Archive for the ‘Uncategorized’ Category

Sh*t my dad says: “CO2 is increasing … So What?!”
Sunday, May 30th, 2010

My father (who is apparently a member of a newly discovered North American club) is a Global Warming skeptic. I think I’ve convinced him recently, however, that CO2 is indeed increasing in the atmosphere at a dramatic rate and that increase is of man-made origin. Being an appropriate skeptic, he correctly asks, “CO2 is increasing … So What!?”

Here’s why CO2 build-up in the atmosphere is meaningful:

Our atmosphere is relatively transparent to visible light. Therefore much of the energy from the sun passes through our atmosphere and is “absorbed” by the surface (which is relatively opaque to visible light). The surface then begins to warm and as a result re-radiates the energy. This re-radiation occurs at a different wavelength then the incident energy and is generally shifted toward the near infrared (commonly referred to as “heat waves”). Our atmosphere however, is not as transparent to the near infrared or “long wavelength” end of the visible spectrum and so this energy is “captured” by the “greenhouse gases” in our atmosphere and the resulting is a warming of the atmosphere. You know that the atmosphere is not as transparent to the long wavelength, red end of the spectrum because “the sky is blue”. If the atmosphere was equally transparent to all visible light then, even during the day, the sky would be pure black (like pictures from the Moon). You also know that we’re warmer with an atmosphere than we would be without it because you know what happens when you cover your own body with a blanket.

greenhouse_effect2

Everything above is without debate. Now, however, it’s important to attempt to model this precisely and that is difficult. If the earth were a pure “blackbody” then it would be relatively easy. For example, we could assume that all light energy from the sun that hit a “disk in space” of diameter equal to the earth’s diameter was absorbed completely and thermal equilibrium were achieved. Using the Boltzmann’s Law we could then determine the temperature a blackbody globe would be to emit this much energy (thermal equilibrium). This predicts a temperature of about 42 Fahrenheit. This immediately complicates however because the earth doesn’t absorb completely and some of the energy is reflected. This is known as the earth’s albedo and is roughly estimated to be about 68% absorption efficiency. In addition, we have to estimate how effective the atmosphere is in capturing the energy re-emitted by the earth. This is known as emissivity, i.e. what percent of the energy radiated by the earth is emitted out from the atmosphere. This is roughly estimated to be 61%. Using these two parameters for earth’s light absorption and atmospheric emission we then predict a temperature of 56 Fahrenheit. This is a fairly simple model but it gets pretty close to the actual average earth’s temperature which is about 55 to 56 Fahrenheit. (This model is further explained here and here’s a simple excel spreadsheet that implements these calculations).

OK, now we’ve got a pretty good handle on what affects the temperature of our climate: the incident energy from the sun, the reflectivity or albedo of the earth’s surface and the energy absorption or emissivity of our atmosphere. If any of these parameters change, then the temperature we experience is going to change. So the simple answer to “Why is CO2 build-up meaningful?” is that the amount of CO2 in the atmosphere can change the emissivity of the earth’s atmosphere. According to our model, a one percent change in emissivity will result in a 2 degree Fahrenheit rise in temperature. Note also that in the model a one percent change in albedo also results in a 2 degree change in temperature. This is why the polar ice caps are considered of such importance, the size of the “white” polar ice caps (areas of high reflection) is a large determinant of the earth’s albedo.

Again, at a high level, there no debate in any of these points. The earth is a physical object that obeys the laws of thermodynamics and it’s made of materials that have physical characteristics. If these physical characteristics change (e.g. albedo, emissivity), the the point of thermal equilibrium will change according to the laws of thermodynamics. What’s also true, however, is that precisely measuring and predicting these effects on a global scale is extremely difficult and highly debatable. The measurement of average surface temperature of the earth is extraordinarily hard, especially when trying to reproduce a backward history of these measurements. Predicting and measuring the average emissivity of the atmosphere, especially as a function of the atmospheric make-up is again, an extraordinarily difficult problem to make complete and precise. To further complicate the model, the two parameters emissivity and albedo interact. A lot of work in this area is subject to debate and, unfortunately, when driven by a political agenda often complete crap. A relatively objective look at the complexity involved indicates why so much is available for debate. It doesn’t change the reality that if we put enough CO2 into the atmosphere, we’re going to change the temperature of the climate, that’s just physics. (Note: CO2 is only one of the “greenhouse gases” a relatively poor name for gases that absorb energy in the infrared spectrum such as water vaper, ozone, CO2, nitrous oxide and methane)

