Ron WilsonEDN Executive Editor Ron Wilson explores how IC design teams really work: the struggle for power efficiency and performance, wrestling with semiconductor processes and design methodologies, the challenges of global design teams. How do we somehow herd architecture, IP, design and verification into a successful tape-out?


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Monday, August 25, 2008

Heard at Hot Chips: As design outsourcing matures, a potential problem is emerging

Aug 25 2008 6:00PM | Permalink | Email this | Comments (29) |
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There has been much angst about design outsourcing in recent years, the majority of which has come from US-based designers who have lost, or who fear for, their jobs. But as the industry gets more experience with the practice, there are other problems emerging as well, that impact not just designers but the outcome of designs, and quite possibly the competitiveness of the companies that outsourced the work in the first place. This is due to a natural evolution in the progress of outsourcing.

All of this came from an overheard conversation at Hot Chips this afternoon. A senior architect for a major US company was talking about the problems he has faced with outsourcing. He was describing how as the design teams on the other side of the Pacific get more sophisticated, the partition between the US and the—usually—Asian team has begun to shift.

In the good old days, when we were only sending routine bench-level jobs off shore, the partition was at a functional block, or even a task level. The bulk of the design team remained rooted in the US, with senior US people in control. Only some clearly-defined blocks, or specific tasks such as logic verification, went to the outsource team, and the process was tightly controlled.

But as the outsource teams gain more experience and more senior people, that practice is shifting. Today, often the architecture team is all that's left in the US, and the entire implementation team is on the other side of the Pacific. This reflects the rapid growth in sophistication and management skill of Asian design teams. But it creates a problem, according to my unintentional informant.

The problem is simple. Architects divorced from actual implementation tend to drift into Never-Never Land. Without drawing unflattering parallels to Frank Lloyd Wright here, these architects tend to create idealisms that are unworkable in the application, or are simply unimplementable. Conversely, implementation management separated from architects tends to lack vital information about the intent of the design—stuff that is very hard to capture in a specification but that would strongly influence how the design was implemented.

The result, according to the victim of my eavesdropping, is an increasing risk that designs would come back working perfectly, except not actually doing what the architects had in mind. Like that famous series of cartoons about the tire on a limb from many years ago, the design falls into a morass of miscommunication. Architects without recent implementation experience, and without the design team leaders sitting across the table from them, create a cloud palace. The design team, not party to the original discussions about the design requirements, by enormous effort comes as close as they can get: a palace on a mountain top. Marketing wanted a jumbo jet.

The risk here goes beyond mix-ups, reworks, or even failed projects. If US companies allow themselves to become architectural firms without a solid grounding in design, verification, manufacturing, and test, they will run a major risk of becoming uncompetitive as architects as well. Innovation can't live for long divorced from implementation without becoming a branch of literature, not a phase of engineering.


Related entries in: Design and Technology | SOC (System on a chip) | 


Reader Comments


at 8/26/2008 2:05:30 PM, Totally_Lost said:
Where manufacturing goes, is where the dollars for jobs go too. Slowly, and as this story notes, completely. Cost cutting, is job cutting, is industry cutting when it comes to "out sourcing"

at 8/26/2008 2:08:20 PM, heywoodjablome said:
You get what you deserve! What goes around comes around you morons!

at 8/26/2008 2:12:03 PM, Ron Bauerle said:
www.cubiccompass.com/blogs/main/content/binary/TireSwingCartoon.png or www.businessballs.com/treeswing.htm

at 8/26/2008 2:17:44 PM, So predictable said:
Ha, Ha! I and many others have been telling you all so for so long!!! So, next step: maybe our Asian outsource ''partners'' will just get their own ''architects''... and what the hell is there to do in US then? But, hey!... it''s OK: the big CEOs, gurus and Big Management who pushed it all have churned their numbers in Wall Street and their golden parachutes are packed. They can now move on to their next lucrative fiasco. Mission accomplished! The carcasses of companies and workers they leave behind? Well, that''s the next guy''s problem... All praise and worship the wonder and wisdom of the unregulated ''free market''!

