Thoughts from the Executive Office

Maestro PR Blog: Imec’s Take on Foundry Services is a Cue for IDMs

The June issue of “Imec Magazine” (http://magazine.imec.be/data/36/reader/reader.html#preferred/1/package/36/pub/42/page/6) features an article by Steve Beckers, general manager of a new imec program called ICLink. It’s a must-read for anyone who thinks that semiconductor manufacturing can be relegated to dedicated fabs or that there’s no money to be made in foundry services.

Beckers points out that the intense complexity of chips will confine dedicated fabs to those companies with high volumes. Meanwhile, companies supplying chips for markets with lower volumes – medical/lifestyle, automotive, industrial, and others – need lower volumes. Beckers says these are ASIC companies. But there are other companies that fall into the same category of low-volume semiconductors. In other words, there are plenty of companies that focus on markets that are called low-volume, but which really offer high ASPs because the chips delivered are tailored to specific functions.

His premise may be a scenario we already understand: big companies with the highest volumes get the most attentions from dedicated foundries; specialty processes drain valuable time on the manufacturing line and, possibly, to delivery; and, increasing complexity will continue to be the badge of mobile electronics. However, the premise is not the take-away of the article. His point is that ASIC companies and others with smaller volumes will need manufacturing services. Imec will be one source for assisting.

And my point is that IDMs are another.

IDMs can leverage their manufacturing by wisely managing their fabrication facilities, and by offering foundry services to those companies who have brilliant solutions for new and existing markets with high demand. And there are many of those.

Read Beckers’ commentary. He says a lot in a short space. It’s fodder for anyone looking to expand their business.

~Barbara Kalkis, Maestro Marketing & Public Relations, 11 June 2014

#Maestro PR Blog- MEPTEC’s Look at MEMS: An Old Stealth Market Emerges

While EUV, graphene, FinFETs and silicon wafers larger than your extra-large loaded pizza grab industry headlines, some technologies march along – out of the spotlight but into familiar products used every day.  Micro-electro mechanical systems, or “MEMS”, are one such technology. 

 

 At MEPTEC’s (www.meptec.org) MEMS symposium held recently in San Jose, it was clear that MEMS have not just gained traction in a variety of applications, they are making significant headway into the marketplace through increasing numbers of applications. 

 

Two factors are aiding the MEMS market: First, there’s a  ready manufacturing base which includes more than half the Fab Owners Association (FOA) membership. Second, the realities of stalled technology advancements in materials, processing and plain old physics in advanced micro-scaled silicon semiconductors are inspiring device makers, start-ups, innovators, and – according to symposium speakers – investors -- to take a closer look at what MEMS can deliver today.

 

MEPTEC MEMS speakers gave forthright assessments on the status of design challenges, manufacturing, packaging, metallurgical and material considerations, applications and today and near-future markets.  Progress is well underway in each of these categories. Packaging innovation seems to have made the most progress, but then this symposium was hosted by the packaging industry’s organization.

 

From my marketing perspective, the allure of MEMS is that they can be fabricated in volume using what I call today-technologies.  Established device-makers already offer MEMS fabrication processes, so innovators have the ready  manufacturing infrastructure they need to move to market in good time.  

 

Instead of focusing on the “glamorous”  topics (okay, nothing is that glamorous about tech, but you get the idea) dominating today’s headlines, like EUV, etc. mentioned above and other airy promises unfilled because of physics, MEMS can solve problems today.  And when problems are solved, markets are born and grow.

 

MEMS have the right market qualities: 

  1. MEMS utilize today-technologies. Already stated. MEMS can be manufactured today using available technologies like sensors, etc.  Innovators are looking to incorporate MEMS on the same substrate as their silicon counterpart, but I don’t see that as a show-stopper. It’s a technology problem already being addressed.
  2. MEMS can deliver a better price point. Because they are manufactured in volume “lots” or “batches”, like regular silicon semiconductors.  Plus, they rely on mature and, therefore, proven device manufacturing.
  3. Manufacturing expertise and infrastructure exist now. More than half the FOA members already support MEMS manufacturing with 6” and 8” wafers. These members are IDMs, or integrated device manufacturers. They are manufacturing experts with front-end design knowledge, production know-how, and expertise in the back-end tasks of assembly, packaging and test. This means MEMS designers/companies have a ready infrastructure.
  4. MEMS can deliver high performance in areas where a single chip can’t. This is the heart of MEMS as “devices”. They are micro-systems that can do what one scaled integrated circuit can’t, or what it is too expensive to do in one chip.
  5. MEMS already support a wide variety of applications. And companies are identifying others.

 

Meptec MEMS symposium speakers identified a multitude of current and future market categories and specific applications: automobiles, consumer goods, flow rates, general medical and medical imaging, paper detection, UAVs and obstacle detection.

 

To get an idea of the MEMS market size, I checked in with Tony Massimini, chief of technology at Semico Research (www.semico.com).   Massimini says the 2013 market for MEMS was $16.1 billion dollars, or 5.2% of the total global semiconductor sales.   These figures reflect MEMS that are key components for sensing, and other functions in smart phones, tablets, autos, and other products in consumer, communications, computing and industrial applications.  Massimini estimates that sector growth could reach $28.5 B by 2018, with the majority of sales from inertial motion sensors (gyroscopes, accelerometers and magnetometers) and pressure sensors.

