Industry Squibs

There are so many interesting conferences, symposia, and panel discussions that it is pity that one cannot attend them all. As such, it is always nice when someone who does attend an interesting event, takes the time to post of few highlight. Even better when a nice succinct trip report with some observations and commentary is provided. This time, the thanks go out to Mike Demler, and his The World is Analog blog for providing excellent coverage from the 10th Annual Wireless Communications Alliance (WCA) What’s Hot and What’s Not in Mobility 2009 investor panel discussion that occurred last week in Santa Clara, CA. Part 1 of the report can be found here, and part two can be found here. The panel consisted of Eric Zimits (Managing Director, Granite Ventures), Dev Khare (Vice President, Venrock), Tim Chang (Principal, Nortwest Venture Partners, and Scott Raney (Partner, Redpoint Ventures), and was moderated by Scott Ellison (VP Mobility Wireless, IDC). I encourage you to take some time and read both parts as they contain some interesting highlights and observations on a variety of subjects including: venture capital, mobile - software, services, infrastructure, TV, health, commerce, and advertising - just to mention a few.

If you are only interested in semiconductor startup related comments, here are the key takeaways: Startup capital for fabless digital design startups is almost non-existent. And while that Panelists placed the blame on China’s plethora of fabless design startups, I’m more in agreement with Mike’s observation that it is the cost of developing chips on the leading edge process that has erased the value proposition for potential investors. The Panelists were in agreement on the fact that RF and analog areas where a much better opportunity for semiconductor startups mostly due the smaller team sizes that are needed. The number of RF and mixed-signal startups that we have covered on this blog over the last few months very much supports this notion. As a matter of fact, I would say that any startup that can take what is usually considered an analog design problem and can find a digital implementation for it stands a good chance of finding some funding especially in the wireless space. On a related note, Femtocells are also becoming increasingly of interest mostly due to the bandwidth overloading that is currently experienced by the majority of the wireless carriers. We covered a startup called Percello last year that specializes in basebend processors for the Femtocell market. Finally, on the mobile processor side of things, the panelists held a strong believe that ARM will eat Intel’s lunch over the next few years and displace Intel’s Atom processor in the netbook/smartbook and smartphone markets. Once again I have to agree with Mike that one should never underestimate Intel, even if they are a relative newcomer to the SoC space (disclosure: I do have an affiliation with Intel; however, the opinions on this blog are purely and completely mine, and are not reflective of Intel’s opinions and business strategy).

The other day I ran across an article on EETimes.com titled Which chip makers will rule in 2018? While the focus of the article is on the future, probably the most interesting piece of data that it contained was actually a table, depicted below, which showed the top 10 semiconductor supplier from 1978 to 2008 in ten year increments. It is surprising how much information can be gleamed from a simple table such as this one: rise and fall of companies, countries, results of mergers and acquisitions and so on.

Here are a few observations: For those like myself, that cannot call themselves industry veterans quite yet, it might comes as a surprise that in 1978 TI and Motorola where the two dominant companies. Noticeable as well is Intel’s 9th position in the ranking below National and Fairchild. As we all know, over the next few decades Intel would go on and climb the ranking to eventually claim the number one spot. National and Fairchild did not fare nearly as well. By the late 1970s Fairchild was very much past its glory days, and in 1979 it was acquired by Schlumberger Limited – an oil field services company. Not surprisingly, in 1987 Schlumberger sold Fairchild to National, however as can be seen from the table, by the time 1988 rolled around, the combined entity no longer made the top 10 list. The 1988 rankings show the ascend of Japanese suppliers: NEC, Toshiba, and Hitachi claimed the top three spots, respectively, and overall, Japanese companies claimed six of the top 10 spots. In 1998, the picture changed again, with Intel taking the number one spot and with Samsung’s ascend signaling the emergence of South Korea as a major player in the semiconductor field. Interestingly the table also places Infineon in the tenth spot. In actuality, the company still ought to be have been called Siemens at that point since Infineon did not spin out from Siemens until 1999.

