Enabling the next growth wave for semiconductors – a new approach to enable innovative startups Tarun Verma, Partner Silicon Catalyst November 11, 2015 Agenda • Evolution of semiconductors • Today’s innovation and startup dilemma • MEPTEC role Semiconductor’s industry’s virtuous cycle More R&D (innovation) Lower cost/function $’s Increasing Expanding semiconductor applications revenue (more silicon) ... so everything must be going well? well? going be must everything so ... Source: WSTS 2/15 2/15 WSTS Source: $335B! $335B! ... revenues record reached just Semiconductors Semiconductors just reached record revenues ... ... but underlying trends are not good Development costs Growth is slowing EBITDA is down are skyrocketing 41% Top 5 Semi 186 Other Semi 15% 1% EBITDA (% of Rev) EBITDA (YoY) -26% Source: SIA, AlixPartners Source: 2012 Data, AlixPartners 2/14 Source: Semico 2013 structure chain supply the of Evolution B DOMESTICASIA EURO/LAINT’L D: C M Y K 02 EDIT PASS EDIT OK / : PE DAD XXX 84ASIA XXX EUR-LA INT SVIC 33 JMP SCT point start a company,” says Patterson. business-cum-science orientation, “I be- their PhD thesis. They began almost The loyalty and affection alumni show came a guy who made products instead mindlessly making lists of their favorite their alma maters is part of the Silicon of calculating brackets.” Web sites. Rather than crack down on Valley perpetual motion machine. Silicon It seems like nobody does just one the digital goofing, the engineering Graphics Inc., started by Stanford engi- thing around here. Stanford’s current school cut the pair slack. neering professor James H. Clark, be- engineering dean, John Hennessy, did Fast-forward two years to a hugely came a huge donor of money and equip- pioneering computer-science work in successful 1996 initial public offering— ment. Equally important, alums donate RISC chips in the early 1980s. Then, and a time to return favors. Filo and their personal time. Wilson Sonsini Hennessy took a sabbatical, raised some Yang, worth more than $100 million Goodrich & Rosati partner Sonsini and venture capital, and founded MIPS Com- apiece, became the youngest individuals Mario M. Rosati, for example, both puting. He returned to Stanford in 1985. ever to endow a professorship in the teach courses at Berkeley. “The gap between research and what’s Stanford engineering school, with a gift “NO LIMIT.” David Kelley, the successful in production,” says Hennessy, “has nar- of $2 million. “As long as we maintain head of Palo Alto’s IDEO industrial de- rowed to almost nothing.” the practices that have made us what sign firm, exemplifiesSemiconductors what goes right in For all his vision, was Dean Terman once might we area today,” haven Terman wrote for in 1973, entrepreneurism and the Valley’s academic/industry relations. well have gaped at 1990s-style entre- describing Silicon Valley’s energy and When he’s not running IDEO, he’s help- preneurship. He could never have pic- success, “then there is no limit to the ing to steer a product-design program at tured Internet darling Yahoo! Inc., longevity of the situation.” his alma mater,startups Stanford. “The reason …. I which now started out consolidation in a grungy campus Amen, say today’s is entrepreneurs.the reality Or knock myself out and work two full- trailer in 1994, where electrical engi- rather, Yahoo! time jobs is I feel indebted to Stan- neering grad students David Fhilo and By Joan O’ C. Hamilton in Palo Alto, ford,” says Kelley. Thanks to the school’s Jerry Yang were bored to tears with with Linda Himelstein in Menlo Park E E 1955 Shockley Labs* 1957 Fairchild 1969 Four Phase* William Shockley, Semiconductor* FAIRCHILD’S OFFSPRING Lee Boysel, Jack Faith eight others (From left) Gordon Moore, Co-inventor of the transis- Sheldon Roberts, Eugene E tor, Shockley recruited Kleiner, Robert Noyce, Victor 1972 Kleiner Perkins eight young men from Grinich, Julius Blank, Jean Caufield & Byers East Coast labs to develop Hoerni, Jay Last Eugene Kleiner the technology. They left Founded by “The Traitorous because of Shockley’s Eight” from Shockley, Fair- E erratic management style child was the first company 1980 LSI Logic and became the founding to work exclusively in silicon. Wilfred Corrigan cadre for the West Coast It spawned more than 30 semiconductor industry. Silicon Valley companies, E including Intel, Advanced 1969 AMD Micro Devices, and National. W.J.SandersIII,seven others F 1967 National Flamboyant Sanders left Fairchild to found this up- Semiconductor H HH Charles Sporck, two others 1961 Signetics* 1968 Computer 1968 Intel and-down rival to Intel. The (now Philips Semiconductor) Robert Noyce, Gordon Moore swing is up right now. After leaving Fairchild, Microtechnology* David Allison, David James, John Schroeder, The