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www.rocelec.comwww.rocelec.com
Semiconductor Industry Pac-Man and the DMSMS Fallout
Inventory Distribution Product Manufacturing Manufacturing Services
Dan DeiszDirector of Design & Technology
December 2015
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Table of Contents
• Semiconductor Market Segments
• Semiconductor Industry Consolidation
• Market Segment Focus of Mergers & Acquisitions
• Product Fallout – Winners & Losers
• Packaging Fallout
• Military Strategies for Semiconductor M&A Fallout
• Conclusions
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Semiconductor Market Segments
2013 – The last year that government spending was uniquely tracked.
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Semiconductor Market Segments
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Semiconductor Industry Consolidation
• Altera – Intel
• Freescale – NXP
• Broadcom – Avago
• Atmel – Dialog
• International Rectifier – Infineon
• Micrel – MicroChip
• PMC-Sierra – Skyworks
• EZChip – Mellanox
• Pericom – Diodes
• IBM Micro – Global Foundries
• Fairchild – ON
• Maxim?
• Others?
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Semiconductor Industry Consolidation
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• Inexpensive Capital
• Cash on hand with larger companies
• Many chip stocks are historically undervalued
• Smaller companies struggling to compete; need scale– Heavy R&D required to keep profit margins up
• Moore’s Law slowing down and becoming expensive– Industry maturity
– Only 4 companies at 14nm (Intel, TSMC, Global, Samsung)
– SMIC not too far behind
• Focus on growth markets of Datacenters, Automotive, and Consumer
Semiconductor Industry Consolidation:Why now?
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Chinese government-backed Tsinghua Holdings
– $100B over 5 years
Semiconductor Industry Consolidation:Why now?
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Market Segment Focus of Mergers and Acquisitions
Merger or Acquisition Go-Forward Market FocusIntel - Altera Datacenter Silicon
NXP - Freescale Automotive & IoT
Avago - Broadcom Networking
Dialog - Atmel Industrial Sensors
Infineon – International Rectifier Larger scale in Power Semiconductor market
Microchip - Micrel Larger scale in industrial, automotive, and communications
Skyworks – PMC-Sierra Data storage & transport hyper-scale datacenter
Mellanox - EZChip Layers 1-7 connectivity for datacenters and carriers
Diodes - Pericom Larger size/scale of mixed-signal portfolio
IBM Micro - Global Foundries Larger scale for leading-edge foundry capability
Fairchild - ON Larger scale in Power Semiconductor market & Automotive
Datacenter, Automotive, Consumer/IoT, Larger Scale
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Product Fallout :Market Segment Focus Major Areas
• Datacenter Silicon– Processors (Intel)
– SSD Disk Drives – New memory architectures (Intel/Micron 3D Xpointvs. HP/Sandisk – Memristor SCM technology)
– Spinning Disk Drives (Seagate, WD)
– Connectivity (Mellanox, Skyworks, Avago)
– Power Management (TI, Infineon, ON)
• Automotive– Sensors (Renesas, Infineon, NXP, ST, Infineon)
– Microcontrollers (NXP, Infineon, TI, Dialog)
– Power Management (TI, Infineon, ON)
• Consumer (IoT)– Sensors (Sony, ADI, NXP, Infineon)
– Processors & Microcontrollers (Nvidia, Qualcomm, Intel)
– Smart Cards (NXP, Infineon, Samsung, ST)
– Wireless (Avago, TI)
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Product Fallout :Questions to Ask of Market Segment Focus
• Intel – Altera with a focus on Datacenter Silicon– Support for silicon not fabricated at Intel?
– Independent entity until?
– Management structure?
• NXP – Freescale with a focus on Automotive & IoT– Future of PowerPC and 68xxx at Freescale?
– Fab and product line consolidation likely?
– Management structure?
• Avago – Broadcom with focus on Networking– Avago aggressively drives cost/profit, culture differences, layoffs?
– Very large portfolio likely to be consolidated?
– Management Structure?
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Product Fallout : Winners & Losers
• Winners– Automotive Market Segment
– ARM processor architecture
– SSD memory architectures (new)
– Power Management
– Xilinx, for now
• Losers– PowerPC processor architecture
– 68xxx product architecture
– Older products run on internal fabs
– Non-SSD memory architectures
– Military Segment
– Leaded package options
– Anything in higher pin-count DIP, PQFP, or PLCC packaging
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Packaging Fallout
• Massive semiconductor market consolidation brings product-line consolidation and/or elimination
• Product lines can be discontinued because of revenue, silicon, packaging, and test platform reasons
• Packaging obsolescence:– DIP
• 40-pin first, followed by others
– PQFP
• Higher pin count (e.g. 240-pin) first, followed by others
– Flip-chip BGA substrates are unique for each design!
– Leaded options
Package Obsolescence is a Significant EOL Driver
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Military Strategies for Semiconductor M&A Fallout
• Count on more redesign/refresh money
• Budget for dramatic increase in LTBs over next couple years
• Invest in custom silicon for long-term systems:– Control more of what is available and when
• Adopt Automotive product architectures:– Military will never again be a market segment focus for new semiconductors
– Industrial Controls may be another segment for applicable architectures
• Watch the IoT segment space for the establishment of long-term available semiconductor products
• Incorporate trends in package obsolescence
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Military Strategies for Semiconductor M&A Fallout• Adopt the strategy of proactive continuing source management:
– Military should pay for the component-level BOM from the OEMs
• Letting the OEM, alone, decide mitigation strategy when there is also incentive for redesign dollars is a conflict of interest
– This is not just running the BOM through a parts search engine and reporting BOM health
– Check with ALL Authorized Sources
• Authorized sources while a part is active can be different than authorized sources when inactive
– Proactively divide BOMs into critical parts versus non-critical parts – push the OEMs to do this up front!
• Critical parts are anything software touches and are typically Processors, ASICs, FPGAs, Microcontrollers, and specialized memory
• Non-critical parts are less effort to design out or design around
• Partner with a long-term semiconductor supplier and the OCM BEFORE obsolescence occurs to ensure solutions for Critical Parts
Improvise, Adapt and Overcome
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Conclusions
• Market segment focus and the need to scale are the primary
drivers for the 2015 semiconductor M&A activity.
• Semiconductor OCM consolidation in 2015 is massive and
will change product availability starting in 2016.
• Package obsolescence is part of the fallout of product line
and industry consolidation.
• Partner with a long-term semiconductor supplier BEFORE
obsolescence.
• Improvise, Adapt and Overcome!