Going into midyear 2004, most of the leading companies in the semiconductor industry have posted improving financial performance figures over the past six quarters, a strong indication of the strength and breadth of the economic recovery. Industry analysts are uniformly optimistic in their 2004 forecasts, with a consensus forecast for overall industry growth of 25 percent and foundry growth of 30 percent. With strong demand from both fabless and integrated device manufacturer companies, we are running at full operating capacity, and expect demand in the second half of the year to be stronger than in the first half.

The challenges brought by the increased complexity of deep-submicron technologies will continue to impact the chip industry, and the foundry industry in particular. A whole range of issues will affect leading-edge system-on-chip (SoC) production. These include the challenges of new semiconductor materials (high-k, silicon-on-insulator, strained silicon) and nanometer scaling, as well as signal integrity, IR drop, noise margin and crosstalk issues. In response to those challenges, EDA methodology is becoming increasingly important, with a focus on design-for-test and design-for-manufacturability to meet time-to-market challenges.

UMC is addressing these issues by closer collaboration with its partners throughout the supply chain. This includes collaboration with customers, equipment providers, and EDA tool and intellectual-property (IP) vendors. Today's foundries must not only have the best process technology and manufacturing efficiency, but must also possess the required knowledge in system design and architecture to provide complete SoC solutions to customers. UMC's complete foundry SoC solution starts from a common logic-based platform, where designers can choose the process technology and transistor options that best fit their application. From there, technologies like RF CMOS and embedded memories can be integrated to further fine-tune the process to customers' individual needs.

These process technology solutions must be complemented by such silicon-proven design solutions as reference flows, process-optimized foundation IP (standard-cell libraries, I/O, memory compilers) and application-specific IP (analog and functional IP) that are optimized for portability and cost.

UMC has developed strong partnerships with the best solution providers addressing these issues. Although our core competence remains process technology development and manufacturing prowess, we must also excel at planning and managing strategic relationships with the third-party vendors that make our total SoC solutions possible.

As time goes on, foundry providers like UMC will have to offer more complete solutions. At the same time, due to their engagement with the best-of-breed companies in each respective field, foundries will offer flexibility unimaginable with traditional ASIC vendors, in addition to the already well-documented productivity and cost efficiencies associated with dedicated foundry specialization.

Jackson Hu, Chief Executive Officer United Microelectronics Corp., Hsinchu City, Taiwan