Semiconductor Industry Veterans See the Old Order Crumbling

  • November 27, 2018
    Panel discussing the future of the semiconductor industry.
    Photo: Tekla Perry
    (Left to right) Pete Rodriguez, CEO, Silicon Catalyst; Helen Li, managing partner, Needham & Co; Cliff Hirsch, publisher, Semiconductor Times; Jim Hogan, managing partner, Vista Ventures

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    What will the semiconductor industry look like in 2024?

    That’s the question Pete Rodriguez, CEO of semiconductor startup incubator Silicon Catalyst, asked a panel—and a roomful—of industry veterans earlier this month. And few were shy about predicting dramatic, and, for some companies, potentially catastrophic, changes.

    Memory is in motion

    Their first warning went to the companies currently cranking out semiconductor memories, feeding the seeming insatiable demand for solid state storage. China has already been working hard to build DRAM factories, they indicated, and a trade war with the United States will likely push that effort into a higher gear.

    Said Cliff Hirsch, publisher of Semiconductor Times: “I think the real question is what do Micron, Hynix, Samsung, Toshiba, and Western Digital do when their fabs are sitting idle because China has taken over the memory business.”

     “Years ago, we [in the U.S.] were building DRAMs,” said Jim Hogan, managing partner, Vista Ventures, “and we got killed by the Japanese. Then the Koreans came in.

    “It’s not going to happen immediately, but if you are the Chinese government, and you put all this money into DRAM, you aren’t going to buy DRAM from anybody else,” said Hogan. “That won’t be good for Koreans or Micron or anybody.” He predicts that, “This is going to have a huge political impact.”

    “Is there a value proposition in cranking out DRAM?” asked Hirsch. “Sure, Micron is getting 60 percent margins today, which is unbelievable, but what about in a few years when they are getting 10 percent margins? Maybe it’s time to think of them as the textile industry of the future, and they should be going offshore.”

    The last new fab on earth…or at least in the U.S.

    After conceding the future of DRAM to China, the group took a look at the process innovations that have driven node sizes down to 7 nanometers and kept the companies that developed them in the game. That path, they indicated, is coming to an end.

    Today, said Silicon Catalyst’s Rodriguez, only “three companies are doing 7 nm or below: TSMC, Samsung, and Intel [which is] a distant third. Only three companies in the world can afford it; working at the leading node is very expensive.”

    Intel, suggested Hogan, might not be in the game for much longer. “What does it cost to build a fab?” he asked. “Fourteen billion. How much cash does Intel have now? Fourteen billion.  So they have just one more shot at this.”

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