at 8/26/2008 2:45:44 PM, Wm.Eslinger said:
I concur and a parallel issue occurred between the design and fab quadrants. The fabless/foundry model had been shown to work well up until the 130 nm technology point. But when significantly different materials were needed to advance to smaller geometries, the disconnect between design and semiconductor fabs created hard-to-solve reliability issues. Problems that required interdisciplinary know-how to correct.

at 8/26/2008 3:07:13 PM, Dr. Gloom said:
To add insult to injury, any idea how long will it be before entire architecture and design are being manufactured by a third party not affiliated with the original company? 6 months to a year is my guess since "reverse engineering" is not required!!!

at 8/26/2008 3:26:40 PM, Richard D. said:
The next outsourcing will be the CEOs. Since all functions will be oversea, there won''t be anything left for them to managed. The asian will do a much better job than them. Example: cars, electronix, manufacturing of goods, etc.

at 8/26/2008 3:44:57 PM, Siliconstani said:
Indeed a challenge it is. However it's a challenge that can easily be overcome by leveraging of outsourcing best practices adopted years back by the Software development industry. cross-posting to WadiBlog wadiwallah.com/blog

at 8/26/2008 5:41:17 PM, Greg said:
How come the USA government seams to be supporting other countries by getting in these stupid trade deals that make us outsource jobs so these countries can sell back to U.S.A.; yet these Asian countries never buy much American made products.. The biggest mistake opening trade with China ... how is an American worker supposed to compete with someone who make $1.00 A DAY IN China?!! All those free trade advacates talk about how great free trade is but never mention any answer to these points. Some companies such as Nielson in Oldsmar FL were replacing USA workers with India workers ... to boot the old workers have to train there replacements or they would not get severance pay!!MMMMM.. is there anybody in gov't for the AMERICAN people?!

at 8/26/2008 5:41:18 PM, Greg said:
How come the USA government seams to be supporting other countries by getting in these stupid trade deals that make us outsource jobs so these countries can sell back to U.S.A.; yet these Asian countries never buy much American made products.. The biggest mistake opening trade with China ... how is an American worker supposed to compete with someone who make $1.00 A DAY IN China?!! All those free trade advacates talk about how great free trade is but never mention any answer to these points. Some companies such as Nielson in Oldsmar FL were replacing USA workers with India workers ... to boot the old workers have to train there replacements or they would not get severance pay!!MMMMM.. is there anybody in gov't for the AMERICAN people?!

at 8/26/2008 5:56:05 PM, Michael said:
All is transient. Civilizations come and go, and if in this process we don’t “kill”the Earth we, as humans, may have a chance to go beyond the limits we know today. ...and if we do, don’t worry, there are other beings in this Universe that perhaps will continue what we started and couldn’t finish or just write in their logs that the earthlings were too stupid were not able to survive. Whose loss will be?

at 8/26/2008 6:59:58 PM, Bluebear said:
Without political conflicts, the forces of the free global market will provide that as long as Asian countries can still offer comparatively cheaper labor per unit of productivity to complete jobs that require higher skill level, increasingly higher level jobs will continue to be shipped oversea. Massive technology transfers into developing countries are taking place. However, to compete for survival, the global corporations, i.e. the owners of the technologies, really have not the choice to favor workers in the U.S. over those in any other geographic regions. Where is all this globalization heading? Two possible outcomes: (1) a geopolitical breakdown due to inefficiency caused first by the lack of global planning and coordination, and, as the emotions got escalated, due to natural resource endowment differences