Nothing about tech is easy. Consider that 20 years ago, you relied on a fax machine instead of the internet if you needed information quickly. You read the daily newspaper. You needed to pump serious iron in order to carry a computer. Too long ago?  Okay. Ten years ago you were using a digital camera for photos. Your ear buds were clumsy enough to take out your hearing. And your desk still had a fax machine on it.

 

MEMS Work Now.

MEMS hold promise for nurturing new applications and products by utilizing available technologies today at the same time it innovates for tomorrow.  Challenges do persist. The MEMS industry needs to find a way to produce MEMS on silicon substrates, but I don’t see that as showstopper. Universities, think-tanks and new companies are hard at work on this task.

 

The device substrate answers will come, as will new applications. Maybe not tomorrow, but the symposium left me convinced the minds behind the products are running very fast to bring solutions to market. I believe they can do it.

 

For more information on MEMS you can check out these sites:

~Barbara Kalkis, ©Maestro Marketing & Public Relations.

 

Maestro PR Blog: Good Companies and Bad Mistakes. (This may mean you.)

A Mil-Aero company is rumored to be ‘on the block’ as I write this. It’s one of those mid-sized companies – about $500 million – that seem to have a sound product portfolio, excellent reliability and quality, a solid customer base, and overall strong corporate culture.  Now, all of that hangs in the balance.  Set aside all the trauma of job loss and economic impact.  Acquisitions threaten every aspect of the corporation, not just the characteristics listed above.

Customers in the Mil-Aero space, like any other tech sector, require stable suppliers: companies that can be counted on to deliver the right product at the right time.  When a company hits the $500 million dollar mark, we expect that they have jumped the hurdles of fiscal solvency, management problems, technical innovation that threaten the life of smaller companies. We expect at the half-billion-dollar range, the company is on a continuing upward revenue trend.

Acquisitions typically kill a brand.  Fab managers usually sniff and shrug their shoulders over branding. They view it as an advertising exercise, a waste of company funds compared to a new piece of shiny manufacturing equipment (even though the cost of branding a company is pocket change compared to equipment prices that could bale some states and small nations out of debt.)

Regardless of whether you are a fab manager, an engineer designing analog circuitry, or running numbers in the finance department, it’s your company’s brand that labels your company as a winner, a reliable source, a good place to work, a product to buy or cross off the vendor list. 

Brands get their reputation from the same people who will only buy Miracle Whip instead of mayonnaise, drive a German car instead of a Japanese or American one, fly a certain airline.  You get the picture.

Regardless of our job titles and responsibilities, we are all consumers when we shop. It doesn’t matter whether it’s a cell phone or a semiconductor or devices that must prove 99.9999% uptime in rugged environments.

As every acquisition rumor arises, I wonder. . .

  1. Does the executive management lack the skills and/or smarts to grow the company?
  2. Has the company failed to identify, understand, or keep pace with trends, demands?
  3. Is the technology obsolete and the ability to innovate gone, lost, or just never existed?
  4. Is the management team just tired? Got what they wanted in terms of salaries and looking for early retirement?
  5. Is being a successful mid-sized company with a dedicated niche following and customer base just not good enough? Ie, Does the management team want more revenue than the company can generate?
  6. Is the marketing effort a failure in its ability to compete, find a niche, build an alluring brand image, outsmart the competition?

Although it’s not stated, in every instance above, failure comes down to the executive management team, the CEO,  the Board of Directors, and the major investors.  Sometimes the failure is too much homogeneity in the thinking of the executive team, the fear of thinking differently, saying that an idea is bad, wrong, or plain stupid. Sometimes emotion outweighs logic. Easy answers are faster to implement than hard ones that will take time.  Sometimes, wringing the company for revenues that translate into personal salaries is enough.

Thankfully, there are companies that want to be financially successful. When considering the qualities of those companies that I admire, I find the best ones are those who want to build an empire. No, not just a billion-dollar empire.  An empire that leads in their competitive sector, market, industry. One that ensures investors and employees get an excellent return on their investments of money (investors) and time (employees). I like companies that are good corporate citizens and realize that they owe their communities and stakeholders more than taxes.  Companies that give to charities, support community efforts and events; take a ‘green’ approach to their business practices. The leaders – and winners – are companies that are positive corporate citizens and thrive, regardless of their size.

Here’s an analogy from consumer marketing.  Central Dairy in Jefferson City, Missouri, has an ice cream shop (610 Madison Street) off the main route, away from the State capitol building, various state agency buildings and countless law firms.  After touring the city, my friends took a detour to go to Central Dairy’s ice cream shop. When we entered, every booth was taken and there was a solid line of customers ordering every flavor of ice cream from vanilla to Muddy River.   From the time we entered until we left, the place stayed crowded and the ice cream rolled out two scoops at a time.

Is the Central Dairy the largest company in Missouri? I don’t know. It doesn’t matter. What I do know is that it is successful.  They sell a quality product that attracts customers to that part of town to buy it.  The www.visitjeffersoncity.com site even lists it as a destination. It gets a 4.5 – 5-star rating on various sites.  

Technology and business-to-business marketers can learn a lot from consumer marketing.  Small businesses may seem unworthy of your notice but when they are successful there’s a reason for it. It’s smart to find out what that reason is, because it’s usually so basic you can emulate it in any industry.

