Xilinx announced their quarterly results last week. Because of their financial year not being aligned with their calendar year this is actually 4th quarter of their 2014 financial year. New Year’s Eve 2015 comes early for Xilinx. The results were very good. As Moshe Gavrielov, the CEO, said on the conference call:Xilinx delivered both record revenue and record gross margin in fiscal year 2014. 10% growth in annual sales was driven by our 28-nanometer sales. These exceeded $380 million for the year completely surpassing, both our initial forecast of $250 million and our recently revised target of $350 million. Similarly, our sequential growth in the March quarter was driven by exceptionally strong sales for our 28-nanometer product generation. This increased by more than 40% sequentially exceeding $140 million
So Xilinx is clearly making the transition onto their 28nm products really ramping, exceeding everyone’s forecasts. The current run-rate is nearly $600M a year and it is still ramping so the actual revenue for next year should well exceed that number. They are targeting over $700M which might turn out to be conservative. Xilinx now has 70% market share in the programmable logic device segment.
They are anticipating repeating the successful 28nm ramp again at 20nm. They shipped functional samples of Kintex UltraScale, the industry’s first 20-nanometer product, in November. They reckon this is at least six months ahead of the competition. Altera is using TSMC at 20nm (just like Xilinx) and then switches to Intel for 14/16nm, so for 20nm the process wars don’t come into it. The basic product trajectory is that the first year there is trivial revenue (design-in), some in the second and it really takes off in the 3rd year. This is the 3rd year for 28nm. Xilinx expects 20nm to have a similar ramp, or perhaps slightly faster. They expect 16nm and 20nm together to roughly equal 28nm since the processes are coming so much closer together than originally forecast.
Recently Xilinx also received and demonstrated functioning devies in-house for the first Virtex UltraScale product. This is the industry’s only high end family offering based on 20nm. There are many more 20nm tapeouts coming in the second half of the year now that they have Kintex and Virtex 20nm products well on the way to sampling to customers although there seems to be a bit of a lull in Q2. Taping out a chip, making masks and building silicon is now so expensive that it shows up clearly in the operating expense line for the overall company.
One of the big drivers of Xilinx’s 28nm product is the LTE buildout in China. Everything concerned with China Mobile is on a huge scale. Its subscriber base is about twice the US population. By the end of 2014 they will have deployed 500,000 base stations. And China Telecom will also deploy 1-200,000 base stations. Base stations are a sweet spot for programmable devices, the power constraints are less extreme than handsets but the reprogrammability as standards evolve is really important. Xilinx is in the universal radio cards, baseband and backhaul.
Another interesting tidbit is that Xilinx’s 28nm inventory is up. They were asked about this. Some is just inherent in the increased business (if revenue goes up then inventory tends to rise too) and some is precautionary. Xilinx sees 28nm capacity tightening and they want to make sure they get the wafers so that they can take advantage of opportunities when they arise. China’s base stations buildout in particular seems to be fairly volatile and hard to predict, and it is a large business that they cannot just assume they will have enough product for if they don’t plan explicitly.
Altera announced on the same day as the Xilinx call that they had demonstrated their FPGA technology on the Intel 14nm Tri-gate process, which means they have successfully built a test-chip. Xilinx were asked about the timing of 16FF products but Moshe ducked the question:we are continuing to make progress on 16 and there is no need for us to say more because at this point in time, we will deliver that technology as we’ve predicted we expect to tape out this year.
SeekingAlpha transcript of the conference call is here.
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