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Creating an Ecosystem for Semiconductor Design Services
Ash Patel
Monday, October 3, 2011
Overview – The semiconductor design services industry is a growing field, due to rising costs and shortage of engineers in countries, where IC companies are located. According to Garnter, the number of outsourced chip design stats, grew by 21.4 percent in 2010; compared to a decline of 9 percent in 2009, and a rise of 6.5 percent in 2008. The chip design services revenue, increased by 34 percent in 2010.

Chip design companies, are getting comfortable working, with service providers; resulting in complete projects to be outsourced, instead of just individual blocks. For supporting the current and future needs of their customers, the design service providers need to focus on building an ecosystem.

Ecosystem – The capital investment needed to start a design service company may restrict the growth of the company. If the company creates an ecosystem with vertical partners, it can grow faster and adapt better to changing market needs. The figure below shows the various components of a semiconductor design services ecosystem.

Talent Source – Engineering talent is scarce and especially well-trained engineers. Every service company should recognize and understand that, engineers are their key assets. Business growth will be proportional to the number of engineers they can hire and retain.

For a company to succeed, it needs to have access to students from good schools, and to do so it should build strong relationships with the school management.

Training Institute – Talent acquired from schools does not always have the practical experience needed to contribute to the bill ability of the service company. Engineers need to be trained for industry needs, and hence the need of a state-of-the-art training institute. Training institute should be run on an independent basis, by experienced teachers; at the same time it should impart some knowledge about the company culture.

Partners – Companies with matching ideologies and non-overlapping domains can accelerate mutual growth, by forming partnerships. Partners are a key ingredient of a semiconductor design service provider’s ecosystem. Chip design and manufacturing is a capital intensive and complex process, making the need for partners a necessity and not an option. Various types of partners are as follows

* EDA vendors

* Foundries

* Packaging vendors

*Test houses

*Service Providers covering Complimentary Domains

* Industry Standards Bodies

*Sales Representatives

Service Company – The design service company is the centerpiece of the ecosystem and its main objective is to provide customer satisfaction, by utilizing all the components of the ecosystem. To build a long lasting company, all factions of the ecosystem should collaborate and work as a unit. For a service company to scale, the management system should promote ownership and develop leaders. This can be done by empowering employees to make their own decisions, even though they might make some mistakes. By giving the power to make decisions, you let the employees feel that they are an integral part of the company and they will go the extra mile to create customer satisfaction. Performance rewards should be well structured, so that the employee can correlate his or her hard work with the reward. The sense of ownership can be further strengthened, by providing stock ownership to the employees. A sense of pride and ownership is a key for long term retention of employees, and stable work force is a key to a company’s success.

Every company should have a social cause and allocate some of its resources towards the improvement of society. Charity work can be in the form of time or money. Companies can help local schools’ infrastructure or by creating employment. Goodwill created among the society and employees by social contributions, results in better business growth, hence making social cause a mutually beneficial item. Employee Development directly translates into company development and is a great tool for recruiting. Having invested in training and retaining the employees, companies should not be short sighted but should always invest in employee development. This can be done, by understanding the career aspirations of the employee and enabling him or her to achieve those goals. Leadership classes, supporting higher education, mentoring on the job, exposure to industry events, are some of the tools a company can use to develop their employees. A satisfied employee results in a satisfied customer, which translates to better business.

Company events and benefits, should be framed keeping in mind the entire family and not only the employee. If the family is happy, it is a great incentive for the employee to work hard and also a recruiting tool for the company. Medical, retirement, and emergency loans are some of the benefits a company can provide to assist the employee’s family. Events, such as offsite activities, sports, and cultural functions should include family, to create a strong bonding between employees. Summary - The growing focus of the semiconductor industry on reducing chip design cost and time and acquiring the ability to churn out ever more new products at shorter intervals will be a key factor, in shaping the chip design services market in 2011 and beyond.

2010 was the year of return to growth, for many third-party chip design service providers. However, in 2011, design service providers will need to "go the extra mile", to retain their customers and keep growing by providing value-added services. This further solidifies the reason to have a well functional ecosystem.

The author is Director of Business Development, Sankalp Semiconductor
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