE CHIP AND THE INVOLVEMENT OF THE CUSTOMER'S SYSTEM ENGINEERS AS SILICON ARCHITECTS. IN THIS CASE. WANG LABORATORIES WANTED TO INTEGRATE A 16 BIT MICROPROCESSOR TO REDUCE THE SIZE AND COST OF THIS SYSTEM WITHOUT SACRIFICING COMPATIBILITY WITH A LARGE BODY OF EXISTING SOFTWARE. IN ORDER TO ACCOMPLISH THIS OBJECTIVE. A JOINT DESIGN TEAM WAS FORMED CONSISTING OF THREE WANG ENGINEERS WHO THOROUGHLY UNDERSTOOD THE SYSTEM ARCHITECTURE AND TWO VTI ENGINEERS WHO HELPED THEM INCORPORATE THEIR IDEAS ON SILICON. - 17 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 TECHNICAL BREAKTHROUGHS - MICROPROCESSORS/ASIC - SLIDE 15 THE EMERGING ASIC MARKETPLACE IS DRIVEN BY TWO SIMILAR TECHNICAL FORCES. THE FIRST OF THESE IS CONTINUING IMPROVEMENTS IN LSI AND VLSI PROCESS TECHNOLOGY WHICH ALLOW AN EVER INCREASING NUMBER OF SYSTEM FUNCTIONS TO BE IMPLEMENTED ON A ON A SINGLE INTEGRATED CIRCUIT. THE SECOND DRIVING FORCE IS THAT OF ADVANCED SOFTWARE FOR COMPUTER AIDED DESIGN. AS OUR INDUSTRY RESPONDS TO THE CHALLENGE ARTICULATED BY HOWARD BOGERT A COUPLE OF YEAR.AGO, WHICH IS TO COME UP WITH A 'VISICALC FOJLIC DESIGNERS'. WE WILL SEE MORE AND MORE OF THE WORLD'S 200,000 - 300,000 SYSTEMS ENGINEERS BECOMING SILICON ARCHITECTS AND CREATING THEIR OWN APPLICATION SPECIFIC INTEGRATED CIRCUITS. THAT'S A KEY INGREDIENT TO THE EXPLOSIVE ASIC GROWTH. - 18 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 TECHNICAL BREAKTHROUGHS - SLIDE 14 NEW ELECTRONICS MARKETS ARE USUALLY CREATED THROUGH A COMBINATION OF USER NEEDS AND CORRESPONDING TECHNICAL BREAKTHROUGHS THAT ADDRESS THOSE NEEDS. MICROPROCESSORS WERE NO EXCEPTION. THE MICROPROCESSOR PROVIDED A WAY TO EXPLOIT THE EMERGING LSI PROCESS TECHNOLOGY BY CREATING HIGH DENSITY NON-MEMORY DEVICES. THE IMPLEMENTATION OF A PROGRAMMABLE DEVICE ON A SINGLE CHIP WAS A MAJOR TECHNICAL BREAKTHROUGH. IT PERMITTED SYSTEMS ENGINEERS TO WRITE SOFTWARE THAT ADAPTS AN INTEGRATED CIRCUIT TO A PARTICULAR APPLICATION. - 19 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 THE RESULTS IS A SINGLE CHIP THAT REPLACED SIX CIRCUIT BOARDS CONTAINING OVER 1000 INTEGRATED CIRCUITS. IN 53 WEEKS, BEGINNING FROM THE TIME WHEI TRAINING OF THE WANG ENGINEERS STARTED, THIS TEAM PRODUCED A CIRCUIT WHICH WORKED COMPLETELY ON THE FIRST PASS AND WAS READY FOR PRODUCTION WITHIN 3 MONTHS. TO ILLUSTRATE THE POWER OF THE NEW DESIGN TECHNOLOGY THAT IS FUELING THE ASIC REVOLUTION, DESIGNS OF SIMILAR COMPLEXITY CARRIED OUT BY MERCHANT SEMICONDUCTOR VENDORS, TWO OR THREE YEARS AGO WOULD HAVE REQUIRED PERHAPS 5 TIMES AS MANY PEOPLE FOR A PERIOD TWICE AS LONG. OR IN OTHER WORDS, A FACTOR OF 10 MORE RESOURCES TO COMPLETE THE SAME PROJECT. THIS PRODUCTIVITY IMPROVEMENT IS THE RESULT OF ADVANCED CAD TOOLS, WHICH IN TURN IS MAKING SYSTEMS ENGINEERS SILICON ARCHITECTS. - 20 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 PROLIFERATION OF SUPPLIERS - MICROPROCESSORS/ASIC - SLIDE 18 IN LOOKING AT THE ASIC MARKET WE SEE MANY PARALLELS IN THE PROLIFERATION OF ASIC SUPPLIERS. ALTHOUGH CUSTOM IC'S HAVE BEEN AROUND FOR A WHILE, THE GROWTH OF THE ASIC MARKET WAS FUELED BY A NUMBER OF START UP COMPANIES. AS THE MARKET HAS GROWN, MOST OF THE MAJOR SUPPLIERS HAVE ENTERED THIS MARKET OR HAVE ANNOUNCED PLANS TO DO SO. ACCORDING TO DATAQUEST, THERE ARE NOW OVER 140 COMPANIES WORLDWIDE PROVIDING ASIC SOLUTIONS. IN THE EARLY PHASES OF THE ASIC MARKET MOST OF ASIC PRODUCTS WERE AVAILABLE ONLY FROM A SINGLE SUPPLIER BUT RECENTLY HE HAVE OBSERVED A NUMBER OF SECOND SOURCE AGREEMENTS. - 21 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 PROLIFERATION OF SUPPLIERS - MICROPROCESSORS - SLIDE 17 AS THE MICROPROCESSOR MARKET DEVELOPED, WE SAW A PROLIFERATION OF SUPPLIERS. INITIALLY THE MARKET WAS ESTABLISHED BY NEW OR START UP COMPANIES, NOTABLY INTEL AND ZILOG. WHEN IT BECAME CLEAR THAT MICROPROCESSORS WERE NOT 'J. JUST A- NICHE MARKET, MOST OF THE MAJOR SEMICONDUCTOR SUPPLIERS GOT INTO THE ACT. FURTHER EVIDENCE OF THE MATURING OF THIS MARKET WAS GIVEN BY SECOND SOURCE AGREEMENTS AMONG SUPPLIERS TO PROVIDE ALTERNATE SOURCES OF SUPPLY. IN ORDER TO EXPAND PRODUCT FAMILIES THROUGH SHARED EFFORTS, SECOND SOURCING AGREEMENTS WERE EXPANDED TO BECOME CO-DEVELOPMENT PARTNERSHIPS. ANOTHER NOTEWORTHY MILESTONE IN THE HISTORY OF THE MICROPROCESSOR MARKET WAS THE EMERGENCE OF DISTRIBUTION AS A MAJOR MARKET CHANNEL FOR BOTH MICROPROCESSORS AND THEIR ASSOCIATED DEVELOPMENT SYSTEMS. - 22 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, GA 95131 / (408) 971-9000 / Telex 171973 AS WITH MICROPROCESSORS, WE ARE ALSO SEEING THE EMERGENCE OF PARTNERSHIPS TO DEVELOP AND BROADEN ASIC PRODUCT LINE. AN EXAMPLE OF THIS IS A CO-DEVELOPMENT AGREEMENT RECENTLY ANNOUNCED BETWEEN FAIRCHILD AND VTI FOR THE EXTENSION OF A 2 MICRON GATE ARRAY FAMILY. WHILE THESE FOUR FEATURES SEEM TO PARALLEL SIMILAR DEVELOPMENTS IN THE MICROPROCESSOR MARKET, IT MAY YET BE TOO EARLY TO CLAIM THAT DISTRIBUTION WILL PLAY THE SAME CRITICAL ROLE FOR ASIC AS IT DID FOR MICROPROCESSORS. HOWEVER, WE ARE SEEING A GREAT DEAL OF INTEREST FROM DISTRIBUTORS IN ASIC PRODUCTS AND IN ASIC DESIGN CENTERS. AND I PREDICT THAT THE DISTRIBUTORS HILL RESPOND TO THIS CHALLENGE AND WILL BECOME A MAJOR FACTOR IN THIS MARKETPLACE. - 23 - Dataquest Incorporated, A Subsidiary of A.G. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 DESIGN TOOLS - MICROPROCESSORS/ASIC - SLIDE 20 THE EMERGENCE OF HIGH PERFORMANCE 15 AND 32 BIT MICROPROCESSORS, COUPLED WITH THE DEVELOPMENT OF ADVANCED IC DESIGN SOFTWARE, HAS RESULTED IN THE PROLIFERATION OF ASIC DESIGN WORKSTATIONS. ALTHOUGH THESE ARE MORE COMPLEX AND MORE EXPENSIVE THAN THE MICROPROCESSOR DEVELOPMENT SYSTEMS, THERE SEEMS TO BE A PARALLEL HERE TOO. AS WITH MICROPROCESSORS, THE EARLIEST VLSI DESIGN WORKSTATION SOFTWARE WAS SUPPLIED BY ASIC VENDORS. JUST AS HE OBSERVED VENDOR INDEPENDENT DEVELOPMENT SYSTEMS COMING INTO THE MICROPROCESSOR MARKET, WE ARE ALSO NOW SEEING THE ADVENT OF INDEPENDENT CAE/CAD WORKSTATIONS SUCH AS THOSE AVAILABLE FROM - 24 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 DESIGN TOOLS - MICROPROCESSORS - SLIDE 19 ANOTHER NOTEWORTHY FEATURE IN THE EMERGENCE OF THE MICROPROCESSOR MARKET WAS THE IMPORTANCE OF DESIGN TOOLS. INITIALLY THESE DESIGN TOOLS WERE SUPPLIED ALMOST EXCLUSIVELY BY THE MICROPROCESSOR VENDORS BUT LATER WE SAW THE ADVENT OF VENDOR INDEPENDENT DEVELOPMENT SYSTEMS SUCH AS THOSE AVAILABLE FROM HEWLETT PACKARD AND FROM TEKTRONIX. AS THIS TABLE SHOWS> THE NUMBER OF INSTALLED MICROPROCESSOR DEVELOPMENT SYSTEMS BETWEEN 1975 AND 1985 HAS BEEN A LEADING INDICATOR OF THE GROWTH IN THE SILICON SIDE OF THIS MARKETPLACE. - 25 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 DAISY, MENTOR, AND VALID LOGIC. CLOSELY RELATED TO THIS IS WORK GOING ON NOW IN THE DEVELOPMENT OF A VENDOR INDEPENDENT INTERCHANGE STANDARD, EDIF, WHICH SHOULD FURTHER ACCELERATE THE GROWTH OF THE ASIC MARKET. IN THIS TABLE WE SEE THAT THE NUMBER OF INSTALLED ASIC WORKSTATIONS IS EXPECTED TO GROW FROM ABOUT 1000 IN 1985 TO OVER 50,000 IN 1990. INTERESTINGLY, THE PROJECTED GROWTH FOR WORKSTATIONS IN THE 5 YEAR PERIOD 1985-1990 IS GREATER THAN THAT FOR MICROPROCESSOR DEVELOPMENT SYSTEMS IN THE 10 YEAR PERIOD 1975 - 1985. - 26 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 CUSTOMER SUPPORT - MICROPROCESSORS - SLIDE 21 SINCE THE MICROPROCESSOR MARKET HAS BASED ON NEW TECHNOLOGIES, TRAINING AND CUSTOMER SUPPORT WERE CRITICAL TO ITS GROWTH. TRAINING WAS INITIALLY ESTABLISHED BY THE MICROPROCESSOR VENDORS, THEN BY CONSULTANTS AND NOW NEARLY EVERY ELECTRICAL ENGINEERING GRADUATE HAS COMPLETED AT LEAST ONE CLASS IN MICROPROCESSOR APPLICATION. IN DEVELOPING MICROPROCESSOR BASED DESIGNS, MOST CUSTOMERS FOUND THAT THEY NEEDED LOCAL TECHNICAL SUPPORT AND THIS NEED HAS MET THROUGH THE ESTABLISHMENT OF EXTENSIVE FIELD APPLICATIONS ENGINEERING FORCES BY THE MAJOR MICROPROCESSOR SUPPLIERS AND DISTRIBUTORS. - 27 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, GA 95131 / (408) 971-9000 / Telex 171973 CUSTOMER SUPPORT - SLIDE 22 IF ANYTHING, THE TECHNICAL SOPHISTICATION OF THE ASIC MARKETPLACE IS EVEN GREATER THAN THAT OF MICROPROCESSORS. FOR THAT REASON, TRAINING AND LOCAL SUPPORT ARE PERHAPS MORE CRITICAL TO THE SUCCESS OF THIS REVOLUTION. ASIC TRAINING WAS INITIALLY PROVIDED BY VENDORS, SEVERAL' OF WHOM OFFER EXTENSIVE TRAINING PROGRAMS. WE ARE NOW BEGINNING TO SEE THE EMERGENCE OF ASIC ORIENTED COURSES IN SOME OF THE LEADING UNIVERSITIES AND WE EXPECT MANY MORE RELATED COURSES AND MORE PARTICIPATING UNIVERSITIES, BY THE END OF THE DECADE. IN ADDITION TO FIELD APPLICATIONS ENGINEERS, ASIC SUPPLIERS ARE PROVIDING IN-DEPTH LOCAL SUPPORT THROUGH DESIGN CENTERS. THERE ARE ALREADY ABOUT 220 ASIC DESIGN CENTERS WORLDWIDE INCLUDING VENDOR-FUNDED CENTERS, USER CAPTIVE DESIGN CENTERS IN MAJOR SYSTEMS HOUSES CUSTOMERS AND AN EMERGING AND RAPIDLY GROWING NUMBER OF INDEPENDENT THIRD PARTY ASIC DESIGN COMPANIES. AS A PART OF THEIR ASIC STRATEGY, DISTRIBUTORS ARE ALSO OPENING DESIGN CENTERS. - 28 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 OLIVE STORY - SLIDE 23A - 23B IN THIS EXAMPLE, OLIVETTI SHARED SYSTEM AND VLSI TECHNOLOGY THROUGH AN IN-HOUSE JOINT DESIGN CENTER TO IMPLEMENT NEW FEATURES AND REDUCE THE COSTS OF THIS ADVANCED ELECTRONIC TYPEWRITER. - 29 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 TECHNOLOGY ENHANCEMENT - MICROPROCESSORS - SLIDE 2^) FURTHER GROWTH OF THE MICROPROCESSOR MARKET WAS FUELED BY RAPID ONGOING IMPROVEMENTS IN PRODUCTS AND TECHNOLOGY. THIS TOOK THE FORM OF INCREASING INTEGRATION AS MICROPROCESSORS WENT FROM H BITS TO 8 TO 16 TO TODAYS POWERFUL 32 BIT MICROPROCESSORS. TECHNOLOGY ENHANCEMENT ALSO RESULTED IN HIGHER PERFORMANCE AND IN THE AVAILABILITY OF ON CHIP MEMORIES SUCH AS RAM, ROM, AND EPROM, WHILE COST PER FUNCTION DECLINED. RECENTLY THE NEED FOR HIGHER INTEGRATION AND LOWER POWER HAS RESULTED IN A PRONOUNCED TREND TOWARDS CMOS FOR MOST NEW MICROPROCESSOR DESIGNS. - 30 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 TECHNOLOGY ENHANCEMENT - MICROPROCESSORS/ASIC - SLIDE 25 AGAIN THERE APPEARS TO BE A STRONG PARALLEL IN THE TECHNOLOGY EVOLUTION OF MICROPROCESSORS AND ASICS. THE PROGRESSION FROM PROGRAMMABLE LOGIC ARRAYS TO GATE ARRAYS TO STANDARD CELL DESIGN TO SILICON COMPILERS WILL RESULT IN INCREASING LEVELS OF INTEGRATION AND SOPHISTICATION FOR ASIC PRODUCTS. SMALLER GEOMETRIES AND MORE EFFICIENT INTERCONNECTION SYSTEMS ARE MAKING ASIC PRODUCTS THAT OPERATE AT HIGHER AND HIGHER SPEEDS. WE ARE NOW WITNESSING THE EMERGENCE OF TECHNOLOGIES THAT PERMIT ON BOARD MEMORIES INCLUDING RAMS, ROMS, AND EPROMS. AS THE MARKET MATURES, WE ARE SEEING DECREASING COSTS PER FUNCTION, AND CMOS IS CLEARLY THE DOMINANT PROCESS TECHNOLOGY FOR THE ASIC MARKETPLACE. THE LAST TECHNOLOGY ENHANCEMENT ON THIS SLIDE - ME6ACELLS - IS REALLY AN INDICATION OF THE CONVERGENCE OF THE MICROPROCESSOR AND ASIC TECHNOLOGY. - 31 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 RIdder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 MEGACELLS - SLIDE 26 AS SHOWN HERE, MEGACELLS CREATE LARGE SCALE BUILDING BLOCKS THAT ALLOW EFFICIENT INTEGRATION OF MANY LSI FUNCTIONS ONTO A SINGLE VLSI CHIP. THESE FUNCTIONS CAN INCLUDE MICROPROCESSORS AND THEIR ASSOCIATED PERIPHERALS AS HELL AS BUILDING BLOCKS FOR COLLECTING SO CALLED RANDOM LOGIC. IN THIS DIAGRAM HOST OF THE MAJOR ELEMENTS OF MANY MICROPROCESSOR BASED SYSTEMS CAN BE IMPLEMENTED ON A SINGLE CHIP. THESE INCLUDE THE MICROPROCESSOR ITSELF, THE I/O CONTROLLER, A CRT CONTROLLER, SOME RANDOM 'GLUE' LOGIC, AND A TIMER. - 32 - Dataquest Incorporated, A Subsidiary of A.G. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 USER/VENDOR INTERFACE - MICROPROCESSORS -- SLIDE 27 FINALLY, THE MICROPROCESSOR MARKET WOULD NOT HAVE EVOLVED OR GROWN SO RAPIDLY WITHOUT THE EMERGENCE OF A NEW-USER VENDOR INTERFACE. IN THE MICROPROCESSOR ERA, SEMICONDUCTOR VENDORS HAVE SUPPLIED THE RAW TECHNOLOGY IN TERMS OF INCREASINGLY SOPHISTICATED MICROPROCESSORS, WHILE USERS HAVE SUPPLIED THE SYSTEMS KNOW-HOW IN THE FORM OF SOFTWARE TO PUT THESE MICROPROCESSORS TO WORK. TO A GREATER DEGREE THAN WE HAVE SEEN WITH OTHER FORMS OF INTEGRATED CIRCUITS, A STRONG MUTUAL LOYALTY HAS DEVELOPED BETWEEN MICROPROCESSOR USERS AND VENDORS. USERS TEND TO CHOSE MICROPROCESSORS FROM THE SAME VENDOR THAT THEY HAVE WORKED WITH BEFORE AND TEND TO BUY THE SILICON FROM THE SAME VENDOR THAT HAS PROVIDED DESIGN SUPPORT. IN RECOGNITION OF THIS, VENDORS HAVE WORKED HARD TO SUPPLY AN ADEQUATE FLOW OF MICROPROCESSOR COMPONENTS. USERS HAVE ALSO BEEN GIVEN A GREAT DEAL OF DESIGN HELP TO USE CURRENT AVAILABLE MICROPROCESSOR PRODUCTS AND THEY HAVE BEEN GIVEN AN UNUSUALLY DETAILED VIEW IN THE FUTURE PRODUCT PLAN FOR MOST NEW MICROPROCESSOR PRODUCTS. - 33 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, GA 95131 / (408) 971-9000 / Telex 171973 USER/VENDOR INTERFACE - MICROPROCESSOR/ASIC - SLIDE 28 THIS TREND TOWARD A STRONGER USER-VENDOR INTERFACE ALSO APPEARS APPLICABLE TO THE EMERGING ASIC MARKET. AGAIN THE ASIC VENDORS ARE APPLYING RAW TECHNOLOGY IN THE FORM OF DESIGN TOOLS, AND PROCESS, WHILE USERS ARE SUPPLYING THE SYSTEMS TECHNOLOGY THAT PUTS THESE TO WORK IN A PARTICULAR APPLICATION. THE SYNERGISM OF THIS PARTNERSHIP IS ONE OF THE MOST IMPORTANT ASPECTS OF THE ASIC REVOLUTION. AS WITH MICROPROCESSORS, THERE APPEARS TO BE A STRONG DEGREE OF MUTUAL LOYALTY BETWEEN ASIC USERS AND THEIR VENDORS. - 34 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 HOWEVER THE ASIC MARKET ADDS ANOTHER DIMENSION TO THE USER-VENDOR RELATIONSHIP. WHEREAS DESIGN ASSISTANCE FOR MICROPROCESSORS COULD BE SUPPLIED IN A GENERIC WAY WITHOUT THE VENDOR BECOMING HEAVILY INVOLVED IN THE DETAILS OF THE USER SYSTEM, ASIC CIRCUITS OFTEN INVOLVE JOINT DESIGN PROJECTS IN WHICH THE ASIC VENDOR MUST REVEAL A GREAT DEAL ABOUT CAD AND PROCESS TECHNOLOGIES, AND THE SYSTEMS SUPPLIER MUST REVEAL A GREAT DEAL ABOUT HIS PROPRIETARY SYSTEM CONCEPTS. OUT OF THIS HAS GROWN A STRONG DEGREE OF MUTUAL TRUST BETWEEN VENDOR AND IJSER IN THE ASIC MARKETPLACE. MAINTAINING THE HIGHEST DEGREE OF INTEGRITY IN DEALING WITH CONFIDENTIAL INFORMATION IS PARAMOUNT TO THE SUCCESS OF THE ASIC COMPANIES. - 35 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 APPLICATION SPECIFIC SYSTEM SOLUTIONS - SLIDE 29 THIS COOPERATION IS THE REAL FORCE DRIVING THE EMERGENCE OF THE ASIC MARKET. THROUGH APPLICATIONS SPECIFIC INTEGRATED CIRCUITS WE CAN COMBINE ADVANCED SYSTEMS IDEAS WITH KNOWLEDGE OF CIRCUIT DESIGN AND PROCESS DESIGN TO ACHIEVE RESULTS THAT ARE TRULY SYNERGISTIC. BUT BRYOND THE TECHNOLOGY SYNERGY, THERE IS THE CUSTOMER-VENDOR TEAM SYNERGY.. A TRUE PARTNERSHIP THE HALLMARK OF ASIC IN THE FUTURE. - 36 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen CoITipany / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 HICROPROCESSOR/ASIC REVOLUTION - DRIVING FORCES - SLIDE 30 IN SUMMARY THEN, IT APPEARS REASONABLE TO DRAW PARALLELS IN THE GROWTH OF THE MICROPROCESSOR MARKET AND THE GROWTH OF THE ASIC MARKET, BASED ON THE FORCES THAT ARE DRIVING THE TWO MARKETS. IN THE ASIC BUSINESS, WE HAVE SEEN STRONG DRIVING FORCES IN THE FORM OF USER NEEDS AND SUPPORTING TECHNICAL BREAKTHROUGH. WE ARE OBSERVING THE PROLIFERATION OF SUPPLIERS. WE ARE SEEING THE SAME SIGNIFICANCE ATTACHED TO DESIGN TOOLS AND LIKE THE MICROPROCESSOR SUPPLIERS, ASIC VENDORS ARE PROVIDING HIGH LEVELS OF CUSTOMER SUPPORT. THE RATE OF TECHNOLOGY ENHANCEMENT CONTINUES TO BE VERY RAPID IN THE ASIC MARKET AND HOST IMPORTANTLY WE ARE SEEING THE EMERGENCE OF AN EXTREMELY CLOSE USER-VENDOR INTERFACE. - 37 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 TWO REVOLUTIONS - SLIDE 31 I HOPE I HAVE CONVINCED YOU THAT THERE ARE A REMARKABLE NUMBER OF SIMILARITIES BETWEEN THE BY NOW HISTORICAL MICROPROCESSOR REVOLUTION, AND THE ONGOING ASIC REVOLUTION. WE'RE ALMOST HALF WAY THROUGH THE DECADE. HOW ARE WE DOING SO FAR? COMPARED WITH THE FIRST FIVE YEARS IN MICROPROCESSORS, OUR GROWTH RATE IS CONSIDERABLY LOWER, BUT THE MARKET IS MUCH LARGER. FOR THE NEXT FIVE YEARS, THE ASIC GROWTH RATE PROJECTED IS WELL BELOW THE MICROPROCESSOR GROWTH RATE FOR THE LAST FIVE YEARS. GIVEN THE SIMILARITIES OF DRIVING FORCES, AND THE SIMILAR PERVASIVENESS ACROSS NEARLY ALL IC APPLICATIONS, ONE MIGHT EVEN CONCLUDE THAT THE ASIC GROWTH PROJECTIONS ARE CONSERVATIVE! THANK YOU. - 38 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 RIdder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 (:i:aDataquest Dataquest APPLICATIONS, THE FUEL OF PERVASIVENESS Kenneth V. McKenzie Associate Director, Semiconductor Group Dataquest Incorporated Mr. McKenzie is Associate Director of DATAQUEST's Semiconductor industry Service. He is responsible for all research activities on semiconductors and related publications. During Mr. McKenzie's 14 years in the electronics industry, he has held management positions in both design engineering and marketing. Previously, he was Marketing Manager at Zilog, Incorporated, and was Marketing Manager for 8-bit microprocessors at Intel Corporation. Dataquest Incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 i??^^;^-*^^?-?^^^.;;^^?-!;^!;^)^.^^.:^^.?)^!^^ jn, [^:^^^,fp^;^;;MV-;^J7"^^-=^i^^it^^^;:^ •wLrliJI IIJ Ii' APPLICATIONS THE FUEL OF PERVASIVENESS KEN MCKENZIE s^ Associate Director W. Semiconductor industry Group Dataquest incorporated a wi|^aiii4|^##%»^^ ,!^Jii.i:i.