The Real Innovations that Fabless Companies Should Look At

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James O'Riordan, CTO, S3 gave a plenary talk at the IEEE SoC conference in September 2009 on

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  • We offer innovative ESD solutions that reduce the risk of respins for fabless companies.
    our solutions use up less area and improve on parameters like capacitance, resistance and leakage.
    So we fit the description given in this presentation
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The Real Innovations that Fabless Companies Should Look At

  1. 1. What are the real innovations at which Fabless companies James O’Riordan CTO should be looking? IEEE SOCC 2009, Belfast, 9th Sept Copyright © 2007-2009 Silicon & Software Systems Limited
  2. 2. Who are S3? The Connected Consumer Technology™ Company Brief Statistics Founded in 1986 260+ Employees 6 Design Centres Globally IC Design, IP Licensing, Embedded Software Development Consumer Electronics Focus
  3. 3. Agenda • Industry Background • Purpose of a Fabless company • The Standing Army problem • Outsourcing • Licensing in • Licensing out • Software • Suggestions for Innovation
  4. 4. Industry Background • 1947: 1st transistor • 1958: 1st IC • Industry is in a maturing stage • No longer 17% average growth • Consolidation / re-structuring Source: stochastix.wordpress.com
  5. 5. Fabless is a ‘long-term’ play • To play requires ‘long-term’ ability • It can take 8 years to get to profits • It can be an expensive journey Source: flickr
  6. 6. The Goal: Build a Valuable Company • The goal of a Fabless company is to build a valuable business • This applies whether it is a start-up or publicly quoted company • In everything you do, you must think “does this make us a more valuable business” Source: priceyincanada Copyright © 2007-2009 Silicon & Software Systems Limited Slide 6
  7. 7. Don’t Get Distracted From The Goal • Shareholders and VCs are not giving you money: - to hire loads of people - to invent new things … - these are just means to the end! • Innovation must be focused on the goal • Always ask: “Does this innovation make the business more valuable?” Source: irishheritagecarnival.blogspot.com Copyright © 2007-2009 Silicon & Software Systems Limited Slide 7
  8. 8. An Over-done Strength Can Be a Weakness • Fabless companies tend to be dominated by techies • A problem with being a techie… … You think you can design everything! • But does this mean you should design everything? Copyright © 2007-2009 Silicon & Software Systems Limited Slide 8
  9. 9. What makes up a “Business” • The ‘IC design’ is only the tip of the iceberg Product Development * Market Opportunity The Business Structure Channel & support * Quality & Manufacturing * Source: Sean Millar * Outsource
  10. 10. Don’t Build a Standing Army • ‘Provisioning an organisation for the peak load it must sustain, at the peak of a SoC development (perhaps a few months), leads to under-utilisation at other times.’ • The Standing Army - Worryingly common! • This is a high fixed cost • It potentially remains indefinitely Source: Flickr -Roseinbal • It is more than just salaries, it is EDA tools, computers … • When you don’t need it, it is a waste of money • Money that would be better spent on something else • But it is worse than that … Copyright © 2007-2009 Silicon & Software Systems Limited Slide 10
  11. 11. Parkinson’s Law Cyril Northcote Parkinson (1909 – 1993), a Naval Historian presented a Scientific Law in 1955; “work expands so as to fill the time available for its completion” Engineers will find work to do! “work expands to fill the resources available” Which can contribute to: Feature Creep – $$$ Source: George Burnett Source: George Burnett Copyright © 2007-2009 Silicon & Software Systems Limited Slide 11
  12. 12. Parkinson’s Law But worse… It can lead to skewing towards ‘Technology Push - your product may start heading in a direction not required by the market! Source: Drurydrama Source: Drurydrama Copyright © 2007-2009 Silicon & Software Systems Limited Slide 12
  13. 13. You need different skills at different stages • When you start you need to get a good product definition • You then need to design and implement this product that the market wants • You then need to sell the product Product Marketing Development Sales Copyright © 2007-2009 Silicon & Software Systems Limited Slide 13
  14. 14. Sub-contract Development • Most Fabless start-ups are dominated in numbers by engineers, which makes them susceptible to the above problems • Sub-contract development – What counts is: not what you are paying when you are using it, but what you are not paying when you are not using it – So you have an encouragement to not only save money, but ensure your get a better product Copyright © 2007-2009 Silicon & Software Systems Limited Slide 14
