Mixed-signal semiconductors: black art, high value
By Jim Jones and Sharon Wienbar - February 1, 2004
It has become a matter of almost religious faith that the prices of semiconductor components decrease as much as 15 percent per quarter. The infamous Moore's Law, which stipulates that semiconductor processing power will double every 18 months, has translated into an ever increasing amount of functionality packed into the same silicon area and ever falling prices for chips in high volume.
That, however, concerns the world of digital circuits, with cost decreases based on the size of a standard transistor, the world of processors and memory and "sea of gates" logic functions. This law is entirely untrue in the world of mixed-signal semiconductors, which handle power management and populate such devices as communications transceivers and application-specific analog circuits.
Analog mixed-signal devices are pervasive in high-volume gadgets that have gone mainstream: laptop displays, MP3 players, digital cameras, automobile sensors as well as controllers and power management in anything electronic. The market size for analog semiconductors keeps increasing, to an estimated $44 billion in 2003. The $5 spent on a "jellybean" power management circuit (so called because these circuits are sold by the pound, like jellybeans) five years ago is still $5, if not more.
This industry seems ripe for cost reduction and competition. Almost every other manufacturing-based industry has seen jobs move to Asia or other low-cost regions, with resulting price declines. Amid a significant shift of U.S. white collar and technology jobs—including semiconductor manufacturing and industrial design—to Asia, analog semiconductor design has so far remained immune from this trend. Why not analog? Or, why not analog yet? While most companies in the world of digital circuits struggle to reach or maintain 50 percent gross margins, why do analog-semiconductor companies regularly reach gross margins of more than 70 percent?
There are few automated tools for analog circuits, because they can produce unpredictable noise in one section that affects another.
The key is that analog design is more art than science. You have probably heard this before, but the consequence is that products are hard to replicate yet cost little to produce. Analog design differs from digital design in several ways: There are few automated circuit-design tools for analog circuits, because analog circuits can produce unpredictable noise in one section that affects another—the physical layout is very sensitive. Analog circuits use a wide range of manufacturing processes to tweak performance to the desired level. And there are relatively few analog artists with training in both circuit design and process engineering who can deliver quality products.
Changes are afoot in the old analog world. The well-publicized explosion of semiconductor fab capacity in Asia, particularly in China, has hidden the fact that several of these large fabs are targeting analog circuits. These fabs offer dramatically lower costs of production and are also training grounds for a new generation of analog chip designers outside the U.S. Foundries such as Advanced Semiconductor Manufacturing Corp. (ASMC) and SIM-BCD (a joint venture of the Shanghai Institute of MicroSystem and Information Technology and BCD Semiconductor, of Bermuda) may someday become catalysts for competition and cost reduction in the analog world, just as TSMC and UMC have delivered broader price competition in the digital world.
Will analog design ever be demystified? Send your experiences email@example.com.
Jim Jones and Sharon Wienbar are directors at BA Venture Partners (www.baventurepartners.com), where Jones covers system and component manufacturers tackling next-generation communications infrastructures and Wienbar covers enterprise software and Internet infrastructure companies.
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