^:iiiJ3E?!Vfrni'-i;,iirKlJri;jl^ii^ m^m ' • < . '^Semiconductors - The new CRUDE OIL" Jerry Sanders > . r ^ » - 1 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 . INTEGRATED CIRCUIT CONSUMPTION BSonsof Doitrs —1 SO m - » • a 10 n _ _ f-i 1—II—1 rn n n 1 1 70 7172737i757»7?7t74IOH«M»1»S»»JBn ' iiii)iiIm)jiniia.mjM APPLICATIONS - THE FUEL OF PERVASIVENESS y.ii"A''A"A'A''jta3WRW«aa»' 'I • if < • v^wvntvrftvffMcxiM.-ttMX BUILDING THE INDUSTRY FOUNDATION • PRODUCT EVOLUTION • DISPLACEMENT MARKETING • "GOLDEN RECORDS" • USER ACCEPTANCE - 2 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 BUILDING THE INDUSTRY FOUNDATION isesms» 1960-1980 THE DISPLACEMENT ERA • 20 YEARS AGO. DISCRETE = 95% OF TAM • 10 YEARS AGO. ICs = 46% OF TAM • MICRO MARKET IS ONLY 10 YEARS OLD • DISPLACEMENT OF TTL LIMITED BY SPEED BUILDING THE INDUSTRY FOUNDATION "I.H'JM-iLW.Y, £«°«a» 1960-1980 THE DISPLACEMENT ERA APPLICATIONS • "DUMB" CRT TERMINALS • ELECTRONIC SCALES • "SMART" GAS PUMPS • POINT-OF-SALE TERMINALS - 3 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 APPLICATIONS - THE FUEL OF PERVASIVENESS agmwaaaaaaa DEVELOPING THE TOOLS FOR GROWTH • RELIABLE PRODUCT • FUNCTIONAL SYSTEMS INTEGRATION • USER APPLICATION SUPPORT • MARKET-DRIVEN PROCESS TECHNOLOGY • PREDICTABLE FACTORIES DEVELOPING THE TOOLS FOR GROWTH • PRACTICAL DESIGNER WORKSTATIONS • HARDWARE/SOFTWARE SYNERGY • THE USER DRIVES THE MARKET • APPLICATIONS TECHNOLOGY • APPLICATION-SPECIFIC ICs - 4 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 DEVELOPING THE TOOLS FOR GROWTH 1980-1985 TRANSITION TO THE INFORMATION AGE APPLICATIONS • THE OFFICE PERSONAL COMPUTER • ELECTRONIC HOME ENTERTAINMENT • CAD WORKSTATIONS • VOICE/DATA INTEGRATION •nB9MaBIMMff9S>E3g« iinminiiHininM^jj DEVELOPING THE TOOLS FOR GROWTH attwaaaawfii'KwwMBwwaaBttt ii'^IIiw ,nj>',t'nir»in;i,"xwi»MaB'wwttiinFjIiOT»wi 1980-1985 TRANSITION TO THE INFORMATION AGE • MEETING THE JAPANESE CHALLENGE • MARKET-DRIVEN PRODUCT PLANNING • USER/VENDOR RELATIONSHIPS • FACTORY AUTOMATION • APPLICATION-SPECIFIC ICs - 5 - C 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 maiiMiliJilijiijMdMUi'Itl fISl 1IH MB APPLICATIONS FOR GROWTH rsrsrsesfsesssrsv^ 1985—^ • COMMUNICATIONS • COMPUTER • CONSUMER • GOVERMNENT/MILITARY • INDUSTRIAL • TRANSPORTATION ^•ff^^*^'*0^'™^^^*?'"Oft*^ APPLICATIONS FOR GROWTH 1985—«- THE SILICON "ENGINE" • HARDWARE/SOFTWARE TRANSPARENCY • GENERIC I/O • HUMAN MODELING (AD • CONSULTIVE PROCESSING - 6 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 CONSUMPTION ($) BY END USE PDCortnOF nrtticET I I i«1 in iw I i I i Iocw^nn . MTTQ laHSunER Tti£can iwusm. -«««• APPLICATIONS FOR GROWTH usxaasKKMoaaetii ts»MVK»vaaasaeMae)U)KSMmmm.w^:iinui 1985—* COMMUNICATION APPLICATIONS • INTEGRATED VOICE/DATA/GRAPHICS • USER-IMAGE SECURITY • CELLULAR MOBILE TELEPHONE - 7 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 APPLICATIONS FOR GROWTH sgansagsRaaaaaia a^'asaasxwvr^twifKwwsrv ,i,vr"v^fvj,:iiujii'xsei 1985—^ COMPUTER APPLICATIONS • TRANSPARENT VIRTUAL PROCESSORS • VOICEPRINT USER PASSWORD SYSTEMS • REAL-TIME CONCURRENCY • NON-DIGIT HUMAN INTERFACE • OPTICAL STORAGE APPLICATIONS FOR GROWTH iaiw.aiif.jBeg aai"!" px'xx jLijusBIeiai8SBiww."i'.'i''jw".ii')Ir'A'it.','i', 1985—^ CONSUMER APPLICATIONS • "SMART" CREDIT CARD • ALL-ELECTRONIC STILL CAMERA • HOME ENVIRONMENT SYSTEM • HOLOGRAPHIC ENTERTAINMENT - 8 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 APPLICATIONS FOR GROWTH imarjainjj «»» 1985—^ GOVERNMENT/MILITARY APPLICATIONS • REUSABLE SPACE SYSTEMS • HEALTH CARE • FAA SAFETY/CONTROL • HIGHWAY/TRANSIT SYSTEMS • "CS" DEFENSE SYSTEMS APPLICATIONS FOR GROWTH iiw.n.'.Af.i.'.ufj.A.'.i:' tMIi»XS» 1985—«- INDUSTRIAL APPLICATIONS • MOTOR CONTROLS • ENERGY MANAGEMENT/POWER SUPPLIES • PROCESS CONTROL/INSPECTION SYSTEMS • ROBOTICS • MEDICAL MONITORING/CONSULTATION - 9 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, GA 95131 / (408) 971-9000 / Telex 171973 UI.».r..^J,1l.f.LiJ11ILIJ>f.U APPLICATIONS FOR GROWTH v.'K'p.vii.'imvt.'. 1985—^ TRANSPORTATION APPLICATIONS • "SMART" CAR ENGINE • PERSONAL AUTO SECURITY SYSTEM • DIAGNOSTIC MONITOR/SCHEDULER • "HEADS-UP" DRIVER DISPLAY CONSOLE • CRASH-AVOIDANCE SYSTEM 1985 — "SMART" CREDIT CARD • SINGLE. ALL-ACCOUNT DEVICE • BUILT-IN SECURITY SYSTEM • MEDICAL HISTORY AND MILITARY ID • PASSPORT AND LOCAL CURRENCY CONTROL • AUTOMOBILE SECURITY INTERLOCK - 10 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 rMPACT OF FUTURE APPLICATIONS I I IIII ii'iiii I I III! I II > I III mill IIII II II I I II 1985—«- TOUCH-SENSITIVE CLOTHES IRON • AUTOMATIC TURN-ON BY TOUCH • INACTIVE FOR 10 MINUTES - SHUTS OFF • LOWER ENERGY CONSUMPTION • ELIMINATES MAJOR CAUSE OF FIRES • BUILT-IN TEMP CONTROL IMPACT OF FUTURE APPLICATIONS 1985—^ "SMART" CAR ENGINE • ELECTRONIC VALVES (NO CAM) • INTEGRAL FUEL INJECTION • COMPUTER IGNITION (NO DISTRIBUTOR) • VARIABLE POWER CURVING/EMISSIONS • SELF-DIAGNOSTICS/SERVICE - 11 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 iriTiniBr"iniriiiinniiiiiiiniiiiiniiiini' iiiiii'Kin t iiiiiiiiinii iiiiin i ii mn asuansuustu IMPACT OF FUTURE APPLICATIONS •ll'1'..'l.'"'"*'***''''^'!"'"^'''!''"'"'"""'™' 1985—* ALL-ELECTRONIC STILL CAMERA • DIGITAL STORAGE REPLACES FILM • FRAME-BY-FRAME ASA CONTROL • ON-BODY COLOR BALANCE/FILTERING • HOME COMPUTER EDITING/'BRUSHING" • ELECTRONIC IMAGE TRANSMISSION sse^at/M/eeaxasssaeBBasiBeeeatiMUieutteeuii/uis^ miuii ii j m LII MwaMtMaaaaassBaaiaaiggBawMiwWMWWWsBgWMt^^ IMPACT OF FUTURE APPLICATIONS M» • SYSTEM LEARNS FROM THE USER • VOICE I/O FOR THE "THIRD HAND" • PRODUCTIVITY LEVERAGE • MAN/MACHINE SYNERGY • REVERSE OBSOLESENCE - 12 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 APPLICATION - THE FUEL OF PERVASIVENESS APPLICATIONS FOR GROWTH • END-USE MARKETING • PRODUCT PLANNING TECHNOLOGY • THE "SOFT" DATA CATALOG • INTERNATIONAL CHALLENGES • "WHAT BUSINESS ARE WE IN?" - 13 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Dataquest Dataquest HIGHLY INTEGRATED SYSTEMS Jon Cornell Senior Vice President and Sector Executive Harris Semiconductor Mr. Cornell is Senior Vice President and Sector Executive of Harris Semiconductor's Sector. Previously, he was Director of Analog Operations, Vice President of Analog Operations, and the head of Harris' Products Group. He joined Harris in 1968 as an Associate Principal Engineer. Mr. Cornell attended Rensslaer Polytechnic Institute and received a B.S. degree in Physics from Wichita State University. He later received a Master's degree in Electrical Engineering from the University of South Florida in Tampa. Dataquest Incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 HIGHLY INTEGRATED SYSTEMS: A Convergence of Key Technologies Jon E. Cornell Senior Vice President, Sector Executive Harris Corporation, Semiconductor Sector The history of electronics can be characterized as a quest for higher levels of integration per unit volume and lower costs per function. SLIDE ONE — [Progress chart with past five phases, HIS phase] Looking at that progress over the last half century or so, there are five major phases of progress and each began at a time when the then current technology was reaching limiting barriers. In every instance, the beginning of a new phase marJced industry advancement toward production of a more integrated device than was possible in the previous phase. And those five phases were all the result of a radical new technology introduction that revolutionized the design of future systems. Our industry is now on the very threshold of another significant phase that is not the result of a revolutionary new product or process, but rather the convergence of three important and evolving technologies. More importantly, while the old progression was toward more integrated components, this next phase will move toward more highly integrated systems. And the impact'of integrating systems is great — we can again make real strides in reducing overall system size, decreasing - 1 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 significantly the cost-per-function and marlcedly improving system reliability. The ability to now concentrate on the design and development of ^systems is indicative of the maturity of our industry where, for the first time, a real partnership between system design houses and semiconductor manufacturers can be struclc to the benefit of the whole industry and its customers. SLIDE TWO — [HIS driving forces: CMOS, DA, PKG] The three technologies that have evolved to drive this next level of integration are Complementary Metal Oxide Semiconductors (CMOS), Design Automation and Paclcaging. CMOS CMOS was, for many years, seen as an advantage only in power-limited applications where very dear tradeoffs — notably in performance and level of integration — were made. Now there is no sacrifice in performance as compared to NMOS/bipolar and the low power advantage is still retained. In fact, modern silicon gate CMOS technology has progressed to the point where it is clearly the technology of the future for VLSI. But even more importantly to the realization of true highly integrated systems, CMOS allows dense paclcing of components because of low heat dissipation made possible through its low power operation. DESIGN AUTOMATION Another key to the next phase of highly integrated systems is the evolution of Design Automation technology. Computers have been used for years to aid in the design of electronics, but that usage normally involved a collection of discrete hardware and software that didn't communicate and did not allow a hierarchal approach to solving design-oriented problems. The familiar term for this level design tool is CAD (computer aided design). Design Automation is far more than that. It's a whole integrated process that allows top-to-bottom design coupled with simultaneous bottom-to-top analysis and feedback. Since Design Automation uses a common database where changes on one level trigger automatic adjustments at all other levels, the designer can move from initial concept through logic, layout - 2 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, GA 95131 / (408) 971-9000 / Telex 171973 and even manufacturing steps with the ability to interrogate any level at any time. Further, it allows the engineer to concentrate on total system capabilities rather than on discrete gate functions — effectively giving the system/logic designer the tool to design the IC with no major change in methodology. In a nutshell. Design Automation provides for the first time the integrated system needed to develop "systems in silicon." PACKAGING The last of the three converging technologies needed to realize the highly integrated system goal is paclcaging. With new packaging techniques using low-cost plastic leaded chip carriers (PLCCs), we can achieve higher pin count and smaller size than that possible with conventional dual-in-line packages. Also, surface mounts can be installed on both sides of boards, decreasing further the overall board size. SLIDE THREE — [CMOS driving forces: speed, function, power] The driving forces in selecting CMOS technology are power, functionality and speed. POWER In the past few years, integration levels have increased to the point where conventional NMOS power barriers were reached. With CMOS, a 90 percent reduction in power over NMOS/bipolar designs is feasible. Converting existing designs to CMOS effectively break the power barrier experienced with the most dense units of today. But a more significant CMOS advantage for tomorrow's highly integrated systems is that as CMOS integration levels increase, total system power requirements actually lessen. That occurs because a large percentage of the power dissipation in CMOS is to drive external interconnect capacitance at system level. Another benefit is that with static CMOS design, which gives the ability to stop the system's clock, system power requirements can be reduced by yet another order of magnitude. So static CMOS gives a new dimension of flexibility with respect to controlling system power/performance tradeoffs. - 3 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 FUNCTION CMOS has evolved to the point where industry-standard, and highly integrated, functions are now available. Examples of that are the 80C86 16-bit microprocessor, the 80C51 8-bit microcomputer and the 80C85 radiation-hardened microprocessor. In addition, many SSI, MSI and LSI peripheral functions are now available. SPEED CMOS is not a laggard in performance, either. In the past, slow speed was associated with CMOS circuits. But the low performance state was more the result of a lacJc of attention paid to CMOS technology than any inherent limitation. By applying modern MOS fabrication techniques, CMOS has now converged on NMOS performance. Today it is widely recognized that advanced CMOS designs provide performance as good or better than NMOS while Still realizing the benefits of low-power. And because of these advances it should be noted that the next generation of industry-standard products are being designed today in CMOS technology. SLIDE FOUR: [Driving forces of Design Automation] Design Automation is a Jcey to achieving a high level of system integration. The three driving forces in the development of DA are hierarchal software, networked hardware and modular design. HIERARCHAL SOFTWARE Using CAD, the design progressed from the bottom up and after all the worJc was done, a top down analysis was done to see if the circuitry worlced. With DA's hierarchal software, top down design methodology becomes possible with bottom up analysis available throughout the design process. Part of the analysis possible is multi-mode simulation. Behavioral, logic and circuit simulation can be done from the same database and these three modes can even be "mixed" appropriately. And with a very large DA database and simulation abilities, it is feasible to simulate circuits containing large numbers of transistors. So larger, more complex systems can be handled by a smaller number of less experienced design engineers. That is why Design Automation is so vital an issue in the emergence of Highly Integrated Systems. Obviously, development of HIS is a more - 4 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 design intensive taslc and to maintain leadership in this area, it is absolutely essential to achieve greater design efficiency. NETWORKED SYSTEM Another important part of Design Automation is the integration toward a completely networked system. With a common database tying integrated workstations, data can be captured easily at remote locations and current data can be distributed and used where it's needed. Current systems network the design, simulation, test, maskmaking and layout functions. Very soon, computer-aided manufacturing stations will be tied in to completely automate the design sequence. Then, any change on any level will ripple to every other level. MODULAR DESIGN Modular Design is the use of standard SSI, MSI or LSI functions for the development of a VLSI circuit. Three significant advantages of this approach are the reduction in development risk, the increase in design efficiency and the ability to customize and optimize for a given application. The risk is lowered by using industry-standard and characterized functions as building blocks; efficiency is improved by reduction of development time and cost through the use of higher level functions. By using industry-standard functions, designers can use the same functions they previously used in PC board-level design. Since each cell comes as a fully tested and proven unit, designer learning time is reduced and output is increased. A designer who completed "X" number of gates per week can do lOX or lOOX using DA. SLIDE FIVE: [Driving forces of Packaging] Advancement in packaging technology is the third key in the realization of Highly Integrated Systems. Packages are becoming larger and yet smaller — larger in pin count and smaller in size. Advanced functions and the increased I/O of high integration call for increased efficiency in board layout and packaging. - 5 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 RIdder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 SURFACE MOUNT Advances in surface mount technology now give significant packaging benefits. Surface mounting can reduce the area occupied on the board by about 3-1 over dual-in-line packages. The reduced height of plastic leaded chip carriers (PLCC) and LCC packages further reduces overall volume and, of course, weight savings are realized when package size is reduced. The emergence of PLCC packages is also significant since it uses low cost plastic materials and eliminates the thermal mismatch encountered when ceramic type chip carriers are mounted on epoxy boards. In fact, the curled leads of PLCCs provide a buffer against thermal or mechanical stress and show none of the material mismatch seen with ceramic leadless chip carriers. PLCCs can be used with conventional fiberglass PC boards and allow easy manufacture of highly integrated systems. HIGH PIN COUNT The smaller outline of surface mount packages allow a higher pin count per board area which is important for the integration of several functions on a single chip. As integration goes up, the requirement for I/O goes up and the surface mount concept makes high pin count packages feasible for manufacturing. SYSTEM INTEGRATION Since integrated CMOS systems don't