The 2008 rankings also showed some major changes in part due to mergers and acquisitions: Renesas, a joint venture between Mitsubishi and Hitachi, joined the list. NEC, which spun out NEC Electronics in 2003, dropped off the list completely. Earlier this year though, Renesas and NEC Electronics announced plans to merge by 2010 and thus create the world’s third largest semiconductor supplier, at least on paper. Motorola and Philips, both of whom spun out their semiconductor divisions as Freescale Semiconductor and NXP Semiconductors, respectively, have failed to translate the spin-outs into sales, and as such both have dropped off the list. Hynix Semiconductor, a spin-out from Hyundai Electronic, joined Samsung as the second South Korean company on the top 10 list, continuing the ascend of Korean companies. The 2008 list also showed the emergence of fabless semiconductor companies, with Qualcomm joining the list in the 8th spot. Strictly going by name recognition and ignoring all the new ventures created through mergers and acquisitions only Intel and Toshiba have remained in the top 10 list over the last three decades. What will the next decade bring is an interesting question indeed, but we’ll have to wait till 2018 to find out.

Jeff Immelt, GE’s chairman and chief executive, has been one busy guy as of late, if not with actual work then at least with giving speeches and publishing articles regarding the future of the Unites States as it pertains to business, technology, and innovation. Consider his latest piece, co-authored with John Doerr who is a partner at Kleiner Perkins Coufield & Byers, that was published the other day in the Washington Post. The article, titled Falling Behind on Green Technology, is more or less a call for the U.S. to get serious about green technology. Two major points are presented: First, the U.S. has the top five leading internet technology companies, but when it comes to green technologies the U.S. has only one of the top five wind power producers, one of the top ten solar panel producers, and two of the top ten next generation battery manufacturers. Second, because long-term guidance from policy makers is lacking, and current policy is detrimental to green technology startups, the U.S. is falling behind significantly when compared to other countries, especially China.

Of course, the statistics above might only become a problem if one truly believes that renewable energy is indeed the next big thing - a very hotly contest topic as is evidenced by the number of comments left by readers. One should not really be completely surprised that Jeff keeps pushing green technologies. GE is heavily vested in wind turbines, heavy machinery, and appliances. Each one of these segments is likely to profit significantly from any regulation requiring higher efficiencies - then again maybe profiting handily while cleaning up the environment might not be so bad after all. The article’s introduction of the China scare is also somewhat amusing; after all, the Russian scare during the cold war era seems to have worked wonders for American ingenuity, so maybe all that is needed now is a green war era? All humor aside, it is a brief article so you can consumer it quickly and decide for yourself.

In case you need a longer dose of Jeff Immelt you might be interested in the video below showing the speech he gave when GE announced a new Manufacturing and Software Technology Center outside of Detroit. The speech, titled American Renewal is rather long one coming in just short of 45 minutes. If you don’t have your coffee handy and a comfortable chair, here is quick synopsis: Jeff argues that the U.S. cannot rely on being a service-led and consumption based economy. It needs to be technology based and export that technology. Further, goals need to be set long term in terms of great undertakings and compensation must be adjusted such that people that truly have brains are valued more than bean counters. Jeff proposes a plan that consists of five fronts: First, an increase in R&D spending is needed since technology makes countries and people wealthy in the long term. Second, the U.S. needs to focus on clean energy and affordable healthcare as the engine for future job growth. Third, the U.S. needs to seriously commit to manufacturing and exports, rather than relying on the American consumer to lead the recovery. Fourth, the U.S. should utilize the government as a catalyst for leadership and change through public/private partnerships, while at the same time be cautious about too much regulation that might stifle innovation. And finally, he encourages business leaders to be responsible for the competitiveness of their own country. In addition to all of the above, Jeff encourages those who have capital to invest, for the best time to invest is when it is hard to do so for others. The video is below, so you can watch it and make up your own mind. Regardless, whether you agree with Jeff regarding renewable energy or affordable healthcare, if either of them comes to pass there ought to be plenty of opportunities to capitalize on this for low-power and analog semiconductor startups.