The past year has not been a stellar one for Altera or much of the semiconductor industry, but Daane held out hopes the year ahead will bring a rise in capital spending at cellular carriers, driving sales of communications chips.
If you take memory chips out of picture -- which did well due to shortages -- I've seen figures of 1-2% growth this year, roughly another flat year. We've been moving sideways. It's hard to grow a $300 billion industry at a high rate. Overall I see a more mature semiconductor industry not subject to the boom and bust cycles of the past.
Spending on communications infrastructure was "at a low point" in 2013, while global GDP was down with ongoing recessions in Europe and an industrial sector that "slowed down quite substantially."
Smartphones were the driving force in semiconductor revenue in 2012 and 2013 after significant spending on gear for the first LTE networks in 2010 and 2011. "Now the consumer side may slow a little bit, and we probably will see more infrastructure spending" in the year ahead.
The recent Avago-LSI merger bid and the breakup of Mindspeed are signs of a maturing, consolidating semiconductor industry. Activist shareholders are putting public pressure on Marvell, Nvidia, PMC Sierra, and Triquint to make similar moves. "If there's not as much growth, you need higher marketshare... and that will force some changes."
Don't expect consolidation in FPGAs. "I think a lot of the consolidation in programmable logic happened in the early and mid 90s, when we bought Intel's product line, Xilinx bought Philips', and Toshiba and others sold or shut down businesses."
Now Altera, Lattice, and Xilinx command more than 90% of the FPGA market. The sector requires players to invest in their own programming tools and IP blocks, creating a barrier to entry. He dismissed the newest startups such as Achronix and Tabula. "We haven't seen them in the marketplace, hardly at all."
Altera's acquisition of Enpirion in May is a better model for how the sector will find growth going after adjacent markets. The startup's power modules help reduce power consumption in designs that use an increasingly broad array of voltages.
They had a good product set, and we scaled them into more accounts such as communications, where they didn't have the money to invest. Their revenues will grow from $20 million this year to $35 million next year and perhaps $60 million the year after. It's a very steep ramp, and design wins are very strong.