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GlobalFoundries Exposed, Part II!

GlobalFoundries Exposed, Part II!
by Daniel Nenni on 09-12-2010 at 10:02 pm
Categories: EDA, Foundries, GlobalFoundries, Synopsys

EDA CEO panels are usually rather dull but this one definitely held my interest. It was standing room only and I was surrounded by familiar faces from not only EDA and IP company executives, but also representatives from the top semiconductor companies around the world! The theme of course was collaboration, promoting the GFI “IDM-Like” business model for the merchant foundry business, but there were some surprises.

Doug Grose, GFI CEO, is an engaging speaker and has quite an impressive resume, with 25 years at IBM before joining AMD as senior vice president of technology development, manufacturing and supply chain. While I have not met Doug Grose yet (hint), the people who I know that have, confirm my first impression, that his leadership and technical skills are well suited to the competitive challenges GFI faces.

“AMD has put a number of the long-held assumptions about how to gain efficiency to question, and we’ve found some very interesting ways to approach the problem,” said Dr. Grose. “AMD is looking for ways to cut waste and drive value to our customers-it’s an approach based on Lean fundamentals.”

After the introduction by Doug Grose, Mojy Chian, GFI senior vice president of design enablement, was the first speaker. I know Mojy from Conexant years ago and the spin-out Mindspeed Technologies. I also worked with Mojy and his team at Altera. If you want to know how to yield at TSMC 40nm, talk to Mojy and his Altera design enablement team! Mojy credited the Chartered Semi foundry and AMD integrated device manufacturing experience for GFI’s vision of a new type of collaboration between partners and customers.

Synopsys CEO Aart DeGeus was the speaker that blew me away. Aart’s presentation compliments my blog Mobile 2Drive Semi 4Ever! Aart definitely gets social media, the mobile internet revolution, and how it will shape the semiconductor industry for years to come. I would also guess that Aart, like me, has teenage kids and a vegan mother in-law that he avoids. Aart correctly stated that social media IS collaboration and that we are raising a new generation of collaborators, so we had better be prepared to enable them, unlike my computer science undergraduate experience where collaboration was called cheating!

Aart also introduced the word systemic (yes I had to look it up) and a mathematical equation correction: Semiconductor design enablement results are not a SUM but a PRODUCT. As in, if anywhere in the semiconductor design and manufacturing equation there is a zero, the results will be a bad wafer, die, chip, or electronic device, which supports GFI’s vision for a new type of collaboration between partners and customers.

The other panel members had interesting stuff to say as well but I’m out of space. Joe Sawicki was very funny. I really like Joe but in my mind I was playing a game of “Where’s Wally?” This was a CEO panel so where was Wally Rhines? The CEO of ARM was also not there, Rajeev Madhavan, CEO of Magma, was not invited. Lip-Bu Tan, Cadence CEO was there but I would have preferred Cadence CMO John Bruggeman. Lip-Bu looked bored and only briefly mentioned EDA360. By definition, EDA360 is all about collaboration and should have been the centerpiece of the Cadence presentation. Just my opinion of course, but I am an internationally recognized industry blogger.

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GlobalFoundries Exposed!

GlobalFoundries Exposed!
by Daniel Nenni on 09-06-2010 at 9:45 pm
Categories: Foundries, GlobalFoundries


The GlobalFoundries Technical Conference last week was one of the best I’ve seen. The theme of the conference was “GlobalFoundries is bringing the collaborative IDM semiconductor design and manufacturing culture to the merchant foundry business!”

“We ramped volume production at the 45/40nm node well ahead of all foundries and we are poised to maintain this leadership at 32/28nm, with plans to extend this to the 22/20nm node.”

Gregg Bartlett, Senior VP of technology and R&D, did one of the most complete technology reviews I have seen, in 28 minutes! I was even afforded time with Gregg for follow-up questions after his presentation (the benefits of being a world famous blogger!).

Thus far, GFI has executed an incredible marketing and PR campaign, taking full advantage of TSMC, UMC, and SMIC’s conservative culture. My first concern is can GFI implement technically, especially in regards to yield? My second concern is can GFI offer competitive pricing and capacity? As we all know in the wafer business, pricing and delivery trumps all.