need large power supplies, fans, heat sinks and fins, these new developments in packaging technology can be used. And the ability to now use PLCCs and LCCs means a more reliable, more easily manufactured and less expensive per function unit can be delivered to the customer. SLIDE SIX: [Technology convergence facilitates HIS development] So the convergence of these technology forces now places us on the Highly Integrated Systems threshold — the next industry phase. While each evolving area of these converging technologies is important, key areas that should be illustrated by example are: the Speed possible with CMOS, Modular Design benefits, and the packaging advantages afforded by Surface Mounts and System Integration. - 6 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 SLIDE SEVEN: [Impact on Performance: J-11] A joint development of Digital Equipment Corporation and Harris Semiconductor, the J-ll is fabricated using advanced self-aligned junction-isolated (SAJI IV) process. The J-11 set contains features not previously available on chip including full PDP-11 memory-management functions, high-speed cache memory support and on-chip floating point instruction set. Even with the added value of increased function and decreased size, the J-11 still exceeds the performance of all members of the PDP-11 family. Of significance is the key role of CMOS and advanced packaging techniques in achieving superior system performance. SLIDE EIGHT: [J-11 block diagram] J-11 bus capacitance is reduced because of sharply shortened interconnect distance. Another significant benefit of CMOS is its ability to drive capacitive loads. As a result, two 22-line buses are run at 200 nanosecond bus instruction time. SLIDE NINE: [Impact of Modular Design: 82C55A and 82C37A] The circuits pictured are the 82C55A and the 82C37A. Both were created using modular standard cell design. Modular design is a proven vehicle for creation of LSI products and it supports migration to advanced processes like SAJI V. As a result of modular design, we can shrink these products to our new double metal CMOS emd realize a 40 percent area reduction without redesigning or doing hand re-layout of the product. Also, the LSI creation becomes a building block for highly integrated peripherals. SLIDE TEN: [Highly integrated communications interface] Another good example of modular design is this highly integrated communications interface. These functions, created with modular design techniques, can be easily incorporated into a multi-function, single chip device that saves board space and pin count. This interface is a 68-pin device that replaces components with a total pin count of 218. - 7 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 SLIDE ELEVEN: [List of LSI SuperCells] PERIPHERAL CIRCUITS: 82C37A DMA controller 82C52 UART/BRG 82C54 Programmable Interval Timer 82C55A Parallel I/O 82C56A Multifunction UART 82C59A Priority Interrupt Controller BUS SUPPORT CIRCUITS: 82C82 Octal Latch 82C83 Octal Latch (Inv.) 82C84A Clock Generator 82C85 Static Cloclc Controller 82C86 Octal Bus Transceiver 82C87 Octal Bus Transceiver (Inv.) 82C88 Bus Controller 82C89 Bus Arbiter DATA COMMUNICATIONS; HD15530....Manchester Encoder-Decoder HD15531....Manchester Encoder-Decoder HD4702 Baud Rate Generator HD6402 UART HD6406 UART/BRG/MODEM Control HD6408 Manchester Encoder-Decoder HD6409 Manchester Encoder-Decoder MEMORY; IK RAM Reconfigurable RAM IK RAM Reconfigurable RAM SLIDE TWELVE: [Impact of System Integration] The impact of system integration can be clearly seen here as system size shrinJcs by a factor of 6. The functions on these two 6X12 inch boards can be integrated into the 4x6 board with surface mounts on each side. This could not be done without using modular design, CMOS process and advanced packaging techniques. SLIDE THIRTEEN: [CMOS for harsh environments] The real world of industrial controllers is one characterized - 8 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 by contaminants such as dirt, dust, oil; extremes of temperature and humidity; and vibration — a real "board buster." This product shows the benefits of rugged computers sealed off from harsh environs. Future systems are certain to need the same "tough hide" made possible by the low power, low heat operation of CMOS and lean, intractable PLCC and LCC packaging. SLIDE FOURTEEN: [Hewlett-Packard's The Portable] The HP-110 is another example showing the impact of CMOS on system packaging, power supplies and portability. A nine-pound, notebook-sized computer that offers the power and capabilities of a desktop computer and runs on batteries so it can run with you — certainly a strong case for highly integrated CMOS systems. SLIDE FIFTEEN: [summary] The use of CMOS processes. Design Automation and advanced Packaging techniques will open new markets and applications for the electronics industry, and bring the significant benefits of increased integration to conventional applications. The development of these converging technologies ensures growth and continuing innovation for the "Information Age." - 9 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Acceleration Rate of Integration moM.r ifmannte INTEQIUTION /VACUUM LEVEL i^ 1*M TECHNOLOGIES CONVERGE CMOS DESIGN AUTOMATION HIS PACKAGING TO DRIVE HIGHLY INTEGRATED SYSTEMS - 10 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 CMOS DRIVING FORCES POWER •—• ___ FUNCTION CMOS SPEED ^ DESIGN AUTOMATION DRIVING FORCES HIERARCHAL SOFTWARE •—•——_ ^~~""~-—.^ '^ NETWORKED DESIGN SYSTEM AUTOMATION _^ • MODULAR DESIGN - 11 - Dataquest incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 PACKAGING DRIVING FORCES SURFACE MOUNT __ HIGH PIN COUNT PACKAGING " SYSTEM INTEGRATION HIGHLY INTEGRATED SYSTEMS ». a convergence of technology forces - 12 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 J11 J11 BASE J11 J11 OATA CONinOL CONTftOL CONTIIOL CHIP CHIP CHIP CHIP a 1 a . - IMCIM WMTMICnOM HM M \irtO *IKHUUAT» HM - 13 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 IMPACT OF MODULAR DESIGN 82CS5A 82C37A HIGHLY INTEGRATED COMMUNICATIONS INTERFACE I/O S2CS4 •2C55A INTERVAL no TIMER S3C5M I/O CONTROL PIC I/O LOGIC HO-6410 6 SN 74225 UART-i)R G FIFO a2C84A OSC. I/O - 14 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 IMPACT ON SYSTEM INTEGRATION THE SEALED ENVIRONMENT REAL WORLD OPERATION - 15 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 THE PORTABLE HIGHLY INTEGRATED SYSTEMS • Now practical through evolution of Icey technologies • Pervasive impact on next generation systems - 16 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 (IDa Dataquest Dataquest PAST CMOS: KEY TO VLSI PERVASIVENESS Dr. T. J. Rodgers President Cypress Semiconductor Dr. Rodgers has been the President and Chief Executive Officer of Cypress Semiconductor Corporation since its founding in 1983. During his nine years in the integrated electronics field, he has held positions as Static RAM Product Manager at AMD and Manager of Memory Development at AMI. Dr. Rodgers received an A.B. degree in Physics and Chemistry from Dartmouth College, where he was a Sloan Fellow; and M.S.E.E. and Ph.D.E.E. degrees from Stanford university, where he was a Hertz Fellow. Dataquest Incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.G. Nielsen Company / 1290 Bidder Park Drive / San Jose, GA 95131 / (408) 971-9000 / Telex 171973 WORLDWIDE WSTS SHIPMENTS INTEGRATED CIRCUf (IBILLIONS) 1982 1983 1984 1965 196e 1987 WORLDWIDE WSTS SHIPMENTS DIGITAL CMOS ($BILLlOh6) 1982 1983 1984 1965 1966 1987 - 1 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Pari< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 WORLDWIDE WSTS SHIPME^^S DIGITAL BIPOLAR (IBILLIONS) 1982 1963 19S4 1985 1966 1987 MEMORY MARKET Sh^RE (DATAQUEST) 1980 1981 1982 1983 1984 1985 1956 1987 1988 • BiPaAR • JSMCS n CMOS YEAR - 2 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 4K STATIC RAM PRICE VERSUS SPEED SPEED COMPANIES TECHNOLOGY PRODUCT ASP(1983) ASP(1965) ISTS 3 ECL 100/10474 J20.00 $10.00 25nS 3 ECL 100/10474 $15.00 $750 35nS 3 HMOS 2148/9 $5.50 $3£5 45nS 6 HMOS 2148/9 $4.00 $2.65 55nS 11 HMOS 2148/9 $2.75 $2.00 7QnS 11 HMOS 2148/9 $2.35 $1.80 150ns 2 NMOS 2114A $1.90 $1.60 200nS 15 NMOS 2114 $1.25 $1.15 450nS 15 NMOS 2114 $0.90 $1X)0 GATE DELAY VERSUS YEAR m 2 1975 1975 1977 1979 1981 195-5 1974 1976 1978 1980 1982 YEAR - 3 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 CYPRESS PRODUCT STRATEGY -- FAST 1K RAtvIS -- BIPOLAR NMOS CMOS ORGANIZATION 256X4 256X4 256X4 SPEED 35NS 25NS 15NS POWER 155mA 120mA SOmA POWER-SPEED PROD 27nJ 15nJ 6nJ ESD PROTECTION <400V >1000V >2000V ALPHA SENSITIVITY HIGH NONE NONE DIE TEMPERATURE 135C 123 C 1050 FAILURE RATE VERSES POWER 500 ] K RAM IN THREE TECHNOLOGIES BIPOLAR 400 F=Foc -Ea/KT RATE Ea=1eV 0 420 eeo 653 POWER (MW) - 4 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 ELECTROSTATIC DISCHARGE 8000-. 7000- eooo- 5000 4000 3000 2000 1000 VOLTS 0 1 2 3 4 5 6 7 9 10 11 12 13 14 15 PIN NUMBER CMOS 16K REGISTERED PROM COMPARED TO BIPOLAR PARAMHER CMOS BPOLAR SPEED 35nS/15nS 40nS/20nS POWER 495mW (PLASTIC) 971mW(CERDP) SUPPLY TOLERANCE 10% 5?: ESDPASSvaTAGE >2000V -20QV CHIP SIZE 19;200SQMLS 29.700 SQ MILS - 5 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Dataquest Dataquest TELECOMMUNICATIONS IMPACT OF SEMICONDUCTORS Marisa Bellisario Managing Director and Chief Executive Officer Italtel Group Marisa Bellisario is Managing Director and Chief Executive Officer of the Italtel Group. Prior to joining Italtel, Ms. Bellisario was President and Chief Executive Officer of Olivetti Corporation of America. Formerly, she was in charge of Product Planning and Operations Planning at General Electric Information Systems Italia and at Honeywell Information Systems Italia. She began her business activities in 1960 at Olivetti Divisione Elettronica. Ms. Bellisario graduated in Economics at Turin. Dataquest incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Si TELECOMMUNICATIONS IMPACT OF SEMICONDUCTORS Sis Conference San Dlegot October 16, 1984 Marlaa Bellieario Managing Director and CEO, Italtel Ladlaa and gentlemen, good afternoon and thank you for inviting me to speak on the Impact of semiconductors on the telecomiDunicatlons industry: a topic which, of course, is one of the top priority issues on my agenda. I am in charge of Italtel, the largest Italian manufac turing company in the telecommunications Industry and part of the Iri-Stet Croup. In Italy, Italtel holds fifty-two percent of the market, in terms of installed lines; in Europe, our share amounts to nine percent and accounts for three percent of the worldwide market. Total consolidated sales for 1983 amounted to 1,100 billion lire*. Last year, we recorded a 10 billion lire profit**, while in the pre vious years our losses were substantial. The company's performance in the first six months of 1984 confirm this positive trend: consolidated sales Increased by 20 percent, compared to the first semester of 1983; consolidated profit amoun- * 725 million dollars at the 1983 average exchange rate. ** 6.6 million dollars at the 1983 average exchange rate. - 1 - Dirtiiont Holuiofil CtUrn* IttiWI tOlB4 MIIlno < Vi* A di ToCqutVlII* It - Ml. 43BaMSa • 436*5393 - Mlox 914640 • Ftuimll* (gruppo 3 CClTT) (OJ) 438S$37B Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 ted to 16»3 billion lire* growing by 27 billion lire** compared to the first 8lx months of 1983. Telecommunications are undergoing a radical change: the telepho ne's functions and services are no longer limited to voice hattdling. Data processing Is also rapidly changing together with the role of computers. In fact, today's increasingly sophisticated and powerful computers are merely the direct evolution of the number-crunching calculators of the Forties. Two worlds, which until today have led separate lives, are beginning to merge. The Integration process is just beginning. However, it is so it&portant that we Europeans have invented a specific term to define it: "telematics". You can't find "telematics" In an Ameri can dictionary: I've been told that the nearest translation could be "customer premises equipment". However, In my opinion, this definition is still inadequate, since telematics Is an all-encom passing concept. The starting point for the integration between telecommunications and data processing is microelectronics, I.e. silicon. Here, a few hundred miles from Silicon Valley, is one of the two technological * 9.B million dollars at the average exchange rate for first semester 1984 ** 16 million dollars at the average exchange rate for first semester 198A - 2 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 aources which are the driving forces behind the transformation and evolution of manufacturing processes, products and applica tions. At the risk of hurting someone's national pride, nay I remind you that the other technological source, equally Important, also faces the Pacifici Japan. I an here to speak on the basis of my experience In telecommunica tions. However, I am also here to meet people and gather first hand information on work In progress In the silicon Industry and on the fast pace of technological change. This type of contact is esseiitlal In order to keep up with the state-of-the-art in a market where competition Is global and requires a new relationship between vendors and buyers. Let me highlight some facts on telecommunications. This slide shows the breakdown per area of the world market for private and public telecommunications systems: these are our estimates for 1985, which is practically today. The United States are first In terms of the number of telephones lostallsd. They also outrank other countries when taking into account the telephone density, i.e. the number of telephones as percent of population, as this slide illustrates. However, as far as the number of subscribers Is concerned. Western Europe Is ahead of the United States by 3.5 million. Taking Into account subscri ber density, the united states are again in first place. The number of subscribers and/or telephones Is a well-established Indicator also for assessing a country's economic and social situation. This slide compares each area's subscribers, as percent of total world subscribers, with its GNP, as percent of total world GMP. Telephone penetration will continue to be a useful Indicator even when. In the near future, telephones will evolve - 3 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Into telematlc terminals or integrated workstations handling every type of infomtatlon (volce» datat texts, laagee. graphs). The following slide ranks the worldU major telecom manufacturers in terms of equivalent lines produced. These are our estimates, although based on official data available at year-end 1982. Let me stand up for Europe by pointing out that six out of twelve compa nies are European or operate in Europe. Moreover Itt's main production sites are in Europe. Through a simple addition we learn that» in 1982, five companies belonging to ECC-member countries (Siemens, Alcatel Thomson, Plessey/GGC, Italtel* Philips) produced 5.6 million equivalent lines, which is close to 6.1 million produced by At&t. If we add to the EEC total the 1.8 million lines manufactured by Ericsson (which has many subsidiaries in the ECC countries), the European grand total Is 7.4 million, which ranks Europe as the world's first by a significant margin. Japan's overall 1982 production totalled 2.6 million equivalent lines: a much lower level than the European one. However Japan has already achieved full co.'ordination so that all Japanese firms manufacture the aame systems. These figures are a clear indication of the role of the "Europe of Telecommunications" in the industry's evolution and of the ever-Increasing importance it will have in the future. To assess the impact of semiconductors on telecommunicatlona, let ne highlight the transformation process which networks are now undergoing. The evolution towards digital technologies has just started: the slide shows the number of digital exchanges, as percentage of total exchanges* installed in 1982 in four European countries. The US figures are included for comparison. - 4 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 The following «llde lists the public switching systems presently installed or being field tested: the first aeml-electronlc ex change dates back to 1965 ( these exchanges, as we have seen, handle a significant share of the telephone traffic In the United States). The first central-control electronic exchange was introduced in 1977. The Implementation of fully digital exchanges, mainly of the distributed control type, is a current event. As you can see, the bottom of the list Is very short: it Includes one of Italtel's products, the Proteo UTlO/3, which has completed final acceptance tests on the part of the Italian operating company : thirteen of these exchanges have already been shipped , to be installed in the Italian network. We produce the UTlO/3 in our plants in Mllano and Palermo (in Sicily) and, during 1984, have recorded some significant successes abroad: Cuatemala, Mozambique and Albania have chosen our system to modernise their telecommunications network for an overall value of about 80 billion dollars. Compared to the United States, Europe was late in beginning the