So let’s stay with “An Un-confused Truth”, (whether or not convenient): The earth is a natural system that is currently in a state that supports complex life and is especially conducive to the dominance of man. This particular state of the earth, however, is not it’s only possible state and, in fact, not the state that it’s been in for long. The earth has existed as a solid sphere for about 4.5 Billion years. A unique characteristics of the earth right from the start was that its distance from the sun allowed for water (note our simple model predicts a temperature of 42 Fahrenheit, right where H20 is a liquid). It turns out that water and a bit of methane gas is a great cocktail to allow complex carbon molecules to occur and bacteria (or prokaryotes) seem to have existed on the earth for nearly 4 of its 4.5 Billion years. The creation and proliferation of bacteria is what created the atmosphere and the atmosphere warmed the earth to above 50 Fahrenheit creating a globe whose surface is covered mostly by oceans. The nursery of the oceans and about three to three and half billion years of incubation allowed complex animal life forms to emerge. The exact conditions that have allowed man to be the dominate complex life form have existed for about 200,000 years. Those conditions include a mild and consistent climate that let’s man’s intelligence and memory find food year round. And a long term stability that has allowed our species to develop a continuous memory of nearly 10,000 years to form what we loosely call “knowledge”. But please note the time scale: if the 4.5 Billion years of earth’s existence were a timeline that spanned from the tip of your right hand across your shoulders to the tip of your left hand, then you could wipe out the time of man by swiping a nail file across the tip of your left middle finger(*).

The belief that this world is in a stable, self-correcting state that has existed and will exist forever is naïve. The reality is that we exist in a highly unusual place: a relatively small and solid planet, just the right distance from a relatively small and stable star that allows water to exist as a natural form; and that condition has been highly stable for approaching 5 Billion years. Given time, it will change. The responsible behavior for us, given our knowledge is to try to preserve the gift of our environment as best we can. Our lives depend on it.

(*) – The analogy of the ‘a nail file wiping out the time of man’ is one of my most remembered passages from Bill Bryson’s excellent book A Short History of Nearly Everything. You should read it.

… and while we’re on the Topic of “Global Warming”
Sunday, February 21st, 2010

I’ve recently been spending a good deal of time learning about energy and alternative energy approaches. “Why!?”, you ask … because I recently got surprised by a high energy bill and wanted to make sure that I wasn’t paying hundreds of dollars extra a month!! In looking into it, I realized that within the tiered rate structure of California, I was paying greater that $.30/kWh for energy and felt cheated within a world that has reduced the average cost of energy to about $.10/kWh. Being the selfish, greedy, SOB that I am, I decided I wanted alternatives!!

Now, because I’d hate for you to get the wrong impression, I’ll also point out that there’s a strong belief that projected world’s energy needs when supplied by today’s technology, leads to, in the most dramatic framing, “the destruction of the global environment”. Therefore, alternatives are required!! Putting us in this “boat” together then … learning about alternative energy is important for us all so that we can save the planet …

By the way, there are other people in the boat rowing in the same direction and the TED group recently highlighted an interesting talk by none other than Bill Gates.


OK, if you’ve read this far it means I didn’t completely alienate you with my introduction and you did not get sidetracked by the much more compelling content of Mr. Gates’ talk. I appreciate your patience. As a reward I’ll try to get on track and give you a few “talking points” on “global warming”, a topic that’s filled with debate and sometimes rancour.

