Mr. Tirupattur began the panel by describing today’s industry as a collaborative model, where customers tell the IP companies what they want, and what they can do better.  What the industry needs is a dynamic ecosystem that improves efficiency, with no waste or redundancy.  It’s not just who wins in the ecosystem, but how do we get paid for the value we bring to the table?

The panel was asked to address whether consolidation in the semiconductor industry is a good thing or does it hinder innovation?  Dr. Sherwani asserted that for basic functions, standardization is necessary, but if it reaches the top it kills innovation.  For the IP business, standardization of all IP would be bad.  He hopes that investment continues to support small IP companies that bring vibrant, customized IP to the marketplace.  He worries that if the industry consolidates into a few large companies, the quality of innovation will fall and the value of the corresponding hardware and software will fall.

The panel then discussed what IP blocks are critical to design efforts.  Tony Stelliga said that high performance I/O cells with low impedance are critical.  There is also a high need for advancements in memory in order to intepret commands on the fly. There could be I/O cache and instruction cache and fast links with frequency planning.

The panel and audience members discussed who drives the IP ecosystem. Although fabless companies take the risks, the economic center lies with the system companies.

Another interesting point that was made was that companies in the industry need to do a better job of time-to-market by being ready to go as soon as a consortium casts a standard in stone.  The companies that can do this today are the biggest winners.  Members of the IP community need to particpate in the standards forums so they can be ready to jump into a market as soon as a standard is ready.

Jean-Marie Brunet said that collaboration needs to occur between the process and the foundry teams.  He said that, while there is no lack of innovation, the ecosystem is really important at the advanced nodes, and that IP design cannot occur without collaboration.  Suk Lee went on to say that the foundries’ role in the ecosystem is really to help foster a strong and diverse ecosystem.  It is very difficult for small IP players to enter the market, even though they are responsible for a lot of the innovation.

An audience member asked if we will see power management embedded in processor cores as opposed to existing only as discrete chips.  Mr. Stelliga said that integration of power management is very challenging, so they are still doing discrete chips.  There is a move to have very sophisticated BCD processes for power managment, but the chips are so small already, that it doesn’t really make sense to try to inegrate them at this time.

The panel ended with a discussion of 2.5D and 3D technologies.  They will be applied in parallel.  3D will become reality in 2 to 3 years.  The panel members think that 3D memory has lots of potential for the semiconductor industry.

Adrienne Downey

Director of Manufacturing Research

Figure 1: Semiconductor Unit Sales and Wafer Demand

Source: Semico Research Corp. & SIA

Reality sinks in when we look at the percent change in wafer demand since 1991.  (See Figure 2)  Wafer demand growth is anything but stable.  There is almost a 50-point spread between the peak growth year to the worst year of decline.  Even if we throw out the worst year (-23% decline in 2001) and the best year (25% growth in 1995) the change in wafer demand growth rates range from -2.7% up to 24.9%.

Figure 2: Percent Change in Wafer Demand

Source: Semico Research Corp. & SIA

The challenges arise when market variables are considered.  There are thousands of semiconductor products which do not always move in concert.  In 2012, wafer demand for NAND flash products will increase by over 30%, while DSP wafers will experience a decline.  The industry’s wafer manufacturing facilities utilize over four different wafer sizes and numerous process technologies.  When leading companies attempt to grab market share, often times the result is the creation of inventory gluts and shortages.  Add supply chain bottlenecks into the mix, technology and product migration, and capacity planning becomes a nightmare.  Although silicon revenues were up, SEMI reported silicon area shipments down by 3.5% in 2011 compared to 2010.

Figure 3: Wafer Demand by Product

Source: Semico Research Corp. Wafer Demand Model

Intel is ramping its 22nm product lines, and the foundries are filling their 32nm/28nm capacity.  At the same time we continue to see growing demand for mature capacity for MEMS, image sensors, power management, discretes and opto chips.  One line may look easy to forecast but the confetti in Figure 3 makes the life of a forecaster very…colorful.  It’s the detail that provides the meaningful insight.

For more information on Semico’s Wafer Demand Data, please contact Jim Feldhan at jfeldhan@semico.com or visit Semico’s website at http://www.semico.com/studies/category.asp?id=13.

- Joanne Itow, Managing Director

ADI’s PVP is a new dedicated vision accelerator.  The company touts this feature for sophisticated, multi-function analytics.  It can perform up to 25 billion math operations per second.  The BF608/9 is well suited for many embedded vision applications.  The PVP along with the dual 1GHz Blackfin DSP cores offers customers a flexible architecture for them to develop specialized algorithms.  The target applications are ADAS (Advanced Driver Assistance System), industrial machine vision, and security & surveillance.

