CEO Interview: Michel Villemain of Presto Engineering, Inc.

One of the many advantages of being part of SemiWiki is the interesting people we get to meet. As I have mentioned before, the semiconductor industry is home to many brilliant and successful people and Dr. Michel Villemain is certainly one of them. Michel is the founder and CEO of Presto Engineering and it is interesting to note that he has a Doctorate in Computer Science, Artificial Intelligence, one of the trending terms on SemiWiki today.

You have been in the semiconductor business for more than 25 years, what are the recent changes in the industry that seem the most game-changing?
We are seeing the emergence of a fourth wave of semiconductor growth: first was defense and large frame computers; then PCs; then smartphones; and now Internet of Things (IoT). The first three waves saw primarily a race to performance, epitomized by Moore’s law. Now, connected objects are not essentially driven by performance, but by application fits. Whereas a wearable may need advanced fab processes in order to fit into a small formfactor and run as along as possible on a light battery, industrial or infrastructure applications do not. Interestingly, a lot of legacy 8-inch fabs are currently on allocation.

What we will see is a split in our industry between, on the one hand smartphones/consumer, driven by performance and volume and going vertical (in an interesting pendulum: we’ll see the resurgence of Integrated Device Manufacturers/IDM) and, on the other hand, a multitude of IoT projects with limited volumes and harder access to production resources, but with significantly higher ASPs. For instance, we served 200 customers last year: 30 of those are or will be in production this year, with average volume around 1Mu/year and Average Selling Prices (ASPs) north of $1.

IoT has become the latest catch-all buzzword; what does it mean for you?
Last year we conducted a comprehensive analysis of the IoT market and we established a segmentation that aligns with our services. Like most in the industry, we’re seeing growth in sheer unit volume–although mainly driven by RF tags, payment deployment and consumer devices. We have decided to focus on segments whereby our capabilities bring more value: industry 4.0, automotive, conditional access, and smart cities and buildings. Those segments see more system OEM players integrating chips into existing applications, as opposed to merchant semiconductor companies. While historically, we have catered to IDM and fabless (which we still do, of course), now more than half of our sales funnel is non-semi. Unquestionably, we are seeing semiconductor demand being increasingly driven by system companies.

From your vantage point, what are the most significant challenges facing those new entrants?
System companies are used to designing their product internally and then outsourcing production (the electronics industry created the Electronics Manufacturing Services/EMS market). Most have typically seen ICs in their products as an off-the-shelf device from an IDM or fabless semiconductor provider, and have thus, considered this IC as a mere BOM line item and hence cost element of their product.

However, they are now starting to shift their perspective and see that using custom devices within their product is a way to reduce costs, and protect the IP that they have in their application and application data. Most are not targeting advanced System on a Chip (SOC) devices where design cost (esp. verification and mask set) expenses are in the $10Ms; rather they are working in the field of ASIC devices where design, mask set and verification cost can be very an affordable investment that adds value to their product and enables the capture of significant value from their IoT application.

By moving from standard ICs to custom ones (and for some by internalizing chip design) they start to be exposed to the complexity of industrializing an IC then running production, from starting wafers to managing yield and complex backend processes. To do these activities at Presto, we have more than a dozen different skillsets in-house, including: device, product, test, reliability and failure analysis along with IT, quality, supplier management, planning, logistics, contracts… All supported by a comprehensive, semiconductor-custom ERP and, of course, complete lab with a substantial accumulated investment in test and analysis equipment.

Additionally, IoT applications require RF (for connectivity to the Internet), embedded non-volatile memory, analog—all somewhat simpler to design and harder to yield predictably. We execute about 50 industrialization projects every year, so we see our fair share of custom IC development, and when things are not done properly, a 6-month project can easily turn into a multi-year debugging exercise.

How can Presto help?
Most of those issues are preventable if addressed early in the development cycle. The challenge for new entrants is therefore early access to the supply chain, since in order to design properly, you need to target the right process, IP, route; you need to choose the right package and (most critically for RF and analog) target the right test solution (close to 50% of the overall cost for some IoT ICs). With our history, platforms and relationships, we provide our customers with a qualified window into all those areas, regardless of volume or expectations. This can make the difference between a 6-month project and much longer challenge.

We are confident in our ability to perform since, quite uniquely in our market space, we developed our business by integrating existing operations from larger semiconductor companies (e.g., Cypress, NXP, Inside Secure). Interestingly, having been on both sides, we know that large organizations often spend massively more than smaller ones on post-design activities (sometimes, astonishingly, more than 10 times more). It is then part of our added value to leverage this accumulated expertise in order to bring efficiency (and predictability) in what we do. Our customers value this ability that we have to de-risk an ASIC project.

What would you like to share with SemiWiki’s audience?
I think more and more of our customer-base will come from non-semiconductor companies that want to get onto the IoT bandwagon; and my main message to them is: “semiconductor is cheaper and easier to access than you think.”

These days it is straightforward to create a smart IoT device with an ASIC that uses mature, relatively inexpensive semiconductor technologies to turn what was a $50 product into a $5 device. This fuels a much wider adoption of the IoT application and makes for a much simpler and more profitable ROI. Working with an organization like ours, just like you have used EMS for a long time, you can focus on integrating an ASIC into your products while leaving its post-design complexity to us. This will foster the fourth growth wave that we are all looking forward to enabling!

Also Read: Is an ASIC Right for Your Next IoT Product?

About Presto Engineering, Inc.
Presto Engineering, Inc. provides outsourced operations for semiconductor and IoT device companies, helping its customers minimize overhead, reduce risk and accelerate time-to-market. The company is a recognized expert in the development of industrial solutions for RF, analog, mixed-signal and secured applications – from tape-out to delivery of finished goods. Presto’s proprietary, highly-secure manufacturing and provisioning solution, coupled with extensive back-end expertise, gives its customers a competitive advantage. The company offers a global, flexible, dedicated framework, with headquarters in the Silicon Valley, and operations across Europe and Asia. For more information, visit: www.presto-eng.com.

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