king of PC micro- Sporck ran National for 24 Lionel Kattner, Mark years, building it into a Jack Schmidt, two others processors, Intel is now the H Weissenstern, two others largest chip company in the 1983 Cypress giant in analog and T. J. Rodgers, Lowell Turiff digital chips. world, with revenues top- ping $20 billion. Most Intel HH 1985 Cirrus Logic 1973 Synertek* execs stay on board instead E H Michael Hackworth, Kam- Robert Schreiner, of launching startups. G 1981 SEEQ 1981 Linear ran Elahian, five others R. Barringer, six others Gordon Campbell, Technology George Perlegos Robert Swanson, Robert Dobkin H H H 1993 NeoMagic 1979 VLSI 1974 Zilog* H E Kamran Elahian, Technology Federico Faggin, 1985 Chips 1985 Atmel Prakash Agarwal Ralph Ungermann & Technologies* George Perlegos, H Jack Baletto, Tsung-Ching Wu 1983 Sierra Dan Floyd, Gordon Campbell, Dado Semiconductor H Gunnar Wetlesen H Banatao, two others James Diller, 1996 Planet Web 1984 Xilinx four others Kamran Elahian Bernard Vonderschmitt H HH 1983 Wafer 1989 S3 1994 3Dfx H Ron Yara, Gordon Campbell, H 1986 Synaptics Scale Integration Dado Banatao Scott Sellers 1983 SDA Systems* James Soloman Eli Harari Federico Faggin, Carver Mead WAYNE MILLER/MAGNUM PHOTOS *Acquired 84 BUSINESS WEEK / AUGUST 25, 1997 1960’s 2010’s DISTRIBUTION: GROSS • RAEBELLO • WALLACE 10 QPS Chip-only ventures headed for extinction? # of Seed/Series A Deals 54 53 42 37 32 28 22 22 4 4 7 6 Source: GSA • Long time-to-revenue • Relatively large investment required • Few IPO successes • Less investment from traditional sources We are in the “post-chip” era Megatrends are driving new volume technology markets …. these all need solutions in silicon MEGA-TRENDS ● Mobile Computing will continue to converge functions and drive compute power ENERGY ● Internet of Things will drive mobile processing at low power with ubiquitous RF ● Coverage and insatiable bandwidth needs will drive Next-Gen Wireless NEXT-GEN WIRELESS ● Increase Security concern at all levels: government, enterprise and personal ● The Cloud will cause upheaval in IT ● Personalization through technology and logistics MEDICAL WEARABLES & SENSORS TRANSPORTATION ● Energy Efficiency is needed for sustainability & lower cost of ownership This is the best time ever to innovate in silicon as we enter the IoT “Era of Devices” “… lack of exciting new products and a decline of early-stage new investments.” “Most observers appreciate the Valley's four-year cycle, but few have ever noticed a much longer, 20-year cycle in electronics.” “We have lived in the Era of Code …. But that era is ending, as the cycle of hardware begins to assert itself in the form of watches, wearables, mobile health, autonomous cars, drones, 3D printing and a revolution in sensors, all tied together by a cloud-like Internet of Things.” “We are entering the Era of Devices. This will be led by builders” While you can spend $100M starting a semiconductor company, it is not necessary or typical 130nm has the most design starts Even 28nm Can Be Done Frugally 65nm & 45nm have yet to peak 22/20nm 32/28nm 45/40nm 2015 65nm 2014 2013 90nm 2012 .13u/.15u • 1st 50GFLOPS/Watt processor .18u • 1st crowd sourced funded semiconductor company 0 500 1000 1500 2000 2500 3000 Source: I.B.S. 2011 • Total invested <$5M What alternatives are available to semiconductor startups? Friends and Bootstrap Angel Incubator Gov. Crowd Strategic Corp. Venture Family NRE projects Programs & funding Partner Capital grants Pros Small $’s Certainty of Just 1 Network and Oen non- Promotes Market Network and income person to services diluve MVP feedback (at credibility convince approach least 1) Cons Only $’s, not May go off Only $’s Low $’s On Qmetable Short term Partner Diluon access or course w/ and terms of horizon control / connecons small projects agency influence Hard to find Short Qme to Hard to incubate obtain What do semiconductor startups say they struggle with? Rank Issues Rank Expenses Top 3 Challenges $’s, EDA, Prototypes, Test Source: Silicon Catalyst, 15 startups surveyed in 2014 We will supply innovators with the tools and support they need … rather than spending time fundraising In exchange EDA MPW Lab DFM, System Equipment Integration & for ~$2-3M Tools Prototyping Prototyping in goods, services In-Kind Contributions and funding, Silicon Catalyst Secure Business Lots of will take Mentoring Work & Legal Pizza Space Support common equity Silicon Catalyst minimizes need to raise seed capital and makes any cash investment more impactful ● Founders can get to work building a team and executing ● Founders retain more equity ● Cash goes to innovation, not table stakes ● Startup is more “fund-worthy” Silicon Catalyst Overview Silicon Catalyst startup profile 16 Monthly Activity 60 Cumulative