To help avoid the rancour, I propose a set of framing questions that have helped me try to understand further the issues in debate and the things worth doing about it. These questions are as follows:

  1. Is there a build-up of Carbon Dioxide in the atmosphere?
  2. If so, is this build-up of man-made origin?
  3. If so, what are the implications of this build-up of carbon dioxide?
  4. Given the implications, what should we do about it?

Question 1 – Is there a build-up of Carbon Dioxide in the atmosphere??
This question, though leading, is primary to the debate. The core result is presented as the “Keeling Curve”, shown below, with all the background on that particular curve presented at the NOAA site that “owns” the measurements. This data quickly provides a convincing picture that, yes, Carbon Dioxide is building in the atmosphere.

Keeling Curve

keeling2

Question 2 – Is this build-up of man-made origin?
Though slightly less obvious then the first, the data here is again pretty convincing. The core data is the measurements made that attempt to determine the carbon dioxide concentration over the last 400,000 years and compare that to the direct measurements made over the last 50 years.  This reasoning, though circumstantial is, none the less, strong.  The argument strenghtens by estimating the effect that the 8 billion or more tons of estimate carbon production would have in an environmental model (see graph below).    Believing the data, however, you could still argue that something other then man’s activity is the source but it’s tough to believe given the spike in CO2 concentration is wholly coincident with the industrial age.   In addition, there is supposedly a direct method to estimate the “age” of carbon in the atmosphere.

icecore

Question 3 – If so, what are the implications of this build-up of carbon dioxide??
Now enter the realm of the debatable!  The advertised implication is “Global Warming”.  This now overused phrase is the result of many decades of research that begin with the observation we learned in high school known as the “Greenhouse effect”. Interestingly the first observations of the existance of the “Greenhouse effect” were made as early as 1824 by none other than Joseph Fourier, the namesake of the oft use “Fourier Analysis” techniques. Many observations and experiments have been made since and you’re encouraged to look and view the many presentations, one of which is presented here. Of course, the debate begins as conclusions here depend on the accuracy of the models, which, in my opinion are questionable and how these models relate to other natural and chaotic phenomena. Nonetheless, arguing in the extreme: it’s not debatable that a different atmosphere would, in fact, change the temperature of the planet (see, for example, Venus)

Question 4 – Given the implications, what should we do about it?
OK, we’ve loosely presented some of the scientific background, intentionally moving from the most concise and compelling to the more complex and debatable. Now we’ve arrived into the realm of the pure political. Man’s activity is measurably producing over 8 billion tons of atmospheric carbon/year. But acting to change man-made carbon production on a global basis would require a political structure and will that doesn’t exist. If you are where I am, that 1) atmospheric carbon dioxide IS increasing and 2) it’s due to MAN-MADE effects and 3) this will inevitably have SOME effect on the environment we live in then it’s easy to conclude that, all else being equal, we should choose energy sources that produce less carbon. Unfortunately, there’s almost no choice where “all else is equal”.

Global_Carbon_Emission_by_Type_to_Y2004

But recognizing carbon production as a cost of energy is important, and is today, not directly included in the “price”. “Carbon credits” begin the discussion but, already, we start down a road that will be politically difficult to implement. I have to agree with Bill Gates. Results will occur when we have a readily available source of energy that cost less, period, and, by the way, doesn’t produce carbon. This solution, whether it’s as nice and “natural” as solar, wind or waves or it’s of more “industrial strength”, such as nuclear, enables economic activity and improved lifestyle (man’s selfish goal) … and, by golly, even saves the planet from man-made destruction (a nice side effect to carry along).

Going back to my own, admitted, selfish behavior. We’re installing solar panels on our roof! There’s a bit of an up front cost but Akeena Solar has made it easy for me. In addition, the government has conspired to make it so that I’ve contracted with SunRun and bought my solar electricity for the next 18 years at a rate of just of over $.15/kWh.   Now with only a little bit of scheming (and hoping I can control, to some degree, the amount of Xbox Live played during school hours!)  I believe I will have electric bills of zero dollars/year.   If my nefarious scheme works I’ll have paid for my solar panels in less than four years and it’s all upside from there, baby!!  I place the worst case scenario at an investment with about a 10% return which isn’t too bad in today’s slowed economy. And, BTW, I’m reducing the “carbon footprint” of our house. So you see, I can remain the selfish guy that I am … and still do my part in saving the planet.