transformation to digital switches, but it is rapidly recovering ground, as you can see in this slide, which traces Europe's plans compared to that of the United States. The transformation rate varies among the five countries with Prance leading the way. However both Italy's and the UK's curves are also quite steep. Investment plans for telecommunications are quite substantial in major European countries: for instance, the Italian P.T. Telecom munications Plan provides for Investments amounting to approxima tely 2,300 million dollars per year in the next 10 years; the French Post Office expects to Invest about 2,900 million dollars per year until 1966. whereas, for the same time span, the German - 5 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 F.T. le estimated to invest some 4,100 million dollars per year. Most of these expenses will be concentrated on the implementation of networks; Italy, for example, will allocate to networks and exchanges about 80 percent of total telecommunications investments forecasted. The ehlft to digital technologies appears to be slower and less extensive in the United States compared to the main European countries. In fact, as we have previously mentioned, the United States have already heavily Invested in semi-electronic systems to ensure efficient service and adequate returns in the next years. Let me go on to examine the effects of semiconductors on telecom munications manufacturing companies. As far as products are conce'rned, European companies are the main consumer* of eemlcon- ductora ( at percentage of total semiconductor consumption) today and In the next four years. Telecommunications systems and equip ment absorb, this year, 23 percent of all semiconductors consumed In Europe, as opposed to 14 percent In the United States and 9 percent in Japan. The European consumption rate is, as you see, higher than that of the US and Japan. This means that the European innovation rate is higher (as confirmed by the previous elide, which showed network implementation plans In varlona countries). But, It also means that ve Europeans are behind in absolute terms. Consequently, we need to push Innovation much further. In absolute values, the United States will continue to outrank Europe: Its 198A telecom semiconductor consumption is 70 percent greater than the European one* * 1690 million against 977 million dollars. - 6 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Furthermore, European countries have also chosen to give priority to renewing networks, all handled by individual Ptt's, with less emphasis to developing teletnatlc systems/services/Products. This is confirmed by Europe's 1984 consumption values of semiconductors for telecommunications, which is 3 percentage points greater than the semiconductor consumption for computers and terminals.* The consequences of microelectronics In the factories are negative for total employment but positive as far as professional skill Is concerned. Let's take as example the case of three European coun tries, In which telecommunications companies started to shift to microelectronics In the mld-seventles. The slide shows how total personnel has decreased by about 30 percent, affecting mainly blue collars. Telecom companies, In fact, need more technicians, researchers, specialists, systems engineers and less blue collars. This Is confirmed by our experience: we reduced total personnel by 6000 employees In the last three years. Today we are slightly less than 21,000 and our plans provide for an additional reduction of about 4,000 people in the next two years. The change In personnel mix is another major consequence of microelectronics: today Italtel employees are 50 percent white collars and 50 percent blue collars; while, three years ago, the breakdown was quite different. 10 percent of our total workers are engaged In research and development activities today , compared to 8 percent in 1960. Globally, Italtel's research and development staff totals 2,000 persons, which Is the largest R and D group in Italy and one of the first in Europe. * 23.2 percent against 20 percent - 7 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Silicon-based microelectronics reduces added value up to lO-fold, while R and D expenses Increase: approximately .5 to 1 billion dollars and 5 to 8 years are required for developing a complete line of digital switching systems. Time span and costs will Increase with the future generation of products. A strategy focusing on Intercompany alliances and rationalization of supply Is therefore necessary In order to share R and D invest ments among several markets and to achieve economies of scale. This will Improve competitiveness in terms of price, while, as far as technology is concerned, we Europeans already have and master it. 1 have spoken of "we Europeans". However, the Europe of telecom munications ia made up of ten different entitles, none of which can Individually compete, presently or in the future,with American or Japanese companies. I am convinced that Europeans should start to work together on very specific technical and/or market objectives without excluding beforehand alliances with American companies, A first relevant example of this strategy is the agreement between the PTs of France and Germany, on the one hand, and Siemens, Philips and Alcatel Thomaoni on the other, to develop and deploy the same cellular mobile radio system, we are presently negotiating an agreement with Alcatel Thomson In France and with Siemens in Garmany. We have a long-standing cooperation with Siemens for FABXB and public packet switching networks. We have also begun exploratory talks in the U.K. With this fitep-by-seep strategy* In the next three to five years we could achieve a commonality of parte and sub-systems accounting for 15 to 20 p^rr«rit of s whole awiLwliius system. - 8 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 The alliance among Europeans should be coupled with alliances and Joint ventures with high-tech companies, notably those based on both coasts of the Pacific, which can supply advanced products and technologies for specific market segments. We at Italtel, for instance, In 1962 signed with Gte an agreement aimed at jointly developing digital public switching systems. Our co-operation, which also Includes Telettra (the other Italian telecotmnmunica- tiotts company , is going well. As far as private telecommunica tions are concerned, we implemented a "cocktail strategy" choosing small high-tech American partners who can supply the most advanced technologies and products. The objectives of these alliances, or, for that matter, of any industrial alliance, are additional markets and new, advanced technologies. The challenge of tomorrow for telecommunications, transformed by microelectronics, involves willingness to innovate and to face tough competition, flexibility in structures, products and produc tion processes. Moreover it requires en open approach to potential partners, whatever their nationality. The agreements between At&t-Phllips and At&t-Olivettl are only the latest examples of alliances] they are the proof that the telecommunications market is expanding and merging with information handling and data processing. This final slide illustrates the evolution we forecast in the structure of the world market for telecommunications and data processing. As you can see, the greater market share for the Nineties is represented by integrated information systems, encompassing the whole set of user interfaces. Perhaps, beginning with the next decade, our Dataquest friends will be able to organize conferences using telecommunlcaclons or, better still, telematics systems: we will probably be able to communicate without moving from our offices. - 9 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 This hypothesis is technically feasible thanks to silicon-based microelectronics, coupled with the resources, technologies and creativity of people in telecoofflunicatlons, data processing and electronics. This will also help to solve the perennial problem of updating and re-arranging ny schedule. However I expect that airlines restaurants and hotels as nice as this one won't be so enthused. Thank you. - 10 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 SIS Conference Teiecommunications impact of Semiconductors Marisa Bellisario San Diego - Oct. 16,1984 AttaHel - 11 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 World Telecom Market (1985) Africa Oceania Latin America Asia 1% 1.6% .3% 15.6% North America Europe 41.2% 37.6% Total: $ 80 billion AKaKel Telephones (in millions -1982) . Latin America Oceania OA A 10 ^ -^ Other 24.1 West North America Europe 198.8 159.4 Total: 524.2 million - 12 - ARaKei Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Telephones per 100 Population (1962) 77.26 m 43.28 North Western Japan America Europe AttaHel Subscribers (in millions -1982) Latin America Oceania 15.5 Africa 6.6 Other 3.9 — 17.6 Japan 42.5 Nortli America West Europe 104.5 107.9 Total: 330 million AltaHel - 13 - Dataquest Incorporated, A Subsidiary of AC. Nielsen Company / 1290 Bidder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Subscribers per 100 Population (1982) 40.59 35.95 29.31 North Western Japan America Europe AttaHel Subscribers and GNP (1982) Subscribers QNP North America 31.7 27.5 Western Europe 32.7 29.6 Japan 12.9 10.1 Oceania 2.0 1.6 Eastern Europe 9.5 14.8 Asia* 5.3 7.0 Latin America 4.7 6.3 Africa 1.2 3.1 Total 100 100 ^without Japan AltaKel - 14 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 World Public Switching Market (1982) Market Equivalent share lines (000) At&t 29 6100 itt 14 2800 Siemens 10 2000 LM. Ericsson 9 1800 Alcatel Thomson 8 1600 Fujitsu 7 1400 Nippon Electric 6 1200 Piessey + Gee 5 1100 Gte (USA) 4 820 Italtel + Gte (1) 3 630 Northem Telecom 3 600 Philips 2 450 Total 100 20500 (1) Gte Italia and Balglum A Italtel Switching Techniques (equivalent lines-Jan. 1984) France FRO Italy UK USA E/mechanical 63 98 98 70 36 Semi-electronic 23 1 27 59 Digital 14 5 TotallOO 100 100 100 100 A Italtel - 15 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Public Switching Systems (first installation or field test) SEMI-ELECTRONIC 1ESS At&t 1965 CENTRAL CCNTROL E10 CIt Alcatel 1977 DMS 100/200 Northern Telecom 1980 System X Plessey/Gec 1981 EWSD Siemens 1P81 AXE 10 Ericsson 1982 GTD-5 Gte 1982 D60/D70 Nec/FMjitsu 1983 DISTRIBUTED CONTROL 5ESS At&t 1983 1240 Itt 1983 UT10/3 Italtei 1984 A Italtei Digital Networic Implementation Plans (equivalent lines) France 2000 years - 16 - AKaKel Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Telecom Semiconductor Consumption (as % of total semiconductor consumption) % 30- EUROPE 2048 M$ 977 M$ 20 NORTH AMERICA 1691 M$ 3556 MS JAPAN 10- — 694 M$ 1464 M$ 1 t I 1984 19 years Europe North America •^ Japan Altaltel Personnel in Telecom Manufacturing UK France Sweden 77 78 79 80 years 17 - Altaltel Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 White Collar / Blue Collar Italtel 1980 1984 33% 67% 50% 50% Telecom and DP A Italtel Worid Market 1980 1985 1990 Public Public Public Networks Networks Networks ^— Integrated Telephones Private PABXs Networks Telematics lis' Systems DDP and Products WP I/O other Storage other Systems 'Intsgrattd Information System* Altaltel - 18 - Dataquest Incorporated, A Subsidiary of AC. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Dataquest Dataquest IDEAS AND THE PROLIFERATION OF TECHNOLOGY Everett M. Rogers Professor of Cc»ninunications Stanford University Dr. Rogers has been teaching and conducting research on technological innovations for ten years at Stanford University. He was previously on the faculties of the University of Michigan, Michigan State University, and Ohio State University. Dr. Rogers is author of numerous books and articles on communications and innovation, including Silicon Valley Fever (1984), co-authored with Judith K. Larsen. Dr. Rogers is also co-founder with Dr. Larsen of Cognos Associates in Los Altos, California, a firm specializing in research on the impact of technology, and on the process of technology transfer. He received B.S., M.S., and Ph.D. degrees from Iowa State University. Dataquest Incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Dataquest IDEAS AND THE PROLIFERATION OF TECHNOLOGY Judith K. Larsen Senior Research Scientist Cognos Associates Dr. Larsen is a Senior Research Scientist with Cognos Associates in Los AltoSf California. Her research focuses on the social impacts of technology and on public policy affecting the electronics industry. Previously, she was Principal Research Scientist at the American Institutes for Research. She began her career as an engineer at Philco-Pord Corporation. Dr. Larsen has written many journal articles and well as technical books. Silicon Valley Fever, co-authored with Everett M. Rogers, presents an overview of living and working in Silicon Valley. She received a B.A. degree from Gustavus Adolphus College, an M.A. degree from Syracuse University, and a Ph.D. degree from the University of California. Dataquest Incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 CREATING THE ENVIRONMENT FOR IDEAS I. The proliferation of ideas A. Development of ideas and knowledge in semiconductor industry - Great expansion of field. The limits of the technology are being blown out. Increased capability of technology. - Growth in demand - In an industry that's still developing, there are more opportunities to pursue than any one company can possibly follow. Impossible for one company to develop all aspects of a technology. - Multiple development possibilities that are good possibilities - Shortage of people is biggest barrier to more idea proliferation B. Attitude of existing semiconductor companies - Vnienever a company gets est:ablished, its o%m existence becomes its main purpose. So it continues to support what it has done well in the past. - Would be foolish not to, but supporting past traditions/procedures often is incompatible with developing new ideas in new or undeveloped area. II. Silicon Valley factors supporting proliferation of ideas A. Job mobility. High level of employee turnover works to encourage development and exchange of new ideas. B. Strong support network/infrastructure. Easy to find machine shop or assembly company that will do small Jobs at competitive prices. C. Agglomeration. Location of companies in geographically concentrated area. D. Location in proximity to potential customers. Silivon Valley's well- established electronics companies are prime markets for new products. - 1 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 £. Resources. Pool of experienced high-tech engineers and mangers. They know the business. Most new ventures don't have an immediate need for lots of employees; rather they need expertise. F. Venture capital. Perhaps most important: money. III. Incentives for the Individual and the proliferation of new ideas A. $ B. Leave problems in current job. It's a matter of desperation for some people. They get laid off or view their current job as uncertain, C. Role models. The penalty for failure is so low and the examples of what can be done are so many. D. Challenge. Desire to climb out of ruts and break old routines. "After seven years, things at my previous job were getting regular. I was dealing with the same set of competitors and %rith a lot of the same faces and problems." - Elements of challenge include unabashed pleasure in what they do. IV. Developing new ideas outside the existing company A. Introduction. There are two ways of developing new ideas/technologies: (1) Come up with a new idea; turn it into a commercial product; find a marlcet for it. (2) Take an existing idea/technology (from the last place you worked, usually) and improve upon it. The second strategy has the greater likelihood of success, primarily because the market already exists for a product that is being sold. B. Ideas/technologies. - New developers are at the front end of the technology, where there is generally an excess in demand. The excess in supply of semiconductors is usually more characteristic of the middle or end of the technology. - 2 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 - New developers are in markets ignored by large firms. C. Incentives for developing ideas in new setting - Coimnunications are simple - Bureaucracy is minimal. Smaller groups of technical people can develop products more 4tiickly. The bigger you get, the more you tend to have a bureaucratic framework that slows you down. - Employees are highly motivated. - Knowledge that rewards are great if the company's product is successful. Nickel-end-dime founder stock is hard to beat. D. Experience. "We have a couple of things going for us in this company right now that makes it easier. We've done it before, and the second time is easier. The first time around, we did a lot of things right and a lot of things wrong. If you remember the things you did right, you do them the same way; if you remember the things you did wrong, you may not do them right the second time, but at least you'll do them differently." - Establishing credit, making contacts with vendors and customers, and selling a new product are all easier the second time around, largely because of the people's reputations. E. Origins of founders. Although one inight expect the training provided from working for a small company to be best, founders who worked for larger companies (more than 500 employees) have a slightly higher success rate. Reason may be that larger companies often have a successful product line that the new venture can imitate. In addition, larger companies have gone beyond "seat of the pants" management and can produce more seasoned leaders with a better ability to organize and delegate authority. F. Problems of technology-driven ventures -Example of mistakes in technology driven company. Founders are usually engineers with limited skills in related areas. Lack of experience in marketing is usually a critical problem. - 3 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 V. Creating an environment for ideas within the existing company A. Typical scenario: 1. Too much technology 2. Company couldn't or wouldn't develop technology into product. 