The most significant announcement at the conference was a very aggressive 32nm/28nm and 22nm/20nm roadmap. So in addition to supporting multiple versions of 45nm SOI, 40nm CMOS, and 32nm SOI, GFI will beat TSMC to multiple versions of 28nm and 20nm?

The gate-first versus gate-last issue also came up. GFI claims that gate-first will offer a 15-20% die area advantage over gate-last. Gate-first will also allow existing design practices. During a discussion with Dr. S.Y. Chiang, the senior vice president at TSMC in charge of R&D, I was told that a gate-last approach with restricted design rules would yield much better. Dr. Chiang also predicted that 20nm will require the gate-last approach due to added complexities. I asked Gregg Bartlett twice what gate strategy GFI would use at 20nm and was unable to get a clear answer.

he other interesting announcement was the GFI 28nm AMS reference flow:

“GLOBALFOUNDRIES has joined with Cadence to deliver the major elements of the AMS production design flow in Q3, 2010, with all of the flow steps supported by the GLOBALFOUNDRIES PDK. The reference flow contains PCells that enable critical advanced features within Cadence Virtuoso custom design tools. The complete production-level AMS flow is expected to be released to customers in Q4 2010, with silicon validation scheduled for early 2011.”

Another interesting thing I learned at the conference was revenue. Being a private company has distinct advantages, such as no required financial disclosures, but the GFI CEO did mention revenue. The combined AMD and Chartered manufacturing operations did $2.5B in revenue last year. In 2010, Doug Grose estimated $4B, which would put GFI in contention for the #2 slot with UMC. Given the technology road map, IDM like collaboration, deep pockets, and aggressive marketing and PR, I would put GFI in contention for #1 with TSMC.

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Cloud Computing = Darknet! BEWARE!

Cloud Computing = Darknet! BEWARE!
by Daniel Nenni on 07-25-2010 at 5:47 pm
Categories: General

Cloud computing will be the tragic end to the digital world as we once knew it. As we become more and more dependent on mobile internet devices we become less and less independent in life itself. Consider how much of your critical personal and professional information (digital capital) is stored via the internet and none of it is safe. With a quick series of keystrokes from anywhere in the world your digital capital can be altered or wiped clean leaving nothing but skin and bones.

If you haven’t read the “Daemon” and “Freedom” books by Daniel Suarez you should, if you dare to take a peek into what cloud computing has in store for us all. Daniel Suarez is an avid gamer and technology consultant to Fortune 1000 companies. He has designed and developed enterprise software for the defense, finance, and entertainment industries. The book name “Daemon” is quite clever. In technology, a daemon is a computer program that runs in the background and is not under the control of the user. In literature a daemon is a god, or a demon, or in this case both.

The book is centered on the death of Mathew Sobol, PhD, cofounder of CyberStorm Entertainment, a pioneer in online gaming. Upon his death, Sobol’s online games create an artificial inteligence based new world order “Darknet”, which is architected to take over the internet and everything connected to it for the greater good. The interface to Darket is a pair of virtual glasses that acts much like a smartphone does today. While the technology described in the books seem like fiction, most of it already exists and the rest certainly will. The technology speak is easy to follow for anyone who has a minimal understanding of computers and the internet, very little imagination is required.

The book’s premise is “knowledge is power” or more specifically “He who controls digital capital wins”. So you have to ask yourself, how long before just a handful of companies rule the earth (Apple, Google, Microsoft)? Look at the amount of data Google has access to:

  • Internet and corporate intranet data (Google search engine)
  • Personal and professional internet browsing (Chrome)
  • Mobile communications (Android OS)
  • Google Email-Voice-Talk
  • Google Earth-Maps-Travel
  • YouTube

And dozens of other Google products that can be used to collect and manipulate public and private data in order to spy on us and ultimately control the world.

Cloud Computing is rampant with security flaws and backdoors which could easily enable the destruction of a person, place, or thing. A company or brand name years in the making can be destroyed within a day. In the book, a frustrated Darknet member erases the liquid assets of a non Darknet member who cuts in line at Starbucks. Depending on my mood that day, I could easily do this.

It’s not like we have a choice in all this since Cloud Computing is now a modern convenience. We no longer have to store our most private information in files, boxes, or even on our own computer hard drives. It’s a digital world and we are digital girls. The question is, who can be trusted to secure Darknet (Cloud Computing)?