at 8/26/2008 7:17:22 PM, Bluebear -- Cont. said:
Or (2) a harmonized united nation government that regulates the businesses of the entire world. At the present global civilization level, signals pointed to Outcome (1). The current natural resources shortage causing inflation worldwide indicated that it is not affordable for all nations to be advanced and to consume at the U.S.’s level. Ten years ago shipping jobs oversea helped corporations acquire the cheap-labor comparative advantage. Today, what can those corporations do to gain the advantage of the regions endowed with natural resources? Maybe having the governments boondoggle wars among the oil-rich countries then the private sector supply chains can sell weapons to gain back the wealth. The next burst of weapons may put a hold on outsourcing to give back to the U.S. technology architects the hands on implementation skills to blow up wealth themselves…

at 8/26/2008 7:57:51 PM, TedinAsia said:
There are emotional points of view on all sides of this issue. In the late 80's we looked at the writing on the wall and decided that it was time to "relocate"... OURSELVES to Asia, I have been an Irish American "Ex-pat" ever since. The international business worlds and the governments that control them offer no guarantees of success, it is up to the nimble individual or groups that can adapt and (the key word here) CHANGE to meet global market demand. We all know this, it was the first thing we learned in Econ 101, yet I still see people angry at the industry, angry at the government and angry at the people who sign/signed their paychecks. The corporate world has no choice but to follow the global workforce, if they don't, they will not survive because their competitors will. What is the difference between losing your job to overseas outsourcing or by the fact that your company went under ? Outsourcing saved 50 ~75% of the jobs within that company...unfortunately, not yours. I don't mean to be harsh here, but the people who complain about how can they compete with China staff making $1.00 a day, simple... use your education, your ambition, your entrepreneurial spirit, if you will, and develop a method of production that brings the comparative overhead down to 0.99c. The advantage you have (for the moment) over the 16 year old girl, working 12-16 hour days, living 2,000miles away from her family, in a dorm with 20 other young women with no prospect of a future education (for the moment) is that YOU CAN use your resources (education, experience, business networks, govt. assistance, etc) to compete, she has no resources. Make no mistake here, the days of competing internationally by putting in your 9~5 are long gone, job security and income depends entirely on your performance. There are no unions in the entrepreneurial world. As it has always been in nature, you either evolve or you disappear. Just my 2c,3Y,1NT$,.23HK$,.24rmb.

at 8/26/2008 9:45:39 PM, The next great thing? said:
Well, it was bound to happen sooner or later: Once an innovation hits commodity status, it is really only a matter of time when the market is driven to equilibrium by the negative dollar gradient. Hats off to the Asian community who have managed to take advantage of the opportunity to build their own capabilities. So what''s the next big, new thing in the development of which the US will lead? Bio- informatics? BioTech? Your next brain-storm? Perhaps this is where we ought to spend our collective energies.

at 8/27/2008 12:21:28 AM, Jason said:
Outsoucing has in Europe demolished 75% of the PCB industry, so outsoucing is not just a US Problem but a globel one aswell, I think it's time that we the consumer dig deeper into our pockets and pay the higher prices for the products we want( no price dumping), this way companys can afford to produce in the States and or Europe, The big chiefs should not just look at there (Rich kids) but there kids play mates that are not all that well OFF, well hope to do business with you all one DAY !! if we have a Job:-)

at 8/27/2008 12:36:32 AM, Azmat said:
Not only does design work get off-shored but as the US company becomes increasingly dependent on the partner THEIR political clout increases dramatically. I have observed cases where once the offshoring of manufacturing and of low-level 'cost-reduction design changes' matures, the partner wants to move upstream. When faced with resistance at the working level, they have 'clout' at the exec level, thereby being able to 'over ride' the operational attempts to control offshoring! Viola Battle lost. Jobs goodbye. Value added good bye. Margins good bye. Business BYE BYE!

at 8/27/2008 12:53:29 AM, O.U.T. Source said:
The article and the following comments do not address the real problem, namely the inability of the US engineers to communicate effectively. As mentioned in the article the problem arises from the lack of communication but instead of humbling themselves to work and communicating using modern networking tools and disciplined regularity, US engineers ususally start sulking and blaming the system. I think US engineering will eventually disappear since European and Asian engineers are simply smarter global citizens in this respect. I live with this issue everyday and only very few US engineers have grasped what the real problem is. It's the attitude - like it ususally is.

