By Ron Collett

We’re gearing up for DVCon (Feb. 22-25) in San Jose and not just because we’re participating in a panel. DVCon (on Twitter, @dvCon), which has emerged as a increasingly important event in recent years, features as keynoter Cadence CEO Lip-bu Tan. His topic gives a new voice to the mounting productivity crisis in semiconductor and system design.

According to an abstract of his talk:

“…the industry must approach the product development process much differently. The classic ‘brute force’ methods cannot scale to support the complexity of today’s SoCs and Systems. These traditional methods result in mounting costs and unpredictable schedules that are detrimental to profitability.”

• Cadence approaches the problem by giving engineers (among many other things) design exploration options that speed the implementation of the physical architecture of a chip.

• Numetrics approaches the problem by helping teams quantify the complexity of their design effort and build reliable project and staffing plans. This is crucial in an era where most IC projects slip schedule significantly.

Our vice president of professional services, Steve Gary, will speak on a panel just after Tan’s, titled “What Keeps You Up at Night?” It’s moderated by JL Gray from Verilabs, who writes the excellent Cool Verification blog; he’s posted a panel preview this week.  Also in the conversation will be John Goodenough from ARM Ltd., Sheela Pillai of Advanced Micro Devices, Inc., Jim Crocker from Paradigm Works, Inc. and Victor Melamed from Ambarella.

There are plenty of things keeping the industry up at night, but I think we’ll hear a lot of excellent ways to overcome the sleeplessness and drive productivity—and the industry—to the next level. Hope to see you there.

(Summary: Semiconductor companies are rethinking what it means to be fabless and looking for new ways to differentiate themselves).

By Ron Collett

For the semiconductor industry, there not only is change in the air, there’s thoughtful debate about just what that change looks like.

I’ve been mulling over a couple of intriguing posts, one by another newly minted industry blogger, Sanjay Srivastava, CEO of Denali, and the other on EDN by Kaben Wireless Silicon CEO Paul Slaby.

In Sanjay’s blog, Conversation on Innovation, he’s been mulling how fabless semiconductor startups can survive in the current climate.

He argues (in Funding Fabless Semiconductor Startups) that solutions need to look at how and where money is invested, how we “stage” investments (i.e. valuing investments in IP differently than in silicon) and how we address software investment:

I believe if we get creative about the current fabless investment model, not every semiconductor opportunity needs to be a billion-dollar opportunity before it can attract meaningful investment.

In his EDN post and in a separate webcast, Slaby argues for a “semi-fabless” model:

The semi-fabless company is essentially a combination of an IP provider, a design house, and an outsourced R&D operation. Its core competence and strength lies in specialized R&D and product development capabilities whereas it outsources product delivery operations to the ‘old’ fabless company with the entire infrastructure and the pipeline to market already in place.

There’s no doubt the investment formula needs to be reconsidered. For a semiconductor company to break even, it needs $40-$100 million and six to eight years. More troubling, however, is the selling price of semiconductor startups has been steadily declining. In 2007 it was $160 million; in 2008 it was $95 million and in 2009 the average has been $65 million, according to an EE Times story referencing Lip-Bu Tan, chairman of Walden International, and now CEO of Cadence.

The good thing is there are a lot of “smartest guys in the room” in this industry, and collectively we’re shaping the industry’s future in three main ways:

• Companies are differentiating on products

• Executives, such as Sanjay and Paul and others, are helping drive the investment conversation

• And companies like ours are illuminating the differentiation and benefits of focusing on product-development productivity—fabless companies’ key differentiator today—and overall portfolio management.

This new differentiation is key; it’s key to how companies grow and gain market share and it’s key to the industry’s future.