There’s been an interesting trend emerging the past couple of years; a gentrification, if you will, of the ASIC business. What was thought to be a dying supply chain model has re-emerged as a health and growing segment of the semiconductor industry. Recent figures from Gartner place 2012 ASIC revenue at around $24.4 billion on a growth rate of approximately 8%. Over the next five years, Gartner expects the ASIC segment to grow at compounded annual growth rate (CAGR) of 7.6%, outstripping the CAGR of ASSP’s at 4% and the semiconductor industry as whole at around 4.9%.
I’ve taken this “back to the future” retrospective because the health of today’s ASIC business is rooted in the history of the fabless semiconductor industry.
In the first article of this series, I sited how, in the early 1980’s, integrated device manufacturers — some of them the successful ASIC companies of their time — sold off their excess capacity to their poorer cousins, the start-up (read fabless) semiconductor companies who could not yet afford their own manufacturing capabilities. Then of course, Dr. Morris Chang brought TSMC to market in 1987, providing capacity and manufacturing technology for all comers and introduced the dedicate foundry model that really broke open semiconductor innovation.
Interestingly, Dr. Chang’s vision ushered in not only the semiconductor foundry but also the semiconductor fabless model, the semiconductor third party IP model, and today’s regenerated ASIC business.
One of these new ASIC companies, Global Unichip Corp., now known as GUC, started in 1998, 11 short years after TSMC first opened its doors and about the same time that the foundry industry gained recognition as a sustainable, viable model. The company was founded by a trio of some of the more influential luminaries of the Taiwan semiconductor. The group included Dr. Nicky Lu, IEEE Fellow and the Founder and Chairman of Etron, Dr. Y.L. Lin, a Professor at National Tsinghua University, and K.C. Shih, Founder and Board Member. Even back then, the founders recognized that the semiconductor industry was getting more and more complex and that system houses and fabless companies would not be able to manage the whole value chain.
Mr. Shih referred to his new company as a “design service company” because, at the time, design was the point of greatest complexity. In 2003, TSMC saw the complexity conundrum from the foundry perspective and gave credence to the emerging segment when they became a significant shareholder in GUC. Soon, other companies entered the space. Open Silicon, eSilicon and later Socle provided industry validation.
Growing semiconductor complexity, the demand for increased supply chain efficiency and the risk of costly product failures continued to erect significant barriers to innovation for the fabless, IDM and system house segments and created opportunity for the emerging Design Service companies who began to expand beyond their initial core competencies and into IP customization, test and packing and, in some cases, sophisticated logistics management.
Soon IDM’s began going “fab lite” as they transitioned beyond their process technology differentiation and it became obvious that foundry-partnered design service supply chains might be a better alternative. At the same time, systems houses began to insist on increased differentiation that could only be achieved through domain know-how, IP availability and, interestingly, a return to vertical integration. The confluence of these factors created the need for companies that provided capabilities well beyond design. Success, it became obvious, would come by providing a broad portfolio of “virtual” supply chain (or ASIC) services that could be accessed by individual companies at individual points of entry based upon their specific strengths and their specific needs. And so in 2011, GUC began providing this integrated service set under the banner of its Flexible ASIC Model[SUP](TM)[/SUP][SUB].[/SUB]
Today, GUC’s Flexible ASIC Model covers three integrated supply chain areas: SoC integration, implementation methodologies and integrated manufacturing. Taken together, they bring today’s systems houses, IDMs and fabless semiconductor companies access to a foundry design environment that reduces cycle time, IP and design methodologies that lower the barriers to innovation and integrated technology availability (design, foundry, assembly and test) that speeds time-to-market.
Interesting, the trends that emerge from development of the fabless semiconductor industry continue today and the maturation of Flexible ASIC model appears to be just the next stage in the history of continued semiconductor innovation.