March 21, 2005
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| by Jack Horgan - Contributing Editor
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Most of what I have written and read about semiconductor industry has been regarding the digital world. There is of course another world, the analog world, and in between mixed signal.
According to a study by IBS Group 20 percent of the area, 40 percent of the design effort and 50 percent of the design re-spins. The same firm observed significant growth in the mixed-signal system-on-chip over the last five years and expects a growth rate of the order of 40 percent in the next five years. By next year it is expected that 75 percent of all silicon-on-chips will contain some analog component. The table below shows some data taken from the Autumn 2004 forecast of the WSTS.
A similar view is expressed in the table below by a Databeans forecast issued January 2005:
What is an analog circuit? Linear Technology defines linear or analog circuits as circuits that monitor, condition, amplify or transform continuous analog signals associated with physical properties, such as temperature, pressure, weight, light, sound or speed, and play an important role in bridging between real world phenomena and a variety of electronic systems. Linear circuits also provide voltage regulation and power control to electronic systems, especially in hand-held battery powered systems. Other vendors in this market space have a similar definition of analog circuits.
Examples of analog circuits include:
Because of the varied applications for linear circuits, manufacturers typically offer a greater variety of device types to a more diverse group of customers, who typically have smaller volume requirements per device. As a result, linear circuit manufacturers are often less dependent upon particular products or customers; linear circuit markets are generally more fragmented; and competition within those markets tends to be more diffused.
Sales in America and Europe have generally declined over then past 5 years as customers shift more of their manufacturing operations to Asia and as demand for product has grown in Asia.
The process to produce integrated circuits typically consists of the following steps:
- Wafer Fabrication is a series of complex precision processes that include oxidation, lithography, chemical etching, diffusion, deposition, implantation and metallization.
- Wafer Sort where the silicon wafers are tested and separated into individual circuit devices.
- Product Assembly
- Final Test uses computerized circuit testers and, for certain applications, environmental testers such as burn-in ovens, centrifuges, temperature cycle or moisture resistance testers, salt atmosphere testers and thermal shock testers.
The companies discussed in this week's commentary often perform wafer fabrication in the US or other “high cost” countries, while assembly and test operations are located in low cost countries such as China, Malaysia and the Philippines.
Industry analyst iSuppli has issued a report ranking vendors by market share in the Analog market. The table below shows the rankings.
In the tables that follow the fiscal year rather than the calendar year is used. For the vendors in question, the end of fiscal year 2004 is listed in the table below.
National Semiconductor Corporation (“National”) was originally incorporated in 1959. Its headquarters have been in Santa Clara, California since 1967. It employs around 9,700 people. The company offers more than 15,000 products. The firm describes itself as:
“National Semiconductor, the industry's premier analog company, creates high performance analog devices and subsystems. National's leading-edge products include power management circuits, display drivers, audio and operational amplifiers, communication interface products and data conversion solutions. National's key markets include wireless handsets, displays, PCs and laptops. The company's analog products are also optimized for numerous applications in a variety of electronics markets, including medical, automotive, industrial, and test and measurement.”
National's 5 year financials are presented in the table below. Analog has averaged around 80% of the revenue.
In fiscal 2004 analog products accounted for 84% of sales. The remaining 16% that are not analog or mixed-signal include microcontrollers, advanced I/O, connectivity processors and embedded Bluetooth solutions. Sales growth in fiscal 2004 was essentially all due to the Analog segment. Growth in Analog segment sales was driven by higher consumer demand for products such as wireless phones and notebook computers, and also because of a general trend towards increased analog semiconductor content in a variety of electronic products. Within the Analog segment, sales of power management products led the growth in sales with an increase of 35 percent from sales in fiscal 2003.
For fiscal 2004, sales increased in all geographic regions compared to fiscal 2003. The increases were 35 percent in Japan, 21 percent in the Asia Pacific region, 16 percent in Europe and 8 percent in the Americas. Sales in fiscal 2004 as a percentage of total sales remained flat at 46 percent for the Asia Pacific region and 20 percent in Europe. Japan increased to 13 percent of total sales while the Americas decreased to 21 percent. In 2001 US and UK accounted for 33% and 11% of sales respectively.