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Taiwan Semiconductor Manufacturing Corporation (NYSE: TSM)

Taiwan Semiconductor Manufacturing Corporation (NYSE: TSM)
by Daniel Nenni on 07-11-2010 at 10:09 pm
Categories: Foundries, TSMC

After working with TSMC the past 10+ years the single most compelling question I have is why the stock (NYSE: TSM) is not at record highs. TSMC invented and continues to dominate the foundry business which is clearly the future of modern semiconductor design and manufacture. So why is this not a $20+ stock?!?!?

TSMC reports 36%+ net margins.
TSMC delivers a 24%+ return on equity.
TSMC just announced a 3.8% dividend.
TSMC carries $6B+ total cash.
TSMC has more capacity than its top rivals combined and a third Gigafab under construction.
TSMC has almost a 7X Market Cap margin between its closest rival UMC.
So why is TSM flatlining after yet another record setting month of sales?!?!?

One of my favorite stock crowdsourcing groups agrees that TSM is undervalued. Based on the aggregate intelligence of 165k+ investors participating in Motley Fool CAPS, TSMC has a 5 out of 5 star rating. A Motley Fool CAPS rating indicates a stock’s potential to outperform the S&P 500 as determined by the community. On CAPS, 99% of the 437 All-Star members who have rated Taiwan Semiconductor Manufacturing Corporation believe the stock will outperform the S&P 500 moving forward.

Just how strong is TSMC in the global semiconductor foundry business? Well, with 45%+ market share, TSMC is about three times as big as its closest competitor, #2 foundry UMC, and more than six times as big as the #4 China based foundry SMIC. Even with the overly documented 40nm yield ramping problems, TSMC is still in charge of that node with an estimated 80% market share. Today, the race for 28nm is on with production silicon due out in Q1 2011. TSMC? GlobalFoundries? Samsung? It’s a 3 horse race, expect a photo finish, the winner is the King of the Node!

TSMC is expected to finish 2010 at $12.5B.
TSMC serves the largest and most diverse customer base.
TSMC will spend a record $4.8B on capital expansion this year.
TSMC will be trying to recruit 5,000 new employees this year.
TSMC is investing heavily in LED and Solar thin film PV technologies.
TSMC is the favorite to win the 28nm node foundry race next year.
TSMC has a 5 star Motley Fool CAPS rating.

Out of control consumer spending will continue to drive foundry revenues to record highs. Semiconductor industry mystics see foundry revenue growing 30-40% in 2010 and 8-10% annually over the next 4 years. Meanwhile, in 2010 shares of TSM and UMC are down 12% and 21%, respectively. So tell me again why TSM is yet another under performing tech stock?!?!

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The New Semiconductor Economy

The New Semiconductor Economy
by Daniel Nenni on 07-04-2010 at 1:29 pm
Categories: Semiconductor Services

Bill Wiseman of McKinsey & Company presented “Waking up to the new normal, the world economy after the great recession” at a recent ITAC GSA Conference. Bill supports my previous semiconductor financial predictions in great and graphical detail.

In the United States: unemployment claims are up, home sales are down without government incentives, and manufacturing growth is stalling. New claims for unemployment benefits recently jumped to 1.3 million people without federal jobless benefits, and that number could grow to 3.3 million by the end of the July due to political infighting. In Europe there is a debt crisis, in China there is an economic bubble, and the “double dip recession” search string is climbing the charts on Google.

The question is: How can we reconcile a slow & shaky macroeconomic recovery with a semiconductor industry that looks like this?

  • Almost every semiconductor company has blown away earnings forecasts and topped revenue estimates in recent quarters.
  • Foundries are running at near (or over) 100% utilization, and capex budgets are going through the roof (TSMC @ $5B+?).
  • Parts shortages are keeping capital equipment suppliers from working through their backlogs as fast as they want to.
  • Labor shortages in Southern China are forcing longer hours and higher pay for assembly workers at ODMs.
  • US retailers are seeing double digit same store sales growth in PCs, single digit in TVs and mobile phones.
  • Christmas was off the charts, inventory days in the value chain are at historic norms.
  • Wafer starts placed at TSMC and UMC will grow as much as 20% from Q2 to Q3.

