PARADIGM SHIFT: THE WINNERS ARE. Dr. Jeremy Wang Asia Pacific Executive Director, GSA July 30, 2008

Transcription

1 PARADIGM SHIFT: THE WINNERS ARE Dr. Jeremy Wang Asia Pacific Executive Director, GSA July 30, 2008

2 GSA Mission Accelerate the growth and increase the return on invested capital of the global semiconductor industry by fostering a more effective fabless ecosystem through collaboration, integration and innovation.

3 GSA Board of Directors Dwight Decker Conexant Sanjay Jha Qualcomm Jodi Shelton Danny Biran Altera Rick Cassidy TSMC North America Guillame d Eyssautier picochip Aart de Geus Synopsys, Inc. Jack Harding esilicon Corp Colin Harris PMC-Sierra, Inc. Kenneth Joyce Amkor Fu Tai Liou UMC Steven Longoria IBM Dr. Nicky Lu Etron Technology, Inc. Chris Malachowsky NVIDIA Vahid Manian Broadcom Corporation Michael Rekuc Chartered Walden Rhines Mentor Graphics Naveed Sherwani Open-Silicon Vincent Tong Xilinx Dr. Albert Wu Marvell Dr. Tien Wu ASE, Inc.

4 Asia-Pacific Leadership Council Chairman Dr. Nicky Lu Etron Dr. Chintay Shih Special Advisor Xiaolang Yan College of Information Science and Engineering Zhejiang University Special Advisor Ming Kai Tsai MediaTek H.P. Lin Faraday Qin-Sheng Wang IC China Semiconductor Industry Association K.C. Shih Global Unichip Gordon Gau Holtek Chou-Chye Huang Sunplus Wen-Chi Chen VIA Dr. Woodward Yang Silicon7 Dr. Zhonghan (John) Deng Vimicro Dr. Shaojun Wei Phoenix Microelectronics Jordan Wu Himax Technologies Dr. Ki Soo Hwang Core Logic, Inc. Lun Zhao Datang Microelectronics Dr. Ping Wu Spreadtrum Communications Inc.

5 EMEA Leadership Council David Milne Wolfson Microelectronics Jalal Bagherli Dialog Semiconductor David Baillie CamSemi Kobi Ben-Zvi Wintegra Stan Boland Icera Warren East ARM, Inc. Guillame d Eyssautier picochip Danny Hachoen DSP Group Gennady Krasnikov Mikron JSC Chris Ladas CSR Eric Mayer Infineon John Schmitz NXP Semiconductor Key Topics Analog/Mixed Signal Wireless Automotive

6 VC Advisory Council Wayne Cantwell Crescendo Ventures Steve Domenik Sevin Rosen Funds Phillip T. Gianos InterWest Partners Kenneth P. Lawler Battery Ventures L.P. Josh Ofstein The Carlyle Group Vimal Patel Sierra Ventures Chris Rust US Venture Partners Jake Seid LightSpeed Venture Partners Rob Soni Matrix Partners Mark Stevens Sequoia Capital Lip-Bu Tan Walden International Ron Yara Tallwood Venture Capital

7 Semiconductor Forecasted Growth Forecasted Company Growth Cowan LRA Model 6.8% Databeans 8.7% Future Horizons 10.0% Gartner Dataquest 3.4% IC Insights 10.0% In-Stat 2.4% Inside Chips -8.0% International Business Strategies 4.0% isuppli 7.5% Semico 12.0% Source: Company reports

8 Attributes of a Successful Fabless Company: Fabless Revenue Growth Semi Industry Sales $300 ($B) $250 $200 $150 $100 Semi Industry Fabless Industry % Fabless/WW Semi With More Foundries Available, Fabless Achieved Higher ROI More IDMs Converted to Fabless - Higher Focus on Products $ % % Fabless/WW Semi 25% $ % 20% 15% 10% $50 $17 $52 5% $0 0% Source: GSA *Preliminary Results

