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Challenges and Opportunities Around the Globe: Criteria of Successful Fabless Companies

Challenges and Opportunities Around the Globe: Criteria of Successful Fabless Companies. MANAGING INTERDEPENDENCIES IN THE SEMICONDUCTOR ECOSYSTEM. Lisa Tafoya, Vice President, GSA April 2010. GSA Vision and Mission.

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Challenges and Opportunities Around the Globe: Criteria of Successful Fabless Companies

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  1. Challenges and Opportunities Around the Globe:Criteria of Successful Fabless Companies MANAGING INTERDEPENDENCIES IN THE SEMICONDUCTOR ECOSYSTEM Lisa Tafoya, Vice President, GSA April 2010

  2. GSA Vision and Mission Accelerate the growth and increase the return on invested capital of the global semiconductor industry by fostering a more effective fabless ecosystem through collaboration, integration and innovation.

  3. Semiconductor Ecosystem Study Overview • Background • Semiconductor companies are increasingly dependent on partners in their ecosystem. • GSA partnered with The Wharton School (University of Pennsylvania) to understand the nature of coordination and technical challenges that companies face in creating and capturing value within their business ecosystem, so as to guide industry and firm-level initiatives. • Wharton interviewed numerous participants from all sectors in the Semiconductor Supply Chain, including OEMs, to understand the complexity of the issues that exist within the industry before constructing the survey. • Survey Structure • Web-based survey • Comprised of three sections: Supply Chain, Marketing and Engineering. • Each section will take approximately 15 minutes to complete and can be filled out by yourself or a senior manager in the respective functional roles in your company. • The survey is carried out through a secure Website, and all responses will be kept strictly confidential. • Results • Due to the vast complexities in the supply chain, the results confirm a number of different approaches to managing partners so the resulting data should be viewed as an industry benchmark rather than in sheer numbers alone.

  4. Outsourced Ecosystem Supplier B Complementor A Customer Firm Complementor B Supplier A • Firms are increasingly interdependent on their ecosystem to create and capture value from their innovations efforts. • The ecosystem includes customers, suppliers, complementors (Microsoft is a Complementor to Intel) and rivals. • The research will look at the technological and coordination challenges that exist within an ecosystem and the effective strategies used to manage the interdependencies in the ecosystem.

  5. Preliminary Findings: Supply Chain Personnel Responses

  6. Relationship w/Silicon Foundries • Question: Please rate the extent to which your foundry supplier(s) is involved in your company’s activities. • Possible Selections: 1=Not at all, 2=To a very small extent, 3=To a small extent, 4=To some extent, 5=To a considerable extent, 6=To a great extent, 7=To a very great extent • Outcome: • Respondents indicated that their foundry suppliers are, to a considerable extent, most involved in their cost reduction activities and least involved in system design. • Compared to A/T, fabless firms seem to be more satisfied by their foundry suppliers’ performance in existing customer support.

  7. Relationship w/Silicon Foundries • Question: Please rate your foundry suppliers’ performance in the following areas • Possible Selections: 1=Poor, 2=Fair, 3=Good, 4=Very Good, 5=Excellent • Outcome: • Respondents indicated that foundries perform best in the area of technical competence, while they struggle with price competitiveness. • Compared to A/T, fabless firms seem to be more dissatisfied by their foundry suppliers’ performance in all of the areas.

  8. Relationship w/Assembly & Test Suppliers • Question: Please rate the extent to which your assembly & test supplier(s) is involved in your company’s activities. • Possible Selections: 1=Not at all, 2=To a very small extent, 3=To a small extent, 4=To some extent, 5=To a considerable extent, 6=To a great extent, 7=To a very great extent • Outcome: • Mirroring their foundry relationships, respondents indicated that their A/T suppliers are, to a considerable extent, most involved in their cost reduction activities and least involved in system design. • Compared to Foundry, fabless firms seem to be more satisfied by their A/T suppliers’ performance in new customer engagement, cost reduction and new product planning.

  9. Relationship w/Assembly & Test Suppliers • Question: Please rate your assembly & test suppliers’ performance in the following areas • Possible Selections: 1=Poor, 2=Fair, 3=Average, 4=Good, 5=Excellent • Outcome: • Respondents indicated that A/T suppliers perform best in the areas of technical competence and quality/process yield, while they struggle with price competitiveness (same as foundries) • A/T suppliers performed better than foundry suppliers in all of the areas.