Overall, the chip industry is “still in the overheating [phase]”, TSMC CEO Morris Chang said. “I don’t think it is excessive, but I do expect the growth rate next year may not be as high as everybody hopes.”

What Does Double Dip Recession Mean? When gross domestic product (GDP) growth slides back to negative after a quarter or two of positive growth. A double-dip recession refers to a recession followed by a short-lived recovery, followed by another recession.

The fate of the US economy hinges on whether new jobs appear in the coming months. For perspective, the U.S. requires 125,000 jobs per monthjust to keep up with population growth. “We’re not headed there (recovery) fast enough for a lot of Americans,” President Obama said. “We’re not headed there fast enough for me, either.”Very good observation Mr President!
In a recent essay: How to Make an American Job Before It’s Too Late, Andy Grove champions the job creation engine that once powered America:

The first task is to rebuild our industrial commons. We should develop a system of financial incentives: Levy an extra tax on the product of offshored labor. (If the result is a trade war, treat it like other wars — fight to win.) Keep that money separate. Deposit it in the coffers of what we might call the Scaling Bank of theU.S.and make these sums available to companies that will scale their American operations. Such a system would be a daily reminder that while pursuing our company goals, all of us in business have a responsibility to maintain the industrial base on which we depend and the society whose adaptability — and stability — we may have taken for granted.

I’m with Andy on this one, which is why I champion emerging technology companies. But in order for start-ups to create jobs in America, they must be able to scale in a competitive manner, and that is where the U.S. government is failing us.

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Atrenta Semiconductor Design in 3D!

Atrenta Semiconductor Design in 3D!
by Daniel Nenni on 06-27-2010 at 7:04 pm
Categories: EDA

My vote for most compelling technology at #47DAC is 3D technology. No, I don’t mean Hollywood-style 3D, I’m talking about vertical stacked-die system on chip design. This design approach basically means putting different parts of the system on different silicon substrates, so you can use the right technology for each part, and then stack them vertically.

3D technology promises to reduce cost and improve performance. By putting different parts of the system on a slice of silicon from an optimized process, you don’t have to do things like shoe-horn mixed signal parts into advanced process nodes, which is very expensive and doesn’t really work that well for mixed signal anyway. Because the interconnect between the silicon slices is very short (due to the stacking), wiring delays are minimized and performance should be very good.

There was a lot of talk about 3D at #47DAC last week. Many EDA vendors are jumping on the bandwagon and announcing plans to support it. A session that stands out as one of the more realistic and informative events on the topic was put on by Atrenta, IMEC, AutoESL, and Qualcomm. Front-end design issues were discussed and a front-end flow was demonstrated.

Besides seeing real, working software and not just PowerPoint, this session got my attention because it pointed out how different 3D design will be. One of the main challenges with this technology is choices, too many choices. The demo drove this point home by running different options for a 3D design through a high-level synthesis and virtual prototyping flow. AutoESL provided the high-level synthesis and Atrenta provided the virtual prototyping. If a designer would like to consider 3 different micro-architectures (like loop-unrolling, pipelining or standard) and three different technology choices (like 90, 65 or 40nm), then there are nine possible ways to implement this part of the 3D design. But which one should you choose?

The demo showed how to implement the three different micro-architectures and three different technology nodes by using various synthesis directives for the AutoESL tool. You start with C code and end up with RTL during this part. The Atrenta prototyping tool then read in the nine options and created a physical virtual prototype for all of them, complete with routing congestion and timing data. If you look at the options this way, it starts to become clear which one to choose.

I can’t imagine having the time to go through a complete back-end flow to figure this out, so the front-end planning part seems pretty important for 3D design. Another challenge with 3D appears to be thermal and stress modeling. Stacking dies like this creates all kinds of stress and heat problems. IMEC showed an interface between Atrenta’s prototyping tool and compact thermal and stress models they developed. Very impressive!

By the time this session was over, my brain was hurting from all the degrees of freedom implied by 3D. It will be interesting to watch as 3D becomes real over the next couple of years. We’ll see who wins, but for now, IMEC, Qualcomm, Atrenta, and AutoESL seem to have a jump on some of the hard problems. Please let me know your thoughts in the comment section, I can assure you, 3D EDA vendors will be reading them.