3. Engineers frustrated after company cast aside technology. 4. Rivals/competitors raid company for top people. B. Disadvantages faced by mature semiconductor companies There are several reasons why more older and larger semiconductor companies have a difficult time exploiting new technical product opportunities and new market opportunities. There is little point in exclaiming that large companies should learn to be more innovative; there are perfectly valid reasons why they are not, and perhaps cannot be, more innovative. 1. Initial market niche too small. A market opportunity that offers interesting potential for a new company may be too small to be interesting to a multi-million dollar corporation. Both the management of the large company and the small venture are making sensible, rational decisions when the first declines the market opportimity and the second Jumps at it. 2. De-<:oupling of development and marketing. Basic research comes from the lab; development requires a great deal of interaction between the market and the firm's design emd manufacturing capabilities. Communication lines tend to be long in large companies, and short in small companies. In large companies, it is difficult to get the design staff to understand market needs, and equally difficult to get marketing to appreciate manufacturing's capabilities and limitations. In a small venture, people are likely to have first-hand or intensive knowledge both of the market and of the firm's development capabilities. The key decisions regarding new semiconductor products are at the interface of marketing and maniifacturing; the - 4 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 experienced, technically-trained entrepreneur is particularly well- positioned to make those decisions. Marketing and manufacturing are coupled in one or a few individuals in a new semiconductor company; in a large company they are decoupled into two groups that traditionally have difficulty conmiunicating with each other. 3. Absence of innovation champions. The successful development of a new semiconductor technology requires a "champion** for the innovation. Champions—that is, individueds who become dedicated to, and even zealous about, the new opportunity-^o not easily emerge within a large corporation. And if such an individual does onerge in an established semiconductor company, rarely does he or she have the muscle or clout to focus resources or attention sufficiently to succeed in exploiting the technology. However, in a small company, the entrepreneur is the champion, and has the power to lead staff to critical development efforts. 4. Management Reward Structure. In larger companies, management reward structures place very little emphasis on risk-taking. Rather, a premium is placed upon no surprises in operations. In such an environment, the cost of being %nrong is much higher to a middle nianager than the reward for being right. So what is the motivation for taking risks? 5. Cost of capital. Most semiconductor companies, large and small, face capital constraints. They have more development opportunities available to them than their supply of capital. High interest rates accentuate this situation. Capital budgeting procedures in large companies tend to favor investment opportunities that are relatively low risk, such as investments to reduce costs or to expand production capacity. This %d.ll offer positive returns, but little opportunity for dramatic payoff. This situation is neither unexpected nor necessarily undesirable. The large firm*s - 5 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 stockholders are not expecting the company to undertake high-risk investments, therefore the large company's decisions are consistent with stockholder expectations. C. Advantages for new semiconductor companies Just as there are several reasons why large semi conductor companies are at a disadvantage at capitalizing on innovation, there are several reasons that small semiconductor companies are well positioned to exploit the technology. 1. Ability to focus resources. Nearly all new semiconductor companies are highly focused on one market niche. All of their resources are concentrated on a limited scope of activity. Managers, engineers, and sales personnel are not diverted by the demands of other products, by the needs of customers in other markets, nor by the necessity to make continual improvements in existing devices. The company must be successful in its particular niche. The stubborn commitment and determination for success that accompanies this highly focused effort can overcome formidable obstacles that face virtually every new opportunity. 2. No existing products or customers to protect. A new company has no existing product base nor customer base to protect. If new products make existing products obsolete, thus making existing purchasers unhappy, these unhappy customers will be prime prospects for the new venture. To the extent that large companies make their own devices obsolete with the introduction of new products, it is very often the threat of new ventures springing up in the market that presses them into action. 3. Reward structure. Just as the reward structure of the large semiconductor company mitigates against risk-t:aking, the reward structure in the new venture encourages it. The payoff is in capital appreciation of stock. The overriding motivation is for survival. Resources are carefully - 6 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 deployed, hours are long, efforts are highly focused. The effectiveness in surmounting obstacles and the overall productivity of a new semiconductor company are extraordinary. 4. Risk of Investment. Just as the budgeting procedures of the large company bias against high-risk, high-return investment decisions, the new venture seeks such projects. Venture capitalists who finance new semiconductor companies seek opportunities that hold the promise of creating five to ten times the original investment. Venture capital is a high-risk, high-return game. Just the opposite of the game of allocating a large company's limited capital resources among competing projects. D. Intrapreneurship in established semiconductor companies. ^fuch of the responsibility for the fate of idea development within existing companies rests with corporate management. Review experiences of some cases to see what works and what doesn't. 1. Set up venture group under the umbrella of an established company. 2. Group is actually a subsidiary group, complete vith its own operations officer, manufacturing engineers, quality control specialists, marketing people, and purchasing agents. 3. Has separate quarters. 4. Each team member gets a salary, but also the opportunity to earn just as much in bonuses if the new product makes a good dent in the market. Fat bonuses, more than anything else, are incentives to members of the team. 5. Venture must have freedom to choose research paths. 6. Technological breakthroughs occur when divergent research collides. Important to have cross-fertilization of research ideas. 7. Brainstorming sessions. Getting people to challenge each other's blue sky ideas. "All ideas passed through a Darwinism. Everyone had the - 7 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 right and obligation to coimnent on projects. It was productive because unlike the academic way of doing things (you don't call me on my inconsistencies and I won't call you on yours), there is no such gentleman's agreement." 8. Closer ties between research scientists and product development teams. 9. Visits by corporate executives to labs are critical, and need to be frequent. 10. Role of research manager: (1) Protect troops from corporate gunfire. (2) Obtain equipment and money. (3) Feed the winning ideas. E. Predictable problems - Sometimes management doesn't know enough about new technology to understand how to mesh it with existing product—and to enthusiastically support that transition. - Almost always, communication is bad between corporation and venture group. There is often duplication or overlap of effort. - Research scientists don't comprehend the "adequacy of the product." In the fast-moving, competitive semiconductor Industry, the product must meet the needs and expectations of the market. R&D scientists often want to keep working on the product to make it perfect. However, that can result in the product reaching the market too late, or the product may never get into production. - Guard against venture producing technology that is incompatible wlch existing technology, or new ideas that will obsolete corporate products already on the market. F. Drawbacks of intrapreurship - Some think that a corporate venture group will not catch on. "If you have to make one special arrangement after another to retain your R&D - 8 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 people, all your projects become very expensive. It may not be good business to pursue them.** -Team members can't m£ike as much money as they could in a traditional start-up. -Always the possibility the corporate parent will rescind their freedom. -Corporate venture still gets hung up with corporate bureaucracy. G. Advantages of intrapreneurship - "Bigger companies will have to adopt the concept. There is a shortage of good people, and more and more of them are moving to start-ups in other cities, as well as to local start-ups. If companies don't do a better job of retraining good people, the entrepreneurs will move elsewhere." - Ready access to corporate resources - Extensive sales and distribution network - Corporation keeps entrpreneurs - 9 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 VI. Summary A, Difference between idea proliferation in semiconductor industry and other industries: - Explosive growth of Silicon Valley companies - Failure rate is relatively low in Silicon Valley, That's because companies rarely go out of business; rather they tend to be acquired for their technology, equipment, and staff. - Historically, few banlcruptcies among high-tech firms. - Original team of foimders is rarely intact after a few years. The greater the number of founders, the greater the chance of a split in the group. Pairs of founders have the best record of staying together. - Semiconductor industry characterized by large numbers of companies entering the industry. New corporations ask tough questions, and in so doing they contribute more than their share of discoveries. Not only are they sources of innovation, they also stimulate existing companies to use new ideas. - As the technology matures, both economies of scale and various types of vertical integration become more important, with the cost of entering the industry increasing by several orders of magnitude. Therefore, in most industries the rate of entry for new firms slows down as the industry matures. Warning: Industries vd.th little or no rivalry greatly resemble public Institutions, complete with insensitive bureaucracies. - 10 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 B. Conclusion - Best chance of success, whether within existing c(»Dpany or in new venture: have only two or three partners. They should be trained in different fields, and have worked in large companies. The first product should be an improvement on an existing and successful product. - However there is no formula for success. - Impossible to predict "right" technology. - Human beings and their environments are too diverse for a pat formula to work for everyone. - So what to do? Expect to work on a kind of batting-average basis. Tou can't expect to be successful in developing all new ideas. - 11 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 (Ill/ Daftaquest Dataquest EUROPE—A TECHNOLOGICAL BACKWATER? Malcolm G. Penn Vice President and Director of the European Semiconductor industry Service Dataquest UK Limited Mr. Penn is a Vice President of DATAQtJEST Incorporated and Director of the European Semiconductor Industry Service, based in London. He has 18 years of experience in the electronics industry, and has been involved with all aspects of management, manufacturing, marketing, and uses of electronic components, particularly semiconductors. Prior to joining DATAQUEST, he was Manager of Component Engineering at ITT Europe and held various operational and marketing functions within ITT Semiconductors. Mr. Penn received a B.S. honors degree in Electronic Engineering from Borough Polytechnic University, United Kingdom, Dataquest incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 EUROPE—A TECHNOLOGICAL BACKWATER? Hardly a week goes by nowadays without the world press pronouncing further gloom and despondency on Europe. "Economic stagnation and political malaise darken the future of a once proud and powerful continent." "Europe's escape from inflation—but with commodity prices high, can it follow the U.S. lead in growth?" "Falling back in a critical race—old roadblocks and rivalries brake Europe in the high technology field." "New jobs—the real American lesson for Europe." "Semi markets hit 10-year high; but while boosting production overall, U.S. and Europe will lose market share to the Far East." At least with that one Europe can take some small comfort that it is not alone in being criticized. And now the same story from Dataquest? Well—let us see. First of all, I want to confess that I consider myself to be European and proud of it. Despite the obvious problems and difficulties that Europe faces, some of which are entirely of its own making, I firmly believe in a strong and prosperous future for Europe. I do not support the Other popular consensus that Europe is tomorrow's Third World. I also fully recognize the enormity of the task ahead and the major social and structural changes that will have to take place to ensure success. In the next 20 minutes or so, I would like to share with you some of my reasons behind this conviction. Let us first take a look at the status quo.. As all good market researchers should, I conducted a survey recently on how the average American businessperson perceives Europe. Three main themes were common; • A lost cause—a continent whose transition to a sophisticated and modern society more closely resembles that of the Stone Age than of the computer age. • A continent whose apparent desire to produce agricultural products of every imaginable type seems insatiable, the total cost of which currently runs to some $18 billion per annum to support a $6 billion surplus of produce. - 1 - e 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 • A continent of perpetual industrial strife where workers, protected and pampered by an overgenecous welfare system, seek more and more in return for less and less, and where managers relax secure behind various tariff and nontariff barriers. Oblivious to all. As a European, it is easy for me to appreciate these popular myths surrounding Europe. Indeed, I will go further: I believe there has been a substantial element of truth to support them. Western Europe, once proud and world dominant for two millennia, is currently stagnating economically and faltering politically. There is no denying this fact. After 30 years of nearly uninterrupted growth, the so-called "postwar miracle" has all but petered out. The once vivid dream of a united and influential European coiranunity has shriveled into a parody of itself: a "not-very-common market" perpetually embroiled in tacky quarrels over the price of soya beans and pig meat. In a moment of stark cynicism, the Italian author Luigi Barzini recently wrote, "We Europeans have been reduced to the role of the Greeks in the Roman Empire. The most useful function an Italian or a Frenchman can perform these days is to teach an American or a Japanese the proper temperature at which to drink his red wine." In all this, it is vitally important to remember one major difference between the European and U.S. cultures—that is the European ability to be frank and openly self-critical and to parody and make fun of oneself. This is quite contrary to the U.S. culture, where such actions are akin to betrayal, and where even the most blatant of blunders is rapidly dismissed as either irrelevant, or, as is more often the case, is presented as a resounding success. At first sight, therefore, it is easy to appreciate how a simple analysis of these facts can lead to the conclusion that Europe is rapidly becoming