~Barbara Kalkis, Maestro Marketing & Public Relations, March 2014

Barbara Kalkis's Maestro PR Blog: Semico's "Spin" on IDM Market Opportunities

Question: How many items in your home operate thanks to semiconductors? 

You can start counting up the appliances sprinkled around your kitchen, crowding your car out of your garage, or taking up space around the house. Or, I can just tell you without torturing you.  According to Joanne Itow, VP and analyst of Semico Research (www.semico.com), the answer is more than 70.

Put aside trendy electronics like computers, tablets, readers, telephones, cell phones, TVs, game consoles, and cars. Think smaller, hidden and portable, after all, we’re talking about semiconductors.  From the bathroom (thermometers, glucose meters, blood pressure cuffs) to the laundry room (washers) to home control (security systems, temperature controls) to the treadmill gathering dust in the garage,  we rely on electronics to monitor, analyze, calculate, gauge, measure, manage, communicate and report information to us any time we want it.

I don’t believe any other industry has provided the platform for advancing the information age as semiconductors have.

In an address to IDMs (integrated device manufacturers; ie, companies that own their own fabrication facilities) and their suppliers, Joanne reviewed several key industries that promise rich market opportunities for, what I will call, electronic platforms.

(I’m using the term ‘electronic platform’  to indicate semiconductor-based products.  The “chips” are the foundation to create the invention and operation of our vast array of consumer goods.)

The first market to capture everyone’s interest is healthcare.  Joanne stated that 860 million people worldwide are chronically ill.  Diabetes, an increasing global epidemic, shows all the signs of mushrooming  as the number of diabetics jumps  from 366 million worldwide in 2011 to 550 million by 2030.  In the USA alone about 140 million people are chronically ill. The biggest health problems?  Diabetes and its ‘cousin’, obesity.  About 25% of US healthcare dollars go toward addressing these two health threats.

Another factor is that 21% of the USA population will be over 65 years old by 2050.  In some countries, the percentage is higher.   But ‘seniors’ have become a feisty, stubborn lot.  They are adamantly determined to remain in their own homes, rather than moving to senior housing or living with their kids, grandkids, dog, cat, and pet gecko. 

The only answer to this scenario is electronic innovation.  Electronic devices for medical and lifestyle applications  reduce the stress of disease and chronic illness by making them manageable.  The independence, control, fewer doctor visits, and potentially lower insurance bills all make this market alluring financially and universally desirable to every consumer!

 

Infrastructure Opportunities.

As global population increases, common infrastructure systems for highways, skyscrapers, fuel delivery and other commercial and industrial systems are stressed to keep pace. Determining how electronic systems can address applications will be a challenge requiring input of industries typically lagging in electronics know-how.

Meanwhile, the flagship market for chips – computers of all types and mobile devices – will only continue to grow.  “The Cloud” will mushroom, demanding more server and storage capability.

Semico says that 200mm still leads in total number of units sold, with 300mm occupying less than 15% of total units. But! Revenues for 300mm wafers lead that of 200mm and other wafer sizes, and demand for 300mm wafers will grow by 12.6% CAGR over the next five years.  

200mm  [  300mm Now.

Attention  smart operations and fab managers:  No crystal balls are need. This revenue trend means that if  you run a 200mm wafer fab, you need to transition to 300mm now.  Yes, Europe fabs, this means YOU. 

You still have high demand for the cheaper 200mm wafer products but…for how long?  Customers can switch suppliers faster than you can select, order, buy, install, test, and mass-produce silicon on new equipment. Result?  Your near-term revenue can dry up before your requisition for next-generation equipment ever gets approved, let alone signed. (Good-bye quarterly, annual earnings.  Oh, and you own stock in your company, too? Oops.)

Sensors and MEMS are two growing device sectors but still largely untapped for a variety of possible applications.  In basic technology, the analog market and power management devices remain strong.  Semico cites the Asia-Pacific region as the largest analog market in 2013 with sales of almost $23 Billion.  The Americas and Europe are neck and neck for second place, with sales of $6.8 Billion and $6.4 Billion respectively.  Sales in Japan have dropped in recent years down to $4 Billion in 2013.

The Take-Away.

  1.  Healthcare, industrial, infrastructure and other mainstream markets deserve a second look from innovators.  Designing new systems and ecosystems poses a challenge, but the world has the talent pool to address it.  And, for device-manufacturers, we know the problems in these markets can be solved with proven, cost-effective 300mm manufacturing.  
  2. Wireless communications devices will continue to proliferate.  That means…
  3. . . .Analog, mixed-signal, MEMS technologies will continue to grow right alone with the markets!
  4. Despite the attention given to 450mm wafers, EUV, and other evolving technologies, the workhorse technologies at the heart of IDM businesses are still pumping revenue growth in many markets, with new opportunities on the horizon.  Hello, Tomorrow.

Barbara Kalkis, Maestro Market & Public Relations, March 2014

 

Maestro PR Blog: Fab Owners Forum Shows Problems, Opportunity

The Fab Owners Association (FOA) convened this month (February) for its annual review of the integrated device manufacturing (IDM) model.  It’s not a meeting of hyper-happy executives. You need to go to a software conference for that kind of fun.  Rather, it’s a no-nonsense review of how the IDM model is faring in the fiercely competitive business of making chips, selling them, and finding lucrative markets.  Problems persist. It’s a tough industry. It doesn’t have the financial allure of fabless companies or those partying software folks.  But for anyone who’s been on the IDM roller-coaster for a while, you know we still enjoy the ride.