ADI’s PVP has several functional blocks.  It provides acceleration in such key areas as object detection, object tracking, and object identification.  The PVP architecture is able to run up to five vision algorithms simultaneously.  This enables vision systems to monitor and process data from several sources and off load work from a main processor.  This is particularly important in automotive applications where so many things are going on and driver safety is critical.

Semico Spin

ADI is offering a powerful and sophisticated product at a very competitive price.  The BF60x family pricing starts at $15 in 1K units.  In addition, ADI is offering a rich development suite of software tools and development boards.  Machine vision has had a long history but its growth has been hampered by complexity and cost.  There are about 65 million vehicles (passenger and commercial) produced annually worldwide.  The ADI BF60x opens up opportunity in automotive and other applications.  The flexible architecture and development ecosystem will enable innovation.

Tony Massimini

Chief Technology Officer

Semico Research Corp.

tonym@semico.com

602-997-0337 X3

The digital home has been coming for decades. Ma Bell knew; 30 plus years ago, its vision of the future was “data and pictures at your fingertips.” Star Trek knew; iPads were a standard accessory over 20 years ago in the show. And now reality is finally catching up.

This means big changes are needed in the console arena if they’re going to be able to survive this new frontier. Our televisions are now smart and possibly 3D. Our Blu-ray players are smart and affordable. Our smartphones and tablets stream movies wirelessly to our TVs, and smartphones have become our gaming platform of choice.

During previous console releases, selling points have included:

1. Better graphics
2. Inexpensive Blu-ray player
3. Streaming HD content
4. Innovative games, etc.

But these selling techniques won’t work anymore for the following reasons:

1. Current consoles already take complete advantage of the TV with processing power to spare (except for the Wii). We are at “movie quality” graphics.
2. Blu-ray players are now as low as $65, down from the $400 to $1000 range during 2005, when the last consoles were released.
3. Streaming HD content is now possible from phones, tablets, computers, TVs, Blu-ray players, etc.
4. Nintendo had a firm hold on the innovating gaming arena in 2005. But now smartphones and tablets have taken most of the gaming market share.

So let’s be honest: we don’t really need a new gaming console, at least not one in its current incarnation. This is probably why Sony previously claimed that its PS3 was good for another few years and didn’t plan an upgrade until 2015 or 2016.

Except, when does anything ever go according to plan? The three major console manufacturers — Sony, Microsoft, and Nintendo — are in constant competition with each other (even when they won’t admit it). Perhaps so much so that they’ve forgotten to look beyond the console market for other threats to their gaming market share. While the console market for the last few generations has generally had a long lifecycle, the rest of the world has continued to innovate around them at exponentially faster rates.

We go into a deeper analysis of the imminent threats facing the console market in the March 2012 Semico IPI report that includes forecast figures for consoles and tablets.

What does the future hold for the gaming industry? The next few years must look terrifying to console manufacturers for the following reasons:

• Gaming has moved to smartphones and tablets, where they’re priced under $5, while console games are still around $30 to $60.
• Xbox 360 and PS3 are already lagging behind the iPad in terms of screen resolution.
• Console games are stagnating in the creative department. Some of Nintendo’s recently announced game releases include Mario Tennis, a Brain Age Sequel, Sonic the Hedgehog (from Game Gear), and another Fire Emblem game. (All sequels and remakes.)
• Console game sales in the US have been on the decline, down 21 percent in December 2011, down 34 percent in January, and down 20 percent in February.

Sony, Microsoft, and Nintendo all see Apple as a huge threat on the horizon. Apple has taken over the handheld market during the last six years, creating a world that is changing too fast for console manufacturers to keep up with, but they’re not going away without a fight.

Nintendo is in the unique situation of trying to play catch-up with Microsoft and Sony, while trying simultaneously to jump ahead and compete with Apple. Sony, within just a few months, changed its tune from “no new console anytime soon” to “you never know.” Sony’s new CEO is from the company’s PlayStation division, and rumors are already swirling about a new PS4 with an AMD GPU. Microsoft has said no new console for 2012, while rumors of a new tablet-like controller speak of a 2013 release.

Nintendo, Microsoft, and Sony are all geared up to be content providers via their individual networks. This strategy has problems of its own as consumers buy hardware to play games. If one piece of hardware can play all games, then most likely the consoles will become regional systems, with Microsoft popular in the Americas, while Sony and Nintendo fight for Asia Pacific market share. This scenario guarantees the next-gen consoles will not be able to maintain the large penetration rates and market shares of the past.

The next-gen consoles should be considered media portals more than gaming systems. Both Microsoft and Nintendo expect their next-gen controllers will be remote controls for the TV, browsers, and gaming devices. The controllers may even be used as portable display devices. They seem to be trying to bypass the tablet market instead of embracing it by licensing out content.