an economic and technological backwater. It is also easy to overlook some of the underlying structural and social changes that have already occurred over the past few years. It is as a result of these changes that I believe Europe will arrest its temporary decline, moving from decadence to renaissance. I also believe that the first results have already been achieved. But more on that later. Firstly, it is important to understand some of the reasons that have led to the present-day European economic demise. Without a doubt, the cost of two major world wars within 25 years of each other was high. It left much of Europe heavily in debt and in economic and industrial ruin. In 1945, postwar Europe was starving. The most immediate priority was to rebuild agricultural self-sufficiency. The European solution to sickness, poverty, and homelessness was to construct a complex and all-embracing welfare state system. Today, true poverty and starvation - 2 - © 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 have long faded into the forgotten European past—nominal wages in Western Europe have multiplied by more than 10 since 1960 and real living standards have quadrupled. Even Europe's millions of jobless have gotten along reasonably well, with between 65 percent and 95 percent of their previous wages being paid by the state. In its wake, this social success has brought with it other problems. For example, one of the by-products of the welfare system is that it does not reward success and innovation. Cossetted by years of social protection, many Europeans have lost their entrepreneurial attitude and ability to take the necessary risks in their business or personal lives. Today's business requires greater risk taking than ever before. By definition, risk denotes the possibility of failure. In Europe, failure is still considered a personal and professional catastrophe—in the United States, merely a setback. This problem is further aggravated by the flattening of rewards and by increased job security, even in the case of unsatisfactory performance. The postwar "brain drain" of frustrated Europeans to the United States and Canada was a direct result of these phenomena and, in many respects, was driven by many of the same forces that resulted in the so-called "Silicon Valley Phenomenon." All through the 1970s,- European governments behaved with fiscal abandon. Wages outstripped real growth by 25 percent, social spending ate up larger shares -of each country's GNP, and industrial production increased in the EEC by just 7 percent, in contrast with 12 percent in the United States and 28 percent in Japan. There is, nowadays, a growing realization in Europe that the pendulum has swung too far, that some of the postwar programs have now become far too successful, and that social idealism has not only become too expensive but actually undesirable and occasionally counterproductive. One by one, European leaders have now set about rationalizing their economies and falling in step with the prevailing austerity. Overall, a general economic realization now prevails, even amongst the most idealistic and staunch socialist governments, that austerity must be maintained, despite the howls of protest from the left, strikes—and even street violence—by the affected workers, and the resultant lack of popularity. A new competitive energy is emerging amongst some of the European companies and governments, together with the growing realization of the need to compete effectively in a world market. It is my contention that the excesses of yesterday have now given way to the realities of today. - 3 - © 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 At this point, I would like to pause and take a look at Europ.e from a technological point of view. A review of the appropriate statistics soon indicates that, at the bottom line, Europe's industrial performance has lagged that of the rest of the world. Let us, for example, take semiconductor components. In 1983, Europe consumed some $3.4 billion worth of semiconductor components, up 6.4 percent from 1982. At the same time, the world market grew 26 percent. Last year, Europe represented approximately 18 percent of the world semiconductor market, down from 25 percent some five years ago. Again last year, the European-owned semiconductor companies produced approximately 10 percent of the total world consumption, i.e., approximately $1.9 billion. This was down from 21 percent eight years ago. Counting total production in Europe increases this figure to $3.1 billion, or approximately 16 percent of the world's consumption. At face value, all this seems pretty disturbing until three facts are taken into consideration. Firstly, the continuing strength of the U.S. dollar versus the European currencies. In local currency terms, the European market last year grew approximately 19 percent, with the individual countries growing from a high of 37 percent (United Kingdom) to a low of 10 percent (France and West Germany). The U.S. figure was 27 percent. This year's growth looks like it will turn in at over 35 percent in U.S. dollars or some 55 percent in local currencies. Consumption is much stronger than the dollar figures give credit for. Secondly, the "good behavior rule" does not apply in Europe. The European market is a free-for-all battleground where the U.S., Japanese, and European companies all fiercely fight each other for market share. Prices in Europe have been substantially lower than those for comparable devices in the United States for at least three years now, despite a 17 percent import tariff for most devices. This has had the effect of stimulating substantial numbers of design-ins of semiconductor components to replace the more traditional electromechanical solutions. A lot of these products have yet to reach production status. Again, this has further depressed the underlying strength of the consumption trends when measured in value terms. Thirdly, the European semiconductor companies have traditionally sold their products predominantly into their own national markets. For example, in 1983, the European companies' non-European market share was only $0.4 billion—less than 3 percent market share. This, again, tends to undervalue their real growth and production value (due to the currency distortions) and at the same time points to a very real opportunity for substantial growth via the export markets, a fact that has not gone unnoticed by several of the major European semiconductor producers. - 4 - e 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 It is as a direct result of this new outward-looking policy coupled with a strong U.S. dollar that we expect to see a substantial improvement in the growth and performance of t:he European semiconductor companies. Whilst no one can deny the general conclusion that, from a performance point of view, Europe has lagged behind the world, I believe that this has been a problem of implementation, rather than a fundamental lack of capability. Europe has always been a source of substantial technological innovation and creativity. I have listed here on this next slide a few examples, some of which may surprise you. Let me mention some Others: • The first commercial electron-beam microscope • The first commercial electronic computer • The compact disk We commonly attribute creation of the integrated circuit to Jack Kilby and Bob Noyce, and yet, the essential features were outlined some seven years earlier by the British engineer G. W. A. Duimner. More than that, in 1957, at the International Electronic Component Symposium held at the Royal Signals and Radar establishment in Malvern, United Kingdom, Dummer demonstrated a model of such an integrated circuit. Although purely a design exercise, that model was not so different from the circuit patented by Kilby two years later. Furthermore, the basic planar process fundamental to today's semi conductor technology was developed by a European, Jean Hoerni, when he worked for Fairchild in 1960. Perhaps the ultimate irony of all lies vith the ubiquitous TTL, invented in the United Kingdom by P. M. Thomson (patent number 24222/61). And yet, in 1983, the U.K. semiconductor companies' worldwide IC market share was less than 2 percent and that of TTL was effectively zero. It is not creativity or technological competence that have lacked in Europe, merely the drive and coromitunent to turn these ideas into mass-produced, cost-effective products. It is my contention that this situation can very readily change, and I believe that, in some significant instances, it has already done so. Fundamentally, it is attitudes that have to change. In order to be successful in industry today, it is imperative to consider world markets. And in order to be successful in world markets, one needs three basic ingredients: the right products, competitive manufacturing capabilities, and the people to develop and make these products and to bring them to the world marketplace with the courage and determination to succeed. My next slide demonstrates that the international opportunities for Europe are there and can successfully be exploited. Here, we have plotted the European and worldwide semiconductor market growth for 1980 through 1983 with a projection for 1984. We have also plotted the - 5 - © 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 cumulative worldwide semiconductor revenues for all the European-owned semiconductor companies, together with the specific worldwide semiconductor revenues of Perranti and SGS. As you can see, both these companies substantially outperformed the worldwide market growth—and that in a time period of the worst semiconductor recession the industry has ever experienced. Also on the semiconductor front, some of you may be surprised to realize that Thomson is the world's second largest zener diode manufacturer, and Philips and Siemens are amongst the world's largest KCL producers. Though not European owned, but almost exclusively European staffed and based, ITT is the world's second largest small-signal plastic transistor manufacturer and, since the early 1970s, has held a world leadership position in consumer ICs. A fully digital VLSI IC color TV chip set has been in production in Germany now for over a year, and a newly announced VLSI IC costing around .$10 adds videotex at roughly one-third the cost of the comparable conventional semiconductor solution. In linear ICs, SGS has held a leadership position since the 1960s, and Ferranti has been producing gate array devices since 1972. Inmos, the U.K. start-up funded by the British government, has demonstrated substantial innovation in memories and is poised to follow suit in the microprocessor area with the much heralded transputer. And finally. Philips is still by far the number one semiconductor manufacturer and supplier in Europe and is, in addition, a major world electronic equipment innovator and manufacturer. In the electronic equipment field, in addition to Philips, there are also now many other European success stories. For example, Thomson, Nixdorf, Sinclair, Olivetti, and Ericsson, to name but a few. In the automotive market, names such as BMW, Ferrari, Mercedes, Porsche, and Rolls Royce are still synonymous with style, performance, and technological leadership. In the field of military electronics, few people realize that Thomson is the world's second largest manufacturer behind Hughes, and in aerospace. Airbus Industrie, a European collaboration, has emerged as a viable alternative to Boeing's virtual dominance of the civilian airline market. The emerging Information industry promises a major opportunity for Europe, and one where Europe's inherent strengths can readily be adapted. As I mentioned a while ago, a simple analysis of the current European performance statistics masks several key leading indicators. Firstly, some European companies are seriously contending world leadership—and a few are even setting the pace—in several information industry segments, and Europeans have a long history of technological innovation. - 6 - © 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Secondly, European information industry initiatives are backed and encouraged by stronger public support than in the United States; public R&D spending has increased by a factor of five in recent years. Thirdly, Europe's latent demand for the information industry is enormous: • Europe's GNP is the same order of magnitude as that of the United States. • Europe's population, at 340 millioii people, is 55 percent greater than that of the United States. m The number of electronics companies in Europe is similar to the number in the United States. • Europe's literacy rate and educational standards are amongst the highest in the world. • Information industry centers of excellence, research institutes and universities, as well as private and nationalized companies are emerging. A recent EEC study shows that European companies have at least adequate capabilities in most of the necessary basic information industry technology segments. European politicians and business executives are determined to ensure that Europe remains a factor in information technologies and is not squeezed out by the United States and Japan. Many also feel a need to become less dependent on U.S. technology, given the guarded U.S. policies on technology transfer and high-technology exports. Certain areas of strength already exist, including videotex, integrated services digital networks (ISDNs), robotics and related CAD/CAM, ergonomics, applications software, and even microelectronic components. Substantial investments are currently being made in computational theory, artificial intelligence (AI), processor architectures, distributed systems, and consumer computing devices. Strong support is being given by the European governments both in political and financial terms. All of them rank advanced manufacturing processes, robotics, and factory-of-the-future technology amongst their R&D priorities. Whilst precise implementation policies may differ, the overall objectives are similar. France has a centrally planned program directed and controlled by the French Ministry of Research and Industry. The United Kingdom, on the other hand, has only minimal planning at the national level, preferring a diffused, highly decentralized, and loosely coordinated strategy. The German approach falls in between the two and is characterized by well-coordinated, close cooperation between the - 7 - e 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 public and private sectors. France, Germany, and the United Kingdom are currently allocating around $4 billion annually in public funding to electronics and information industry-related R&D. At the EEC level, a five-year, Europe-wide research program, ESPRIT, was recently launched, designed to foster pan-European cooperation and thereby give European information industry companies a better chance to compete more effectively worldwide by sharing front-end research costs, providing better cross-fertilization of ideas, reducing duplication, and pooling resources. Joint ventures amongst European companies and non-European companies are becoming more common (for example, the recent decision of Bull, Siemens, and ICL to create a joint research center in Munich). ICL and Siemens have tapped the best of both U.S. and Japanese technologies. Olivetti and Philips have teamed up with AT&T in office automation and telephone exchanges, and Ericsson and Honeywell are cooperating on PBXs. Many other cooperative agreements are currently being discussed and, in addition, several European companies have become involved in associations, minor participations, and venture capital investments in start-up technology-oriented companies in the United States. In closing, there are several reasons why Europe has not yet met its full technological potential. Europe has been slow to introduce and accept technology management as a discipline. Its expertise in commercialization has been lacking, primarily due to its past nationalistic market tendencies. In addition, its market skills have remain unproved outside of Europe. Lack of basic technology and innovation has never been a contributory cause. We believe that these problems are resolvable, and, already, a new breed of European managers are emerging, managers that are far more willing to accept the challenges associated with today's high technology, including the willingness to break the barriers of industrial tradition and restrictive and inflexible working practices. In some fields, leading-edge customers and markets are appearing in Europe. In the United Kingdom, for example, per capita penetration of personal computers is higher than in the United States. The rate of penetration of videocassette recorders (VCRs) has been equally phenomenal. In 1982, the U.K. VCR market was only 10 percent smaller than that of the United States. At leading European automobile manufacturers such as Volkswagen and Fiat, the level of factory automation already exceeds that of the leading Japanese producers. Given the substantial number and variety of information industry strengths that Europe is nurturing, we firmly expect the European companies to capture a substantial share of the emerging technology markets. Any U.S. electronics company that aspires to a global position must develop its European market simultaneously. Treating Europe as an incremental market—sometimes with obsolescent domestic products—is increasingly both unrealistic and injurious. - 8 - C 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 EUROPE--AN OVERVIEW "ECONOMIC STAGNATION AND POLITICAL MALAISE DARKEN THE FUTURE OF A ONCE PROUD AND POWERFUL CONTINENT.' Newsweek--April 9, 1984 EUROPE--AN OVERVIEW (Continued) "EUROPE'S ESCAPE FROM INFLATION--BUT WITH COMMODITY PRICES HIGH, CAN IT FOLLOW THE U.S. LEAD IN GROWTH?" Business Week--August 27, 1984 - 9 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 EUROPE--AN OVERVIEW (Continued) "FALLING BACK IN A CRITICAL RACE-- OLD ROADBLOCKS AND RIVALRIES BRAKE EUROPE IN THE HIGH-TECHNOLOGY FIELD.' Time--August 13, 1994 EUROPE--AN OVERVIEW (Continued) 'NEW JOBS--THE REAL AMERICAN LESSON FOR EUROPE'* Financial Times--August 14, 1994 - 10 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 EUROPE--AN OVERVIEW (Continued) "SEMI MARKET HITS 10-YEAR HIGH: BUT WHILE BOOSTING PRODUCTION OVERALL, U.S. AND EUROPE WILL LOSE MARKET SHARE TO FAR EAST." Electronic Business--August 1, 1984 EUROPE--AN OVERVIEW (Continued) •EUROPE--A TECHNOLOGICAL BACKWATER?' DATAQUEST--October 17, 1984 - 11 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 EUROPE--AN OVERVIEW (Continued) WHERE ARE WE NOW? THE EUROPEAN BACKGROUND THE PRICE OF TWO MAJOR WORLD WARS WITHIN 25 YEARS WAS HIGH: • HEAVY DEBT • INDUSTRIAL AND ECONOMIC RUIN • STARVATION • POVERTY AND HOMELESSNESS - 12 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 • TRUE POVERTY AND STARVATION HAVE LONG GONE. • NOMINAL WAGES ARE UP TENFOLD SINCE 1960 (REAL LIVING STANDARDS UP FOURFOLD). BUT IN SOLVING THESE PROBLEMS, OTHERS WERE CREATED. THE EUROPEAN SOCIAL AND ECONOMIC ENVIRONMENT • DOES NOT REWARD SUCCESS AND INNOVATION • ENTREPRENEURIALISM STIFLED • DISCOURAGES RISK TAKING • FAILURE IS A SOCIAL STIGMA • POSTWAR "BRAIN DRAIN" IN ADDITION. EUROPE WAS LIVING BEYOND ITS MEANS. .