… and for 2009 the winners are …
Friday, January 22nd, 2010

It’s the tough times that separate the weak from the strong and 2009 was tough enough to buckle the knees of the most stalwart. Given that semiconductor industry revenue dropped by about 10-11% in 2009, it’s interesting to look at how the top fabless semiconductor companies faired. This article from Semiconductor International lists the results from 2009. It’s a little premature, as many of the 4th quarter results aren’t fully out yet, but it’s a pretty good snapshot. Given the 10-11% average drop it’s logical that the average for the top 25 was significantly less, about 5%. However, even in this group there was a considerable spread.

Top 25 Fabless Semiconductor Companies by 2009 Revenue

Top 25 Fabless Semiconductor Companies by 2009 Revenue

Looking at the table a few things standout. First, it’s interesting to separate the list by country of origin. As there is only one company from each of Japan and Europe, it hard to conclude anything on average except that neither region has embraced the fabless model. Note, however, the stark difference between the results in the U.S. and in Taiwan. The average decline for a U.S. based company in the top 25 was 8.7%, pretty close to the industry average. A company in Taiwan in the top 25, on the other hand, grew an average of 13%!!

As, or maybe more interesting, is to look at how the companies did against their regional average. Seven companies beat the regional average in the U.S.: Atheros, Silicon Labs, Qualcomm, Avago, PMC-Sierra, Broadcom and Semtech. Is there any doubt that that list represents the “cream of the crop” of fabless IC companies. More unique, however, is that two U.S. companies managed significant growth in this environment. Congratulations to Atheros and Silicon Labs, among my most admired companies in the fab-less industry.

But let’s turn attention to Taiwan. With the regional average being 13% growth, these companies are operating in a different (more condusive to growth?) environment. Within that environment, three companies beat that average, Mstar, Mediatek and Realtek. These names have and should strike fear in the management of U.S. based companies. These companies continue to grow on a business model focused on cost based design for volume applications. They make strong ties to local foundries and easily capture design wins with local ODMs. Given that TSMC is destined to become the 2nd largest semiconductor company in the world in just a few years we are only going to see the strengths of Taiwan based companies increase. U.S. management and investors, take note …

Top 25 Fabless Semiconductor Separate by Country and Sort by 2009 Growth

Top 25 Fabless Semiconductor Separate by Country and Sort by 2009 Growth

Project Tuva
Thursday, November 5th, 2009

For everyone who appreciates science, and especially those who don’t yet, there’s a precious resource that has recently become available.    Bill Gates has acquired the rights to films of a series of lectures at Cornell University given by Dr. Richard Feynman.    These lectures have been digitized and enhanced with notes and links and are presented at the Project Tuva website.   Some background on the site development and its enhanced learning experience is discussed at the xconony website.    I am so very thankful to Mr. Gates for making these available.   To view some of the core concepts of Physics presented by Dr. Feynman, one of the great minds of our age,  is truly a privilege.

And while I’m expressing appreciation, I am becoming convinced that Mr. Gates, though one of the great “industrialist”,  will be remember in the lens of history as one of the great philathropist of our time.    The work of the Bill & Melinda Gates foundation  is exemplary and its quality is due to the personal involvement of Bill and Melinda Gates making sure their legacy is effectively applied.

Thank-you Mr. and Mrs. Gates

Waves of Innovation …
Tuesday, November 3rd, 2009

I  saw two things on waves and innovation in the last week.   One was the movie Riding Giants.   Laird Hamilton is unbelievable!!   …  and “innovation” is often about not accepting that “it can’t be done”.

