Semicon likely to grow 12pc in 2008

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Semicon likely to grow 12pc in 2008

If there will be an economic recession, the chip industry (but not all firms) is in the best shape possible to weather the ensuing storm

Pradeep Chakraborty

Wednesday, May 14, 2008

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Changing market dynamics
Is Fablite a valid option? While there is nothing wrong with being fabless, folks are just not sure whether the best starting point is being an IDM. Teamwork has to be perfectly orchestrated, as the competition is tough.

As for the market share dynamics, the top 10 companies (IDMs) have been losing share. Fabless share has been growing, but it is still relatively small.

Coming to the realities of the foundry market, TSMC's lead is now unassailable. If TSMC was an IDM, it would be No. 2, challenging Intel and passing Samsung. Moving more into design looks inevitable.

Finally, execution, and not technology, is everything! Execution has and will continue to make the difference. Applications (software) will play the role of the key differentiator as well, and it has value. Design is the means to an end, and not the end.

From the chip industry's perspective, the electronics market was traditionally Japan, North America and Western Europe. It now encompasses the entire Asian Rim, China, Eastern Europe and India.

Far from maturing, the chip industry itself is still in its volatile, high-growth phase, with at least a further 20 years of strong growth in prospect. Penn concluded, "The underlying growth drivers for chips has never been better."

Back to the basics
We started with the need to get back to industry basics. We end in the same way! The industry is adviced to stick to basics like:

* Don't invest in low cost areas just because they are cheap -- they have a habit of becoming high cost tomorrow, plus the hidden extras.
* Don't make outsourcing decisions just because they are easy -- especially if there's no way back.
* Don't make strategic cut-backs just to trim the bottom line -- some decisions, e.g., R&D, take a long time to impact, and then it's too late.
* Stop looking for high volume/high value market niches -- they don't exist, need to learn how to compete
* Do show strong leadership
* Do have a long-term plan and stick with it -- even if it negatively impacts 'the next quarter' balance sheet
* Do show a commitment and determination to succeed
* Do stay focused and resistant to external meddling
* Do execute ruthlessly -- this is the key competitive differentiator)
* Do … just do it with passion -- it's the passion that makes the difference!

©CIOL Bureau

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PCM said on 6/11/2008 3:15:37 AM:
Wow! You are on the dot!

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