Abstract
As a study of the anatomy of organization of high clockspeed industry, the consideration of potential profit and capabilities are fundamentally intertwined in the determination of the vertical scope of the company. Turbulent and volatile markets of high clockspeed consumer electronics are becoming the norm as life-cycle shorten and global economic and competitive forces create additional uncertainty. The growth rate of semiconductor industry is beginning to slow down where the yearly growth rate averaged 16% from 1960 to 2000 and the projected growth rate is around 6% from 2000 to 2010. The wafer foundry market is undergoing a transition, forcing more semiconductor companies to move towards fab-light or fabless strategies. This is because that the investment in new factories and the development of new technologies (such as 32nm, 22nm) is outpacing most companies’ financing resources. It is estimated that the growth rate of wafer foundry is around 18%, over the years 1985 to 2005. The wafer foundry, fabless IC design and fab-light model will continue to survive and thrive, as the economic and technical factors that dictate the need to amortize the cost of technology development and fab ownership. Today, fabless design companies together with foundry have demonstrated the agility and speed to satisfy their customers in the supply chain. Integrated device manufacturers (IDM’s), on the other hand, continue to be cost-efficient to meet high-volume (such as microprocessor, DSP, DRAM, Flash) or high-variety (such as analog) market. IDM cost-efficiency comes from tightly aligned technology/product roadmap, leading-edge capacity and in-house resource to have seamless intertwine among process technologies, product development and other “enabler” infrastructure such as IP, mask, physical design kits, design tool, test and assembly. To shorten the time-to-market for of new product introduction and to couple with the emerging trend of fab-light strategy of IDM’s (major customers of foundry are fabless design companies today), wafer foundry providers have to become the complementors of their customers and invest heavily on advanced capacity, deliver optimized process technologies together with the fast deployment of robust IP, design libraries, EDA tool, design service and DFM (design for manufacturability) design ecosystem. Design ecosystem is becoming the bottleneck of advance product introduction in semiconductor industry where the competition is mainly between supply chains. The readiness of DFM ecosystem will help to close the gap between fabless designers and IDM designers, who have access to DFM information from their own fabs. Wafer foundry providers have to upgrade their capability to master the upstream and downstream capability, in other words, design ecosystem rather than merely wafer manufacturing will become one of key success factors for wafer foundry industry. Leading edge technologies urgently need the process-design integration where a structured concurrent process/design development is a must. The importance of time or speed as a competitive weapon has been recognized for some time, the high risk attached to lengthy and slow development/deployment of new products has become unsustainable due to the nature of “the winner takes all” in semiconductor industry today. This thesis discusses the vertical disintegration and integration of semiconductor industry, particularly, the consideration of profit, time-to-market and development resource lead foundry providers to master specialization (such as DFM, embedded memory, power efficiency, bandwidth, high precision analog) where the existing design or process capabilities along the value chain are heterogeneous. The boundary between wafer foundry and its customers changed/evolved in the cases of virtual IDM, foundry-direct, re-targeting and re-branding. The business models of these four cases have to be appropriate to manage the relationship and expectation of foundry’s customers. The double helix system of wafer foundry is a variant of the IDM where wafer foundry providers beef up their capability on design, test and assembly to become the complementors of their customers. Hence, design flow, system, design tools and concurrent engineering management have to be deployed through “agility and speed” to create a responsive supply chain. This is because that the “total service” component of foundry providers and the mindset of foundry employees are critical factor for the shift of double helix on wafer foundry. Foundry providers must manage the global value chain in addition to the management of their own factories and technologies. The challenge to foundry providers is to shift from wafer production to value co-creation where “enablers” are deployed on time to allow faster development pace and frequent/profitable product upgrade. The changes in the capability in the supply chain will reshape the landscape of foundry and change the roster of qualified participants of semiconductor industry. Most semiconductor suppliers have either already executed or are in the process of implementing the shift from “captive fab” to “shared foundry”. The foundry providers urgently need to articulate the need of their customers, and stimulate the creation of IDM-alike infrastructure to serve as an extension of resource for their customers to face the challenge and opportunities ahead.