 

 

Surprisingly enough, my overall take-away from the FOA meeting is that things are looking pretty good. Of course, I’m a PR person and we’re supposed to be positive or we need to find another career.  But my opinion is not based on my optimism, but that of the participants.   

 

Some quick takeaways from the agenda:

  1. IC industry growth for 2014 will run about 7%.
  2. Analog, power and MEMS continue as high-demand technologies.
  3. 200mm fabs still produce the highest percentage of wafers, but. . .
  4. 300mm revenues are higher.
  5. 450nm and EUV face delays still … again … yet.
  6. Many lucrative “large niche” markets remain untapped.
  7. Markets to watch include industrial, biotech, infrastructure, and others.
  8. IDM-Supplier collaboration increases manufacturing efficiencies.
  9. Face-to-face discussion works best to create manufacturing solutions.
  10.  “Conflict minerals” will move from an industry issue to reporting line item.
  11. Applications, consumer demand, and price will drive the industry, so . . .
  12. When consumer price is a factor, that’s good for IDMs.

 

7%  Outlook for 2014

Bill McClean of IC Insights sees the 2014 worldwide semiconductor market garnering $350.7 Billion, for 7% growth over 2013 revenues. His firm pegs USA GDP at a 2.7% growth this year, although his caveat is that the IC industry as an ‘economy driven industry model” whereby folks buy electronics based on how they feel about the economy. (I disagree.) While  2.7% may seem low, he looks at the European Union to come in at 1.1% and Japan at 1.3% GDP. Turning from the macro-picture, Bill noted the strong promise of devices relying on analog and power technologies.

 

Analog and power management. Remember both those technologies. They play a role in every discussion about ongoing and future opportunities.

 

China, Innovative Friend or Foe?

Handel Jones, PhD, and president of International Business Strategies, gave an overview of the China semiconductor market. Aside from praising the Chinese IC industry’s strides, he had some interesting insights into the IDM model.  He believes that that control of wafer fabs has advantage for analog, power and what he termed ‘specialty areas’.  And he commented that the fabless model was over-rated for many markets. Buy his book ChinAmerica and you might learn more.

 

The high-growth markets he named were MEMS sensor, RF and analog-based technologies.

 

Dr. Jones also noted that semiconductor innovation has gone global and that technologies based on GaN show strong promise.

 

Innovation – Alive and Thriving or Slowing Down?

Innovation is a tough topic in the industry. There are some who believe that innovation has slowed down. Nothing could be further from the truth. Five years ago, analysts were projecting market growth for digital/video cameras. Now that market’s been absorbed into phone market statistics. That’s phenomenal innovation in a very short timeframe. 

 

I maintain that some of the best technology innovation has come from the packaging/assembly, equipment and materials industries.  Consider the intelligence it took to manufacture machines that churn out 20nm chips.  Or 3-D packages. Or semiconductor chips you can swallow for an in-body look at your health. Or the materials used to deliver those chips.  Innovations like these occur all the time. They just don’t garner the consumer media’s attention compared to the latest smart-phone software app.  And those apps, by the way, come to life on a slice of silicon.

 

Your Chip-Based Home

Joanne Itow of Semico sliced the market a bit differently from earlier speakers by looking at the number of electronic devices in a household. Semico counts >70 of them.  The affordability of consumer electronics presents an interesting dichotomy created by technology. Consumers want more features in the electronic devices in their home, but they don’t want to pay a high price to get them.  Nothing new there. However, that desire presents an opportunity for mature technologies and IDMs.  IDM manufacturing shaves costs by having high-volume manufacturing and design under one roof. And, price has been a key factor in the growth of MEMS, 3D and other technologies that don’t require ultra-deep submicron technologies.

 

Joanne noted that while 200 mm wafer fabs still produce the majority of chips, 300 mm fabs produce more revenue and demand.

 

Conflict Minerals.  No, Not Diamonds.

Ron Jones on N-Able Group, outlined requirements for reporting conflict minerals used in the semiconductor industry. “Conflict minerals” are defined as those coming from places like the Democratic Republic of Congo. Tin, tungsten, tantalum, gold are just four metals from conflict minerals.  Semiconductor “DNA” will need to be identified and reported in SEC filings to ensure that minerals are being mined in a responsible way.  Sounds tough to me.

 

Fab Manager: Know Thy Markets

 

No, fab managers do not have to become marketers, but they need to know the markets suited to their manufacturing. I’m a big believer in the IDM model because manufacturing is at the heart of it.  By owning design and manufacturing, companies have the tremendous benefit of product and market differentiation; design-to-delivery timeframes; brand appeal – which includes “apps” (or, applications); and that, in turn, results in sales and revenue.

 

The problem is that manufacturing has tarnished the IDM model. There are many reasons. One factor is that CEOs do not have the background to run manufacturing…or the discipline to control it. Yet, many companies have been successful as IDMs. Linear Technology is one. Samsung is another. There are plenty more.

 

The IDM model, which is what we call an ‘aggregated’ model, ties in with the consumer desire for more apps at a lower price. By designing chips in-house, like IDMs do, companies can deliver what consumers want. This is exactly why we see Google and other companies outside the semiconductor industry taking an interest in chip design.  While they may not become IC manufacturers, IDMs have an opportunity to refine their business model to capture new business, or lose it.

