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SEMICONDUCTOR INDUSTRY OUTLOOK: ECM BRINGS DESIGN CHAIN MANAGEMENT TO CENTER STAGE

AMR Research – Vinay Asgekar

AUGUST 3, 2001 -- Product lifecycles have shrunk, in some application areas by more than 50% over the last six years in the Semiconductor and High-Tech industry, which thrives on innovation. Product cannibalization, a major contributor to the lifecycle shrinkage, is an accepted best practice in the industry and is evident from the speed at which processor upgrades and revisions were introduced in the PC market the past few years. To keep pace with product development, most companies are focusing on Time-To-Market (TTM), but industry leaders are going beyond TTM by focusing on Time-To-Volume (TTV), which directly impacts the product's profit generation ability and enhances its opportunity to capture market share. High profit margins typically last only through the first third of the lifecycle, beyond which the competitive products catch up and margins decline dramatically. The steeper the volume ramp, the better the chances of establishing market share and attracting higher margins.

However, extensive outsourcing of manufacturing and design activity makes managing TTV a daunting task. Using external resources splits up the internal design chains and disperses the characterization process, which is instrumental in bringing the product to volume, across the enterprises and across the globe. On the other hand, deeper collaboration with downstream demand chain partners is needed more than ever as design complexity increases and performance requirements become more challenging. These facets of the modern design process point to a new topology of the design chain, from semiconductor component manufacturers to Original Equipment Manufacturers (OEMs), which must be capable of delivering the volume-ramped product into the market rapidly before the competition.

Current systems with established vendors like Agile Software, PTC, i2 Technologies, and SAP are not sufficient for the Semiconductor industry.

Companies must also integrate niche functionality from companies like Syntricity, ChipData, IDe, and Synchronicity into a platform that lets design chains consistently deliver high-quality, volume-ramped products into the supply chains on time. Flexibility to morph the software system based on each instance of design chain topology can become a bottleneck without an Enterprise Commerce Management (ECM)-compliant platform. Inflexible systems cause an adverse impact on TTV and hence the profit potential of the product, making ECM an important way companies can distinguish themselves in this competitive marketplace.