People working in the chip industry are too smart. They are so smart that they can’t make money, Dr Keh-Ching Huang, marketing director of Global Unichip Corporation (GUC) told the Globalpress Summit Conference in Santa Cruz today.
Huang thinks the potato chip industry is smarter than the silicon chip industry because, while the ASPs of silicon chips keep declining, and the margins keep getting smaller, he had seen potato chips being sold under the label ‘Gourmet Potato Chips’ and selling for 20% more than ordinary potato chips. Unfortunately the Gourmet ASIC has yet to be invented.
That’s despite the fact that GUC took 100 man years to design a 50m gate device and is currently discussing a 100m gate design with a customer.
The problem for the silicon chip industry, reckons Huang, is that the competition is so fierce that chip companies accept it when customers demand price reductions. Meanwhile, the industry’s challenges get more and more demanding.
"In 2007, we started designing on 65nm," he said, "it was 2009 before it went into production. So market uncertainty becomes as huge factor when you’re doing a design. It’s a risky business."
ICs made on process technologies at 90nm and more advanced accounted for 34% of GUC’s revenues last year and 80% of its 2009 NRE revenue.
It is taping out its first 40nm design, an SOC for a mainland China customer, and has several engagements on 28nm designs.
GUC has the distinction of achieving 50% CAGR over the last five years when the industry’s CAGR was 9%. Revenues topped NT$2bn (US60m) in Q1 2010 and were over $8bn in 2009. The company is 35% owned by TSMC which fabs its designs.
GUC is following the green fashion. "We have to say we’re a green company to keep in step with the rest of the industry, and we’re working on making the whole company more efficient so we’re a green company," joked Huang.