IMPACT OF AI AND DEEP LEARNING

ON SEMICONDUCTOR MARKET OPPORTUNITIES

FOR DESIGNS
JUNE 25, 2018

INTERNATIONAL BUSINESS STRATEGIES, INC.

632 Industrial Way | Los Gatos CA 95030 | USA | 408 395 9585 | 408 395 5389 (fax)
www.ibs-inc.net | info@ibs-inc.net
 INTERNATIONAL BUSINESS STRATEGIES BACKGROUND
IBS
▪ IBS has been in business for over 29 years
▪ Previous experience in managing 1500+ engineers at Rockwell International, which included avionics, communications,
and semiconductors. Strong emphasis on communications
▪ Interface with most global leaders in electronics industry, with customers in U.S., Europe, South Korea, Japan, Taiwan,
China, India, etc
▪ Interface and support for major global corporations such as Intel, Qualcomm, Broadcom, Microsoft, Nokia, Samsung,
SK Hynix, Sony, Toshiba, Apple, Cisco, Huawei, IBM, Fujitsu, Canon, NEC, Hitachi, Renesas, TSMC,
STMicroelectronics, TI, ARM, Cadence, Synopsys, Mentor Graphics, Seagate, Globalfoundries, SMIC, NXP, and others
▪ Interface and support for financial institutions such as Goldman Sachs, Carlyle, Blackstone, CitiGroup, Warburg Pincus,
Walden, KKR, Morgan Stanley, Credit Suisse, BNP Paribas, Bain Capital, Bank of America, TPG, and others
▪ Participated with French government on their advanced technology initiatives
▪ Involved with advanced technology concepts, price-sensitive platforms for smartphone and other high-volume
platforms, and high-performance infrastructure companies on global basis
▪ Strong expertise in China. Published two books on China: China’s Globalization (How China Becomes No. 1) and
Chinamerica (McGraw Hill). Forbes blog contributor, China Daily articles, Global Times editorials, EE Times, etc
▪ Involved in number of due diligence projects on number of IPOs
▪ Support for strategic initiatives for number of global technology leaders
IBS HAS HIGH MARKET SHARE IN TECHNOLOGY AND STRATEGY BUSINESS
© 2018 INTERNATIONAL BUSINESS STRATEGIES, INC. ALL RIGHTS RESERVED. MS-DAC6.2518 SLIDE 2
 KEY ISSUES IN ELECTRONICS AND SEMICONDUCTOR INDUSTRY
IBS
▪ Smartphones represent largest consumer of semiconductors through 2027
• 5G ramp-up will start in 2020
China will have one billion mobile 5G users in 2025 to 2028
• AR will be next key feature for smartphones
▪ Growth of semiconductors in automotive applications is increasing
• ADAS
• Electric vehicles
▪ Data centers represent growth market for semiconductors
China will be largest market in future
▪ AI will have disruptive impact on demand and supply in semiconductors

CONTINUED MIGRATION TO SMALLER FEATURE DIMENSIONS, BUT WITH INCREASED

DESIGN CHALLENGES (AND OPPORTUNITIES)
© 2018 INTERNATIONAL BUSINESS STRATEGIES, INC. ALL RIGHTS RESERVED. MS-DAC6.2518 SLIDE 3
 SEMICONDUCTOR MARKET
IBS
$840B
$790.2B
MPU
$733.3B
MCU
$681.3B DSP
$633.4B Standard Cell ASIC
$630B FPGA
$589.3B
$548.7B Special-Purpose
Logic
$511.8B
Semiconductor Market

$478.4B General-Purpose
$472.6B
Logic
$440.8B
$408.7B Display Driver
$420B
Analog
$337.1B $338.8B

MOS Memory

$210B

Other
Semiconductor

$0B
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

GROWTH THROUGH 2027, BUT WITH POTENTIAL FOR DOWNTURN IN 2020

© 2018 INTERNATIONAL BUSINESS STRATEGIES, INC. ALL RIGHTS RESERVED. MS-DAC6.2518 SLIDE 4
 TSMC’S REVENUES BY FEATURE DIMENSION (FY)
IBS
$10B
$9.4B

$8.5B $8.5B
$8.1B $8.1B ≥0.25µm
$7.9B
$8B
0.18/0.15µm
$7.2B
TSMC's Revenues By Technology Node

$6.9B 0.13/0.11µm
$6.7B
$6.5B $6.3B 90nm
$6.2B $6.2B
65nm
$6B
45/40nm

28nm
$4B

20/16nm
$2B

10nm

$0B
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2015 2016 2017 2018

NEXT PHASE IS 7nm, AND THERE IS LARGE DECLINE IN 10nm REVENUES IN H2/2018
© 2018 INTERNATIONAL BUSINESS STRATEGIES, INC. ALL RIGHTS RESERVED. MS-DAC6.2518 SLIDE 5
 EDA MARKET
IBS
$24B

