Everybody knows  that the $250bn plus global semiconductor market is being driven these days by the whims and fancies of a 17-year-old girl.  Well, a universe of 17-year-old girls, as consumer products of all kinds raid the chip shop for novelty and new features.  That said, the semiconductor industry looks as if it is heading for a period of slower growth with TSMC, the Taiwan-based manufacturer that is the world’s leading silicon foundry, predicting  only single figure sales  growth - admittedly high single figure sales growth - next year compared with the high teens it enjoyed in 2006.  Loss of momentum in the fixed and mobile phone and personal computer businesses are being blamed.  The industry remains cyclical but not perhaps as cyclical as before, old hands reckon.

Nevertheless, the growing influence of fashion and the desire for trendiness in the consumer space is  being reflected in the fact that a two-year chip manufacturing cycle is being squeezed into 12 months as the market demands new features and applications at ever shorter times to market.  The trend to greater complexity is remorseless.  TSMC manufactures to order chips designed by its customers - over  7bn eight inch wafers or their equivalent this year alone. It has been tuning up its two lines capable of handling giant 12 inch wafers, the silicon platters on which individual chips are inscribed. 

And here’s the killer: several start-up companies whose designs are to be manufactured by TSMC next year will go straight to the industry’s most advanced technology - 65 nanometre - rather than starting in traditional fashion with a less taxing regime (say, 1.3 micron) and then moving up.  This is a dramatic change, brought about by the pressure to deliver, and deliver rapidly. 

But unless you’re thinking big, don’t bother starting this small.  You’ll need an estimated $250m a year in sales to justify the cost of design, prototyping and fabricating a chip in 65 nanometre technology.

- London

December 1st, 2006 in Uncategorised | Permalink