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Open Standards: Apple is the Antichrist!

Open Standards: Apple is the Antichrist!
by Daniel Nenni on 06-22-2010 at 2:46 pm
Categories: General

Where would we be without open standards? Not a good question for Steve Jobs since Apple is the open standards antichrist and one of the most successful tech companies in the history of Silicon Valley. But one of the reasons why I, along with millions of other enlightened electronic gadget consumers, avoid Apple products with a passion is open standards.

Enlightened people are tired of paying premium prices for closed systems in trendy packaging. Enlightened people will toss their iPods, iPhones, and iPads as soon as Google gets Google Listen right so we can be entertained on Android devices, and as soon as Android apps ramp up. You don’t have to download to Android devices, you can stream directly from the source. Google understands the cloud, it’s not clear Apple does. Google TV could be the knock-out punch in Google vs Apple, open versus closed systems, either way it will be one of the most innovative battles gadget consumers have seen in a long time.

Open standards are also the building blocks of modern semiconductor design. Standard hardware and software interfaces enable cost effective products that integrate easily with embedded processors and other vendor independent SoC enabling technologies. With Open standards, semiconductor and systems design complexity is dramatically reduced for all companies in the design chain. Less time/effort is wasted pursuing incompatible or unproven paths saving consumers both money and frustration.

The best book on standards I have read just came out, “The Ten Commandments for Effective Standards” authored by EDA’s own Karen Bartleson and cartooned by Rick Jamison. I got an autographed copy and a hug from Karen at #47DAC (I blog for hugs). I read it cover to cover during my trip and must say it is an excellent read for technology executives and gadget consumers alike. As Karen says in her intro:

Technical standards play an important role in business as well as everyday life. They provide opportunities for market growth and competition. They enable interoperability. They make customers happier. They bring order out of chaos!

The Ten Commandments for Effective Standards

[LIST=1]

  • Cooperate on Standards, Compete on Products
  • Use Caution When Mixing Patents and Standards
  • Know When to Stop
  • Be Truly Open
  • Realize There Is No Neutral Party
  • Leverage Existing Organizations and Proven Processes
  • Think Relevance
  • Recognize There Is More Than One Way to Create Standard
  • Start with Contributions, Not from Scratch
  • Know that Standards Have Technical and Business Aspects
    Of course Open standards is a double edged sword. Companies have to innovate on a level technical playing field and not compete on format alone. Companies cannot charge consumers a premium or lock them into outdated product lines so they must innovate fast and efficiently. Open standards is bad news for Apple, Microsoft, Intel, and Cadence executives, but great news for gadget consumers and our overall quality of life. Lets not forget, without open standards we would not have the personal computer, the internet, the world wide web, and most importantly we would not have Android 2.2 FROYO which will change how we do mobile internet from this day forward.

    lang: en_US

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Personal Message to Carl Icahn RE: MENT

Personal Message to Carl Icahn RE: MENT
by Daniel Nenni on 06-16-2010 at 6:06 pm
Categories: EDA

According to an amended 13S filing, you now own 7.9% of Mentor Graphics, up from 6.86% disclosed on May 27th. Just what are you thinking!?!?!? Clearly you are a smart guy and you pretty much invented the game of corporate raidership, but EDA? Mentor Graphics? EDA does not need you, Mentor Graphics does not need you, I do not need you Mr Ichan.

In 2008 your net worth was US$14 billion, putting you in an eight way tie for the 46th richest man in the world. In 2010 Forbes recalculated your net worth as $10.5 billion, making you the 59th richest person in the world. You can only go down from here Carl. Me, on the other hand, can only go up. This is my 27[SUP]th[/SUP] Design Automation Conference, EDA is my life, and I will fight you for it with my very last blog.

Being a pilot myself and a big aviation fan, I remember you buying control of TWA in 1985 and carving it up like a Thanksgiving Day turkey. You sold TWA’s most profitable assets to competitors, putting what was left into bankruptcy. TWA eventually got rid of you in 1993 but never recovered and was later acquired by American Airlines. A sad ending for an aviation pioneer that was “Run by Flyers” including my all time favorite pilots Charles Lindbergh and Jack Frye.

