American semiconductor industry, the rise and the fall, and then there is Apple

If the recent economic events are not gloomy enough for you, why not read about how the American semiconductor industry has been in a slow decline over the last thirty years? To be fair, Brian Bradshaw’s article is not all depressing with a portion devoted to the initial rise of the American semiconductor industry. The fall section however is significantly longer and more detailed, discussing such topics as Japan’s DRAM dominance in the mid 1980s to the limited success of the American Sematech initiative. An interesting observation made by Brian is that Sematech allowed the chip industry to reach a level of maturity at which point the price of capital and labor became the dominant factors in selecting sites for future manufacturing plant location. This, according to Brian, is the reason why of the last 40 chip factories, 35 were built in Asia, and only 5 in the United States (US) and Europe combined. He further examines the ascend of South Korea to DRAM and Flash memory dominance and the emergence of the chip foundry business. Finally, Brian spends a little bit of time musing about the future of the US industry and the major players.

Reading through the article one can’t fail to notice how Texas Instruments to some degree or another is quite connected with the current state of affairs. Whether through joint ventures with other companies, board members, or spin-offs, the company has its fingers in more places than one might imagine - quite fascinating. As far as the discussion on the future is concerned, it would have been nice if Brian had expanded his analysis of some of the major players. For example, many engineers question IBM’s commitment to the semiconductor industry? If they could find a buyer with deep enough pockets would they try to get rid of the division? How about Oracle’s recent acquisition of Sun? How much of Sun’s engineering will survive the acquisition? There have also been rumors of Sun being interested in developing x86 processors. Then there is Intel’s recent success with the Atom processor and the collaboration agreement with TSMC. And finally, increasing amounts of rumors are emerging regarding Apple’s ambitions for chip design as described in a recent Wall Street article. As a matter of fact, quickly browsing through the current Apple job opening yielded several chip design positions ranging from circuit design, to verification, and implementation, all of which seem to be located in the Santa Clara Valley - Maybe the outlook for chip design in the US is not so bleak after all.

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No.1 Oracle to invest in SPARC

According to an interview posted on Oracle's website:

http://www.oracle.com/sun/lje-oracle-sun-faq.pdf

How about this for a fitting quote: "We think designing our own chips is very, very important. Even Apple is designing its own chips these days."

Submitted by maciej, on 2009-05-11 14:22:54

No.2 IBM's Commitment

A few years ago I did a few ASICs with IBM. The "commitment" question came up, especially regarding FAB longevity. Here is how they addressed it - IBM is a server company, servers require cutting edge process technology to build so IBM invests heavily in FABs and servers require spares for decades so IBM must maintain old FABs. Just look how many AS/400's are in use today running mission critical applications and will probably still be in use ten years from now.

Submitted by drewcswj, on 2009-05-20 08:48:02

No.3 IBM's CEO

Maybe you are right and what you state above will hold true in the future. At the same time IBM's CEO has lately been very vocal about the future of the company being services, see this article here: http://tinyurl.com/mbjqlh

Submitted by maciej, on 2009-05-31 23:01:45

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