System-in-package (SIP) is growing much faster than system-on-chip (SoC), but the semiconductor industry faces the problem of who is going to develop the necessary tools for SIP.

The warning came from Christine King, CEO of AMI Semiconductor, at this year's Globalpress Summit Conference in Monterey.

At a panel session on SIP vs SoC, King said that the two dividing lines were technology and complexity. "If it's an all CMOS solution then SoC is best," she said. "If diverse technologies are being integrated, then SIP is best."

For example, automotive applications might require high voltage, plus CMOS, plus ESD protection, EMS compliance and with sensor capability delivered in MEMs. This would be best served by SIP.

Christine King

The other deciding factor is complexity. King gave the examples of a low complexity solution for a washing machine, which took two years to develop and cost $2.40 in an SoC, and a high complexity solution with stacked flash die which went to a SIP for an ASP (average selling price) of $4.80 and took 18 months to develop.

Panelists at the Globalpress Summit Conference pointed out that SIP was being driven by mobile phones where the short product life and frequent change of specification, for instance adding a camera one year and a video or MP3 the following year, lent itself to the flexibility of SIP.

SIP also avoids the escalating costs of SoC NREs (non-recurring engineering charges) and their soaring development times.

However SIP faces the problems of multiple supplier issues (i.e. silicon from different manufacturers), a larger power requirement, a bigger form factor and a lack of tools.

"Who," asked King, "is going to invest in the tools we need for SIP?"

Leading edge not good for profits

Meanwhile, King told the Globalpress Summit that being at the leading edge of technology is not the best way to make profits in the semiconductor industry.

“There’s great business to be had in 0.5µm, 0.35µm and 0.18µm," said King. “We’re just in the process of closing a four inch fab. Our customers are up in arms about it. They say: ‘This product has 20 years to go'.”

King pointed out that the gross margins made by the leading technology companies did not match the margins of what she called the proven technology companies providing ‘real world’ solutions.

Gross margins at the technology leading companies are: Intel 48 per cent; Texas Instruments 45 per cent; STMicroelectronics 37 per cent; Freescale 31 per cent.

Gross margins at the real world companies are: AMI 48 per cent; Analog Devices 59 per cent; Maxim 71 per cent; Linear Technology 78 per cent.

The real world market is worth 40 per cent of the total semiconductor market, said King, and it is growing at 10 per cent.

Agreeing with King, Lew Counts, vice-president and fellow at Analog Devices, said that in the 1995-2005 decade the analogue market grew 115 per cent while the total semiconductor market only grew at 83.6 per cent.

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