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Maximizing the Success of the Chinese Semiconductor Industry Mark Templeton President & CEO

Maximizing the Success of the Chinese Semiconductor Industry Mark Templeton President & CEO. Network Effects. Evolution of the Semiconductor Industry. Vertical Suppliers. ASIC Vendors. Fabless Semis. Modern ERA. Fully Vertically Integrated. System Manufacturer. Design & Distribution.

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Maximizing the Success of the Chinese Semiconductor Industry Mark Templeton President & CEO

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  1. Maximizing the Successof theChinese Semiconductor IndustryMark TempletonPresident & CEO

  2. Network Effects

  3. Evolution of the Semiconductor Industry VerticalSuppliers ASICVendors FablessSemis Modern ERA FullyVerticallyIntegrated SystemManufacturer Design &Distribution Design EDA IP EDA ASICVendor Manufacturing Manufacturing Fab Equipment 1980’s 1990’s Today 1970’s

  4. Horizontalization is a One Way Process • Specialization advantages • Improved: • Functionality • Quality • Ease-of-Use • Economics • Choice • Vertical providers aren’t funded to improve against these “soft” requirements

  5. Trigger “Horizontal specialization occurs when a technology exceeds the requirements of a majority of the market.”

  6. Communication Between Layers Design • Layers represent 3rd parties • Communication requires standards • The fewer the better • Leads to de-facto standards • Success means adoptingglobal standards EDA IP Manufacturing Fab Equipment

  7. Layer Communication Forms a Network ManufacturingPartners EDA Vendors DesignPartners IC Design Teams Service Providers Vertical Semi Companies IPProviders Consultants/Contractors

  8. Value in Networks ( ( (

  9. Value in Networks ( ( ( ( ( ( ( ( (

  10. Metcalfe’s Law Value of Network = (Number of Nodes)2

  11. Metcalfe’s Law “Success means buildinga large, high-value networkas quickly as possible.”

  12. Build the Network • Your network must be global • Think of it as a community • All members must be able to succeed • Nurture the network • Compete with it and it goes away

  13. The Fishing Net

  14. Two Ways to Fish

  15. Semiconductor Math • ~1,000 customers • 80% of revenue from 10 • If only 10 provide revenue, then why chase 1,000? • There is no way to tell which 10! • The companies that cast the widest net,end up with the healthiest businesses

  16. It’s Not a Cathedral

  17. Fabs Aren’t Built in Silicon Valley Anymore

  18. Fabs Can Be Built Anywhere

  19. Moore’s Law – One Billion in 2005 Source: Intel and Public Information

  20. Where the Money is Made Source: TSMC Website

  21. Pure-Play Foundry Technology Source: Fabless Semiconductor Association

  22. What’s a Fab Cost? (US$Billion) Source: Fabless Semiconductor Association

  23. Where’s the Money? • Most of the volume is in technologies that are 3 or 4 years old (if not older) • The few early adopters need the latest process technology one to two years before the broader market • Technology differentiation alone is insufficient (and usually unnecessary) • Most customers are looking for adequate technology, good pricing and great service

  24. It’s Global – “Be There”

  25. Competition is Global

  26. It’s a Global Business – Be There • Office locations • Local “culturization” • Front office • Business practices • Don’t compete with your customers • Protect IP • The industry’s biggest concern about China

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