Fortunately, that approach is not going to work in EDA. There are no competitors strong enough to buy Mentor’s most profitable turkey parts. Synopsys is the only EDA company with a bankroll large enough. Fortunately, Synopsys holds either the #1 or #2 market position in every semiconductor design segment so what is their motivation to buy a Mentor drumstick or wing? Synopsys also has an ego larger than the EDA turkey itself and has been competing head-to-head with Mentor since birth. Buying the Calibre franchise would be admitting DRC defeat and that is just not part of the Synopsys ultra competitive culture.

What about Cadence? There is even worse history there. Remember when Cadence tried to buy Mentor and Mentor returned the favor by trying to buy Cadence? That was Cadence CEO Mike Fister’s Waterloo. Even if the new Cadence billionaire VC CEO Lip-Bu Tan could raise the money for Mentor parts the company integration would not work. Mentor just does not like Cadence. Speaking of that, I had beers with Cadence CMO John Bruggeman Monday night. Great guy, great sense of humor, great use of hair products, he totally gets me. So do me a favor, next time you see him shake his hand, spin around then shake it again. That is the secret EDA360 handshake, he will greatly appreciate your support!

What about Magma? Looking at their balance sheet, I could probably buy Magma if things don’t turn around soon.
One corporate raidering possibility I see is a foundry buying Mentor parts. TSMC, GlobalFoundries, and Samsung, all have the money and competitive spirit to do so but the top fabless semiconductor companies might not care for that at all. Bringing semiconductor design full circle with tools coming directly from the semiconductor manufactures? Is that really what we want to do here?

Another possibility is a fabless company buying the Mentor giblets. Kind of like the rumor that Apple will buy ARM. Definitely a game changer, definitely would be fun to watch, but definitely would not be in the best interest of us electronic gadget consumers.

So Carl, EDA needs Mentor, EDA needs three big dogs at the food bowl. Lets have lunch, talk turkey, I have some other corporate raidering ideas that are much more interesting than EDA.

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Warning Signs for Semiconductors!

Warning Signs for Semiconductors!
by Daniel Nenni on 06-13-2010 at 9:39 pm
Categories: Semiconductor Intelligence, Semiconductor Services

Federal Reserve Chairman Ben Bernanke recently testified before Congress that the U.S. economy is recovering, and he predicts the nation will not experience a double-dip recession, or as I predicted a big “V” then a small “v” in my blog: China Semiconductor Bubble.

Bill Jewel from Semiconductor Intelligence agrees with Bernanke:
Semiconductor Intelligence forecasts the semiconductor market will grow a strong 31% in 2010, moderating to 10% in 2011. IC capacity utilization will peak at 96% in 2010 and drop to a still healthy 90% in 2011.

Citing the 16 year history of SICAS data, Bill notes that semiconductor manufacturing utilization has exceeded 95% only three times – in 1995, 2000 and 2004 – which resulted in shortages and price increases. Like 2010, each of the three years also saw strong growth in semiconductor capital expenditures. Unfortunately the booms of 1995, 2000 and 2004 were short lived with the semiconductor market and semiconductor capital expenditures either declining or showing significantly slower growth rates in the years immediately following – 1996, 2001 and 2005.

TSMC and UMC financials also support Bernenke. TSMC revenue hit an all time high of $1.07 billion in May 2010, resetting the record of $1.048 billion in the prior month. May revenue 2010 grew 37.9% from a year earlier. TSMC has estimated its consolidated revenues will reach $3.12 billion in the second quarter with the results of April and May amounting to more than 2/3rds of that number. UMC also posted May ($313M) over April ($289M) gains with revenue for the January-May rising 82.8% from a year earlier. Both companies acknowledged mobile internet devices as a driving force behind record revenues and profits for 2010.

Speaking of which, an updated version of Mary Meeker’s Internet Report can be found here, I first blogged about it in: Semiconductor Industry 2008 – 2018.