During fiscal 2004, National's operations were organized in the following six groups: the Analog Group, the Displays and Wireless Group, the PC and Networking Group, the Custom Solutions Group, the Imaging Group, and the Information Appliance Group (which was ultimately disbanded in early fiscal 2004). In late August 2004, National announced the sale of its imaging business to Eastman Kodak Company to focus its investments on resources that support the core analog areas.
The Analog Group designs, develops and manufactures a wide range of products including:
- power management products (power conversion, regulation and conservation);
- high performance operational amplifiers;
- high performance analog-to-digital converters;
- high efficiency audio amplifiers;
- thermal management products.
In fiscal 2004, nearly 43 percent of the Analog Group's revenues were derived from original equipment manufacturers, while the remaining 57 percent came from our worldwide authorized distributors. Major oems include HP, IBM, LG Electronics, L.M. Ericsson, Motorola, Nokia, Samsung, Siemens, and Sony.
The Analog segment sales for the first half of fiscal 2005 remained higher than sales for first half of fiscal 2004, driven by higher consumer demand for products such as wireless handsets and notebook computers, and a general trend towards increased analog semiconductor content in a variety of electronic products. However, efforts by distributors and customers to reduce inventories combined with lower than expected demand patterns caused sales in the second quarter to decrease from the level in the corresponding quarter of fiscal 2004. In connection with these inventory adjustments, demand for our analog products was weak in the Asian wireless handset market and flat-panel displays market.
Analog Devices, Inc (ADI) was founded in 1965. The firm specializes in high performance analog, mixed-signal, and digital signal processing integrated circuits. High-performance devices are generally defined as devices that support a minimum of 10-bits of accuracy and a minimum of 50 megahertz of speed. The firm has wafer fabrication facilities for high-performance analog products are located in Massachusetts, California, and Ireland. Product test is conducted at facilities in the Philippines. Corporate headquarters is located in Norwood, MA. ADI currently has a worldwide workforce of approximately 8,900 employees, including over 3,000 engineers.
ADI produces and markets several thousand products. Their ten highest revenue products accounted for approximately 17% of company revenue for fiscal 2004. The majority of the products are proprietary, meaning equivalent products are not available from competitors. Their largest single customer, excluding distributors, represented approximately 3% of our fiscal 2004 net sales, and the 20 largest customers, excluding distributors, accounted for approximately 29% of our fiscal 2004 net sales.
In fiscal 2004, analog product sales increased 31% from the levels recorded in fiscal 2003. In fiscal 2003, analog product sales increased 16% from the levels recorded in fiscal 2002. In fiscal 2004, DSP product sales increased by 21% from the levels recorded in fiscal 2003 after increasing 35% from the levels recorded in fiscal 2002. Over the last three fiscal years, net sales from analog products were in the range of 78% to 80% of net sales and sales of DSP products represented the remaining 20% to 22% of net sales.
The fastest growing part of ADI's business has been to customers in markets other than North America and Europe. Approximately 19% of fiscal 2004 net sales were to customers in Japan. Approximately 14% of our fiscal 2004 net sales were to customers in China and approximately 22% were to customers elsewhere in Asia, principally Taiwan and Korea.
In terms of industry segments Automotive accounted for 16%, Defense/Aero 11%, Instrumentation 23%, Process Control 14% and ATE 36%.
The data converter and amplifier product categories represented approximately 60% of fiscal 2004 revenue. Other analog IC products include analog signal processing devices such as analog multipliers, switches, multiplexers and comparators.
ADI has an iMEMS portfolio of products that integrate signal conditioning and MEMS, micro-electromechanical systems. This currently includes accelerometers used to sense acceleration, and gyroscopes used to sense position. The majority of our current revenue from micromachined products is derived from accelerometers used by automotive manufacturers in airbag applications. However, revenue from consumer and industrial customers is increasing as the firm develops products using this technology for applications in these end markets.
