Until a bit of the dust settles on Wall Street I’ve decided that it is best to cruise the modern InterTubes for stories about the chip industry. Here are a few that I have been pondering:
Over on the EE Times website Mentor Graphics CEO Wally Rhines writes a piece about the deconsolidation in the chip industry:
Semiconductor Industry, Deconsolidation
Figure 1 shows that semiconductor revenue based upon foundry wafers grew to about 20% of total semiconductor sales by the year 2000 and then remained flat for most of the next decade. The 20% share of revenue assumes that fabless semiconductor companies sell their foundry-produced products at about a 2X multiple of their foundry cost. This 20% share has recently begun to grow again. Exceptionally large capital investments by foundries in 2010 and 2011 will inevitably increase the share of semiconductor wafers sourced from foundries.
I think it is important to recognize that this most relevant to the fabless chip houses and not those that have manufacturing facilities – foundry or IDM. Much of the consolidation in the semiconductor food chain has taken place in the capital equipment business and its supply chain.
This story was linked to another, longer article Wally released over a year ago: Is Semiconductor Industry Consolidation Inevitable?
Most interesting to me was this observation on Page 2:
Looking back across the past six decades, TI (Texas Instruments) is the only company that has remained in the top ten throughout semiconductor history. When consolidation does occur, it is mostly among those companies that fail to adapt to the next level of emerging technology.
Never under-estimate the big Texan.
While I was reviewing this I was thinking about some of the comments made by the Gartner analysts during Semicon West – see this article I wrote last month for a few of their thoughts:
