Those who have not read the Hackworth interview on foundries should do so. It is very informative not only about the foundry industry but also about Cirrus' struggles over the last few years. I thought Mike pulled together a lot of things from the past that I have seen elsewhere and put them into a coherent whole.
I believe the changes in the foundry industry have had a profound impact on Cirrus over the last three years. In fact, I would go so far as to say that they are the foremost reason both for Cirrus' severe troubles in '95-'96 and their continuing inability to come charging back. (I am not saying that there aren't other reasons, e.g., increased competition in graphics, semiconductor market conditions, poor project management decisions, etc.)
Those who have followed CRUS for a few years are familiar with the situation three years back, but the Hackworth interview provides a good summary of the effect of the changes in the foundry industry at that time:
"But at about that time, there was a plethora of fabless companies coming to market because the model had been proven and was obviously very successful... And with a large number of new fabless companies wanting to buy the same wafers, the foundry suppliers saw this as an opportunity to bring on new customers and not have Cirrus Logic represent such a dominant percentage of their business. That was a very terrible situation for us . . . We went from four main foundry suppliers in 1994 to some 12 foundry suppliers at the peak, which was an enormous dissipation of our product development resources." (italics mine)
But what was a new perspective to me was Hackworth's take on the recent changes among the foundries which have also served to hurt CRUS. The size and services of the foundries have gone from being hard on large and growing fabless companies like CRUS circa 1995 to being beneficial. Now CRUS is being hurt by having more capacity from their JV fabs at a time when they could really benefit from using the foundries. But Hackworth's explanation of the evolution of the foundry industry is what fascinated me:
"The foundry companies are highly competitive, and they all are pushing the technology very rapidly. Each one wants to be the first with 0.25-micron, with 0.18-micron, with copper, be the first guy with this, the first guy with that. The free-enterprise system is
working its fantastic magic with the foundry industry, and that allows the semiconductor companies to rely on having a strong wafer supply, attractive prices, and outstanding technology. It's probably better than what any single company can do internally."
Again, I believe that those who haven't read the article would find it worthwhile:
pubs.cmpnet.com
Many thanks to DJBEINO for making the rest of us aware of it.
G.P. |