Laird on a small wave ... for him

Laird on a small wave ... for him

The other, which my strange make-up found equally exciting was a talk by Norman Winarsky of SRI that discussed coming “Waves of Innovation”.     Now to be honest,  Norman discussed the “Five Waves of Innovation”.    I know that because that’s what my notes are titled.    I then have notes on four waves.    So, much like my surfing ability,  I somehow missed a wave.      The four I did catch were nice rides, however:

  1. Robots/Agents

    I think this may have been two waves, one being bots that probe, investigate and possibly disrupt ”the network” and the other being agents.    Regardless, I believe that “agents” piece of it is most interesting.    Norman demonstrated an “agent” application that is in market presently: “Siri” (SRI’s baby?).     Pretty compelling demo.    It’s a phone app, speak to it, ask it to DO something, (e.g. “Make me a reservation at Manressa at 8pm on Thursday”) … done.     I expect it will be received as a “breakthrough” app.    And as is often the case in “breakthroughs” there’s only a little that’s new … it’s mostly a set of developed technologies that are ready to be put together in a new and useful way:

    Speech Recognition – It’s a done deal, speech can be recognized to greater than 99% accuracy, especially in context.   Go buy an app from Nuance.    I also believe this is further evidence of Jeff Hawkin’s model On Intelligence,  all good speech recognizers are trying to “predict” what you’re saying and they do a better job with better predictors.

    Web Search -  I don’t have much to add … if you want to learn more “Google it”.

    Select and act – This is the “new” technology, and this is the result of $150M of government investment in the CALO project.    I think it’s great,  but it certainly builds upon the fact that good search technology has given you a list that almost all of the time has everything relevant in the first handful of results (when was the last time you found what you were looking for on the 2nd page of a web search?).    From there it’s building a “confidence score” on whether and how to act and the mechanism for recovery, i.e. “trying again”.   The “difficult” problem in the UI  is when the agent doesn’t get it right, the human response is to simply repeat the same words slower and louder (“I said, I NEED A ROLL OF TOILET PAPER!!!”).     The machine has to be “smart enough” not to more accurately get to the same, wrong result.

    I look forward to watching Siri progress.   

    I also believe, in general, voice will come back as a viable and important UI as the personal device moves from Notebook to Smart Phone.    I just can’t buy that thumb typing on a virtual QWERTY keyboard is the optimal way for a human to efficiently instruct a machine (the original keyboard layout was designed to prevent mechanical jams of letter swing-arms!?! C’mon … we can do better). 

  2. Pharmaceuticals

    This, in my opinion, is the biggie!!   The 20th century was the century of physical sciences.   In scientific terms, the century began with J.J. Thompson’s discovery of the electron and the century comically ended with the Luddite fear that the Y2K effect would “stop the world” as we had become too dependent on the “buggy” computer, the culminating economic application of electron theory and electronics.    I think the 21st century will be remembered as the century of biological science.    The Human Genome Project completed two years ahead of schedule in 2003 and the result is a complete map of the human DNA.    More telling, the cost of DNA sequencing has dropped so dramatically that instead of it costing $100M’s that it cost to sequence the human species, any other species can be sequenced for a mere few million dollars.  

    Our ability to understand and control biological processes, as a result will be astounding. The near term result is good types of “designer drugs” that have unprecedented effectiveness.    The “Cure for Cancer”, in general, may be no nearer than it was 20 years ago but the cure for an individuals cancer is getting pretty close.    Catch the early signs, use a biological simulation to model the metastasizing mechanism and develop a drug “cocktail” that prevents and reverses it’s course for that individuals body and biological processes — cancer stopped.    And so we attack and cure the biggies: heart disease, diabetes, obesity, cancer.    They are all simply biological processes that can be “modified”.    Does this mean eat right, see your doctor regularly and when he occasionally catches something awry he provides an appropriate cocktail and makes sure you live to be 100?  Maybe it’s so.  And what about aging itself, isn’t that just a biological process that can be understood and controlled?