 

Thanks to ARM and other IP suppliers, even “small” companies can design many of their own chips and turn them over to a manufacturer for fabrication.  I see IDMs as being able to fulfill this demand because there are more mature technologies than new ones.

 

Collaboration Key to IDM Success

Kudos to Applied Materials/Infineon; MEI/Anadigics; Semplastics/Intersil; Applied Materials/Polar Semiconductor; MAX/Sunpower; Busch Vacuum/Freescale; and Eyelit/MAX.  These companies were the highlight of the FOA conference.  They presented a probem, defined it, and showed how they solved it, along with the data to prove it. At other conferences, vendors will talk about a client or two, but the client is typically not in the audience. This model not only showed attendees how collaboration solves problems, it demonstrated how collaboration results in efficiencies that translate into dollars saved.

 

The IDM model has a lot of problems, like every other business. And, like every other business model, there are solutions waiting to be found.  If you’re in the IDM business, you know it’s a roller-coaster ride. So what? The roller coaster is the best ride in the park.

 

~Barbara Kalkis, Maestro Marketing & PR(sm)

Maestro PR Blog: IBM Mulls Selling Semi Business. Am I Really Surprised?

Solid State Technology Magazine (www.electroiq.com) reported that IBM Corp. is exploring the sale of its semiconductor business, with Goldman Sachs assisting.  The news isn’t really a surprise, just a disappointment that many important US top executives seem to lack the understanding of how to make manufacturing a successful business unit. 

 

Owned semiconductor manufacturing has concrete benefits. Manufacturers can cut the design-to-delivery timeframe and get to market quickly. Companies can differentiate their products in terms of features, performance, and, therefore, value to customers.  Market appeal means stronger brand appeal.  Brand appeal correlates to sales and revenues.

 

However, manufacturing is a hardware business. It means understanding machinery, processing, and operations.  It also means understanding chip design, product cycles, and being able to tie a lot of activities together from sales, to design, to fabrication, to delivery.  It just doesn’t seem that some executives can string all those activities together.

 

The IBM CEO has a sales, marketing and service-consulting background. This is similar to what we saw in the former and current Hewlett-Packard CEOs. While these resumes are stellar, they are not compatible with the requirements for manufacturing businesses.  That makes the IBM move not surprising, just confirmation that manufacturing requires manufacturing expertise.

 

The above is the personal opinion of Barbara Kalkis, Maestro Marketing & PR

 

Maestro PR Blog: The Integrated Device Manufacturing Model: Use It or Lose It

Back in the late-1980s, integrated device manufacturers (IDMs)were so sure of the soundness of their business model that they scoffed at the idea of only offering manufacturing or only doing semiconductor chip design.  Those of us old enough to remember recall the maxim that ‘real men have fabs’.  Unfortunately, it turned out that a lot of real men also wanted to design chips and let someone else deal with the financial and production hassles of getting designs to silicon and into the customer’s hands.   We know the result:   the meteoric rise of foundries and fabless semiconductor companies at the expense of IDM revenues and the allure of their business model.

We can breeze by the 1990s, the dot-com boom-and-bust, and the internet age.  For those past 20-plus years, the models of fab, fabless, and internet companies became accepted, refined, and successful. And the IDM model? It’s muddled along by streamlining, going ‘fab-lite’, and moving into markets like MEMS, where older process technologies are still viable.  Will IDMs never learn???

Fast forward to today in 2014. Business models as we know them are in for changes that will slam many companies into further oblivion.  And it’s all happening with the force of a tsunami moving with a force that is deceptively lazy but unrelenting in  its speed and the force with which it will hit the global shoreline. 

 

The Tsunami named “Google”.

The name of the tsunami is Google.  No longer an internet/social-media company, it is moving inexorably to a semiconductor model that will rock fabless and IDM companies in the next few years.  How did it begin?

In December, while Wall Street was busy watching retail sales and consumers were checking off their holiday hsopping lists, a Google ‘insider’ hinted to a Bloomberg journalist that the web-search giant was beginning to design its own server processors. It’s unclear how the rumor started or its substance. Maybe it was because some well-known computer architects (Luiz Andre Barroso, Urs Hotzle, James Laudon) already work there.  Or, maybe it’s because Google posted a job opening for a “digital design engineer” with expertise in ASICs.

Word of the shift moved from Bloomberg and spread to multi-national wire services quickly, and then faded away like smoke from a cigarette. After all, the Google spokeswoman, Liz Markham, dismissed the rumor by saying Google is “actively engaged in designing the world’s best infrastructure.” And that, she added, “includes both hardware design (at all levels) and software design.”  So much for a definitive answer.  But, where there’s smoke, there’s always some fire somewhere.

Currently, Google designs its own server systems and buys its server processors from Intel.  If the December rumors prove true, Google would begin designing its own computer chips using ARM Holding’s technology. ARM’s modular architecture lets designers create custom chips using only those blocks necessary to a customer’s design requirements.  And that’s the key concept here: custom design.

 

What IDMs Know.

As any IDM knows, custom chips provide the best performance. Custom design will allow Google to tailor chips to their architecture, to their specific applications, to the increasing demand for video, and to other services only imagined on the horizon.  It should make an IDM’s head reel at the possibilities.

