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Economics Emerges as a Key Driver of Semiconductor Industry

Benny Thomas
Friday, July 2, 2010
Benny Thomas
The semiconductor industry has been one industry that has been mainly driven by the technological advancements, but now with economics in the spotlight especially after the recent slowdown, there is a new trend emerging. “In the last 20 years, the semiconductor industry was driven exclusively by technology, but now even economic dynamics are of equal importance,” says Dr. Aart de Geus, CEO and Chairman of Synopsys, who calls this trend as ‘Technomics’, which refers to the increases in both scale and systemic complexity across both technology and economics.

According to Geus, the systemic complexity is rapidly moving across the IC design ecosystem: from analog to digital interactions, from the huge amount of software development now undertaken to the physical realities of advanced devices, and the need to understand and optimize for increasingly tough manufacturing challenges. “From systems to silicon, no part of this complex process is immune from either the technology or the economic pressures,” points out Geus, while speaking at the Synopsys Users’ Group (SNUG) conference in Bangalore.

The economic slowdown has hit the semiconductor industry hard, but as many companies start the process of refilling depleted inventories, the semiconductor market is recovering more quickly than some expected. “Since fourth quarter of 2008, when the recession was at its worst, most semiconductor companies have continued to report improved results in their earnings releases, providing further evidence that economies are starting to recover,” he says. Though the industry remains optimistic about the future, the expectation is that there is still a way to go before unemployment levels start to reduce significantly, Geus adds.

Going forward Geus believes that video applications are set for huge growth, driven by mobile, high definition and 3D products. As a consequence, both bandwidth and storage need to expand massively to cope with the increasing demand for data. “There will also be continued development within cloud computing technologies to make computers available over the Internet,” he says. Forecasters also see the energy sector investing more in generation, storage and conservation technologies, and smart grids are becoming increasingly important.

For 45-nm process technologies, Synopsys has seen an extension of the standard two-year “time-to-400 tapeouts.” Furthermore, two clear customer trends have emerged. Many customers are choosing to skip nodes by taking advantage of an existing platform to perform multiple derivatives, while others are opting to ‘squeeze’ older nodes to manage costs, Geus explains. According to him, now more value of the SoC design is in integration as designers are choosing to implement more functions in software as functionality expands faster than Moore’s Law. “However, the return on investment from Moore’s law is falling with advanced processes,” Geus said to the India SNUG members in Bangalore.

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