Linear Technology Corporation was organized and incorporated in 1981. Linear designs, manufactures and markets a broad line of standard high performance integrated circuits. They market over 7,500 products to over 15,000 original equipment manufacturers. Applications for the firm's products include telecommunications, cellular telephones, networking products, notebook and desktop computers, video/multimedia, industrial instrumentation, automotive electronics, factory automation, process control, and military and space systems. The principal product categories include amplifiers, battery management, data converters, high frequency, interface, voltage regulators and voltage
Linear's wafer fabrication and manufacturing facilities are located in Camas, Washington and Milpitas, California. Assembly and test facilities are located in Penang, Malaysia and Singapore. The Penang facility opened in October 1994 and services approximately 60% to 90% of the firm's assembly requirements for plastic packages. The Company's primary subcontractors are Carsem Sdn, located in Malaysia; and NSE located in Thailand. Linear also maintains domestic assembly operations to satisfy particular customer requirements, especially those for military applications, and to provide rapid turnaround for new product development. After assembly, most products are sent to the Company's
Singapore facility for final testing, inspection and packaging as required. In addition, the Company's Singapore facility serves as a major warehouse and distribution center with the bulk of the Company's shipments to end customers originating from this facility.
Linear sells to over 15,000 Original Equipment Manufacturer customers directly and/or through the sales distributor channel. Distributor and direct customers generally buy on an individual purchase order basis, rather than pursuant to long-term agreements. The firm's primary domestic distributor, Arrow Electronics, accounted for 15% of net sales during the last three fiscal years. No other distributor or customer accounted for 10% or more of net sales for fiscal 2004, 2003 or 2002.
During fiscal 2004, 2003 and 2002, export sales which were primarily to Europe, Japan and Rest of the World (“ROW”), which is primarily Asia excluding Japan, represented approximately 71%, 68% and 64% of net sales, respectively. Because most of the Company's export sales are billed and payable in United States dollars, export sales are generally not directly subject to fluctuating currency exchange rates.
STMicroelectronics N.V. is registered in the Netherlands with its statutory domicile in Amsterdam. The Company was formed in 1987 with the name of SGS-THOMSON Microelectronics by the combination of the semiconductor business of SGS Microelettronica (then owned by Societa` Finanziaria Telefonica (S.T.E.T.), an Italian corporation) and the non-military business of Thomson Semiconducteurs (then owned by Thomson-CSF, a French corporation) whereby each company contributed their respective semiconductor businesses in exchange for a 50% interest in the Company. ST is one of the world's largest semiconductor companies. In 2004, ST's net revenues were US$8,760 million and net earnings were
Corporate Headquarters, as well as the headquarters for Europe and for Emerging Markets, are in Geneva. The group totals close to 50,000 employees, 16 advanced research and development units, 39 design and application centers, 16 main manufacturing sites and 88 sales offices in 31 countries.
On its website ST claims that according to the most recent data from independent sources, it is the world's leading supplier of application-specific analog ICs overall with number one rankings in various segments within this field, including wireless ASICs, computer peripheral ASICs and automotive ASSPs. ST is also the leader in MPEG-2 decoder ICs, and ASICs/ASSPs overall, including a number one position in digital consumer ASSPs. Additionally, ST is ranked at number two for discrete products, and in the memory market, ST is ranked third in NOR Flash ICs. In application segments overall: ST is number one for ICs in set-top boxes; at number two in smart cards, at number three in automotive;
and at number four in wireless.
North America and Europe have declined as percent of total revenue from 24% and 34% respectively in 2000 to 14% and 27% in 2004. The growth has been in AP outside of Japan and in Emerging defined as Eastern Europe, India, Africa, Latin America and Middle East.
In 2004 ST sales by major markets were Communications 32%, Consumer 21%, Computer 16%, Industrial 16% and Automotive 19%. ST see market CAGR for all these segments in the 10% to 12% range. From another perspective ST sales were 66% differentiated products (Telecom peripherals and Automotive, Consumer & Microcontroller), 15% Memories and Logic, 14% Discretes and 5% Standard & Commodities.
Maxim Integrated Products was established in 1983 and is headquartered in Sunnyvale. . As of June 26, 2004, the company had 7,599 employees Maxim markets approximately 5,000 analog ICs. Their products include data converters, interface circuits, microprocessor supervisors, operational amplifiers, power supplies, multiplexers, switches, battery chargers, battery management circuits, RF wireless circuits, fiber optic transceivers, sensors, and voltage references.
