A 2008 Year End Update on Current

Semiconductor Industry Eco-System

James Chu

2009.01.05

To NCKU Compound Semiconductor Class

Outlines

� Heads-Up! Open Your Business Eyes

� The Driver for CMOS Technology Evolution

� The Semiconductor Industry Eco-system� Episode 1: CMOS scaling: Challenge & Opportunity

� Episode 2: SEMI Market & Economic Status Diagest

� Episode 3: What Options Besides CMOS ?

� Briefing: New Business Start Up Process

� Summary

Heads-Up! Open Your Business Eyes

Opportunity Recognition Part 1

General

� Deregulation (cell phone) or Regulation (health care)

� Unequal Development Pace (80’s hw/sw)

� Many fragmented industries

� Service Shift (fi, 30% to 80% in 25 years)

� Off-shore Manufacturing

� Early in Product Lifecycle

� Missing Niches

Opportunity Recognition Part 2

High Potential Ventures Criteria

� Industry Issues� Structure (Sellers fragmented)� Market Size (Large ,but not too big, and Growing)� Growth Rate (Accelerating)� Market Capacity (Demand not filled)� Market Share Attainable� Reducing Cost Conditions are BAD

� Economic Issues� Profits after tax (High)� Time to Breakeven (Less then 2 years)� Return of Investment (ROI) is 25% and up� Capital Requirements (Low)� Gross Margins (High)

Opportunity Recognition Part 3

High Potential Ventures Criteria

� Harvest Issues

� Value-Added Potential

� Exit Mechanisms Nurtured by Founders

� Capital Market Context - Timing

� Competitive Advantage Issues

� Degree of Control over Prices

� Entry Barriers

� Team

IC Chips System Requirement : the Driver

Episode 1: CMOS scaling: Challenge & Opportunity

Consumer Stationary Performance Trends

Consumer Stationary Design Complexity Trends

Consumer Stationary Power Consumption Trends

Consumer Portable Process Performance Trend

Consumer Portable Design Complexity Trend

Consumer Portable Power Consumption Trend

Recent ADC Performance Needs for Important

Product Classes

Preliminary Summary

� Design complexity (from desired function diversity) and Power Consumption are two key trends for the design of SOC Consumer chips.

� Stationary Device:

� Processing performance is the most important differentiator.

� Multiple Data Processing Engines (DPEs) to enhance the performance

� Software enabled functional flexibility.

� Longer lifecycle and broader application area.

� Portable Device: � Desire High Performance-to-Power ratio.

� The trend indicate the power consumption substantially exceeds the performance requirements.

� Shorter product life cycle due to dedicated functions.

A Example : Intel CPU evolution on- Ion increase � increase performance

- Ioff reduction � reduce leakage

From Intel IDF 2008

From Intel IDF 2008

From Intel IDF 2008

CMOS Scaling : Challenge and

Opportunity

CMOS built on Silicon Material Engineering

Curtsey of ©Robert Simonton

From Intel IDF 2008

Scaling Drive the Transistor Engineering Complexity

Scaling Drives the Need for New Materials

SPCC Tutorial Short Course 2008© 2008 Muhammad Hussain/Twan Bearda

From Intel IDF 2008

ITRS (International Technology Roadmap of Semiconductor)

2008 Year End Update

From Intel IDF 2008

From Intel IDF 2008

From Intel IDF 2008

From Intel IDF 2008

From Intel IDF 2008

From Intel IDF 2008

From Intel IDF 2008

From Intel IDF 2008

TSMC Technology roadmap

From Intel IDF 2008

Preliminary Summary

� CMOS Scaling bring in lots of new materials into manufacturing process.

� The recent CMOS scaling barriers overcomed by Strain Silicon and HKMG.

� CMOS Scaling will continue to 22nm (2012 available) , III-V material play more role in the scaling.

� CMOS Scaling likely to end in 22nm and followed by nano wire devices, optical connect , carbon nanotube.

Episode 2: Digest of Economic Status &

Forecast

From Intel IDF 2008

Electronic Industry Independence

It is interesting to note that every time there was a two-year double-digit decline in capital spending, the

following year showed a double-digit increase.