  15. 15. Sub-contract Development – other benefits • If you are not one of the big players, with a large number of product developments running at any time, then you run the risk of not being able to be ‘sharp’ • If you are not playing regularly you will not be competitive • “If you don’t have the critical mass of designs, get in someone who has” Source: USA Today Copyright © 2007-2009 Silicon & Software Systems Limited Slide 15
  16. 16. Master the Art of Sub-contracting & Outsourcing Apart from sub-contracting Development are there other things you can sub- contract / outsource? Why not – Sales - Outsource? – Finance function - Outsource? – IT support – Outsource? – Cost-downs of existing ICs - Sub-contract – IC packaging, assembly and test – Sub-contract? – Order fulfilment, shipping and logistics - Outsource? What you need to know is: – what is important when doing these, – what it is important to look for when you are getting their deliverables, – what the main issue you have to manage are, – how to best manage multiple suppliers (with complex interactions) – And knowing how to do the above quickly and efficiently But you don’t need to do them yourself Copyright © 2007-2009 Silicon & Software Systems Limited Slide 16
  17. 17. Master Sourcing Source: Automotive News Europe Copyright © 2007-2009 Silicon & Software Systems Limited Slide 17
  18. 18. Semiconductor Industry Trends • Emergence of the Fabs • Equal access to the same manufacturing capability! • Multi-project wafers •share the cost of prototypes • Advancing geometries - 90, 65, 40, 28nm … Source: IEEE Spectrum Copyright © 2007-2009 Silicon & Software Systems Limited Slide 18
  19. 19. License in IP • Avoid the “not invented here” syndrome “Not Invented Here (NIH) is a term used to describe persistent social, corporate or institutional culture that avoids using or buying already existing products, research or knowledge because of its different origins.” - Wikipedia • License in the Intellectual Property you need – Less risky • Experts who focus sole on it designed it • It is used in many different ICs – Lower cost • The supplier can recover his development costs over more than just one customer / product Copyright © 2007-2009 Silicon & Software Systems Limited Slide 19
  20. 20. License in ‘Off-the-shelf’ IP • When designing at the board level, the initial design tends ‘off-the-shelf’ ICs • When designing silicon chips, the initial design often asks for ‘bespoke’ IP? Copyright © 2007-2009 Silicon & Software Systems Limited Slide 20
  21. 21. License in ‘Off-the-shelf’ IP • ‘Bespoke’ IP is costly for a supplier to supply • Supplier has more business model flexibility when supplying ‘off-the-shelf’ - has to recover some of their R&D cost over each license sale -more open to royalty rather than up-front cost - For a VC funded fabless company up-front IP cost may not be an efficient use of capital - IP costs funded from the success of the product is less costly Copyright © 2007-2009 Silicon & Software Systems Limited Slide 21
  22. 22. Summary so far … • Keep focused on market • Know your differentiators – and concentrate your innovation here • Do not try to do everything yourself • Build the skills to: – Manage outsourced design – License in IP • Take ‘Off-the-shelf’ Copyright © 2007-2009 Silicon & Software Systems Limited Slide 22
  23. 23. When should you start to think about the after life? • Consider your customer’s product development cycle – What happens when they ‘cost-down’ their product? • Will your IC be designed out? … but has its function been integrated into an SoC? … is there still business for you? • Consider planning the lifecycle of your IC, supply it as IP to SoCs • Will this distract you from your immediate goal? … remember “outsource” Copyright © 2007-2009 Silicon & Software Systems Limited Slide 23
  24. 24. License out IP • To lengthen product life • To dominate a market Copyright © 2007-2009 Silicon & Software Systems Limited Slide 24
  25. 25. Software Design Costs - ITRS
  26. 26. Software Software can account for 80% of the development cost Software is an integral part of the system • Good HW alone is not good enough • Total system design must be considered Without good software your ICs won’t be designed in • Must ensure that this software is built and supported correctly Multi-core • Diminishing returns from increasing clock speed • Enables multiple wireless stacks, richer applications etc. • Homogeneous and Heterogeneous processors • How to program these???