The major benefit is that custom-designed chips can help speed search services where new apps are popping up almost daily.

So, the benefits of customization are performance, speed, architecture efficiency,  and – oh – cost. Google can potentially save millions by designing its own chips.

Add to this news, the January 17 announcement that Google is developing a glucose monitor in the form of a contact lens.  Our tears contain glucose, and this lens will be able to track glucose levels without the pain and problems of pricking a finger. 

According to an article in the San Jose Mercury News by Associate Press journalist, Martha Mendoza, the lens has miniature transistors – the stuff of semiconductor chips – with a fine antenna.  Along with the lens, Mendoza reported that Google has also developed a driverless car. And, of course, we all know about the web-surfing eyeglasses and its proposed network of balloons that will deliver Internet signals to the remotest places in the world.

Google’s exploits are the momentous tsunami I referred to earlier.  The impact will be felt in a variety of ways.  First, Google now moves into a competitive space. Did you really ever think of a web-search company as a fabless semiconductor company? 

Secondly, a world-class company (yes, we’re still talking about Google) is taking major steps toward aggregation of  services, systems, architecture and the chips that are the foundation for all three. 

If you’re in the IDM business, you know what aggregation is. It’s the basis of the IDM model; ie, a company that does it all: design, build, package and assemble chips and then sell them as neat one-size-does-it-all devices that can be purchased off the shelf. 

Third, it is an implicit recognition that market leadership – even in software – is based on hardware.

The rhetorical questions for semiconductor companies are these: Is Google an anomaly? A company beyond all companies in the world?  A company with more imagination, more energy, and more determination to be a problem solver as well as a brilliant success?  Or, are we witnessing another tsunami of change in our industry?

IDM companies laughed at the fab and fabless models until they were passed by and had to scramble to stay viable on Main Street as well as Wall Street.  IDMs then shrugged their shoulders and looked for new revenues in markets  that didn’t require advanced processes and technologies.  Now, Google is forging a new business model.  IDMs can strengthen their aggregated model and begin innovating in different ways that serve current and new markets.  OR, IDMs can once again laugh at, ignore, or watch the future roll over them. 

What’s an IDM to Do?

IDMs are in a perfect position to leverage news that chip design has gained allure amongst companies outside the traditional semiconductor sector.  Why? Because IDMs know the value of owning chip design and manufacturing better than any other business model in the  industry.  (For several reasons – too lengthy for this piece – it seems that only IBM, Intel, and a very few other companies have been able to make the model a true success since the start of the fabless model.)

Aside from the technology innovation standpoint, the ownership of design and fabrication is really about money.  You just get the best performance – that is, speed-- design, product quality, and speed to market when you own the entire chain from idea to finished IC (integrated circuit). If you’re an IDM, you own most of the infrastructure needed to gain time to market.

Your Action List.

  1.  Get out of the office. IDMs need to take a fresh look at the trends shaping the industry. Google did not think up the idea of a contact lens for measuring glucose levels in their lab. The University of Washington did, and then reported on their invention at ISSCC some years ago.  Google then developed it for market adoption.

 

  1. Attend technology events that feature technology innovations and connect the dots between their areas of expertise and the new ideas being presented. ISSCC is still the best venue for this, in my opinion.  But so are the SPIE Photonics, Opto, and Lithography conferences.

 

  1. Speak up!  IDM’ers also need to be active participants in technology events, presenting papers that describe their design and manufacturing expertise. Through these two activities, IDMs hear what processes are required for innovative technologies, and what the challenges are to getting them.  Fab managers are in the best position to link their company’s expertise to what’s needed in the future.  Remember, fabless companies do not understand all of the nuances of manufacturing. They must rely on the foundry. And why shouldn’t that foundry be yours?  So, turn off your Facebook page for a day, because face-to-face meetings are still the way to form business friendships fast.

 

  1. Fab managers need to know process technology backwards and forwards. Not just your own, but other processes, as well.  Once you understand process technology, you can figure out the equipment you need. And I don’t mean upgrades to your current equipment.  You’ve got equipment vendor partners in place with the know-how to get you what you want. Utilize them.

 

  1. Advocate the need for R&D. Yes, this is painful, but it’s the only way to survive and thrive financially.  I’m not talking about building an R&D ivory tower.  I’m talking about collaboration. Work with universities, think-tanks like Imec, or others. Leverage grants.  Do more than just manufacture and sell.

 

  1. Talk the talk of CEOs and CFOs. They care about money, not another piece of equipment. Fab managers need to talk their language. Describe compatible products in new market sectors. Link the manufacturing technology needed to support new device types. Describing how your equipment is failing and why your production line was down for hours is not their problem. It’s yours. Even if it is their problem at the end of the financial quarter.

 

  1. Keep customers happy.  This sounds so easy and is the hardest thing to do. If you doubt this statement, try being your own contractor for a kitchen remodel.  Regardless of how beautiful a plan you have, the torture is in getting all the vendors to cooperate and be on time. Google is designing chips and end-market products because aggregation has many more benefits than coordinating vendors and matching time schedules like puzzle pieces.  When you know your customer, you know their current problems and future opportunities.  Yes, you may be in a fab and not see customers often, but you do see them. Maximize the opportunity.