In fiscal year 2001, Maxim acquired Dallas Semiconductor Corporation in a transaction accounted for as a pooling-of-interests for $2.5B in stock. At the time of the acquisition, Dallas Semiconductor's product line consisted of 390 proprietary base products sold to over 15,000 customers worldwide. Applications for those products include battery management, broadband telecommunications, wireless handsets, cellular base stations, networking, servers, data storage, and a wide variety of industrial equipment.
Most of the wafers produced in fiscal year 2004 were manufactured at one of the company's four wafer fabrication facilities in Beaverton, San Jose, Dallas, and San Antonio. Maxim ships most of its processed wafers to foreign assembly subcontractors, located in the Philippines, Malaysia, Thailand, Hong Kong, Taiwan, Singapore, and South Korea, where wafers are separated into individual integrated circuits and assembled into a variety of packages. After assembly has been completed, the majority of the assembled product is shipped to the company's test facilities located in Cavite, the Philippines, and Chonburi Province, Thailand.
Approximately 70%, 67% and 66% of the Company's net revenues in fiscal years 2004, 2003, and 2002, respectively, were derived from customers located outside the United States, primarily in the Pacific Rim, Europe, and Japan.
In April 1999, Infineon Technologies AG was formed as a separate legal entity and a directly and indirectly wholly owned subsidiary of Siemens AG. Prior to that date, they were the Siemens Semiconductor Group. As such, they have been actively involved in the development, manufacture and marketing of semiconductors since 1952. In March 2000, as part of an initial public offering, Siemens' affiliate, Siemens Nederland N.V., sold approximately 173 million of our shares. Since that time, Siemens and its affiliates have taken a number of steps to substantially reduce their ownership interest in our company. Siemens continues to control the disposition of approximately 18 percent of the
firm. Infineon has a total of approximately 35,570 employees. They create and fulfill the majority of their net sales directly, though they increasingly make sales through a global network of distributors and partners in the Electronic Manufacturing Services (EMS) segment.
Infineon designs, develops, manufactures and markets a broad range of semiconductors and complete systems solutions used in a wide variety of microelectronic applications, including computer systems, telecommunications systems, consumer goods, automotive products, industrial automation and control systems, and chip card applications. Their products include standard commodity components, full-custom devices, semi-custom devices, and application-specific components for memory, analog, digital, and mixed-signal applications.
Infineon's business is organized into four principal operating segments serving various markets in the semiconductor industry: Wireline Communications, Secure Mobile Solutions, Automotive & Industrial, and Memory Products. In 2004 these segments accounted for 6%, 25%, 25%, and 41% respectively plus 3% others.
The table below shows the financials for the last five years. Revenues are 26% from 2001 to 2002 and 17% from 2003 to 2004.
For 2003 Infineon claims to be number 2 in Automotive with an 8.7% share of $13.1B market and number 1 in power with an 8.1% share of a $9.4B market.
North America and Germany as a percentage of total revenue each dropped 3% from 2001 to 2004.
In April 2004, Infineon acquired the Taiwanese chip designer ADMtek Inc., Hsinchu, Taiwan (''ADMtek''). ADMtek will offer a complete IC solution package, to complete our portfolio of broadband access products for the central office with feature-rich, multimedia gateway solutions for customer premise equipment. Also in 2004 the firm agreed to sell their fiber optics business unit (part of our Wireline Communications segment) to Finisar Corporation.
Infineon and Rambus have been in the press repeatedly due to a long standing battle of alleged patent infringement related to memory products.
Separately Infineon entered into a plea agreement with the Antitrust Division of the U.S. Department of Justice in connection with its ongoing investigation of alleged antitrust violations in the DRAM industry. Under terms of the agreement the firm agreed to pay a fine of $160 million.
