"Developing system-on-chip products forces you to believe in the markets that you are attacking," said Hames. The markets TI is targeting- digital cameras, DSL routers, wireless LANs, cable modems, video receivers, digital high-definition radio-all represent major opportunities. Hames refers to them as "$100 million sockets."

Even with some of the intellectual-property blocks available from inside TI, an SoC design can easily cost $20 million. "SoCs are all about scale. The R&D and opportunity costs are just so high, you either win all or nothing," said Hames, who earlier ran TI's DSP operations.

The cost of owning a fab is rising as fast as design. If TI can keep its 300-mm fab relatively full over the length of a silicon cycle, its manufacturing costs also should be lower than those of competitors that rely solely on foundries.

To be sure, TI is using foundries too. Kevin Ritchie, senior vice president of manufacturing, said the company sourced 32 percent of its advanced logic products in the first quarter from TSMC and UMC, plus Shanghai-based foundry SMIC.

"I expect that by the end of the year, we will see the percentage of our advanced 130-nanometer logic go from 32 percent from foundries in the first quarter to 40 percent by the end of the year," Ritchie said. "That is based on today's market forecast; if demand from the market is stronger, it could be 45 to 50 percent."

TI's new DMOS6 fab is one-third-equipped now and is processing 10,000 wafers per month at 130-nm design rules. Ritchie said that the rest of the fab, capable of 20,000 wafers per month, will process 300-mm wafers at 90-nm design rules.

There are plenty of naysayers around who claim there are still no economic advantages in going to 90-nm design rules. Others are hoping that 200-mm wafers will be competitive.

Not Hames. "Once you start on the path of developing for a certain market, you have to believe in your ability to be first or second in that market," he said, sounding a bit like former General Electric CEO Jack Welch. "The third supplier is just barely going to be hanging on, and everyone else will be destroyed.

"The game is favoring the bigger players because it is harder for the small guy to create an SoC; you just need so much IP," said Hames.

David Lammers covers SoC process equipment. Contact him at dlammers@cmp.com.