By Ron Collett

It’s a common refrain, and I heard it this week at the IEEE VLSI Test Symposium in Santa Cruz: Moore’s Law is increasingly difficult to obey. We see evidence of this perception everywhere:

• Manufacturing costs are soaring: A fab that cost $2.5 billion to construction at 90 nm now costs $6 billion at the 22 nm node. So companies are selling off their fabs and losing what was once a huge competitive differentiation for them. Their primary differentiation is increasing their product-development capability.
• System-on-Chip (SOC) development costs run anywhere from $50 million to $100 million per project. A dwindling number of markets can support the ROI that type of investment demands.

This increasing risk has significantly cooled VC investment in our industry. In 2000, venture capitalists invested nearly $4 billion in semiconductor companies; last year, it was $771 million.

This means that to be successful in 2010 and beyond, semiconductor companies must “do Moore” with less. That requires a focus on product-development capability. How do you transform your product-development organization into a world-class team?

Here are some best practices:

• Start with an integrated framework of product-development capabilities. We, with our partners, the global operational-strategy consulting firm PRTM, counsel such a framework to improve product and cycle-time excellence. It’s remarkable how few companies have this kind of framework, but, implemented correctly, it translates into a capability to improve your overall maturity. And the more mature your product-development maturity, the faster you’ll see revenue growth.
• Optimize your R&D footprint. No one builds an SoC at a single site any more. An integrated approach to R&D management is key to taking advantage of synergies and scaling opportunities.
• Extend your enterprise: The cost of development is so high, it’s no longer possible to develop everything in house. Establishing relationships with other companies and with universities is becoming essential.

In an era of doing more with less, these best practices can help semiconductor companies “do Moore” with less, widen their competitive differentiation and increase revenues and profits.