A video-on-demand service will be in the next-gen systems. Nintendo has been several cycles behind the Xbox 360 and PS3, for example, adding Hulu Plus functionality months after the Xbox 360 and PS3 did. According to Nielsen, 33 percent of time spent on the Wii is actually spent watching streaming video. This shows Nintendo is definitely looking to be the main content provider for the digital ecosystem with its next-gen console.

Pricing will also need to change; Nintendo will probably launch at around $250 to $300, while the Xbox will need to launch at a similar price with the Kinect included. The years of the $600 console are over. Apple has changed people’s perceptions of what is affordable and what isn’t, which means if the manufacturers are looking to recoup their costs, it will have to be in the controller market. A $300 controller that functions as a tablet, universal remote control, and handheld gaming device may be worth it to the majority of consumers.

Is this really a big deal?

It is disappointing to hear that these two companies do not see the value in participating in data collection for the semiconductor industry. As an analyst firm, Semico Research utilizes the monthly, quarterly and annual data as one of many reference points to triangulate our forecasts.

But Intel and AMD are not the only significant semiconductor companies that do not participate in the WSTS reporting structure. Other non-reporting members include:

• QUALCOMM
• Broadcom
• Apple
• Altera
• a multitude of smaller yet growing companies.

These six large companies represent more than 25% of the world’s semiconductor revenue each year, and it’s likely that their percentage will continue to expand. This is where reputable primary research and analysis becomes paramount in providing accurate and coherent forecasts.  In many cases, Semico’s forecasts are several levels more granular than what is reported in the WSTS data. Semico relies on our relationships with industry contacts to conduct primary research.  Our extensive internal databases and decades of experience help to accurately model technology adoption and our semiconductor device forecasts.

While it’s sad to see another two companies drop out of the reporting structure, it does not pose a significant impact to Semico Research.  In 1997, the WSTS stopped reporting the semiconductor book to bill ratio.  Semico replaced that indicator with the Semico IPI (Inflection Point Indicator), an index which accurately forecasts changes in the direction of semiconductor sales growth.

Is this recent change really a big deal? For Semico, not so much. Semico has decades of experience tracking non-reporting companies.  Over the last 16+ years Semico has built interactive databases that quantify the industries manufacturing capabilities, market shares, relationship to end applications, capital investment, technology migration and adoption.  The data and the analysis of that information are used to derive our technology roadmaps and forecasts.  Bloggers and smaller research firms are going to be at a disadvantage.  They will have a harder time forecasting the market without these leading companies in the WSTS reporting structure.

This does mean that analysts will have to do their homework.  All data is not created equal.  Semico’s advice:  Be careful who you listen to.

In 2011, semiconductor capex reached a record $62.7 billion, an increase of 25.6% over the 2010 level.  The growth was not nearly as high as the over 140% increase in capex that was spent in 2010.

Top Ten Spenders in 2012:  Announced Capex Plans

Source:  Company Information and Semico Research Corp.

But let’s take a look at who’s spending.  Samsung and Intel, the two largest semiconductor manufacturers and also the top two spenders, are planning on increasing capex 12% and 16% respectively.  These two companies represented over 36% of total spending in 2011 and are expected to represent over 42% in 2012.  The dollar increase from both companies totals over $3 billion for 2012.

On the other hand, the two largest foundries, TSMC and GLOBAL FOUNDRIES have announced plans to decrease capital expenditures by 18% and 35%, respectively.  That’s a $3 billion reduction in spending for both companies.

The Semico IPI Index indicates a bottoming of the current slowdown in February 2012 leading to semiconductor revenues growing 10% in 2012.  More importantly, tablet unit sales will increase 33% in 2012 and smart phone sales will grow by 17%.  Electronics manufacturers reduced inventories to very low levels and there are signs that the supply chain is already beginning to replenish inventory stocks.

If the largest microprocessor manufacturer and the largest memory manufacturer are increasing production capacity and all the other chip manufacturers are spending less, there could be a disconnect on the horizon.  In the past, Intel has successfully managed their capacity by expanding in the downturn in order to be ready for the inevitable ramp during recoveries.

UMC is bucking the foundry trend and is one of the few dedicated foundries that announced plans to increase their capital expenditures in 2012.  Foundries are very nimble and TSMC is notorious for reassessing their position mid-year.  If TSMC and GLOBALFOUNDRIES increase their capital spending to be flat with last year, then the total 2012 expenditures change from 4% down to 0.2% up.

Because equipment spending was so high in 2011, even if total equipment spending declines by 4%, 2012 will be a pretty good year for equipment vendors.  Semico believes increased semiconductor demand is on the horizon.  Fire up those foundries!