    So we’re going to learn to live forever … or pretty close to it.   I won’t touch upon the ethical and moral debate it raises but I do think it’s worth thinking about, especially in context of the dramatic demographic changes the world will see in the next 10-20 years as discussed in the current Economist.

  3. Alternative Sources of Energy

    There’s been a lot written about the new potential sources of energy and there’s been a lot already done to diversify the energy supply away from oil. It’s surprising, however, how little impact “green sources” have made so far and speaks to the breadth and magnitude of the opportunity.    The graph below shows that everything “green” outside hydro-electric generation as of 2007 comprised less than 1% of Total Supplied Energy on a world wide basis!

    image001

    I won’t re-iterate here what alternative sources look most promising and why (think wind and waves) but I will observe that conservation or, maybe more appropriately, efficient energy use remains a strong “pseudo-source” that has the added benefit of reducing carbon footprint.     The graphic below speaks to this “other” opportunity (source: Dr. George M. Whitesides).    This graph shows the inputs and outputs of the U.S. as an energy system.    It deserves some study but the big “take-away” is that over 50% of the energy produced is “lost” in distribution to or at the end application.     Do you hear that “humming” when you go under power lines, it uses power to make that sound.

    Energy Use Graph 4_1

    It speaks to the importance of the Smart Grid initiatives occuring on a worldwide basis.    These initiatives may well have the impact the development of the interstate highway system in the 1940′s and 1950′s did in the last century.    Remember, growth in our new economy, is more about moving electrons and information than it is about moving things.

  4. Enhanced Reality

    I’m not sure what to say about this one. I think I get it … it’s video games, the new multi-billion dollar entertainment industry. And you can easily understand how practical and “cool” it is when you head down to Dave and Buster’s and play Pebble Beach on their golf simulator. It’s not such a big leap to believe you’ll be able to afford to put one in your basement or backyard for your year 2020 birthday. There’s a lot of innovators out there who are going to find lots of “non-entertainment” ways to make this technology useful. And then how far away are we from the vision in Bruce Willis’ latest movie, Surrogates? I’m not sure I like that particular vision … but if I could get anywhere near the thrill Hamilton must experience on the elevator drop of a 50 foot wave, sign me up.

Semiconductor Growth and FPGAs … hmmm
Tuesday, October 27th, 2009

FPGAs are one of the seminal inventions of the Semiconductor Industry.    They have and continue to be a hugely productive and generally cost effective way of exploring designs in complex electronic systems.     Theory says, in fact, that they are increasingly a good choice for full production implementation of systems electronics as the cost of full ASIC design becomes prohibitive.   A whole body of pundits (1, 2)  predict the demise of custom ASICs as the capabilities of FPGA continues to progress.   In fact, there’s a very lucid presentation of why the numbers say that FPGAs will subsume ASIC development over time from the perspective of 2003 and I, generally, agree with this analysis.

OK, so now that we’re about 6 years removed from this analysis what’s happened?    I’ll put out some data.    The chart below shows three revenue sequences since 1994.    One is the SIA data for overall semiconductor industry revenue, the second is the same for fab-less from the GSA and the third is the revenue history on a yearly basis of Xilinx and Altera (summed).    The assumption is that Xilinx and Altera ARE the FPGA market, or at least an excellent proxy as they comprise some 85% or more of the market.    The graph might be a little hard to understand as I’ve scaled the three sequences differently to allow them to plot conveniently on the same axis:  “Xitera” is plotted in Billions, Fab-less is $10′s of Billions and overall Semi is $100′s of Billions.    Regardless, do you note anything unusual?