$21.4B

$19.6B

$18.0B
$18B CAE
$16.5B
$15.2B
$14.0B
EDA Market

$12.9B IC Physical
$11.8B Design
$12B $11.1B
$10.1B
PCB/MCM
$9.3B

$6B
SIP

$0B Services
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

RELATIVELY STRONG GROWTH, BUT ALSO WITH SIGNIFICANT UPSIDE POTENTIAL

© 2018 INTERNATIONAL BUSINESS STRATEGIES, INC. ALL RIGHTS RESERVED. MS-DAC6.2518 SLIDE 6
 NUMBER OF DESIGN STARTS
IBS
12,000

10,632 10,719
10,398 10,536
10,160 10,299
9,896 10,041
9,606 9,754
9,488 ≥0.25µm

9,000
Number of Design Starts

0.18/0.15µm

6,000

0.13µm

90nm

65nm

3,000 45/40nm

28/22/20/18nm

16/14/12nm

7nm

0 ≤5nm
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

MANY DESIGNS ARE IN MATURE TECHNOLOGIES

© 2018 INTERNATIONAL BUSINESS STRATEGIES, INC. ALL RIGHTS RESERVED. MS-DAC6.2518 SLIDE 7
 TRANSISTOR COUNT TREND
IBS
17,000
15,680

12,544
12,750

Transistor Count (MU)

8,360
8,500

6,968

4,250 3,920

2,536
2,112

0
16nm 12nm 10nm 7nm 7nm Plus 5nm 3nm

BASED ON 80mm2 DIE

© 2018 INTERNATIONAL BUSINESS STRATEGIES, INC. ALL RIGHTS RESERVED. MS-DAC6.2518 SLIDE 8
 ADVANCED DESIGN COSTS
IBS
$580M
$542.2M

Validation

Prototype

$435M
Advanced Design Cost

Software

$297.8M
$290M

Physical
$174.4M

$145M
$106.3M Verification

$70.3M
$51.3M
$37.7M Architecture
$28.5M
IP Qualification
$0M
65nm 40nm 28nm 22nm 16nm 10nm 7nm 5nm
© 2018 INTERNATIONAL BUSINESS STRATEGIES, INC. ALL RIGHTS RESERVED. MS-DAC6.2518 SLIDE 9
 VALUE LEVERAGE OF EDA
IBS

Nonmemory IC Market
($229.1 Billion)

Nonmemory R&D
($36.8 Billion)
CAE and IC Physical Design
($5.2 Billion)
VALUE OF EDA CONTINUES TO BE LOW COMPARED TO
IMPACT ON SEMICONDUCTOR INDUSTRY
© 2018 INTERNATIONAL BUSINESS STRATEGIES, INC. ALL RIGHTS RESERVED. MS-DAC6.2518 SLIDE 10
 KEY STRATEGIC ISSUES IN EDA
IBS
▪ Typical designs costs are:
• Engineers 75%
• EDA tools 20%
• Computers 5%
• Total 100%
▪ Complexity of databases is increasing at faster rate than capabilities of design ecosystem
▪ R&D expenditures as percent of revenues declined at many semiconductor vendors in 2017
Key reason is emphasis on short-term profits
▪ System companies are becoming more involved in IC design

SOLUTIONS ARE MEGA DESIGN CONCEPT (SIMILAR TO FOUNDRY BUSINESS MODEL)

AND USAGE OF AI AND SUPERCOMPUTER CAPABILITIES
© 2018 INTERNATIONAL BUSINESS STRATEGIES, INC. ALL RIGHTS RESERVED. MS-DAC6.2518 SLIDE 11
 MEGA DESIGN CONCEPT
IBS

Supercomputer Capacity

Customer Product Specification

Front-end Design Implementation
Libraries
Capacity
IP

Customer Product Designs

DFM Capabilities Back-end Design Implementation Capacity
Reticle Support

Wafer Fab and Wafer Fab and Wafer Fab and

OSATs OSATs OSATs

Prototypes Prototypes Prototypes

Production Value Production Value Production Value

SHOULD MAKE EXTENSIVE USE OF AI CAPABILITIES

© 2018 INTERNATIONAL BUSINESS STRATEGIES, INC. ALL RIGHTS RESERVED. MS-DAC6.2518 SLIDE 12
 CONCLUSION
IBS
▪ Semiconductor market has steady growth in 2018 and 2019
Relatively high probability for downturn in 2020
▪ Key trend is ramp-up of 7nm (TSMC definition) in 2018, with rapid decline in 10nm revenues
7nm Plus will ramp up 2019
5nm is planned for ramp-up in 2020, but with potential for delay
▪ Benefits for continued migration to 3nm and 2nm
Increased integration of IP and lower power consumption
▪ Cost of implementing designs is increasing as feature dimensions reduce
Global shortage of design capacity
▪ Solution for design challenges is mega design concept, which is similar to foundry concept
AI will be important capability to increase efficiency of design engineers
MANY OPPORTUNITIES FOR DESIGN ECOSYSTEM
© 2018 INTERNATIONAL BUSINESS STRATEGIES, INC. ALL RIGHTS RESERVED. MS-DAC6.2518 SLIDE 13