 

  1. Leverage what you’ve learned by being on the front lines. But keep an open mind. Innovators didn’t succeed by reshaping the mold. They broke it.

 

A note to materials and packaging companies:  You really have an open door in terms of spinning ideas off the diabetic contact lens concept.  Innovative companies already make flexible endoscopes that fit inside a ball-point pen. The need for similar products made from silicone and polymers will be even greater as the home medical market continues to heat up.

Innovation and trends don’t spring from a hole in the universe. They are the children of need, desire or, in the case of competition, the drive for greater revenue and market share.  There’s nothing stopping you or your company to innovate, grab a trend or leverage one.  You can start anywhere.  Just start.

 

~Barbara Kalkis, Maestro Marketing & Public Relations 

The opinions expressed in the blog are those of the author.

Maestro PR Blog: BIOMEDevice Conference & Expo. It’s Not about the Show. It’s about the Market.

Maestro PR Blog:  BIOMEDevice Conference & Expo.  It’s Not about the Show. It’s about the Market.

December is not an auspicious month to hold a conference and expo.  It’s tough to compete for attention during holiday sales and celebrations. Your customers may be engineers, but they are also consumers, parents and gift-givers.

Despite the timing and massive to-do list you’re carrying, it might be wise to stop in at the BioMed Device Technology conference and expo (www.BIOMEDeviceSanJose.com) running this week at the San Jose Convention Center.

As a MedTechWorld event, this expo features technology, products, equipment and services for every aspect of medical design and development. That’s a pretty broad range of topics and so not as focused as other biotech events. However, shows like this can sometimes reveal trends that can impact your business.

Wireless applications are billed as a major part of the conference. Wireless self-help medical applications are a market waiting to explode.  Not just for things like heart rate, blood pressure, and glucose monitoring, but for a myriad of lifestyle and medical situations.

While consumer applications on smart phones and tablets have multiplied faster than mosquitoes in a stagnant pond, biomedical applications that allow people to monitor and manage their health have lagged.  We can speculate on the reasons:  reluctant doctors who may be uneducated or simply not know about new devices; doubt about the devices to work accurately, reluctance on the part of the old, established manufacturers of huge equipment to transition to smaller devices that can be used in the field.  The reasons don’t matter.

 

The point is this. We cannot predict how applications take flight and swallow market share. We just know it happens. Aging populations around the world are not going to go quietly into senior living. We are a rowdy group and demanding. After all, we were born during the post WWII good times and have a sense of entitlement about the lifestyle we want. The major aspect of that lifestyle is remaining independent.

Do you really need an economist, a financial analyst, or radio show host to tell you that seniors and seniors-to-be will want technology that delivers products and software to let them be independent and remain in their own homes? 

Even the largest companies in the world miss market shifts and trends because they are too busy clinging to yesterday’s sales success.  Take a look at this conference…or another…your choice. But look at biomedical as a technology that can vault your company into a new market soon.  Consumers are waiting. And, you’re a consumer, too. You know how impatient we are.

~Barbara Kalkis, Maestro Marketing & Public Relations, 03 December 2013. 

Note: Neither Barbara Kalkis or Maestro Marketing & PR have an affiliation with the organization mentioned.

 

 

 

Maestro PR Blog. Rogue Valley Microdevices announces iGrant for MEMS technologies

Maestro PR BlogRogue Valley Microdevices announces iGrant for MEMS technologies.

Rogue Valley Microdevices (www.roguevalleymicro.com) has announced a $175,000 R&D iGrant for innovations in the areas of biotech, biomedical, MEMS and nano- technologies.  The announcement was posted in today’s MEMS Journal (www.memsjournal.com) email blast and on the company’s site,

In the words of Rogue Valley Micro, the 2013 Sustainable Valley technology innovation grant is designed to help researchers, entrepreneurs, and engineers ‘bring new technology or technology-based businesses to life”. 

The deadline for application is 20 July 2013. 

Over and over, we see that grants, incentives and programs that nurture innovation can be inspired by individuals, companies, and organizations.  Funding does not have to be in the realm of millions of dollars from governments or the world’s largest corporations.  Most ideas really just need seed money and curious minds ready to dedicate time and effort to validating concepts.  Let’s see more of this from companies, and aim the grants to working engineers.

Kudos to Rogue Valley Micro for seeding innovation with an eye towards bringing new products to market.  The offer has been made. Now it’s up to engineers to do something with it.

~Barbara Kalkis, Maestro Marketing & PR

 

 

Maestro PR Blog: High-Tech Marketing Lessons from JC Penney. A Customer Perspective

Kudos to the JC Penney Board of Directors (www.jcpenney.com) for removing CEO Ron Johnnson from office.  I’m practically euphoric over the news.  It’s as if 17 months of aggravation are off my shoulders.  My husband can stop whining about how he used to buy all his clothing -- from underwear to outerwear -- at Penney’s BJ (before Johnson).

 

 I no longer need to go into teacher mode with friends and strangers, lecturing about how Johnson slapped his loyal customer base in the face with marketing tactics that threw them out of the store, along with basic marketing principles. Or, how he incorporated sales tactics that don’t work for many industries. 

 

More on that in a minute. I want to vent my personal perspective and each of these comments play into the marketing rules flouted over the past year, completely ignoring the fact that some marketing rules are irrefutable.