Moreover, in every instance in the past, in the second year after the two-year decline, a 59% or greater surge in

capital spending took place!

If the post 2008/2009 time period follows the historical pattern, 2010 will show a double-digit capital

spending increase, which correlates nicely to IC Insights’ current forecast for a 15% increase in spending in

2010.

From Strategic Marketing Associates

WW Capital Spending – by Company

The Forecast

WW Electronics Sales Growth will be Flat, if not Negative, from 2008 to 2009.

Inventories are on the Rise

VLSI’s CPPI Predicts Another Negative Year

Preliminary Summary

� IC market revenue will be flat to minus in 2009, despite the shipment continue to grow.

� Optoelectronic revenue growth is outpacing the crowd.

� IC Capital Equipment Business will highly impacted in 2009. But likely to rebound in 2010.

� FPD Capital Equipment Business has worst outlook.

Episode 3: What besides CMOS ?

Optoelectronics, Sensor, and Discrete Report (O-S-D Report).

Regional Market Shares of O-S-D Products

Reminding : the Business Eyes

Start-Up Capital Formation Process

1. Idea2. Kitchen Table3. Founder’s Commitment4. Pullout from Employer5. Business Plan Creation6. Filling Management Team7. Raising Seed Capital8. Closing Capital & Incorporation9. Finding a Home10. Start-Up11. Secondary Capital Rounds12. Launch First Product13. Raise Working Capital14. Initial Public Offer

Participants in Capital Formation Process

1. Person with Idea (Founder)

2. Key Followers (Buddies, Founders)

3. Business Consultant

4. Lawyers (General, Patent)

5. Corporate Accounting Firm (Acct, Taxes)

6. Venture Capital

7. Board

8. Equipment Leasing Company

9. Commercial Banker

10. Real Estate (Broker, Landlord)

11. Key Suppliers (Tel, Insurance, Furniture, Utility …)

12. Recruiters (Contingent, Retained)

13. Public Relation Firm

14. Media (Local, National, Industry)

15. Customers

16. Wall Street Analysts (Stock Exchange Company, Investment Bank)

17. General Public

Recommended Steps in Plan Stages

1. Idea

2. Research

3. Decide Channel

4. Marketing Plan

5. Strategy

6. Build Rapport with Suppliers

7. Business Plan

8. Iron out Operation Idea

9. Sell or Funding

The Lessons

Summary: 10 Lessons for High Tech

Entrepreneurs

1. Pick right industry

2. Identify valuable opportunities

3. Fit strategy to industry

4. Target technological transitions

5. Focus on an underserved market niche

6. Identify customer needs

7. Project market growth

8. Cross the chasm

9. Prevent imitation

10. Manage risk and uncertainty

Technological Transitions

Time

Perform

ance

Incremental innovation

Disruptive innovation

A Normal Distribution of Adopters…

Early Majority

34%

Late Majority

34%

Laggards

16%

Early Adopters

13.5%Innovators

2.5%

Mean adopter One standard deviation after the manOne standard deviation

before the mean

Two standard deviations

before the mean

Number

Of

Adopters

In Time

Period

Few customers adopt

new products at first

Most customers

adopt new products

In the middle

of the adoption cycle

Few customers adopt

new products at the

ed of the

adoption cycle

Leads to S-Shaped Market Growth

Time

Percent

Adopting

0 5 10 15 20 25 30 35

Low rate of

market growth

Acceleration of market

growth

Slowing of market growth

60

80

40

20

Who Succeeds at Innovation?

Time

Perform

ance

Established firms

Start-ups

Lesson #8: Cross the Chasm

Early Majority Late Majority LaggardsEarly

AdoptersInnovators

The ChasmNumber of

Adopters in

Time Period

Time

Entrepreneurs often find it

easy to sell to innovators and

early adopters, but can’t sell

enough to make the business

worthwhile

Entrepreneurs often find the

majority of adopters to be a

large enough market, but have

a hard time transitioning to

serving them

Summary

� CMOS Scaling has create new material / process technology challenge, so as business opportunity, the continue growth is inevitable.

� Besides CMOS, the Optoelectronic / MEMs / Discrete devices enter into rapid growth phase.

� 2009 will be a low year and consensus of economic rebound likely in 2010.