at 8/27/2008 1:04:46 AM, FEH said:
The "free market" is the illness of that world. Too many people make a huge of money without improoving or transforming a product. Speculation should be prohibited. For me its is difficult to develop and design a product without the manufacturing facility nearby. If at first we outsourced the manufacturing, the next step .... until we outsourced the CEO's and s.o.

at 8/27/2008 1:24:08 AM, Engineer in europe said:
Fully agree; same story in W-Europe where Jabil (St.Pete, Florida) took over some design and production locations from Philips: architecture was to be done in Belgium, while product development was to be done in China/Taiwan. From our point of view, it looks like that after 5 years, they are still not able to execute simple tasks. More likely, it has to do with communication problems inherent to the distance between members of development teams. If one would take (mis)communication, travel and missed time windows into account, it would be far more attractive to keep development at one location. People who decided the split: indeed morrons !

at 8/27/2008 1:50:58 AM, One view from Asia said:
Outsourcing is a' diry' word to me. Don't ask me why? Since US has started it, they will know how to handle it. Believe me, the Americans will know how and when to fix the problems! Globalization trend will continue, whetehr we like it or not!

at 8/27/2008 3:10:50 AM, Jyri Poldre said:
There is nothing inherently wrong if smart entities make niche money e.g. group working on specific design block. The problem is how to define, verify and catalog these so that you can be assured that it click in effortlessly. I am not so much worried about future improvements, just the fact that block works in current design. From my perspecive two main trends are governing design now: 1) Multiple core ICs and 2) quck turnaround ASICs. First gives opportunity to take existing kernels (eg PCB routng, simulation aso) and rework these to take advantage of parallelism. Second requires working and quict-to-merge-find IP-s. There is enough playgroung for smart groups around the world, the only question is in functioning communication channel. It is not best example but one such effort is SPIRIT for packaging HDL ips.

at 8/27/2008 12:07:21 PM, Ex-HP said:
I saw this kind of thing at HP in the early 1990s when they outsourced things. The problem is that the person managing the outsourced vendor initially probably did the same job themselves so they know what to look for and what makes sense. Then that person is replaced or eliminated to save costs and the replacement has only the knowledge transmitted by their predecessor verbally or in documents but none of the tacit knowledge of direct experience. Things begin to off course after that. Often enough the original knowledge is now gone forever from the company as "corporate memory" and to recover requires starting from scratch to relearn and rebuild infrastructure, which the market may or may not allow. Most likely not. I shudder when I think about the implications now of the fact that HP manufacturers none of their consumer products anymore. Who does that now? You might have heard about a little price war going on between Acer and HP. The same Acer who announced a year or so ago about going direct to customers again as a brand. The worst part is there are probably folks at HP who are actually surprised this happened! On the other hand back in 2000 HP was making more money and had better margins on alcohol ink and paper than any other product line so with that kind of cost structure can one imagine meeting Wallstreet''s expectations of compounded/exponential growth with something as "messy" as high tech? Probably not. HP is no longer a technology company.

at 8/28/2008 12:10:58 PM, Hardtruth said:
Appreciate this is written for your major readership in America Ron but the world does not begin in San Diego nor end in Boston. There is life and competence beyond US shores.