For more in-depth coverage of Semico’s 2012 forecast, capital expenditures and the industry cycles, get a copy of Semico’s February 2012 IPI Report.  Contact Jim Feldhan at jfeldhan@semico.com, or go to www.semico.com.

And then scientists taught the robots to limbo.

But now, they’ve broken another speed record (by robot standards) that makes the future a terrifying place.

What is zoom? It’s a sleek, sexy body style – maybe a coupé or convertible. It’s the sound of an engine howling toward a 7,000 rpm redline. It’s carving a corner and hitting the apex exactly. It’s braking as late as possible while double-clutching to downshift, turning-in at the right point and then maxing the exit speed. It’s 0 to 60 in less than 5 seconds. It’s the thrill of pretending you’re a racer. It’s the ego trip of posing as a rugged outdoor 4WD dude. It’s the promise of getting the girl. Until now, zoom is what has sold cars, but we don’t need zoom any more.

My friend doesn’t care about zoom. He doesn’t do drag racing starts or road racing corners. He doesn’t go off-road. He’s married. He already got the girl a long time ago. What he wants is reliable, comfortable, economical transportation. Because he cares about ecological issues, a green car with low carbon emissions is a bonus. He’s a good representation of an average car buyer, but he’s ahead of the pack.

An all-electric car like the Leaf would serve a major segment of the population very well. Most people driving SUVs, pickup trucks or large cars don’t really need them. Their trips are short; they rarely have a passenger, let alone three or more; and they don’t usually carry bulky or heavy loads.

An all-electric does have a limitation. Their range is usually roughly 100 miles round trip. If that’s the longest round trip a person ever makes or if a person is commuting less than fifty miles round trip and the rest of his or her trips are a few miles for groceries or other errands, then range is not a problem. If more range is absolutely a requirement, a hybrid may be a better choice. But, as a short range urban vehicle, perhaps a second car, an all-electric vehicle like the Leaf may be the perfect choice.

-Morry Marshall

As Joanne said, CES was all about the touch screen display – and yes, its very minority reportish.  Putting this one on my wish list.

For example, Kurt Smith, a VP of Verizon Communications Inc., believes a mature supply chain requires three levels: the content creators/manufacturer, the distributer, and the retailer — for no other reason than that’s the way it’s always been done.

Verizon is already behind. This is a lag built upon a generational gap that we can only vaguely understand. For those of us who didn’t grow up with the Internet, the texting of the newer generation is confounding. Worse, today’s toddlers are using iPads in the cradle, so in 10 years the gap will be even larger and more confusing.

And yet, the majority of the panel sessions at CES were filled with old white men. I saw no minorities on the panels. There were two women in the sessions I attended, one older woman who wasn’t even familiar with the panel she was moderating, and another who seemed more afraid of technology than anything else, a disturbing lack of diversity that didn’t reflect the audience in any way.

On the show floor, it was shown just how this disparity is playing out.

George Haber, CEO of Cresta Tech, said, “If it can be done in software, it will.” And to expand upon that, if your product can be replaced with software, it will be, and you’re already behind in this new world. Additionally, this new ecosystem also revolves around a DIY generation: We install our own smart home products; we do our own plumbing; we fix our own phones; and we, the consumers, make hardware obsolete.

Fujitsu is one “victim” of this generation. At CES it showed a tablet that could be completely submerged under water. The downside: The tablet is much more expensive to buy, and if there are any cracks, it must be sent away for Fujitsu to fix. Meanwhile, a product like Liquipel is about $70 and does the same thing with a nano coating. A DIY solution vs. a hardware solution.

We’ve entered this new frontier because we’ve reached a tipping point in technology. When phones start having quad-cores it’s time to admit the “device wars” are over. Other than some tweaking here and there with battery life and sound, how is a company supposed to differentiate itself? Enter, the digital ecosystem “wars.”

The companies at CES reacted to this switch-over in varying ways. Sony Corp.  brought nothing new or interesting to the table in terms of hardware. Instead, it focused on its own ecosystem in an attempt to show consumers how its software is better than Microsoft’s or Apple’s.

Nokia Corp. reacted to this switch-over with a sigh of inevitability. The new ecosystem is narrowing in on the digital home, which the Android and iOS have completely covered. Nokia never made inroads into that market, so it’s done the only thing it could to set itself apart and to keep fighting as one of the largest phone manufacturers of the world: It partnered with Microsoft Corp.

In the fight over you, the consumer, Nokia knows the ecosystem you’ll chose eventually is the same one you’ll ultimately use on your TV, your tablet, your smart home interface (which might be a gaming device, a tablet, a blu-ray, etc.), and your phone.

But maybe you’ve already chosen your ecosystem. Maybe, for you, the battle is already over. In which case, where is our Apple TV?