Collaborative advantage: The future of fabless design?

9/18/2012 6:55 PM EDT

“Virtual reaggregation” is a strategy for re-aligning data dependencies that were split apart from disaggregation of the supply chain, without losing the economic benefits of disaggregation.  The key elements in virtual reaggregation consist of: (I) identifying the major / emerging inefficiencies in data exchange between supply chain segments; (II) aligning those needs with others who share the problem; and (III) defining, as a group, the standard convention(s) that will resolve those needs (including flexibility for future growth).  Effective standards should satisfy critical business problems that no single company can solve alone.

When economics dictates, reaggregation may extend far beyond virtual integration.  In recent years, some semiconductor companies at the leading process edge have seen a resurgence of in-house software development to complement commercial EDA offerings.  In some cases, these companies have prioritized niche requirements, where economies of scale do not apply.  In other cases, process or design technology details associated with leading-edge manufacturing processes or circuit techniques are so proprietary that it becomes essential to develop in-house libraries and software.  In the last few years, two of the IP industry's leading sources of commercial logic and memory IP folded into major EDA industry players, substantially reducing the IP industry's standalone footprint and clouding the distinction between the tools used for design and design content itself.

Based upon this macro-level analysis, what can be extrapolated for the future?  One underlying theme is that economics is a very powerful force, so as relative costs shift, the supply chain's business models will also adapt to reflect the best value-cost ratio.  This holds true regardless of whether any particular (spin-off) industry is in a period of expansion or contraction.  A spin-off industry must continue to offer a better perceived value-cost ratio than all other feasible alternatives, or it will contract.

A second theme is that, despite the compelling economic forces for increased disaggregation stated above, the laws of physics upon which our industry is built remain immutable.  The semiconductor industry's extraordinary data complexities and continually increasing co-optimization dependencies cannot be ignored.  The result has been an increase in technical standards that are able to retain data integrity and accuracy across a dispersed ecosystem of companies.  Not surprisingly, this trend is growing as the system and silicon complexities increase.

By considering how our semiconductor supply chain effectively manages change in both technology and economics, we can better predict, and plan for, a healthy fabless design ecosystem for decades to come.

To find out more about some of these issues, you might want to come to the 17th Si2 Conference on October 9 in Santa Clara. Jim Hogan is the keynote speaker, and the agenda and registration information can be found at this link: http://www.si2.org/?page=1583

Steve Schulz, President and CEO, Si2

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