at 9/5/2008 12:06:43 PM, Dave W said:
A job is not a "thing" you can drop on your foot. It is an activity with the apparent stability of a candle flame. Jobs cannot be "saved" like pennies in a jar. They exist only as long as the job helps someone to the mutual profit of both. Otherwise, there is no job. Somebody still makes buggy whips and core memories, but there are not many jobs there any more. Most jobs are transient. Jobs go away, and you have to find another one. It does not much matter if the old jobs are eliminated by new machinery or by remote, cheap labor. Ironically, we typically use machinery to compete against remote, cheap labor. But the jobs either replaces are gone. . As the blog shows, many people have not learned that you cannot outsource your business. Successful outsourcing is merely subcontracting with another name. But business is founded on satisfying a customer to the profit of both. How you do this is the core of any business. If you try to outsource this core, either the business fails because nobody is actively working at satisfying the customer any more, or your subcontractor decides to take a chance and go into the business of satisfying the customer you forgot and takes up the business you gave away. . Times change. Your seemingly permanent job may be evaporating. You cannot bet on the last race. But you can bet on the next race. People always want more of everything, so there are always new wants to be satisfied by new businesses. Satisfy the new wants, and you have new businesses and jobs. That is how we got through the industrial revolution (craftsmen jobs), the farming revolution (farming jobs) and the computer revolution (clerical jobs).

at 9/25/2008 3:10:02 PM, Mike_in_NJ said:
The very same people who decry "Outsourcing" are writing white papers on how to design this or that widget and "sontributing" to "Open-Source" projects. You are shooting yourself and your comrades in the foot. STOP GIVING AWAY VALUABLE KNOWLEDGE! When you place a value on your experience and education, only then will others do the same. STOP OPEN SOURCE! It's just enabling your own job loss.

at 9/25/2008 3:20:16 PM, Mike_in_NJ said:
The US and Europe can regain world technology domination by doing the following: 1) STOP ALL OPEN SOURCE PROJECTS. 2) STOP CREATING OPEN STANDARDS. Standards should only be licensed to national companies. Creating barriers to entry for foreign competitors (what China/Japan/Korea do). 3) ALL ENGINEERS SHOULD BE LICENSED. Licensing will create true profession for engineers and limit the supply of third-rate labor. Degrees are not required as long as you pass a national licensing exam. 4) STOP PIRACY OF ENGINEERING TOOLS AND LITERATURE. An idiot can get on the web and download millions of dollars of ASIC tools and Engineering Books on everything from FPGA Design to Architecture. The value of your US education and experience just went down the tubes when some numskull with time on his hands can acquire the same for pennies and no student loans to payback. 5) PUT A TAX ON COMMUNICATIONS ACROSS BORDERS. Companies will have to pay more to send their files to their outsourcing vendors. This will level the field between local companies and foreign cheap labor. I'm sure the corporate lackies will flame this post, but someone has to take a stand before we are all reduced to working for $1/day.

at 10/28/2008 4:11:57 AM, Dagitab_ph said:
Open source is maintained not just by US citizen but by many people around the world. It is a natural evolution for software due to the congested competition. Outsourcing on the other hand is just a natural evolution that US and European companies must do in order to prolong or survive. These moves from expensive labor to cheap labor is just a way for economic forces to balance the imbalance condition of world economics. As soon as the third world countries would develop, their cost of labor will begin to rise while the cost of labor of expensive countries will decline due to the outsourcing until a balance is achieved. Saying against outsourcing or open source is just because you lack understanding of economic forces.

at 11/2/2008 9:59:01 PM, Saket Jamkar said:
I liked the response from Ted in Asia. At first sight it seems like a really strong argument. Companies have to compete with others and they go under unless they reduce costs, if a rival has found a way to make it cheaper. Now I haven't been around in the industry for a long enough time, but I never feel like the price of anything has dropped because of outsourcing. I work for a company that makes GPUs and although we are doing more of our work in Asia, the price we sell at is still the same. The price is whatever customers are willing to pay. So clearly this implies companies are making higher profits. There are two alternatives with what to do with the higher profits. Companies could invest the money into R&D again and make even better products or just pay more salaries to their employees. From what I have read, salaries have stagnated in the last few years. So who is pocketing all this money (assuming the company isn't investing more in R&D)... The top executives? Executive pay is sky high! Millions a year or more... Stock holders make money too, I guess but whoever holds the most stock, makes the most money...

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