  10. Internal Organization • Question: To what extent does your company use the following organization choices to coordinate activities between the engineering, marketing and supply chain functions? • Possible Selections: 1=Not at all, 2=To a very small extent, 3=To a small extent, 4=To some extent, 5=To a considerable extent, 6=To a great extent, 7=To a very great extent • Outcome: • Respondents indicated that a dedicated group such as program management is used most of the time to coordinate activities between the different functions within a company, while job rotation across functions is rarely used

  11. Internal Organization • Question: Please indicate the extent to which the program or new product manager has the following responsibilities. • Possible Selections: 1=Not at all, 2=To a very small extent, 3=To a small extent, 4=To some extent, 5=To a considerable extent, 6=To a great extent, 7=To a very great extent • Outcome: • Respondents indicated that program or new product managers have to a great extent the responsibility of being the liaison between the different functions and organization levels for a project

  12. Internal Organization • Question: Please indicate the extent to which the engineering and the supply chain departments jointly carry out the following activities. • Possible Selections: 1=Not at all, 2=To a very small extent, 3=To a small extent, 4=To some extent, 5=To a considerable extent, 6=To a great extent, 7=To a very great extent • Outcome: • To a considerable extent, Engineering and Supply Chain jointly carry out a majority these activities. • They work together most frequently on supplier performance evaluation and new product ramp-up, while working together least on creating formal contracts with suppliers.

  13. Internal Organization • Question: Please indicate the extent to which themarketing and the supply chain departments jointly carry out the following activities. • Possible Selections: 1=Not at all, 2=To a very small extent, 3=To a small extent, 4=To some extent, 5=To a considerable extent, 6=To a great extent, 7=To a very great extent • Outcome: • Supply Chain and Engineering seem to work more closely than Supply Chain and Marketing. Not a good organizational structure from an ecosystem perspective. • Marketing and Supply Chain work together most frequently on existing customer support, while working together least on supplier performance evaluation.

  14. Preliminary Findings: Marketing Personnel Responses

  15. Relationship w/Customers • Question: Please rate the extent to which your company is involved in your customer (s) activities. • Possible Selections: 1=Not at all, 2=To a very small extent, 3=To a small extent, 4=To some extent, 5=To a considerable extent, 6=To a great extent, 7=To a very great extent • Outcome: • Respondents indicated that they are most involved in their customers’ productcost reduction activities and least involved in product concept

  16. Relationship w/Complementors • Question: Please rate the extent to which your company interacts with your complementor (s) in the following ways. • Possible Selections: 1=Not at all, 2=To a very small extent, 3=To a small extent, 4=To some extent, 5=To a considerable extent, 6=To a great extent, 7=To a very great extent • Outcome: • Respondents indicated that most interaction is done through sharing information on a specific market or application, while fewinvest in their complementor Outcome:

  17. Relationship w/Complementors • Question: Please indicate the extent to which your company’s relationship with your complementor(s) has helped your company in the following ways • Possible Selections: 1=Not at all, 2=To a very small extent, 3=To a small extent, 4=To some extent, 5=To a considerable extent, 6=To a great extent, 7=To a very great extent • Outcome: • On average, respondents indicated that to a considerable extent their relationships with their complementors have helped them to gain new customers in existing markets. However, it made a much smaller impact on improving the performance of their products.

  18. Preliminary Findings: R&D Personnel Responses

  19. Product and Development Activities • Project Type 1: Design Revision/Existing Manufacturing Process • Question: Approximately what is your company’s time-to-completion (in months) for an IC project based on the revision in the design of an existing product without changing the process that is used to manufacture the existing product? • Outcome: • When the design is revised but the manufacturing process remains unchanged, time-to-completion is greatest for first working silicon to mass production, while first tapeout to first working silicon takes the least amount of time

  20. Product and Development Activities • Project Type 2: Design Revision/New Manufacturing Process • Question: Approximately what is your company’s time-to-completion (in months) for an IC project based on the revision in the design of an existing product and using a silicon manufacturing process that your company has not had any prior experience with? • Outcome: • When the design is revised and a new manufacturing process is used, time-to-completion is greatest for design start to first tapeout, while first tapeout to first working silicon takes the least amount of time

  21. Product and Development Activities • Project Type 3: New Product Design/Existing Manufacturing Process • Question: Approximately what is your company’s time-to-completion (in months) for an IC project based on a new product design and using a manufacturing process that your company has been using for other products? • Outcome: • When the design is new but the manufacturing process remains unchanged, time-to-completion is greatest for design start to first tapeout, while first tapeout to first working silicon takes the least amount of time

