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Semicon industry experiencing fundamental changes

Posted: 12 Jan 2007     Print Version  Bookmark and Share

Keywords:semiconductor  IC industry  Infineon  Wolfgang Ziebart  Brian Fuller 

The semiconductor industry is experiencing consolidation changes that are fundamentally different from any that have gone before, which will result in fewer vendors that are not necessarily larger than they are today, Infineon CEO Wolfgang Ziebart said.

"The industry is really undergoing fundamental change . . . and previous key factors of success [will] be valid only in certain areas of the market," Ziebart said in an interview with EE Times.

The disaggregation of the past 15 years created a more efficient ecosystem for electronics design and more companies. Those companies were founded in venture-backed start-ups that could avoid manufacturing costs by outsourcing to foundries.

Twenty years ago, some 70 per cent of products were made on the two most recent process nodes, Ziebart argued. Today, because of the high cost of research and development, that percentage has dropped to a range of 40 to 50 per cent, he added.

"For quite a majority of the companies, Moore's Law is not the driver anymore," he said.

With pricing pressures and R&D traditionally budgeted at around 20 to even 30 per cent of total sales, the industry is in for a major consolidation. "It will not take place in that companies will get bigger and bigger," he said. "The consolidation will take place in market segments. In those segments of the market, you will have fewer players but stronger players. Those players will not necessarily become bigger than they are."

Ziebart's company has taken this to heart in the past three years by spinning out its memory operations as publicly traded Qimonda focusing on the communications and automotive sectors.

- Brian Fuller
EE Times

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