Semiconductory Industry Revenue

Two things stand out:   First is the fact that the fab-less industry has continued to outpace the overall industry in the last 15 years, not surprizing … but a trend that has slowed dramatically in the last few years.     Second, of course, is the anomoly of the year 2000.    It was a banner year for FPGAs (and many others in the industry).   But if you study the overall trend there’s something quite surprizing and in direct contrast with the predictions of the pundits in the last several years.     Take the same data for the overall semiductor industry and the “Xitera” sequence and normalize for 1999 (i.e. Revenue in 1999 = 1).   Plotting, the graph below results.  Conclusion:  the FPGA market has not grown faster than the overall semiconductor market for the last decade!    In other words, despite the theory that FPGA’s should be capturing more content because they are a more overall total cost effective solution when including development cost, there has been zero content capture relative to the overall industry …

image001

I discussed this with a long time executive in this industry recently and he was quite aware.    Some of this is ‘self-imposed’.    Xilinx and Altera are among of the best financially performing companies in the industry and, uniquely in the fab-less space, pay a dividend to their shareholders.    Capturing new applications, no doubt, requires business model innovation and sometime aggressive price moves.    Arguably, they are making a choice for margin and profitability over growth and, certainly, the current investment mood favors that.    I think, however, the numbers in the analysis are all too real.    ASIC and ASSP development at advanced nodes is simply becoming too cost prohibative, FPGAs will become a better choice for overall economic cost.   

I remain convinced that FPGAs will re-assert their relative growth against the industry.    This may, however, look like another effect of the Moore’s Law exponential sequence.   It will ride underneath the measured data until the the order of magnitude of the effect makes it immediate.   Suddenly, a step function will occur.    As is often the case in these “steps” it provides an opportunity for some to “step-up” … and some to “trip”.

Foundry forecast … real and meaningful
Tuesday, October 20th, 2009

In my previous post, I noted the strong forecast for the pure play foundry and observed that it requires a structural change to be true.   In asking a few questions to colleagues the suggestion that this is a result of the “hybrid” supply model, or from the design companies perspective “fab-lite” strategy seems to hold water.    The core dynamic, well known and examined in detail in this April article from The Economist magazine, is the fact only IDMs with significant scale can afford leading edge fabs.   While increasingly true at each previous node this seems to have “hit at wall” at 65nm and very few IDMs made the investment.     At this node then there is a “transfer” effect as large IDMs begin to participate in earnest in product outsourcing.    These design decision were made over the past 3 years and are now showing up in product shipments.   Announcements recently by ST, NXP, Infineon and AMD are indicative of the trend and show participation of four of the top ten semiconductor companies in the world.    

Estimating the size of the effect is shown in an update of the graph from the last post.   Two assumptions are made, one that the IC Insight pure play foundry forecast is about right and two, existing fab-less companies, in aggregate grow at the rate of the current SIA industry forecast.    If both those assumption are true then there is $32B of semiconductor revenue in 2012 that would be revenue “transferred” from IDM in-house supply to outsourced, or fab-less supply.     To put it in context, that implies that the foundries have just gained a new design-in customer that grows from zero to almost the size of INTEL in a 3-4 year period of time!

New revenue from hybrid model transferring to foundries

New revenue from hybrid model transferring to foundries

Having lived through the transition from IDM, to “fab-lite”, to fab-less at Conexant I can say that this is going to be a very tough transition for the ‘fab-lite’ companies.     Though a foundry customer, their existing fabs still need filling to make bottom line numbers work.    This tends to pull internal product lines in multiple direction up until the point where the design entity and the fab separate completely.   I commend AMD for making the decision to separate from the fab business immediately and in one step.     In addition, the creation of Global Foundries and their immediate movement to gain scale through consolidation is, while highly risky in execution, the only possible path to long term survival.   

The long predicted maturation and consolidation of the semiconductor industry is showing up in the numbers.     It is very clear that there will be three “mega-entities” in the industry 5 years from now:  INTEL (PC), Samsung (memory)and TSMC (pure-play foundry).    The real question now is who else has the business model, IP scale and plan that delivers sustainability for long term growth.

CONCACAF Champs!!!
Thursday, October 15th, 2009

Yeah Baby!!   … and we didn’t need it but nice to see the desire to “finish” in the 95th minute.

Very best wishes to Charlie Davies for a speedy and complete recovery.

U.S.'s Jonathan Bornstein heads in a goal to tie Costa Rica in the final seconds.