VLSI Japan

For each of the jewels in the technology triple crown of conferences – IEDM, ISSCC, and VLSI – I hope to preview (and occasionally post-analyze) the papers. But what started as a quick look at the 2009 edition of the VLSI Circuits and Technology Symposia quickly veered into a commentary on the Japanese electronics industry.

This year, the conference site for the VLSI Circuits Symposium and the Technology Symposium is Kyoto, Japan. With the economy the way it is, we can expect a distinctly local flavor to these two events. The recession is the time to expect consolidation with some big mergers or acquisitions likely imminent. Semiconductor process development is getting so costly that it is definitely not for the faint of heart. (Is it only real men who own fabs?) Of course, partnerships are nothing new. The IBM fab club has been around for a long time through the Common Platform partnership. There is even some pre-competitive research going on through various entities like Sematech here in North America and SELETE in Japan. But I think things are moving beyond that. The most interesting news related to this was the Intel-TSMC announcement where Intel plans to move production of the mobile Atom processor to TSMC and eventually offer it as an IP core on the TSMC platform.

But Japan could be facing even bigger problems than what we see in North America or even Europe. It’s become casual to attach “unprecedented” to many things in the news, but round after round of big layoffs at several Japanese electronics giants is certainly that. Toshiba was one of the latest announcing 3,900 additional jobs eliminated adding to an earlier round where they shed 4,500 temporary workers. I’m not sure what Toshiba refers to as a temporary job, but perhaps it’s actually the term permanent position that needs more clarification these days. In any case, these measures appear quite drastic for conservative Japanese companies. Hopefully,  they have acted early enough and that nothing truly catastrophic faces the Japanese electronics industry.

Consolidation in Japan needs to happen now. NEC and Renesas appear set to merge. There is a possibility this will extend to include Panasonic as well since they were already engaged in some technology development with Renesas. Semiconductor Insights analysts have been deeply engaged for some time in preparing roadmaps to provide our technology outlook for the major players in the industry. The roadmap for Japanese semiconductor firms made me wonder how much technology development let alone IC volume manufacturing is in Japan’s future. All the big players appeared to be pushing hard into technology consortia like the IBM fab club or even partnering with TSMC like Fujitsu. Panasonic may be the last fab standing – at least for CMOS logic devices. If you think about it, that’s probably where Panasonic ranks considering they were the first manufacturer with a 45nm product on the market, beating even Intel.

Japan needs to continue to look beyond its borders and create global partnerships. Elpida is one company that has shown leadership in this area. To stay competitive with Samsung, Elpida moved to Taiwan through its partnership with Powerchip Semiconductor (PSC) back in 2003. If you want experience and expertise in huge volume manufacturing, Taiwan was and is the place to go. It was the only way to stay cost-competitive, and Elpida’s leadership realized that. Granted, a memory company needs to get that message earlier than a logic manufacturer given the commodity nature of memory, especially DRAM. Elpida continues to work hard on its manufacturing base in Taiwan with a 52% stake in Rexchip which seems to be the best positioned of the Taiwanese DRAM entities since the government’s plan to create the Taiwan Memory Corporation appears to be unravelling.

If 2003 was the year for a Japanese DRAM company to get into Taiwan, then 2009 may well be the year for a logic manufacturer to do the same. Right now, Fujitsu is considering its future on Formosa with TSMC. If they continue down that path, Fujitsu will be a survivor just like Elpida.

Tags: downturn, Elpida, Fujitsu, japan, merger, nec, Panasonic, renesas, Taiwan, Toshiba
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