All posts by Chris
Ritual Wedding Readings
Ah, the beauty of the “pick and choose” school of theology.
I can’t even begin to count all the weddings I have been to that included a reading of what is probably the most popular wedding Bible verse ever: 1 Corinthians 13. In part, it reads
“Love is patient, love is kind. It does not envy, it does not boast, it is not proud … Love never fails. … And now these three remain: faith, hope and love. But the greatest of these is love.” (NIV)
I agree, the sentiments of this passage are quite beautiful. But I wonder how many soon-to-be-married couples have read all of 1 Corinthians and know of Paul’s opinions on marriage. Paul is not exactly the guy I would propose to give a toast at my wedding. For example, 1 Corinthians 7 says
“Now to the unmarried and the widows I say: It is good for them to stay unmarried, as I do. But if they cannot control themselves, they should marry, for it is better to marry than to burn with passion. … Are you pledged to a woman? Do not seek to be released. Are you free from such a commitment? Do not look for a wife. But if you do marry, you have not sinned … But those who marry will face many troubles in this life, and I want to spare you this.”
You don’t hear that one read at too many weddings. I admit that I have faced a few troubles in this life, and the occasional passion did burn (when I was a bit younger). But all in all, I don’t look to Paul for advice in marriage. I think he could have benefited from a little therapy.
Quote of the Day
This morning my daughter Sarah said to me “‘Have’ is my favorite word.” Caught a bit off guard, but used to the non sequiturs that come with being six years old, I replied “Oh really, why is that?” “Well,” she answered, “it’s because ‘have’ breaks the rules.”
I’m so proud of my little girl.
A view from the top (20)
It is an article of faith among semiconductor industry watchers that the last 20 years have seen considerable consolidation among semiconductor makers, with further consolidation all but inevitable. Of course, we can all point to mergers (TI and National being the latest) and players exiting from the market (NEC was the #1 chipmaker in the world in 1991, but now is out of the business). But does the data support this view of rampant consolidation?
I’ve been looking over 24 years of annual top 20 semiconductor company revenue data compiled by Gartner Dataquest (1987 – 1999) and iSupply (2000 – 2010), and the results show a more nuanced picture. As I noted in my last post on this topic, foundries are excluded from this accounting – their revenue is attributed to the companies placing the orders. Thus, this is a semiconductor product-based top-20 list, not a semiconductor fab-based top-20 list. With that in mind, let’s look at the trends.
Consider first, the fraction of the total semiconductor market controlled by the top 20 semiconductor companies. The trendline shows a 15% drop in market share over 24 years for the top 20, or about a 0.7% decline on average each year. In other words, the rest of the semiconductor companies (those not in the top 20) saw their market share grow dramatically, from 23% to 38% or so.
Likewise, the top 10 semiconductor companies saw their market share drop by ten points, from about 56% to 46% (or about 0.45% per year). The top five companies, on the other hand, kept about a constant share of 1/3 of the market since 1987. The trendline has a slope not significantly different from zero (-0.1% per year).
But it’s the top two semiconductor makers that show the most interesting trend. The top 2 have seen a 6% rise in their market share, to 22% today, for an increase of about 0.3% per year. The top three makers have seen a more modest 0.15% increase in market share per year since 1987. Thus, consolidation of market share has only come at the very top of the market, the top 2 to be specific. For the rest of the industry, there has be spreading out of the market among more players. Those top 2 players are now, of course, Intel and Samsung. But in 1987 they were NEC and Toshiba (Intel was #10 then, and Samsung wasn’t on the list).
So is the megatrend of semiconductor industry consolidation a myth? Yes and no. From a product perspective, the data is clear. The top two companies have grown in dominance, but for the remaining 80% of the market or so revenue is being spread over a wider array of companies over time. Foundries can be given some credit for the increased democratization of the market, but the trends were in place before foundries even came into existence. In fact, it is more accurate to say that foundries are a result rather than a cause of this democratization. It is the nature of the semiconductor product itself which has driven this increase in the long tail of the distribution of companies.
While there have always been a few blockbuster product categories (memory and microprocessors) where size matters, the vast majority of semiconductor revenue comes from niche (or at least small market share) products. Big companies don’t excel at making lots of niche products. Thus, small to medium-sized companies who stay close to their customers are able to compete well against their larger rivals. It is likely that this trend will continue so long as Moore’s Law continues.
