Full Service Suppliers to Thrive in Custom Silicon Market Says VLSI's Rich Beyer
SAN JOSE, Calif.--
Adding Value by Simplifying Design and Manufacture of
Multi-Million Gate Custom Silicon
New manufacturing and design technologies will transform the custom silicon business into one of the most important segments of the semiconductor industry in the early 21st century, according to Rich Beyer, president and COO of VLSI Technology Inc. (NASDAQ:VLSI). Speaking at the "Silicon Strategies '98" conference held here, Beyer said that multiple business models will emerge in the custom silicon sector, with each model defined by who acts as "general contractor" in the custom chip design and manufacturing process. In this environment, full service custom silicon suppliers like VLSI Technology will enjoy significant advantages in the marketplace.
"The custom silicon question is no longer, 'How to design a circuit?' but 'How to design the system?' Today's technologies enable all of the elements of a complete electronic system-microprocessor intelligence, logic, analog, memory, power management-to be integrated on a single chip," said Beyer. "As custom ICs form the main element of product design, the custom circuit sector will grow faster than the electronics industry as a whole, creating an exciting business environment for many new and established players."
Riding the Custom Silicon Wave
In his talk, Beyer analyzed the evolution of the system-on-a-chip semiconductor industry from the 1980's to the early 21st century. "Custom systems on a chip clearly represent the next wave of the semiconductor industry in the early 21st century," commented Beyer. "But achieving this destiny depends on the custom silicon industry adapting new thinking and practices to make dramatic progress in chip development productivity. Our job is to make it simple, efficient and economical to design and manufacture even the most complex custom IC products."
Multiple Business Models
Beyer believes that as the custom silicon sector grows, multiple business models are emerging to serve different classes of custom silicon users. "I see at least three business models in the custom silicon business. First we have the current ASIC model, where the customer and IC supplier cooperate in chip design, and the IC supplier handles all production responsibilities. Under the second model, the customer may elect to contract out any or all parts of the design and manufacturing to a series of design houses, electronic design automation (EDA) tool companies, intellectual property (IP) providers, contract fabs, test and assembly houses, with the customer usually acting as 'general contractor.' While this is the most 'open' business model, it also adds complexity to an already complex undertaking."
Beyer believes a third model, based on the capabilities of established full-service custom circuit suppliers like VLSI Technology, is emerging as an important model in the custom IC industry. "In this model, the customer partners with a full-service IC company. The full-service supplier acts as 'general contractor,' offering an optimized combination of design services, focused intellectual property and high-flex manufacturing, along with integrated test, packaging and assembly. We believe this model delivers an advantageous combination of shorter time-to-market and more cost-effective end products with the great virtue of a simplified customer-vendor-technolo gy relationship."
VLSI Value Proposition
Beyer views VLSI's value proposition to its customers as combining the best elements of the company's ASIC heritage with the emerging full-service model. "As a full-service custom circuit supplier our value-added is based on orchestrating an otherwise complex design, development and manufacturing process; market-focused libraries of proven, optimized intellectual property; world-class manufacturing; and an unmatched commitment to customer service. Most importantly, we recognize that our customers want to succeed in their business--whether it be cell-phones, data networking, set-top boxes or advanced computing systems. We view ourselves as a systems-minded custom silicon company for systems-minded customers."
Silicon Strategies '98 Conference
Co-sponsored by Silicon Strategies magazine; Wessels, Arnold & Henderson; U.S. Venture Partners; Wilson, Sonsini, Goodrich and Rosati; and Arthur Andersen, the Silicon Strategies '98 conference is a first-of-its-kind gathering of companies from all sectors of the intellectual-property focused custom circuit industry. The conference program, held March 16 and 17, 1998 in San Jose, featured presentations by leading custom circuit IP, design tools, services and manufacturing companies from around the world.
About VLSI Technology, Inc.
VLSI Technology, Inc. designs and manufactures System-Level Silicon(tm) integrated circuits based on its FSB(tm) functional system blocks(tm) library. Targeting its offerings toward the wireless communications, networking, consumer digital entertainment and computing markets, the company offers its customers advanced system-level integration capabilities. The company is based in San Jose, California, with 1997 revenues from continuing operations of $712.7 million, and approximately 2,500 employees worldwide. Visit VLSI's homepage at vlsi.com.
Note to Editors: FSB, functional system block, and System-Level Silicon are trademarks of VLSI Technology, Inc. All other brand or product names are trademarks and/or registered trademarks of their respective owners.
CONTACT: VLSI Technology, Inc.
Martin Chorich (Public Relations Manager), 408/922-5155
martin.chorich@sanjose.vlsi.com
"Copyright(c) 1998, Business Wire"
"Provided by Dow Jones & Company, Inc." |
