Best Practices: Operations in a Fabless Startup

1. Best Practices: Operations in a Fabless Startup Gina Gloski President Semiconductor Operations Consulting

2. Topics • Planning for Operations • Resource Requirements • Fixed Operations Costs • Variable Cost Factors • Key Things to Remember Semiconductor Operations Consulting

3. Planning For Operations • First step: Establish a baseline • Where is your company/product in the design cycle? • Specification/MRD • RTL • Netlist • Working prototypes Semiconductor Operations Consulting

4. Planning For Operations • At Specification time • Baseline development and material costs • Research foundry capabilities to support product performance and IP requirements • Determine development and prototype cycle time and develop contingency plans • Respin • Redesign Semiconductor Operations Consulting

5. Planning For Operations • At RTL time • Must have completed all items from previous slide… or you are already behind the curve! • Finalize DFT strategy • Evaluate internal or external test program development • Choose foundry partner and begin relationship building • Revise cost and cycle time assumptions Semiconductor Operations Consulting

6. Planning For Operations • At Netlist time • All previous activities completed • Select package, assembly and test/test development partners and begin managing these relationships • Revise cost and cycle time assumptions • Evaluate yield and WIP data management systems • Define operations system requirements • Develop qualification and characterization plan and partners • Evaluate and set document control system • Begin customization of operations forms and key procedures Semiconductor Operations Consulting

7. Planning For Operations • At Working Prototypes time • Ensure all previous steps completed • Update material costs with refined test and assembly assumptions • Select yield and WIP data management methodology • Execute product qualification plan • Execute characterization plan • Complete key operating procedures • Develop or buy forecast, WIP, order management and planning process and management tools • Exit strategy of public offering vs buy out factor in system selections Semiconductor Operations Consulting

8. Planning For Operations Second step: Define requirements to support your end product • Are you shipping a reference design or software with each chip? • Are your targeted customers going to require early ISO 9000/2000 certification? • Software control – you need a document control system at RTL time • Need quality/manufacturing engineer to support component, PCB and supplier selection at time of RTL Semiconductor Operations Consulting

9. Planning For Operations • Are you utilizing alternative fab processes? • RF • GaAs • SiGe • These take longer to debug and qualify and fewer skilled people in marketplace for design • Manufacturing supplier relationships and product support requirements take longer to refine Semiconductor Operations Consulting

10. Planning For Operations • Third step: Product portfolio breadth • How many designs or new tapeouts are anticipated each year? • 5+ design tapeouts per year may justify design tool expenditures and in house operations team • 3-5 tapeouts – portions of operations may be outsourced to reduce cost and underutilization of resources • For 1-3 design starts per year, consider outsourcing both physical design and operations • Determine probability of first time working prototype Be Realistic! Semiconductor Operations Consulting

11. Resource Requirements • Staffing • First hire: “hands on” VP/Director of Operations at RTL time • Plan on 3 months for hiring process • VP/Director accountable for • Staffing up group • Supplier relationship development, pricing negotiations and cost model • With engineering manager supplier selection • System requirements • Positions to be filled by time of production: product engineer, test engineer (if internal test development), quality engineer/document control, supply planner/buyer/order management Semiconductor Operations Consulting

12. Resource Requirements • Product Engineer • Characterization plan and execution • Yield Management strategy • DFT Strategy Semiconductor Operations Consulting

13. Resource Requirements • Planner/Buyer/Customer Service (at production ramp time) • Accept and place purchase orders • Contract reviews • Manage logistics of shipment to end customers • Forecast management • Build plan development Semiconductor Operations Consulting

14. Resource Requirements • Quality Engineer (at netlist time) • Document control development and management (especially important if shipping software and/or ISO compliance) • Supplier quality management • Customer quality management • Component qualification plan and execution Semiconductor Operations Consulting

15. Fixed Operations Costs • What are the fixed cost assumptions? (based on the number of tapeouts annually) • Mandatory to model the following costs: • Labor • International travel and communications • IT support personnel • IT systems and maintenance • Transportation and insurance • Inventory carrying costs • Facilities Semiconductor Operations Consulting

16. Operations Cost – when in Production Semiconductor Operations Consulting

17. Fixed Operations Cost • Staffing • If you have flip chip or thermal or electrical enhancements, add one packaging expert expect to pay at least ½ of package development cost for characterization • If analog content is greater than 20%, add one test engineer and plan 6 months to find • If using alternate fab processes, add at least one process engineer • Remember the risk if you have only one expert in any given area… What will you do if they leave? Semiconductor Operations Consulting

18. Variable Cost Factors • Material Cost Modeling Available at time of Print • IC Knowledge Corp: “Current Year IC Cost Model:www.icknowledge.com • Use FSA wafer pricing data and build your own Semiconductor Operations Consulting