Texas Instruments makes, markets and sells high-technology components to more than 30,000 customers. TI has three separate business segments: 1) Semiconductor; 2) Sensors & Controls; and 3) Educational & Productivity Solutions. Semiconductor is by far the largest of these business segments. It accounted for over 85 percent of revenue in 2004, and historically it averages a higher growth rate than the other two business segments, although the semiconductor market is characterized by wide swings in growth rates from year to year. TI was the world's third-largest semiconductor company in 2004 in terms of revenue, according to Gartner. In 2004 Sensors & Controls accounted for 9% of
revenue and E&PS 4%.
TI's analog semiconductors consist of custom products and standard products. Custom products are designed for specific applications for specific customers. Standard products include application-specific standard products and high-performance standard catalog products. These standard products are characterized by differentiated features and specifications, as well as relatively high margins. Many standard analog products tend to have long life spans. Both custom and standard products are proprietary and difficult for competitors to imitate. Analog products also include commodity products, which are sold in high volume and into a broad range of applications, and generally are differentiated
by price and availability.
TI owns and operates semiconductor manufacturing sites in the Americas, Japan, Europe and Asia.
As part of our manufacturing strategy, TI outsources a portion of product manufacturing to outside suppliers (foundries and assembly/test subcontractors), which reduces the amount of capital expenditures and subsequent depreciation required to meet customer demands, as well as fluctuations in profit margins. Outside foundries provided about 20 percent of TI's total capacity needs in 2004.
Semiconductor revenue of $10,941 million increased 31 percent from 2003, due to increased shipments resulting from broad-based demand, led by 40 percent growth in wireless revenue, 40 percent growth in high-performance analog revenue and 79 percent growth in DLP product revenue. Revenue from analog products and DSPs represents 75 percent of total Semiconductor revenue for both 2004 and 2003.
The company's analog revenue grew 28 percent due to higher shipments as a result of growth in demand for high-performance analog products and wireless products. About 40 percent of Semiconductor revenue came from analog products. Revenue from high-performance analog products, a subset of total analog, grew 40 percent despite inventory reductions that affected demand in the second half of the year, especially for products sold through distribution channels. By sharply reducing factory loadings, TI was able to finish the year with internal inventory at desired levels.
Using new, proprietary manufacturing processes, TI is creating high-performance analog products with performance and power-consumption characteristics that are differentiating TI from competitors. The company introduced about 400 new high-performance analog products in 2004. Despite the long product life cycles intrinsic in this market, about half of TI's high-performance analog revenue came from products introduced in the last few years. This indicates the market's positive response to TI's rise as an innovative and reliable high-performance analog supplier.
Among significant developments, TI introduced a new Impedance Track technology for “gas-gauge” chipsets. This technology calculates a device's remaining power with up to 99 percent accuracy throughout a battery's total life cycle. A digital still camera, for example, could use this technology to display the number of pictures that can be taken with the remaining battery charge.
Koninklijke Philips Electronics N.V. (the “Company” or “Royal Philips Electronics”) is the parent company of Philips. The activities of the Philips group are organized in 6 operating product divisions, each of which is responsible for the management of its business worldwide, being Lighting, Consumer Electronics, Domestic Appliances and Personal Care, Semiconductors, Medical Systems and Miscellaneous. At the end of 2004, Philips had approximately 140 production sites in 32 countries and sales and service outlets in approximately 150 countries, and employed about 162,000 people and recorded sales of EUR 30 billion in 2004.
Revenue from North America as a percent of total revenue has fallen from 15.8% in 2002 to 9.2% in 2004, while revenue from AP has risen from 54.3% to 58.6%. Europe has also picked up 2% of total revenue.
Philips Semiconductors has significant investments in wafer-fabrication ventures: approximately 48% in Systems on Sillicon Manufacturing Company (SSMC) and an additional 6% via Taiwan Semiconductor Manufacturing Company Limited (TSMC), approximately 19% in TSMC, approximately 37% in ASMC and approximately 60% in Jilin, China. In addition, Semiconductors has a 31% share in the aforementioned plant in Crolles, France. The division currently has 20 manufacturing facilities throughout the world, located in Europe, the United States and Asia.
Philips Semiconductors is not active in the memory, microprocessors (MPU) and optoelectronics part of the semiconductor industry
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-- Jack Horgan, EDACafe.com Contributing Editor.