Infineon exec addresses IDM challenges in wireless sector

Eul: Performance can be increased with scaling of technology.

Hermann Eul, member of the management board, Infineon Technologies AG, delivered his keynote on deep sub-micron CMOS technology and the challenges for semiconductor IDM at the VLSI conference. He concentrated on wireless communication primarily the mobile Internet which is becoming one of the key future revenue engines.

Market trends
The mobile phone sells more than a billion and is still growing. It is a very important future market with more innovations. Mobile Internet is driven by a strong demand of business users as well as users in emerging markets who do not have access to computers and want to access the internet with their cell phones. This trend comes along with continuous cost pressure and ongoing feature integration calling for deep sub-micron CMOS technology.

It was thought that the market would be dominated by the top five companies, however the diversity in the market shares shows that it is concentrated on few players while many players share the rest. The solution lies in formulating new business models to get a bigger share of the market. The market has divided into high-end, with the smartphones equipped with slim modems and transmission technology, and the emerging markets at the low-end are dictated by low cost.

Change in value chain coverage
This division leads to change in value chain. The entry of powerful Internet and consumer brands and now even luxury designer brands into the mobile handset arena marks the start of a new era which changes the dynamics in this field and results in a stronger battle than ever to control the wireless value chain. Big ODM/OEM players go into service with competitive offerings. The service players enter into ODM /OEM, while the operators try to extend into both directions of service offerings and ODM/OEM. Consequently, most ODMs are moving into other business models which leaves a gap for the semi conductor industry fill the spot.

How can semiconductor IDM fill that spot?

The semiconductor IDMs can respond by rethinking their value chain coverage. The areas they can concentrate on are:

SoC integration: Low-cost segments drive SoC integration "Single Chip Modem". Designing flexible hardware architectures to reduce overall system BOM and overcome board space limitations

System platform strategy: Offer pre-tested system platforms for aggressive product ramp-up to hit narrow market windows. Develop flexible platforms to serve a variety of models in the fashion driven consumer like market.

Manufacturing partnerships: Form alliances to share cost of technology development. Integrate RF and analogue blocks in standard CMOS technology. The back-end technologies increasingly influence overall system performance hence IDM's should focus on this.

System competence, Inter-Operability Test (IOT): ODM/OEMs focus on higher parts of the value chain and increasingly rely on the system competence of the semiconductor supplier. Hence this also becomes a key focus area for IDM where they can have ownership of the entire platform to simplify IOT.

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