19. Variable Cost Factors NRE • Masks/Merge if IP • Load boards (3 per product) • Probe cards (3 per product) • Burn-In boards • Sockets • Proto wafers (12 wafers) • Corner lot (12 wafers) • Sort, package, assembly, test of qualification and corner lots • Qualification testing cost (Life test, ESD, Latch Up, Temp Cycle) • Tester time rental or supplier test program development cost Package design and tooling • Ball placement tool (BGA only) Semiconductor Operations Consulting

20. Variable Cost Factors Wafer Cost • Process technology (nPoly layers, xMetal layers) • Die Size Xeff (mm) = X + adj. factor for scribe lines (120 to 250m) • Die Size Yeff (mm) = Y + adj. factor for scribe lines • Die Area (mm^2) • Gross Die • Epi/LV/LPa or other custom process adders • Backgrind cost/wafer • Yield parameters: • Process complexity n • Effective do (/in^2) w/small die yield adjustment Semiconductor Operations Consulting

21. Variable Cost Factors Gross Die Formula • Each foundry has their own gross die formula • General formula: Gross dies per wafer = (area of wafer)/(area of die) - Pi*(wafer diameter)/(sqrt(2*die area)) Semiconductor Operations Consulting

22. Variable Cost Factors Defect Density Projections • Poisson's yield model: • Yield = exp(-A*D0) • Both defect density and process complexity lumped into one parameter D0. • Negative binomial model: • Yield = 1/((1+A*D0)^n) • Defect density and process complexity separated out into two parameters. • Murphy's yield model: • Yield = ((1-exp(-A*D0))/A*D0)^2 • This one is not as popular as the previous two. Semiconductor Operations Consulting

23. Variable Cost Factors Defect Density Projections (continued) • If using 30% or more SRAM effective defect density is higher than logic and must be adjusted • Analog IP are less defect density sensitive, but difficult to predict using defect-based yield models Semiconductor Operations Consulting

24. Variable Cost Factors Assembly Cost • Package type • Body size • Thickness • Lead spacing • Ball/pin pitch • Pin count • Number of substrate layers • Number of bond wires • Assembly yield • Electrical characteristics • Thermal characteristics (qJA) and analysis • Cavity up or down or flip chip Semiconductor Operations Consulting

25. Variable Cost Factors Test Cost • Tester cost/hour (platform required) • Probe testing temperature • Final test temperature • Handler index time • Prober index time • Utilization factor at sort • Utilization factor at final test • Final test time in CPU seconds • Wafer sort time in CPU seconds • Final test yield • Wafer sort yield (in addition to defect density) Semiconductor Operations Consulting

26. Variable Cost Factors Overhead Cost • Operations overhead $ (% of units manufactured) • IT overhead (systems and people to support operations) Semiconductor Operations Consulting

27. Variable Cost Factors • Production Ramp Cycles of Learning • Whatever production cost is, plan for at least 2X cost for first 3 months of production. Need to optimize: • Yield • Test time • Cycle time • Can be longer based on volume ramp. Typically need 5 wafer lots at least for digital products • Don’t underestimate cost and labor to get product out • Need slush fund for debug (ebeam, FIB) • Model risk buy contingencies • Can you afford all risk buy material to be scrapped at your cost? Semiconductor Operations Consulting

28. Key Things To Remember • Supplier quotes • Ensure all necessary steps included • Scan, bake, dry pack • 5V tolerant mask step • Package cost factored by number of bond wires • Development of sort, final test and QA programs • Realistic start up and production final test time, including set up and index time (understand test cost models) Semiconductor Operations Consulting

29. Key Things To Remember • Transportation costs for prototypes, preproduction and shipping to assembly (Re: variable costs) • Import/Export classification (DES encryption can add 4 month to product classification time) • Product insurance Semiconductor Operations Consulting

30. Key Things To Remember • Can you afford the operational people if your first product needs to be redesigned? • This is when most companies need to have a Reduction in Force. Minimize this negative impact • Prepare contingency modeling for time and cost if redesign or respin is needed • IT infrastructure • Reverse bill of materials needs tier II ERP vendor as a minimum • Yield management model is required, you own it if you own operations • Reporting, backlog, costed BOM is critical if you own operations • Document Control needs to be put in early, low cost, but trains everyone to control Docs Semiconductor Operations Consulting

31. Key Things to Remember • Be clear on the core skills of your company: • Physical design and operations ownership • Getting the right product to market • Don’t underestimate supply relationship building • There is a lot of trust involved in this business • Don’t start too late – you will not recover! • Cash conservation and contingency planning are critical Where are your funding dollars best spent? Semiconductor Operations Consulting