The most recent GSA 2010 Semiconductor Analyst Growth Forecasts shows quite a bit of instability. Semiconductor Industry Association (SIA) reports that worldwide semiconductor revenue will grow by 28.4% to $290.5 billion in 2010, 6.3% growth in 2011, followed by 2.9% growth in 2012. Gartner forecasts worldwide semiconductor revenue will grow by 27.1% in 2010 but also noted that:

”Chip revenue growth is clearly outpacing system revenue growth, and that is a concern. Gartner’s new semiconductor forecast has below-average growth in the second half of 2010, as we are anticipating a minor correction to realign semiconductor sales with electronic system sales.”

Wait, are semiconductor companies producing more chips than the systems companies can ship? Is this an inventory correction or an oversupply problem due to fears of capacity shortages? Semiconductor manufacturing capacity averaged 60% before the economic crisis started in 2009 and is up to 96% one year later? 27-30% semiconductor growth when economic forecasts project global economic growth rates of 4.6 percent in 2010 and 4.5 percent for 2011? Speaking of instability:

“Achieving long-term fiscal sustainability will be difficult. But unless we as a nation make a strong commitment to fiscal responsibility, in the longer run, we will have neither financial stability nor healthy economic growth.” Chairman Ben S. Bernanke, Economic and financial conditions and the federal budget Before the Committee on the Budget, U.S. House of Representatives, Washington, D.C. June 9, 2010

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Synopsys Acquires Virage Logic!

Synopsys Acquires Virage Logic!
by Daniel Nenni on 06-10-2010 at 6:16 pm
Categories: IP, Synopsys

Overshadowing the acquisition of Denali by Cadence, Synopsys, the #2 semiconductor IP provider acquires Virage Logic, the #3 IP provider. Virage brings the #1 embedded SRAM, #1 BIST, #1 Logic Libraries, #1 DDR, #1 NVM, the ARC CPU cores and audio/video interface technology, and all the AMS IP from the NXP acquisition.

Under the terms of the agreement, Synopsys will pay $12.00 cash per Virage Logic share, resulting in a transaction value of approximately $315 million, or approximately $289 million net of cash acquired. The transaction is subject to regulatory and Virage Logic shareholder approval, as well as other customary closing conditions.

The Virage acquisition looks like a steal compared to Cadence acquiring Denali for $315M. Many people, including myself, had thought there was a bidding war between Cadence, Synopsys, and Mentor for Denali, but I have confirmed that there was not, in fact, a bidding war, just a very clever CEO getting an ultra super premium for his company. 2nd only to the billion dollar blunder of ARM acquiring Artisan Components!

“With more functionality being integrated into a single device, high-quality IP continues to be key for enabling designers to reduce integration risk and speed time-to-market,” said Dr. Aart de Geus, chairman and CEO at Synopsys. ”Bringing Synopsys and Virage Logic together broadens our portfolio and builds on two very strong technical teams. It is also in line with what so many customers are looking to Synopsys to address: a way to quickly incorporate standard functions into their SoCs so they can focus on developing differentiated products.”

It will be interesting to see how the acquisition plays out. There is definitely some overlap between offerings, in fact, Synopsys was Virage’s most feared competitor in the interface IP market. Virage co-founder and CEO Alex Shubat is probably the most valuable asset in the acquisition. He is a semiconductor IP pioneer and one of the best executives I have ever worked with. His technical and customer skills are unmatched which makes him a leader that is easy to follow.

“When I co-founded Virage Logic in 1996, it was with the belief that a semiconductor IP company could provide the technically superior building blocks that the industry needed to accelerate development of high quality, cost-effective end products,” said Dr. Alex Shubat, president and CEO of Virage Logic. ”Today, the transition to a fabless, or ‘fab-lite’ model, coupled with the explosion in SoC product development costs at the advanced process nodes, has resulted in an escalating need by the semiconductor manufacturers for production-proven IP. By joining forces with Synopsys’ impressive engineering team and by gaining access to their global channel, we will be able to accelerate the development and delivery of our broad product offering to help customers meet their design-for-profitability goals. I am excited to join Synopsys to further my original vision.”

This acquisition moves Synopsys even closer to being a semiconductor design enablement monopoly than I ever thought possible. Every semiconductor company around the world is a Synopsys customer. Cadence, Mentor, and ARM executives will lose even more sleep now than ever before, and right before the Design Automation Conference, it just adds to the excitement of one of the most exciting DAC’s we have seen in years! I hope to see you there!