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10 2007 Semiconductor Growth by End Market Cell phones/ Mobile 20% Wired Communications 6% Industrial/ Military 8% 2007 Cell Phone Shipments 12% Growth (Units) PC/Computer 40% Consumer 20% Automotive 6% 2007 Semiconductor Industry Growth $267.5B 2007 PC Shipments 11-12% Growth (Units) 2007 MP3/PMP 23% Growth (Units) 2007 Digital TV 50% Growth (Units) Source: GSA

11 Increasing Challenges Pricing Erosion Volume (Billions of units) IC Industry Volume and Pricing Volume (Billions of Units) Pricing ($) Pricing ($) Volume is INCREASING; Pricing is DECREASING

12 Fabless Industry Sales ( ) $0.4 $0.2 $0.4 $0.7 $ $1.3 $0.2 $0.3 $5.9 $6.7 $7.4 $7.3 $10.2 $17.0 $13.3 $14.6 $22.4 $33.4 $39.0 $49.6 $52.0 $60 $50 $40 $30 $20 $10 $0 Attributes of a Successful Fabless Company: Fabless Revenue Growth Fabless CAGR = 26% WW Semi CAGR = 10% ($B)

13 FABLESS R&D-TO-SALES RATIO (2004-PRESENT) Average R&D-to-Sales 30% 25% 27% R&D-to-Sales ratio at its lowest; sales are at $12.8 billion 21% 22% 20% 15% R&D-to-Sales at its peak; sales are at $8.6 billion Average R&D-to-Sales has remained relatively flat from 2004-present; sales are at $14.2 billion 10% 5% 0% Q1-04 Q3-04 Q1-05 Q3-05 Q1-06 Q3-06 Q1-07 Q3-07

14 2007 Semiconductor R&D Spending Leaders R&D vs. Sales Ratio 17.9% in 07 & 17.2% in Rank Company Business Model Region 2006 R&D ($M) 2007 R&D ($M) 2007 Sales*($M) 2007 R&D as % of Sales % of Industry R&D in Intel IDM U.S % 12.6% 2 Samsung IDM Korea % 9.3% 3 TI IDM U.S % 4.7% 4 Toshiba IDM Japan % 4.4% 5 AMD IDM U.S % 4.0% 6 STMicroelectronics IDM Europe % 3.9% 7 Renesas IDM Japan % 3.0% 8 Broadcom Fabless U.S % 3.0% 9 NXP IDM Europe % 2.9% 10 Qualcomm Fabless U.S % 2.7% 11 Freescale IDM U.S % 2.5% 12 Infineon** IDM Europe % 2.3% 13 NEC IDM Japan % 2.3% 14 Marvell Fabless U.S % 2.2% 1 TSMC Foundry Taiwan % 1.2% 2 UMC Foundry Taiwan % 0.6% 3 Chartered Foundry Singapore % 0.4% 4 SMIC Foundry China % 0.2% *Semiconductor Sales **Excludes Qimonda, which was spun out of Infineon as an independent memory IC supplier Source: IC Insights

15 Fabless Company Distribution 1,600 1,400 1,200 Number of Fabless Companies Worldwide 1,100 1,400 1,250 1,3001,350 Fabless Geographic Distribution Israel 5% 1, % Growth Asia 34% North America 48% Europe 13%

16 Increasing Challenges Reduction in VC Funding $3,000 Fabless Fundings by Year & Round A $2,500 Round A Higher Rounds $2,000 $1,500 $1,000 $1, Deals $2, Deals 41 Deals $1, Deals $1, Deals $1, Deals $1, Deals $1,707 $1,607 $500 $867 $466 $208 $188 $ The number of Round A funding deals have decreased nearly 64% from fabless companies received $1.8B in VC funding in 2007 a -6% YoY dollar-amount decrease. $376 $176 $192 $181 Source: GSA