  22. Product and Development Activities • Project Type 4: New Product Design/New Manufacturing Process • Question: Approximately what is your company’s time-to-completion (in months) for an IC project based on a new product design and using a manufacturing process that your company has not had any prior experience with? • Outcome: • When the design and manufacturing process is new, time-to-completion is greatest for design start to first tapeout, while first tapeout to first working silicon takes the least amount of time

  23. Product and Development Activities • Time-to-completion (in months) for all processes was greatest when there was a new product design and manufacturing process • With the exception of First Tapeout to First Working Silicon, time-to-completion (in months) for all processes was least when the design was revised and a existing manufacturing process was used.

  24. Technical Activities • Question: Please indicate the approximate percentage of engineers in your company that are involved in the following activities. • Outcome: • As expected in a fabless environment, most engineers are involved in IC design, while a low percentage are involved in IC manufacturing & test

  25. Technical Activities • Question: Approximately what percentage of each of the following activities is performed in-house within your company? • Outcome: • As expected from a fabless company, a high percentage of all development/engineering/ design activities are done in-house. • RF IC design is the least outsourced activity, while application software development is the most outsourced activity.

  26. Internal Organization • Question: Please indicate the extent to which the program or new product manager has the following responsibilities. • Possible Selections: 1=Not at all, 2=To a very small extent, 3=To a small extent, 4=To some extent, 5=To a considerable extent, 6=To a very great extent • Outcome: • A program or new product manager’s leading responsibility is being the liaison between the different functions and organization levels for the project

  27. Internal Organization • Question: Please indicate the extent to which the marketing and the engineering departments jointly carry out the following activities. • Possible Selections: 1=Not at all, 2=To a very small extent, 3=To a small extent, 4=To some extent, 5=To a considerable extent, 6=To a great extent, 7=To a very great extent • Outcome: • To a considerable extent, Marketing and Engineering work together most frequently on technology roadmapping, while working together least on industry analysis

  28. Internal Organization • Question: Please indicate the extent to which the engineering and the supply chain departments jointly carry out the following activities. • Possible Selections: 1=Not at all, 2=To a very small extent, 3=To a small extent, 4=To some extent, 5=To a considerable extent, 6=To a great extent, 7=To a very great extent • Outcome: • To a considerable extent, Engineering and Supply Chain work together most frequently on new product ramp-up, while working together least on supplier performance evaluation and creating formal contracts with suppliers. • Engineering/Supply Chain and Engineering/Marketing seem more balanced suggesting that engineering may be driving the organization!

  29. Semiconductor Ecosystem Study Timeline • Timeline • Research Definition and Proposal: Complete • Survey Development and Respondent Identification: Complete Wharton interviewed numerous participants from all sectors in the Semiconductor Supply Chain, including OEMs, to get a better idea of the issues that exist within the industry and to make sure the right questions were asked. • Survey Pretest: Complete The survey was tested on a handful of fabless/Fab-lite/IDM companies. • Survey Implementation – Fabless/IDM Sector (Q1’10-Q2’10): In Process At this time, fabless/Fab-lite/IDM players can participate. At a later date, we will survey the remaining sectors of the supply chain. • Data Analysis – Fabless/Fab-lite /IDM Sector: Q3’10 • Publish Research – Fabless/Fab-lite/IDM Sector: Q3’10

  30. Call to Action! • Who Can Participate in the Current Survey? • Fabless/Fab-lite/IDM Companies • What do I Receive for Participating? • A complimentary copy of the resulting report • Wharton is more than happy to have a follow-up conversation with you or your colleagues on the survey findings and their implications. • Survey Structure • Web-based survey • Comprised of three sections: Supply Chain, Marketing andEngineering. • Each section will take approximately 15 minutes to complete and can be filled out by yourself or a senior manager in the respective functional roles in your company. • The survey is carried out through a secure Website, and all responses will be kept strictly confidential. • Who do I Contact if I Want to Participate? • Chelsea Boone, Sr. Research Analyst, GSA, cboone@gsaglobal.org, 972-866-7579 ext. 123 • Professor Rahul Kapoor, The Wharton School (University of Pennsylvania), kapoorr@wharton.upenn.edu, 267-994-8753

  31. Thank You

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