Moore’s Law keeps the few big players still able to invest in new fabs quite busy, and they need big market categories to justify their big investments. There has been considerable consolidation in the industry if you consider fabs rather than products, since there are now only about five companies that are likely to stay at the front of Moore’s Law over the next few years. And these top five manufacturers have seen growth in their share of fab output. But I doubt that a smaller number of fabs competing at the very high-end of the market will somehow reverse the trend of dispersion for the other 80% of the market. That is, until Moore’s Law ends. Then, these big companies with their big fabs are likely to turn their attentions to markets that seemed to diffuse to worry about. What happens then, in a post-Moore’s Law world, is anyone’s guess.
On the Road
I’m jealous. My friend Ben Woodard has decided to move from Austin back to his home state of California. Don’t get me wrong, I have no desire to leave Austin or move to California. I’m jealous of the way he has decided to go – in style. He is driving across the country, using no highways, in his DeLorean. With his friend Michael for company, the two of them are off on an adventure of unknown proportions. I’m looking forward to his modern version of On the Road, full of blog posts along the way, no doubt. Good luck, Ben!
Happy 7E9 Day!
In honor of Halloween, here is a fright for you: today is the day, according to one UN estimate, that the world population reached 7 billion. (Estimates vary – the US census bureau puts that date as next March). The population is growing by about a million people every five days. If current trends continue, we’ll see 8 billion people in 15 years and 9 billion people by 2043. That means that, if I am lucky enough to live that long, I will see a tripling of the world population in my lifetime (it was 3 billion in 1960 when I was born).
For this auspicious date I’ve updated my population essay and data spreadsheet with the latest numbers. Enjoy.
The top 20 ain’t what it used to be
Looking back on data of the annual top 20 semiconductor companies since 1987, it’s amazing how much has changed. In my last post on this topic, I looked at all the companies that went bankrupt, spun-out, or merged their way into or out of the top 20 list. Change is definitely a constant in this field. Now, let’s look at the makeup of the 2010 list of top semiconductor companies. Here is the list, as generated by iSuppli.
1 Intel Corporation
2 Samsung Electronics
3 Toshiba Semiconductor
4 Texas Instruments
5 Renesas Electronics
6 Hynix
7 STMicroelectronics
8 Micron Technology
9 Qualcomm
10 Broadcom
11 Elpida Memory
12 Advanced Micro Devices
13 Infineon Technologies
14 Sony
15 Panasonic Corporation
16 Freescale Semiconductor
17 NXP
18 Marvell Technology Group
19 MediaTek
20 NVIDIA
It’s important to note that foundries are excluded from this accounting – their revenue is attributed to the companies placing the orders. Thus, this is a semiconductor product-based top-20 list, not a semiconductor maker-based top-20 list.
And that distinction is obvious when looking at the make-up of the 2010 top-20. Six of the top 20 companies are fabless. Another seven are “fab-lite”, meaning they have stopped investing in new fabs or leading-edge manufacturing. That leaves just seven leading-edge semiconductor manufacturers in the top 20. Of those, four make mostly memory (80% of Samsung’s revenue came from memory), two make mostly logic, and one (Toshiba) makes a fair amount of both.
As a point of reference, if TSMC’s revenue were attributed to TSMC rather than their customers, they would be in fourth place, just barely behind Toshiba. The next two largest foundries, UMC and GlobalFoundries, would find themselves near the bottom of the top 20.
So, we have seven semiconductor manufacturers and three foundries that claim to still want to invest in leading-edge manufacturing capacity. That’s a far cry from just 10 years ago, when all 20 of the top 20 semiconductor companies were committed to building new leading-edge fabs. And even this list of 10 companies can’t really afford to play at the bleeding edge. Only five of them (Intel, Samsung, Toshiba, TSMC, and Hynix) have over $10B/year in semiconductor revenue, probably the minimum needed to build that next $5B mega fab. Add EUV and 450mm wafers into the mix, and you can see that there will be very few players at this ultra-high end of manufacturing.
It is conventional wisdom that the last decade has been one of extreme consolidation in the semiconductor business. Next, I’ll look at the numbers to see how well that conventional wisdom holds up.