- 13 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 EUROPE TODAY • A NEW ERA OF REALISM IS EMERGING. • ALL EUROPEAN GOVERNMENTS HAVE SET IN PLACE AUSTERITY PROGRAMS. • REVITALIZED EUROPEAN INDUSTRY (COMPANY LED) IS EMERGING. THE EXCESSES OF YESTERDAY HAVE NOW GIVEN WAY TO THE REALITIES OF TODAY. WORLD SEMICONDUCTOR INDUSTRY PROFILE 1 CONSUMED IN (BILLIONS OF DOLLARS; 2 GROWTH • 1882 1883 •82 TO -83 EUROPE S 32 $ 3.4 6.A% UNITED STATES 6.5 8.3 26.5Z JAPAN 4.1 5.6 36.7Z REST OF WORLD 1.0 1.5 40.22 TOTAL $14.8 SI 8.8 26.02 - - 14 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 RIdder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 WORLD SEMICONDUCTOR INDUSTRY PROFILE PRODUCED BY (BILLIONS OF DOLLARS) % GROWTH COMPANES 1982 1983 •82 TO •83 EUROPEAN $ 1.6 $ 1.9 11.7% UNITED STATES 8.0 9.8 22.5Z JAPANESE 5.1 6.9 36.4% OTHERS 0.1 02 86.8% TOTAL $14.8 $18.8 26.0% WORLD SEMICONDUCTOR INDUSTRY PROFILE PRODUCED IN (BILLIONS OF DOLLARS} Z GROWTH 1982 1983 •82 TO ^83 EUROPE $ 2.7 $ 3.1 11.6% UNITED STATES 6.8 8.5 25.6% JAPAN 4.7 6.4 34.7% REST OF WORLD 0.6 0.8 42.4% TOTAL $14.8 $18.8 26.0% - 15 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 RIdder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 EUROPEAN SEMrCONDUCTOR MARKETS CONSUMPTION AND PRODUCTION ARE MUCH STRONGER THAN THE DOLLAR FIGURES SUGGEST • CURRENCY DISTORTIONS • AGGRESSIVE PRICING • HIGH LEVEL OF SELF-CONSUMPTION EUROPEAN INVENTIONS AND DISCOVERIES PRODUCT COUNTRY BATTERY ITALY MTERNAL-CCMBUSTION ENGIhE FRANCE ELECTRIC MOTOR BELGIUM CATHODE-RAY TUBE GERMANY WIRELESS ITALY DESELENGIhE GERMANY X-RAYS GERMANY RADIOACTIVITY FRANCE TELEVISION UNTTED KI - 16 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 EUROPEAN INVENTIONS (Continued) • FIRST COMMERCIAL ELECTRON-BEAM MICROSCOPE • FIRST COMMERCIAL ELECTRONIC COMPUTER • COMPACT DISK EUROPEAN INVENTIONS (Continued) INTEGRATED CIRCUIT G. W. A. DUMMER 1952 - 17 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 EUROPEAN INVENTIONS (Continued) PLANAR PROCESS JEAN HOERNI 1960 TRANSISTOR-TRANSISTOR LOGIC (TTL) P. M. THOMSON PATENT NUMBER 24222/61 UNITED KINGDOM - 18 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 M * ViVy.'. >1.0v'»:rl.v<-J L • II iL IJLTJJ .hi '•"^'V>v-,, 1^1 'i''fe'-iif,^iff^^?|ag:^^ ^^^^jKSSSSB^^^^^^SBB^S^^^^^^^^^S^^^^^^^SSS^S^^S^^a^^jm .y^iSjnSISSi^sff^aSJiEra?;' STRATEGY FOR SUCCESS • RIGHT PRODUCTS • COMPETITIVE MANUFACTURING • DETERMINATION TO SUCCEED - 19 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 RELATIVE GROWTH IN SEMICONDUCTOR MARKET (DOLLARS, BASE 1980 = 100) 240 FERRANTI 200 160 120 ^EUROPEAN COIVlPANIES " ' , <- EUROPEAN MARKET 1980 1981 1982 1983 1984 EUROPEAN SEMICONDUCTOR WORLD LEADERSHIP • THOMSON--ZENER DIODES • SIEMENS/PHILIPS--ECL • ITT-INTERMETALL--PLASTIC TRANSISTORS/CONSUMER ICs • FERRANTI--GATE ARRAYS • SGS--LINEAR • INMOS--MEMORIES • PHILIPS--NO. 1 SUPPLIER IN EUROPE - 20 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 RIdder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 EUROPE--A TECHNOLOGICAL SUPREMACY- ELECTRONIC EQUIPMENT • PHILIPS--BROAD-RANGE MANUFACTURER • THOMSON--MILITARY ELECTRONICS • NIXDORF--POINT-OF-SALE EQUIPMENT • SINCLAIR--HOME COMPUTERS • OLIVETTI--OFFICE AUTOMATION • ERICSSON--TELECOMMUNICATIONS EUROPE--A TECHNOLOGICAL SUPREMACY- NONELECTRONIC EQUIPMENT • AUTOMOBILES BMW. FERRARI. MERCEDES. PORSCHE. ROLLS ROYCE • AVIONICS AIRBUS INDUSTRIE • GOVERNMENT/MILITARY THOMSON-CSF - 21 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 • READILY ADAPTABLE TO EUROPE'S STRENGTHS • SOME COMPANIES ALREADY CONTENDING FOR WORLD LEADERSHIP • STRONG PUBLIC SUPPORT • ENORMOUS LATENT DEMAND -GNP -POPULATION -ELECTRONICS COMPANIES -HIGH LITERACY AND EDUCATION STANDARDS -CENTERS OF EXCELLENCE EUROPEAN TECHNOLOGICAL STRENGTH-- COMMUNICATIONS UNITED FRANCE GERMANY KINGDOM VIDEOTEX XXX XXX XXX LOCAL AREA NETWORK XX XX WIDE AREA NETWORK XX XX XX LEGEND: XXX INTERNATIONAL CAPABILITY XX SIGNIFICANT FOCUSED ACTIVITY X STRENGTH IN SPECIFIC AREAS - 22 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 EUROPEAN TECHNOLOGICAL STRENGTH-- ROBOTICS AND CAD/CAM/CIM UNITED FRANCE GERMANY KINGDOM LANGUAGES X XX X SENSORS XXX SYSTEMS X XXX MACHINE VISION X XX X SIMULATION AND MODELING X XX X LEGEND: : XXX INTERNATIONAL CAPABILITY • XX SIGNIFICANT FOCUSED ACTIVITY • X STRENGTH IN SPECIFIC AREAS • EUROPEAN TECHNOLOGICAL STRENGTH-- MAN-MACHINE INTERFACE UNITED FRANCE GERMANY KINGDOM ERGONOMICS XXX FLAT-PANEL DISPLAYS X X GRAPHICS DISPLAYS X VOICE SYSTEMS XX X X LEGEND^ XXX INTERNATIONAL CAPABILITY XX SIGNIFICANT FOCUSED ACTIVITY X STRENGTH IN SPECIFIC AREAS - 23 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 EUROPEAN TECHNOLOGICAL STRENGTH-- SOFTWARE UNITED FRANCE GERMANY KINGDOM THEORY OF COMPUTATION XXX XX XXX PROGRAMMING LANGUAGES XX X X OPERATING SYSTEMS X X X ARTIFICIAL INTELLIGENCE XXX XX XXX TOOLS X XX XX APPLICATIONS XX XX XX LEGEND: XXX INTERNATIONAL CAPABILITY XX SIGNIFICANT FOCUSED ACTIVITY X STRENGTH IN SPECIFIC AREAS EUROPEAN TECHNOLOGICAL STRENGTH- MICROELECTRONICS UNITED FRANCE GERMANY KINGDOM JOSEPHSON JUNCTION X GaAs XXX X X VLSI X X XXX HARDENED XX X (MILITARY/SPACE/ NUCLEAR} LEGEND: XXX INTERNATIONAL CAPABILITY XX SIGNIFICANT FOCUSED ACTIVITY X STRENGTH IN SPECIFIC AREAS - 24 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 EUROPEAN TECHNOLOGICAL STRENGTH-- COMPUTER SYSTEMS ORGANIZATION UNITED FRANCE GERMANY KINGDOM PROCESSOR ARCHITECTURE XX XX XXX DISTRIBUTED SYSTEMS XX XX XXX CONSUMER COMPUTING DEVICES X XXX LEGEND: XXX INTERNATIONAL CAPABILITY XX SIGNIFICANT FOCUSED ACTIVITY X STRENGTH IN SPECIFIC AREAS STRONG GOVERNMENT SUPPORT-- A COMMON THEME • FRANCE--CENTRALLY PLANNED AND CONTROLLED PROGRAM • UNITED KINGDOM--HIGHLY DECENTRALIZED AND LOOSELY COORDINATED • GERMANY--CLOSE COORDINATION BETWEEN PUBLIC AND PRIVATE SECTORS - 25 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 EEC ESPRIT • FIVE-YEAR. EUROPE-WIDE RESEARCH PROGRAM • PAN-EUROPEAN COOPERATION • MORE EFFECTIVE COMPETITIVENESS -SHARED FRONT-END RESEARCH COSTS -BETTER CROSS-FERTILIZATION OF IDEAS -AVOIDANCE OF DUPLICATION OF ACTIVITIES -RESOURCE POOLING JOINT VENTURES AND OTHER ASSOCIATIONS • BULL. SIEMENS. ICL JOINT RESEARCH CENTER • ICL AND SIEMENS WITH VARIOUS U.S. AND JAPANESE COMPANIES • OLIVETTI AND PHILIPS WITH AT&T • ERICSSON WITH HONEYWELL • OLIVETTI WITH VLSI TECHNOLOGY • MANY MINOR PARTICIPATIONS AND VENTURE CAPITAL INVESTMENTS - 26 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 EUROPE DOES NOT LACK IN BASIC TECHNOLOGY OR CREATIVITY. EUROPE WILL CAPTURE A SUBSTANTIAL SHARE OF THE EMERGING WORLD HIGH-TECHNOLOGY MARKETS. - 27 - O 1984 Dataquest Incorporated Oct. 15 ed.-Reproduction Prohibited Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 (::)aDataqiiest Abstract Dataquest Conference Presentation Semiconductor Equipment: Key to Pervasiveness W. R. Bottoms The revolution in electronics has had an impact on the economic life of the entire free world. Electronics has indeed become pervasive in the last ten years. The fundamental driving forces for the pervasiveness of solid state electronics have been the decreasing cost of electronic functions delivered and the increasing value of the applications of those electronic functions. There have been many significemt contributors to the decreasing cost of producing electronic functions beginning with the physicists and electrical engineers who defined the basic science upon which the industry is based and continuing with the circuit designers and the process engineers that have developed the process technology required to take these innovative designs from paper into silicon. During the last few years, developments in semiconductor equipment have been a major factor enabling the continued reduction in the cost of - 1 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 electron functions. Decreasing feature size, increasing process yields, and the economic advantages of producing in very large volumes have all been realized through a combination of innovation in circuit designs and processes and through developments in semiconductor equipment. Production equipment for lithography, etching, metallization and high temperature processing have all posed limits in the past to the continuation of decreasing feature size. Solutions to these limitations have been provided by the semiconductor equipment industry. Over the next few years the role played by the equipment industry in the continued expansion of the pervasiveness of solid state electronics by reducing costs will continue to increase. - 2 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 vanan KEYS TO PERVASIVENESS OF SOLID STATE ELECTRONICS DECREASING COST PER FUNCTION INCREASING VALUE OF APPLICATIONS TRANSPORTABILITY OF PRODUCTION CAPABILITY POPULARIZATION OF ELECTRONICS INCREASED LEISURE TIME DECREASING COST PER FUNCTION FEATURE SIZE DESIGN INNOVATION PROCESS YIELD PRODUCTION VOLUME EFFICIENCIES PRODUCTION LIMITATIONS FOR SUBMICRON DEVICES • LITHOGRAPHY • ETCH • METALIZATION • HIGH TEMPERATURE PROCESSING - 3 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 FERTURE SIZE RS R FUNCTION OF varian LITHOGRRPHY TECHNOLOGY IQ ,^<^^* U N t-i cn ^^ u 3 t- (T U li. .5 ~ 7A 7G 78 60 82 84 86 86 YEAR - 4 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 FEATURE SIZE RS fl FUNCTION OF METRLIZRTION TECHNOLOGY vartan 10 U .Rt*" N SP^'l^-'t ' (-1 -5«0»» tn u Q: D I- cr u LI. 74 7G 78 60 62 64 86 88 YEAR - 5 - Dataquest Incorporated, A Subsidiary of A.G. Nielsen Company /1290 Ridder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 vanan PRODUCTION LIMITATIONS FOR SUBMICRON DEVICES HIGH TEMPERATURE PROCESSING • DOPANT REDISTRIBUTION • SUBSTRATE DIMENSIONAL INTEGRITY • MATERIALS COMPATIBILITY — ALUMINUM — POLYAMIDE RAPID THERMAL PROCESSING APPLICATIONS • IMPLANT ACTIVATION • SILICIDE ACTIVATION • PSG REFLOW - 6 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 COST PER ^A OF IMPLANT CAPACITY varian 1.00 rr—I—I—I—I—T 1 1 T , Sarlal Piac*n ••tcfi Pfoeatt 8 0.10 u m 0-0l| 1 I ' I I I 72; 74 76 78 10 U Tim* (Vaart) COST PER 5Q INCH/HR CORTED 1.5 - jj^« Q: I \ z 1 - o in \ B — .j-u 7B ?9 BQ Ql 82 83 YERR SOURCE! VRRIflN - 7 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 vanan DRIVING FORCES FOR THE INCREASING VALUE OF APPLICATIONS RISING ENERGY COSTS EXPANDING COMMUNICATION REQUIREMENTS INFORMATION EXPLOSION MILITARY SYSTEMS RISING ENERGY COSTS PERCENTAGE PRICE INCREASE 1970 ~ 1983 NATURAL GAS 423% ELECTRICITY 390% COAL 356% OIL 658% SOURCE: STATISTICAL ASSTRACT OF THE UMTED STATES - 8 - Dataquest Incorporated, A Subsidiary of A.G. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 varian EXRRNDING COMMUNICRTIONS REQUIREMENTS 160 If) u 150 r O I Q. U 140 U L- 130 7 O ^ 120 -I 110 7 100 70 72 74 76 78 80 82 YERR SOURC£: FCC U.S. MILITARY IC CONSUMPTION 0 L, 1 I I 82 63 84 85 YEAR SOURCE: ICC - 9 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 vaiian TRANSPORTABILITY OF PRODUCTION CAPABILITY TECHNOLOGY IS IN THE EQUIPMENT AUTOMATION DECREASES EDUCATION REQUIREMENT MANPOWER AVAILABILITY "FREEWHEELING" LICENSING EQUIPMENT, MATERIALS, SUPPORT, AND FINANCING AVAILABLE THROUGHOUT THE FREE WORLD TECHNOLOGY IS IN THE EQUIPMENT 3180/3190 SYSTEMS PROCESS DEVELOPMENT FIRST PRODUCTION USE MATERIALS CIRCUIT TYPES 81 ALUMINIUM MOS ALUMINIUM ALLOYS MOS TITANIUM-TUNGSTEN- BIPOLAR ALUMINIUM SEQUENTIAL 82 PLATINUM BIPOLAR DOPED SILICON ALL 83 TUNGSTEN AND TITANIUM SILICIDES 84 TANTALUM AND MOLYBDENUM SILICIDES ™ ^ - 10 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 vanan POPULARIZATION OF ELECTRONICS COMPUTERS IN INSTRUCTIONAL USE IN U.S. ELEMENTARY AND SECONDARY SCHOOLS 1980 1982 MICROCOMPUTERS 30,715 96,462 TERMINALS 21,536 24,446 TOTAL 52,251 120,908 SOURCE: U.S. NATIONAL CENTER FOR EDUCATION STATISTICS INCREASED LEISURE TIME ELECTRONIC GAMES VIDEO EQUIPMENT CONSUMER AUDIO EQUIPMENT TELEVISION R&D RESOURCES OF SEMICONDUCTOR EQUIPMENT MANUFACTURERS EQUIPMENT INDUSTRY SALES $5.58 B EQUIPMENT INDUSTRY R&D .46 B SOURCE: VLSI RESEARCH, INSTAT - 11 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 FERTURE SIZE RS R FUNCTION OF FTCH TFCHNOLOGY vanan 10 titt* ^ffst* SP««*^ crtv* .?si^ ^f^' ttO* iot» U i^e N .(*'>='^ t—t in u Q: 13 »- d U li.. 1 ' ^- 74 7B 78 80 82 84 86 88 YERR - 12 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 (l^aDataquest Dataquest SEMICONDUCTOR EQUIPMENT: KEY TO PERVASIVENESS Dr. W. R. Bottoms President Semiconductor Equipment Group Varian Associates Dr. Bottoms has been President of Varian Associates' Semiconductor Equipment Group since 1981. Previously, he served as a member of the Electrical Engineering Faculty of Princeton University before joining Varian as Manager of Research and Development. He later became General Manager of the Varian/Extrion Division. He has also served as Chairman of the Technical Advisory Subcommittee on Semiconductor Manufacturing Materials and Equipment for the Export Control Commission of the Department of Commerce, and is Chairman of the National Research Council Evaluation Panel for the National Bureau of Standards. In addition, he has authored many papers on equipment and process technology for the semiconductor device industry. Dr. Bottoms received his Ph.D. in Physics from Tulane university. Dataquest incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Dataquest THE IMPACT OF WORKSTATION PROLIFERATION Aryeh Finegold President Daisy Systems Mr. Finegold is a founder of Daisy Systems Corporation and has served as President and Chief Executive Officer of the company since its incorporation in August 1980. Previously, he spent four years in various engineering management positions at Intel Corporation. Prior to that, Mr. Finegold was with Elbit Computers Ltd., where he held several engineering positions. Mr. Finegold holds a B.S. degree from Technion Institute - Israel Institute of Technology. Dataquest Incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Dataquest THIS PRESENTATION WAS NOT AVAILABLE AT PUBLICATION TIME. IF A COPY IS MADE AVAILABLE TO DATAQUEST, WE WILL MAIL IT DIRECTLY TO YOU FOLLOWING THE CONFERENCE. Dataquest Incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Dataquest SERVICE, SOFTWARE, AND SILICON Wilfred J. Corrigan President, Chairman, and Chief Executive Officer LSI Logic Corporation Mr. Corrigan is President, Chairman and Chief Executive Office of LSI Logic Corporation. Formerly he was President, Chairman, and Chief Executive Officer of Fairchild Camera and Instrument Corporation in Mountain View, California. Before joining Fairchild, Mr. Corrigan was Director of Transistor Operations at Motorola Inc.'s Semiconductor Products Division in Phoenix, Arizona. He received his B.S. degree in Chemical Engineering from the imperial College of Science, London. Dataquest Incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 LSI LOGIC CORPORATION LSILOeiC CORPORAnON WHAT DISTINGUISHES THE SUCCESSFUL SEMI-CUSTOM SUPPLIER IN TODAY'S MARKET... IT IS NO LONGER THE •T?OMANCE OF THE SIUCON"... BUT RATHER THE AVAILABILITY OF COMPREHENSIVE, FULLY INTEGRATED, EASY-TO-USE, FAST "SOFTWARE" HE WHO HAS THE BEST SOFTWARE CONTROLS THE HIGH GROUND. - 1 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 CHALLENGE SYSTEM AND CHIP COMPLEXITY INCREASING SHRINKING SYSTEMS LEVEL DEVELOPMENT TIMES ENGINEER SHORTAGE REQUIRE BIPOLAR SPEED WHH CMOS POWER LSIUXSIC CORPORATION LSI