 

Customer Loyalty Counts – in Any Business

I have been a loyal JCP customer ever since I can remember. Growing up in a small town, my parents took us to JC Penney to shop.  That means I have had a JC Penney credit card for longer than I can remember. Not as long as my Macy’s account, but still a long time.  I have shopped these two stores for virtually every outfit I wore.  During the ‘80s, when women were wearing masculine-cut business suits with stiff blouses that sported a bow to show some femininity, I’d stop at JCP and know that they’d have the latest color and style in stock, in my size and probably on sale. And, most importantly, in a quality brand that would wear well through travel and trade show, not just the office.

 

Jump to 2012. A new dawn for JCP under Johnson management.  Business is casual, I’m older (no – really -- I am), and “casual” means “classic” to me.  But not to the newly revamped JCPenney.  Over the past year, the store is geared to a what appears to be 18- to-25-year-olds. The clothing looks like it’s sized for skinny people who can wear a size 00 to 04, have long legs, and no shape.  And I’m saying this from the perspective of a size 08!  Worse, my go-to brands like Jones of New York and many others were thrown out, while still carried at stores like Macy’s and TJ Maxx.  So where did I start shopping last year?  I added TJ Maxx to my increased visits to that good, old, savvy marketer, Macy’s.  (And, please note, ‘old’ is a good thing.)

 

Enough about me. Let’s get to the marketing lessons.  Some marketing rules aren’t just rules. They are tenets.  That means they are principles, doctrine, dogma. Whether your business and brand are big or small, these principles still hold.  Here are the marketing tenets I saw shredded and tossed away in the past year.

 

Rule: Always protect your cash cow.

In retail, the cash cow is the moneymaking customer base. JC Penney had been successful because it has catered to every age group, from tots to totterers and every age in between. Teenagers could buy prom dresses designed in the newest styles, colors, and sizes next to women looking to be mother of the bride. And everyone could walk away happy.

 

Johnson changed this model. He tailored every brochure to young people. One online article I read said that he was trying to cater to young people and not ‘your great-aunt’. The commentator of the quote, I think some analyst, mentioned something about said great-aunt wearing suits with big brass buttons.  I can’t find the quote, because I think the site changed it,  but the point is this – AND TAKE NOTE – Great-aunts are not what they used to be. 

 

Those of us who are at the age to be great-aunts are a strong, feisty bunch who will not be messed with.  We’re the ones who marched for one side or the other during the Vietnam War. We’re the ones who fought for civil rights twice, in 1963 and in 1974. We’re the ones who helped end a presidency. We’re the ones who fought for women’s rights and protecting the environment. And we did it all while earning degrees, advanced degrees, getting married, having kids and becoming successful business people. 

 

But Johnson forgot this rule. The choice JCP gave older women was this: buy what the young girls wear or buy Alfred Dunner. Now, I have nothing against Alfred Dunner. But I’m not ready for elastic waistbands yet.

 

Rule #2.  It takes money, time, and more money to reinvent vocabulary and/or concepts.

Last year, the word ‘sale’ became verboten in Penney parlance. It was replaced with the term ‘best price’. You know what best price means? It can mean anything, from this is the best price we can offer to this is the best price you’ll find anywhere. But in 2012, at JC Penney, it became code for ‘sale’. 

 

Months were color-coded. You could buy something in last month’s color at the best price.  Now, I don’t know about you, but I have a lot to think about and remember during the day, without adding one store’s color code to the list.

 

So, what did we do when we scanned the newspaper ads? We scanned the JCP ad to see the latest teens wearing their skinny, short dresses, and then scanned the other stores’ ads, clipped the coupons and went shopping with our pockets stuffed with special codes and discount offers.

 

The word ‘sale’ is as basic to retail marketing as apples are to apple pie. Did I really need to tell you that??

 

Rule #3.  Sell what you have. All of it.

A recent JC Penney ad showed towels and some household items in the back of the brochure. I can’t remember the last time I saw anything beyond clothing in their ads. Retailers need to feature all of what they have, even if clothing is what brings someone into the store. Remember, shoppers don’t know what they need or want until you show it to them. Anyone who’s browsing is looking for ideas.

 

Rule #4.  Being ‘old’ doesn’t mean being stagnant, unsuccessful or, worse, a pinch-penny.

JC Penney had a successful business model. While they needed to reach out to new, younger customers, they needed to protect their primary audience of older shoppers, while attracting the younger base.  Revamping the look of the store is one way. Hiring younger merchandise buyers and sales staff is another way.  Trendy clothes are another way.  There are lots of ways, too numerous to mention.  But, throwing an entire formula away isn’t the way.

 

I admit to being the generation that advocated not trusting anyone over 30. But now that I am over-30, I am proud that we are an active, intelligent, and determined bunch of people. We know what we want and we’re ready and able to buy it.  And we want it now.

 

With the change of leadership at JC Penney, I’m hoping that the Board of Directors realized that the drop in revenues/earnings at the retailer wasn’t just a financial blip on the screen. It was the voice of customers, who, in the end, are the real investors in the company, saying that things had just gone wrong.

 

JC Penney has the opportunity to fix their business and marketing model, because it has enjoyed a loyal customer base.  I, for one, am ready to dust off my JC Penney credit card and return.  If it is worth it.

 

~Barbara Kalkis, Maestro Marketing & PR(sm).

The above are personal remarks.