INDIA Penn vFINAL DR 18/6/08 11:34 Page 12
Semiconductor India
when the sun is shining, only to have to
hand it back the minute the rain starts to
fall, just when you need it most. This fuels
the inevitable economic boom bust cycles.
The chip industry is subject to a disperse
plethora of cycles from the global economy
down to the making the quarterly number. It
is vital to look at the industry long term,
and not be tempted to micro manage.
The chip industry has probably the steepest
learning curve on the planet, with transistor
costs reducing 30 percent per year. The
Figure 2: The rate of technology change based on the famous Moore’s Law computers that took man to the moon in
1969 were toys compared with today’s
Leadership many of today’s technological challenges. mobile devices, yet the rockets that powered
The top 10 suppliers change with Key to success is developing a good enough them are still governed by Newton’s ‘F =
monotonous regularity at all levels of the and cost effective solution first …… being ma’ strait jacket. The impact this has is a
food/value chain, Figures 3 and 4; ten years first to market is much more important than stream of opportunities.
(five Moore’s Law cycles) is a lifetime in being the best in class.
this business. Even successful companies Investment
eventually lose their way or their chosen Not everyone will succeed, this is the dark Driven primarily by Moore’s law and the
market sector simply runs its course and side of capitalism if you wish, only the best learning curve, product and technological
relative importance. Focusing on core will survive, but failure sows the seeds for obsolescence is rampant. Put simply,
competence versus a broad range business success next time around. It is almost more today’s state of the art is tomorrow’s
strategy amplifies this long term risk and important to learn from what went wrong commodity. In other words, you never grow
the expense of near term expediency. than to live off the glory of the things that well on the old products alone. The cycles
went well. Learn from the mistakes and for the chip industry are generally price not
Technology build a stronger/smarter system. volume driven, causing fairly abrupt and
Constant technological challenge is an sudden market dislocations. To counteract
industry constant, with the ITRS roadmap Cycles this it is important to continue R&D
now reaching out to 2022. It was (relatively) These are an inevitable part of the free investment throughout; you always have to
just as difficult migrating from 5 micron to world economy, put simply it is easy for have the new things coming out the other
3 micron in the mid 1970s as it is to achieve people to borrow money for an umbrella end. In fact, you even have to accelerate the
pace of new development during the troughs
DECADE SC 4.0 SC5.0 SC6.0
of the cycles, something that is both counter
RANK 1980 1985 1990 1995 2000 2005
intuitive and different from other industries
1 Perkin Elmer Perkin Elmer TEL Applied Applied Applied
where you cut costs (investment) in
2 GCA TEL Nikon TEL TEL TEL
recessionary periods and build them up
3 Applied G-SIGNAL Applied Nikon Nikon ASML
4 Fairchild Varian Advantest Canon Teradyne KLA-Tencor
again during the booms.
5 Varian Teradyne Canon LAM ASML Advantest
6 Teradyne Eaton Hitachi Advantest KLA-Tencor Nikon Impact On India
7 Eaton Schlumberger G Signal Hitachi Advantest LAM
India, like China, has a tremendous
8 G Signal Advantest Varian Teradyne LAM Novellus
advantage in that it is a hugely populous
9 K&S Applied Teradyne Dainippon Canon Canon
country with a well established legal and
10 Takeda Riken GCA SVG Varian Dainippon Dainippon
educational infrastructure. It thus has a
Figure 3; The changing face of the top tool suppliers for the semiconductor industry sufficiently large local market to support the
12 www.semiconductor-india.com | Summer 2008
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