LOGIC MEETS THE CHALLENGE • HIGH DEIMSnr HCMOS ASICs - UTIUZING 3 M AND 2 /i GATE LENGTH AND DUAL LAYER METAL • COMPUTER AIDED ENGINEERING (CAE) - UTIUZING OUR PROPRIETARY LDS™ DESIGN SOFTWARE - 2 - Dataquest incorporated, A Subsidiary of A.G. Nielsen Company /1290 Ridder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Ul LOGIC CORPORATION IMPLEMENTATION WE CHOSE GATE ARRAYS AS INITIAL VEHICLE TO IMPLEMENT CHARTER. -/ •N 151 LOGIC CORPORATION STRATEGY FOR THE 80's n. ENGINEERING/SOFTWARE • REGIONAL DESIGN CENTERS • WORK STATION INTERFACE • EVOLUTIONARY SOFTWARE (LDS) / - GATE ARRAY...SINGLE CHIP - GATE ARRAY...MULn CHIP TM / - ZYCAD SUPPORT LDS - FAULT GRADING - STRUCTURED ARRAY I - STRUCTURED CELL MAINTAIN ENGINEERING/SOFTWARE LEADERSHIP & CONTINUE TO SET THE STANDARDS FOR "ASIC" MARKETPLACE. - 3 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 LSI LOGIC CORPORATION THE LDS^** CAE APPROACH • USER FRIEIVJDLY 2 DAY TRAINIIMG • EASE OF ACCESS REGIONAL DESIGN CENTERS • PROVEN # DESIGNS COMPLETED • PORTABLE WORK STATION INTERFACE • SYSTEM LEVEL SIMULATION ZYCAD PORTABILITY OF LDS'** • FUNCTIONAL UBRARIES FOR: - VAUD LOGIC NOW - DAISY SYSTEMS NOW - MENTOR GRAPHICS NOW • VERIFY SOFTWARE FOR: - MENTOR GRAPHICS NOW - DAISY SYSTEMS NOW -VAUD LOGIC NOW • FULL LDS~ FOR IBM & IBM COMPATIBLE NOW • FULL LDS™ FOR D.E.C. VAX AUGUST '84 - 4 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 19 LOGIC OORPORATION LDS"" SOFTWARE UK'I TEOAS BASED EVOLUTION unrr OSLAT uMULAnoN los-i LAraur svsnM f9S2 Mn SHtOM UVBt MCIAL HQHOI lOHITXXSM BAS£0 ACTUAL SElXy SIMULATION m3- JM 2 LATER METAL wnt uetoxjt srsTEMi HCMOS LDSHn tStlH' 1984. ZttZumsK •ASeO SIMULAnON SntUCTURCD ARItAr MEWL HOMOS I LArOLTT SYSTEM JHUUICHIP SlMULmON 'IHSIM STRUCTURED CELL ~*nLATfOUT SYSTEM 2|i SmucniREO ARRAirS HARDUMRE CVEVTI 2li SmUCTUREO CELL MWULWTQN TSIM' FUTune COMPOSAILE nas- mutr SiMuiAnoN "niM' ARRAYS 2 3 4 5 « 7 8 RELATIVE TCSIGN SOPHBTICAnON OF RESUITANT PROOUCT •N r LSItOGIC DESIGN INTERFACE FLEXIBILITY CUSTOMER CUSTOMER WORK KNG STATIONS Ith CUSTOMER INO OISTOMER CNC / PUli. DESIGN \ / AmOUU AND \ / SILICON GUARANTEE \ /rwiott TO MANUKACTUREV - 5 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 LSIUM3IC GORPORAnON LSI LOGIC NOW OFFERS THREE TYPES OF APPLICATION SPECIFIC IC PRODUCTS. • LOGIC ARRAYS ^>N • STRUCTURED ARRAYS t* • STRUCTURED CELL tavoGK S^ggSmoN PRODUCT LINE EVOLUTION SJO- SINGLELArES IHEXU T-4.0- LOGIC VtVJUC na otCAHA => J^ g 3.0- UPTO •» TWO LATER MIEIU sn^ UTTO I"- gPTO IM ^ XM imtfLIUVCD ctu C UPTO joanMii > 03- THREE LAYER MEIAL —I 1 1 1 1 2J S 10 IS 20 40 coMPLExirr OF 2 Mnn NANO (K) - 6 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 LSI LOGIC CORPORATION LOGIC ARRAYS • ORIENTED TOWARD GENERAL PURPOSE LOGIC USE. METAL MASK(S) PROGRAMMABLE. LO\X^ST DESIGN COST. LL 3000 SERIES 3S MICRON, ONE^ArER METAL U. 5000 SERIES 3 MICRON, TWO—LAYER METAL LL 7000 SERIES 2 MICRON, TWO-LAYER METAL 8000 SERIES — 2 MICRON, TWO-LAYER ME1A1, H^"- HIGH OUTPUT DRIVERS Lsiuxac STRUCTURED ARRAYS • ADDS MEMORY AND OTHER STRUCTURES TO LOGIC ARRAY. aRCurrs CONTAIN STRUCTURES SUCH AS RAM, ROM, ALU'S ETC. PROGRAMMED BY METAL AND RECONFIGURABLE. INmAL OFFERINGS IN 2 MICRON TECHNOLOGY PROoua LOGIC ARRAY RAM ROM OTHER I/O AVAILABLE CAFES ISA 2001 2700 2.2KBrrs 16 BIT ALU 144 03-84 iKBir UA2002 «ooo 2oe 03*84 OUALPORT ISA 2003 MOO' 4KBrr 200 oras ISA 2004 AOOC" SKBIT 32 BIT ALU 222 04*84 aooi OPTIONAL 2000- 32K-«4K 4x2901 tSA2005 180 4000 BITS OPTIOIMAL otvs J - 7 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 STRUCTURED CELLS • FULL CUSTOM DIFFUSION AND METAL FOR THE MAXIMUM FLEXIBILmr, DENSITY AND PERFORMANCE. DESIGN ELEMENTS INaUDE RAM, ROM, PLA, STANDARD CELLS, INTERNAL LOGIC ARRAYS AND MEGACELLS —VERY COMPLEX FUNCTIONS. • TU^ MICRON (LSC20 FAMILY| TECHNOLOGY AVAILABLE Q3 84, SCALABLE TO t.6 MICRON IN 1985 (LSC16 FAMIUT). • JOINT DESIGN AND SECOND-SOURCE PARTNERSHIP BETMt^EN LSI LOGIC AND AMD. LSI LOGIC HAS RIGHTS TO CONVERT ANY AMD CMOS LOGIC IC TO A MEGACELL. - 8 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 (::)a Dataquest Dataquest LSI GROWTH: 1985-1995 Jack Carsten Senior Vice President General Manager, Components Group Intel Corporation Mr. Carsten is Senior Vice President and General Manager of the Components Group at Intel Corporation. He joined Intel in 1975 as Vice President and Director of Marketing. Previously, Mr. Carsten was employed by Texas instruments for 13 years, most recently as General Manager of Tl's MOS Division. Mr. Carsten graduated from Duke University with a B.S. degree in Physics. Dataquest incorporated SEMICONDUCTOR INDUSTRY CONFERENCE October 15, 16, and 17, 1984 San Diego, California Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company / 1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 LSI GROWTH: 1984-1994 Jack Carsten Logarithmic growth cannot continue indefinitely. Whether we examine the multipli cation of bacteria, population growth, or the growth of industries, external limiters eventually prevail. Thus, when I was aslced to examine the long range outlooic for our industry, I noted that Dataquest had already forecasted world semiconductors at $175 billion in 1994. This would malce us, in all probability, the largest manufacturing enterprise in the world, surpassing automobile man ufacture, which currently stands at about $120 billion with a relatively low growth rate. If a Statistical approach to market projections strains your credibility, as it did mine, a historical perspective may lend some clues. After a good bit of read ing on industrial growth over the past fifty years, it became apparent to me that the industries which had the most difficulty in gaging growth were the so called "engine industries," and those end equipments using them. It occurred to ine that semiconductors are taking on "engine" characteristics—with most processing appli cations now microprocessor driven, with control, memory, and analog features all being utilized in some predictable ratio. In fact, this is a pattern similar to that which occurred in the use of internal combustion or jet propulsion engines in vehicles, or the use of electrical motors in appliances and machines. - 1 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 I decided to test a hypothesis that semiconductors are the "engines" of electronic equipment, especially data processing. There is a good bit of statistical infor mation available on these industries and they have similar characteristics.. I had data gathered on four "engine" groups in addition to semiconductors, as shown in Fig. 1. All of the engine industries had some characteristic patterns, one of which was high growth. Discounting inflation, all showed a 10-15X real growth over an ex tended period. There were several phases to their maturation, but saturation of end usage (though seldom forecasted) inevitably occurred. Furthennore, their costs followed learning curve predictions for common manufacturing technologies. Fig. 2 is a plot of the growth rates of several engine industries versus world semiconductors. In order to minimize the distortion of inflation, I have used 1967 dollars. I also offset the time scale for world semiconductors by twenty- five years. This graph shows our industry has already exceeded the peak revenues for the engine industries. However, if I were to talce integrated circuits alone (about half of today's semiconductor maricet), the curves look very similar. Each of the engine industries went through growth patterns that are remarkably similar to semiconductors, even though, in many cases, they occurred a long time ago. They have been characterized as having three distinct phases. During the first, or formative period, there was a phase of entrepreneurship and proliferation of producers. In most cases, there was also a large proliferation of end equipment manufacturers, who were largely assemblers of engines. Looking at the long list of automobile companies in Fig. 3, one is sorely tempted to - 2 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 compare to today's list of personal computer manufacturers and speculate as to their survival rate. After the formative period of "engine" manufacture which established standard man ufacturing techniques, there followed a normative period of fifteen to twenty years where process maturation occurred, and independent tooling vendors emerged to produce the tools necessary to efficiently build the "engines". During this period, considerable consolidation occurred whenever the economy was weak, both for engine vendors and for end equipment manufacturers. With the availability of manufacturing expertise from third party tooling vendors, vertical integration was first successful and became a growing trend. Fig. 4 shows a list of U.S. semiconductor companies in business today (I hope it's accurate). Already about 25% of these names are firms who are not only owned by electronic end equipment companies, but at least a portion of their output is being used in internal applications. I believe the percent of semiconductor revenues shipped internally is at least 25% and is growing. This trend seems to be accelerating even as our industry moves to higher levels of technology. The third phase of growth in the engine industries has been called the integrative period. In every case, international proliferation of manufacturing occurred, made possible by a major tooling vendor industry. Production of the product became a subject of national pride and governmental intervention. Most of the "engine" firms were taken over by end equipment manufacturers. (Jet engine manu facturing is a notable exception here.) Independent vendors declined or became specialty manufacturers. - 3 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 RIdder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 In every case, the proliferation of manufacturing expertise and worldwide capacity growth enabled the industry to saturate their end markets such that the bulk of the application of "engines" became a replacement market. Under these circum stances, technology can stagnate and research and development often declined. If there is a cheery note to this picture, it is that the integrative period was at least ten to twenty years, and the slowing of growth was well signaled by end use trends. In order to understand where the semiconductor end use market might be headed, I extended the U.S. installed bases of some major inventions (Fig. 5) to 1994, and compared them with the projected growth in the computer. If this estimate Is accurate, we will have one computer for about every four people in the United States, and the replacement market could well be a rapidly growing share. However, lest we consider one computer per person is an extraordinarily high estimate, I used another "engine" industry which is now clearly saturated in end use application for contrast. Fig. 6 is my personal 1984 fractional horsepower motor Inventory. A total of 29 FHP motors were in use in appliances, clocks, automobiles, fans,—even the motor on my electronic typewriter/printer. I esti mated their manufacturing cost as $248.00 and their average lifetime as ten years. This puts my annual consumption at $24.80, about twice the U.S. average consump tion according to manufacturers' records. It seems reasonable to conclude that there are ten to fifteen fractional horsepower motors in use in the United States for every man, woman, and child. In Fig. 7, I plotted the fractional horsepower electric motor market versus world semiconductors. As you can see, they had similar growth rates until the early - 4 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Parl< Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 1960's when FHP motors declined from approximately 20% per year growth to about 6%. Industry journals at the time are full of complaints about foreign competi tion, industry consolidation, and vertical integration. Whatever the cause, the industry is now growing at little more than the rate of growth of the overall economy, after a period of almost thirty years of growth similar to semiconduc tors . The history of the engine industries has many fascinating parallels to our own. They were all the growth industries of their day, and all of them made dramatic changes to the world economy. However, they were often overforecasted during periods of high growth. It is certainly possible that our industry will continue to be the world's fastest growing industrial segment (for its size) and the Dataquest estimate for a 21% compounded annual growth rate will enable world semiconductors to reach $175 billion in 1994. At that time, Dataquest estimates that MOS will be over two-thirds of the industry at $129 billion (Fig. 8). 1984 certainly meets that criteria, with a semiconductor growth rate of around 55%. However, if we see the decay of growth rate experienced by the engine industries, particularly beyond 1990, I thinic the MOS estimate is too aggressive. Damping MOS so that the compounded growth rate through 1994 is only 20% per year, the worldwide MOS industry would be approximately $60 billion. If the other segments of the semiconductor market grew at the rate that Dataquest forecasted, we would still have an overall industry of over $120 billion in 1994. That still looks aggressive to me. * * * - 5 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Bibliography 1. Sears, Stephen W., The Automobile in America, American Heritage Publishing Co., New York, 1977. 2. Kittieson, B. R., Competition in the Fractional Horsepower Electric Motor Industry, University Microfilms International, London, England, 1961. 3. Land, George T., Grow or Die, Dell, New York, 1974. 4. Naisbitt, John, Megatrends, Warner Books, New York, 1982. - 6 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 INDUSTRIES EXAMINED HISTORICALLY 1914-1982 • STEAM ENGINES • INTERNAL COMBUSTION ENGINES • ELECTRIC MOTORS • JET ENGINES • SEMICONDUCTORS GROWTH OF ENGINE INDUSTRIES VS WORLD SEMICONDUCTORS (1967 DOLLARS) 10 —I— —I 1 1 1965 1975 1985 TIIME SCALE FOR WORLD S/C WORLD S/C FRACTIONAL HP MOTORS III to STEAM o ENGINES Q O 13 S 0.1 ojn 1930 1940 1950 1960 1970 1980 1990 - 7 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 o £. ST i3 c (D (A E CO ALCO DURVEA JEFFEflY MOTOR HORSE SNOeURNEil (D APPERSON E.M.F. JORDAN NASH STANLEY O AUBURN EARL KANSAS CITY HUMMER O NORTHERN STEARNS 3 BAKER ECK KANSAS CITY WONDER OAKLAND STEARNS-KNKIHT •a D> BATTLESHIP ECLIPSE KING OVERLAND STEEL BALL D BEAU BRUMMEL EOSEL KISSILE OWEN MAGNEhC STEPHENS BEN'HUfl ELMORE KLINE MCKARD 6TEVENS-DURYEA I CO ABOiir SOOOiCMmMIES ATTEHPriDTtl WliliUnCTURE AUTOS o o o !5. CD CO -^l CO o to n c (D O o -1 •a o (D U.S. SEMICONDUCTOR COMPANIES _a > CO IN BUSINESS NOW c C_ CYPRESS SEMICONDUCTOR IBM CORPORATION MONOSIL INC. SENSITRON SEMICONDUCTOR VAHIAM SOLID STATE O CO DATEL-INTERSIL IN MOS CORP MOSTEK CORPORATION SENSOR TECHNOLOGY VARO SEMICONDUCTOR CD DEXCEL INTEGRATED DEVICE TECH. MOTOROLA INC. SENSVM INC. VATEC INC. O > DIGITAL EOUIPMENT CORR INTEL CORPORATION MSI ELECTRONICS SIEMENS COMPONENTS VEECD INSTRUMENTS CO oi DIODES INC. INTERDESIGN INC. NAE INC. SIGNETICS CORP VEECO/LAMBOA SEMICONDU^ DIONICS INC, INTERNATIONAL DEVICES NATIONAL ELECTRONICS SILICON GENERAL VLSI TECHNOLOGY E a S a INC. INTERNATIONAL MICROCIRa NATIONAL SEMICONDUCTOR SIUCON SYSTEMS WEITEK CORP. EDAL INDUSTRIES INTERNATIONAL MICROELEC. NCR MICROELECTRONICS SILICON TRANSISTOR CORP. WESTERN DIGITAL o SS ELECTRONIC ARRAYS INTERNATIONAL MICROWAVE NEC ELECTRONICS SILICONIX CORP. WESTERN ELECTRIC CO ELECTRONIC DEVICES -^J INTERNATIONAL RECTIFIER NITRON INC. SOLAR POWER CORP. WESTINCHOUSE SEMICONDUCT I ELECTRONIC TRANSISTOR ITAC CORPORATION OPCOA/REFAC ELECTRONICS SOLAREX CORR XCITON CORR CO o ELECTRONICS S ENERGY TECH ITT SEMICONDUCTOR OPTEK SOLID POWER CORP. XICOR INC. o ELITE SEMICONDUCTOR PROD LAMBDA SEMICONDUCTORS OPTOELECTRONICS INC. SOLID STATE DEVICES ZILOG o ELM STATE EUCTRQNIC8 LANSOALE TRANSISTOR « EL RARAMETRIC INDUSTRIES SOUD STATE SCIENTIFIC ZYMOS CORR CD CD CO -NI u U.S. INSTALLED BASES OF MAJOR INVENTIONS VS. THE POPULATION duum I 1 1 I i T 1 - L, 200M POPULATION ilMM lUUIWI ^r]/'^ 52M- TELEPHONES _^ TTELEVISIONS / 10IM j COMPUTERS/ 5 o 1M / AUTOMOBILES / 100K / ' 10K _LJ 1 1 1 if 1 l/ 1 1 1893 1913 1933 1S53 1973 1994 HISTORICAL DATA e . INTERNATIONAL DATA CORP. FORECAST DATA • INTEL CORP. ESTIMATE. MY 1984 FHP MOTOR INVENTORY HOME 14 CARS (2) 11 OFFICE _4 TOTAL 29 MANUFACTURING COST: $248 AVERAGE LIFETIME: 10 YEARS MY ANNUAL CONSUMPTION: $24.80 U.S. ANNUAL AVERAGE CONSUMPTION ACCORDING TO SIC 38211 $11.09 - 10 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 GROWTH OF WORLD SEMICONDUCTORS VS. U.S. FRACTIONAL HP MOTORS $175B 1D0 10 1 * FRACTIONAL HP ELECTRIC MOTORS (U.S. SIC 36211) jn X ^ 1830 1»40 1»S0 1960 1870 1B80 1990 1994 - 11 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Bidder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 WORLD S/C AND MOS l/C MARKETS HISTORY AND FORECASTS 1 1 I $1758 $129B DATAQUEST // 100 ^- FORECAST // 21%CAG / / $60B INTEL ESTIMATE 20°/DCAG 10 -- f DATAQUEST FORECAST 29%CAG Itl c B I 1 -^ /s/c / MOS l/C .1 1 ! ' " 19S0 1960 1970 1980 1990 1994 - 12 - Dataquest Incorporated, A Subsidiary of A.C. Nielsen Company /1290 Ridder Park Drive / San Jose, CA 95131 / (408) 971-9000 / Telex 171973 Dataquest