A Summer in Austin to Remember
It has finally cooled down in Austin (it only got up to about 88F today), so it is probably safe to talk about the brutally hot summer that is now behind us. It was the hottest summer on record (using the Camp Mabry records, since 1897), and on September 29, we had our 90th day at or above 100F. Wow. For fun, I looked up some other statistics about the Austin summers:
Average number of 100 degree days each year in Austin: 12.3
Greatest number of 100 degree days in one year (before this year): 69 (1925). In 2009 we had 68.
Average date of the first 100 degree day: July 11th
Average date of the last 100 degree day: August 20th
Earliest 100 degree day: May 4th (1984)
Latest 100 degree day: October 2nd (1938)
Years without a 100 degree day: 10 (1987, 1979, 1975, 1973, 1968, 1919, 1908, 1907, 1906, 1904)
Highest temperature of record was 112 on September 5, 2000 and August 28, 2011
Of course, our big fear is that this year is the new normal. A scary thought.
Quote of the Day
“This world is a strange madhouse. Currently, every coachman and every waiter is debating whether relativity theory is correct. Belief in this matter depends on political party affiliation.”
– Albert Einstein (1920)
(Amazing how some things never change.)
It’s hard to stay on top
As part of my fascination with the history of the semiconductor industry, I’ve recently been reviewing data on the annual top 20 semiconductor companies since 1987. Using revenue data compiled by Gartner Dataquest (through 1999) and iSupply (2000 – 2010), it’s been very interesting to see what changes have come about at the top of the heap in our industry. Here is a brief synopsis of some major events in the lives of the top-20 semiconductor companies since 1987:
• SGS-THOMSON was formed with the merger of SGS Microelettronica and Thomson Semiconducteurs in 1987, and changed its name to STMicroelectronics in 1998.
• Harris Semiconductor was formed in 1988 when Harris bought GE’s Solid State division, and was spun out by Harris as Intersil in 1999. GE was a top-20 semiconductor company in 1987, and Harris last saw the top 20 in 1990.
• Matsushita changed its business name to Panasonic in 2008, which bought Sanyo in 2009. Sanyo was last in the top 20 in 1999.
• The memory businesses of NEC and Hitachi were combined and spun out as Elpida Memory in 1999, which then took over the Mitsubishi memory business in 2003.
• The logic business of Hitachi and Mitsubishi were combined to form Renesas Technology in 2003, taking Hitachi and Mitsubishi completely out of the semiconductor business. Renasas then took over the semiconductor business of NEC in 2010 and is now Renesas Electronics. NEC was the #1 semiconductor maker in 1987 – 1991, and has been in the top 20 every year until 2010.
• Hyundai merged with LG Semiconductor in 1999, and changed its semiconductor business name to Hynix Semiconductor in 2001. LG was last listed in the top 20 in 1997. Hyundai first joined the top 20 in 1995.
• Motorola spun out its semiconductor business as Freescale Semiconductor in 2004.
• Philips spun out its semiconductor business as NXP Semiconductors in 2006.
• Siemens spun out its semiconductor business as Infineon Technologies in 1999, which spun out its memory business as Qimonda in 2006, which went bankrupt in 2009. Qimonda was ranked #16 in 2006.
• AMD spun out its Fujitsu joint venture Flash memory business (started in 1993) as Spansion in 2005, and the rest of its semiconductor business as GlobalFoundries in 2009, which merged with Chartered Semiconductor in 2010. Spansion made it as high as 24 in the semiconductor rankings in 2006.
• AT&T spun out its semiconductor business as Lucent Technologies in 1996, which spun out its semiconductor business as Agere Systems in 2000, which was bought by fabless LSI Logic in 2007 (now LSI Corporation). Agere was last in the top 20 in 2001.
• OKI Electric Industry dropped out of the top 20 after 1993, and sold its semiconductor business to Rohm in 2008. Rohm was last in the top 20 in 2008.
• Other companies to drop out of the top 20 were Sharp (last listed in 2009), Analog Devices (2004), Fujitsu (2004), IBM (2005),
• National Semiconductor bought Fairchild Semiconductor in 1987 and spun it out again in 1997, It bought Cyrix in 1997 and sold it 1999. National was last in the top 20 in 1998, and was bought by Texas Instruments in 2011.
And those are just some of the changes in the top 20 over the last 25 years. It’s always a wild ride in the semiconductor business.
Next post, I’ll look at the current make-up of the 2010 semiconductor top-20 list and see what has changed in the last 25 years.