With the recent Global Semiconductor Alliance (GSA) Board of Directors vote to create a new category of semiconductor company, the Value Chain Producer (VCP), eSilicon’s contribution to the overall industry has been formalized and made permanent.
It’s been nearly 10 years since we opened our doors, and in that time, other Value Chain Producers have followed suit. These companies constitute a market segment closing in on $1billion. It is a category that has evolved from a visionary alternative to the classic ASIC model to the mainstream for the development of both ASICs for OEMs and ASSPs for the small to medium sized fabless semiconductor companies (FSCs) – although some of our customers occupy the top slots in the fabless space.
Why is a new category warranted? The reasons are many but here are just a few with a common theme…it’s getting too hard for the average company to make one or two mega complex parts per year. Consider:
-Complexity is forcing the daily availability of critical, specialized skills once provided by operations generalists. Packaging and signal integrity join power management and timing closure as major challenges. Most OEMs and FSCs can’t attract and afford these specialists, where a VCP can keep them engaged in a wide range of products.
- Time and effort spent in vetting the supply chain and working on different contracts for each project versus focusing on product innovation and market growth.
- Integration of chip sets into one SoC has greatly limited the learning curve available to any given team. They once made annually, say, four parts at 180nm and are now making just one at 40nm…and they simply can’t get good at it before moving on to 28nm.
- Wasteful buying practices leave too many dollars on the table that can be optimized by the collective buying power of the VCP. A VCP can beat most companies pricing AND make a good margin. There is waste everywhere to be purged.
- Accessing the “R&D” in any given EDA tool, wafer or package is best done by a high volume buyer or a VCP. A company making one or two chips a year cannot stretch the limits compared to a major FSC nor leverage the special “bells and whistles” in any given tool or raw material for both performance and economics. VCPs solve these and many problems.
A decade ago it wasn’t expected the VCP would be a new semiconductor category. I never had the thought. But today it seems so obvious that a new model would be required to resolve complexity, cost and integration problems globally and seamlessly with the existing supply chain:
Meet the Value Chain Producer.