  27. 27. Suggestion: Innovate around funding • Why would VCs invest in Fabless? – Exits proving hard – no IPOs, no M&A! – Returns not there – valuations > $0.25b! – Cycle is long – 8 years! • Customer NRE funding • Corporate Seed Capital Source: bushywood.com Copyright © 2007-2009 Silicon & Software Systems Limited Slide 27
  28. 28. Suggestions: Know the market • Spend your time and money on Product Marketing – Really analyse the market opportunity – Talk to real customers – Don’t confuse this with • General industry knowledge • Technical knowledge • Unproven hypothesis tgmag.ca Copyright © 2007-2009 Silicon & Software Systems Limited Slide 28
  29. 29. Suggestions: Stay close to customer • Spend your time close to your customer – Much talk about doing engineering in low cost country etc. – The #1 country you need to concentrate on is the one where you customer is! Copyright © 2007-2009 Silicon & Software Systems Limited Slide 29
  30. 30. Suggestions: Innovate around standards • How to take advantage of a Standards body – Standards bodies get dominate by major players – You may get squashed! – Play to your strengths, • E.g. Do what they don’t Copyright © 2007-2009 Silicon & Software Systems Limited Slide 30
  31. 31. Suggestions: Innovate around technology • Don’t get pulled on to the latest geometries, – Older geometries have a lot going for them • They cost less • They are mature and stable – 0.18um for lower cost – 65nm for large volumes Copyright © 2007-2009 Silicon & Software Systems Limited Slide 31
  32. 32. Suggestions: Innovate around services • Do the chips that relate to a service*, and try to get hooked into that service • There is generally more money there, and you need to find out how to be part of that money stream * e.g. Mobile phone services, Digital TV services, iTunes Copyright © 2007-2009 Silicon & Software Systems Limited Slide 32
  33. 33. Suggestions: Multi-skilled people • Employ people with more than one skill – You need them to have a ‘bigger picture view’ – You need them to be able to help in many areas Source: insidehousing.co.uk Copyright © 2007-2009 Silicon & Software Systems Limited Slide 33
  34. 34. Suggestions: Innovate to solve real problems • In terms of market needs, solving problems that exist today, rather than one that may exist tomorrow, bring more certainty to the value • Innovation should be focused on: – understanding the market, – identifying a real problem – applying the right technical solution Source: mostlymath.com Copyright © 2007-2009 Silicon & Software Systems Limited Slide 34
  35. 35. Suggestions: Innovate where there is risk • Find solutions where you reduce others risk • When there is a real risk, people don’t look for the cheapest doctor or cheapest lawyer Copyright © 2007-2009 Silicon & Software Systems Limited Slide 35
  36. 36. Suggestions: Innovate to be more than gap filler • Big companies are more comfortable buying from big companies • Watch that you are not used to fill the gap that exists until the big supplier steps in Copyright © 2007-2009 Silicon & Software Systems Limited Slide 36
  37. 37. Wrap-up • The goal is to build a valuable company • To do this - Focus on what the market wants • Target your innovation where your differentiation creates real value Copyright © 2007-2009 Silicon & Software Systems Limited Slide 37
  38. 38. Acknowledgements Bernardo Henriques, Bob Tait, Sean Millar, Brendan Farley, Donnacha O’Riordan, Conor O’Donoghue, John O’Sullivan, Noel O’Riordan, Fiona D’Arcy, Mark Barry, and many others in S3
  39. 39. Questions? Copyright © 2007-2009 Silicon & Software Systems Limited

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