17 Return on Equity Average Return on Equity (ROE) of Top 25 Fabless & IDM Companies ( ) IDM Fabless (%) Source: GSA

18 Top 25 Suppliers of Semiconductor Worldwide in 2007 (Ranking by Revenue in US$ B) 2006 Rank 2007 Rank Company 2006 Revenue 2007 Revenue Percent Change 2006 Rank 2007 Rank Company 2006 Revenue 2007 Revenue Percent Change 1 1 Intel % 2 2 Samsung % 3 3 TI % 4 4 Toshiba % 5 5 STMicroel ectronics % 7 6 Hynix % 6 7 Renesas % 14 8 Sony % 15 9 Infineon % 8 10 AMD % 9 11 NXP % NEC % Qualcom m % Freescale % Micron % Qimonda % Elpida Memory % Matsushita % Broadcom % NVDIA % Sharp % IBM % Marvell % Analog % Rohm % Other Companies % Total Revenue % Source :isuppli Corp. March 2008

19 Preliminary Estimate by Regions Global Semiconductor Revenue in 2007 By Company Headquarters Location Company Headquarters 2006 Revenue 2007 Revenue Percent Change Percent age of Worldwide Revenue Worldwide $ 260,221 $ 270, % 100.0% Americas $ 123,822 $ 125, % 46.2% EMEA $ 31,198 $ 31, % 11.6% Japan $ 58,356 $ 64, % 23.9% Asia-Pacific $ 46, 845 $ 49, % 18.3% Korea $ 28,117 $ 30, % 11.1% Taiwan $ 12,206 $ 12, % 4.5% China/Hong Kong $ 1,118 $ 1, % 0.4% Source :isuppli Nov. 2007

20 Advanced Active Designs and Tape-outs 2 Years 2 Years 2 Years 90nm 65nm 45nm Source :Synopsys, March 2008

21 Design Leadership Is Expensive Cost ($M) Software Prototype Validation Physical Verification Architecture Feature Dimension (Transistor Count) Source: IBS µm 0.25µm 0.18µm 0.13µm 90nm 65nm (2M) (5M) (20M) (40M) (80M) (120M)

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23 2007 Foundry Ranking 2007 Rank 1 Company TSMC Foundry Type Pure-Play Location Taiwan 2005 Sales ($M) 8, Sales ($M) 9,748 06/05 Sales(%) 2007 Sales ($M) 07/06 Sales(%) 19% 9,813 1% 2 UMC Pure-Play Taiwan 3,259 3,670 13% 3,755 2% 3 SMIC Pure-Play China 1,171 1,465 25% 1,550 6% 4 Chartered Pure-Play Singapore 1,132 1,527 35% 1,458-5% 5 TI IDM U.S % 610 4% 6 IBM IDM U.S % 570-5% 7 Dongbu Pure-Play South Korea % % 8 Vanguard Pure-Play Taiwan % % 9 X-Fab Pure-Play Europe % % 10 Samsung IDM South Korea N/A % 11 SSMC Pure-Play Singapore % 350 8% 12 HHNEC Pure-Play China % 335 6% 13 He Jian Pure-Play China % % 14 MagnaChip IDM South Korea % 322-6% Source :IC Insights. company reports

24 Capex: 2008 Projected Down Year After Second- Highest Year in Semiconductor History $70 $60 $50 $56.3 $ % $51.3 $55.7 $ % $58.2 $ % 20% 15% ($B) $40 $30 4.9% 8.6% 7.6% 10% 5% 0% $20-5% $10 $0-7.9% -13.2% (F) 2009(F) 2010(F) 2011(F) 2012(F) -10% -15% Source: Gartner, 12/07

25 CAPACITY VS. SHIPMENTS

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28 Changing Market Dynamics Consumerization of the semiconductor industry Consolidation of the entire supply chain suppliers, semiconductor companies and end customers Fast adoption of new technology Increasing pressure for financial discipline Focus on return on net assets (RONA) and 50% GPM and 25% NET Reduction in capital investments and depreciation costs Cost and risk sharing through alliances, multi-company research and Companies such as TI and NXP outsourcing manufacturing and process development Sources: EETimes, Electronics Weekly

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