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MOORE OR LESS?

OVERVIEW

Semiconductor companies can keep pace with Moore’s Law. The question is whether they should.

Semiconductor companies have achieved profitable growth by doubling the number of transistors on integrated circuits every two years. Today, costs associated with creating ultra-dense transistors are rising exponentially. At the same time, sales prices are flat—or declining.

In this high-cost/low-return environment, it’s harder for semiconductor companies to justify using Moore’s Law as a tool for sustained competitiveness. Winners will no longer pursue innovations simply because they can. They will pursue opportunities that are clearly aligned to a viable business strategy, as well as their growth and profitability objectives.

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KEY FINDINGS

Today, there is no guarantee that the rewards associated with advanced chip development outweigh the costs.

  • TECHNOLOGY VS. SUPPLY The market for 10nm and smaller process technologies is expected to grow from $14.8 billion in 2020 to $39 billion in 2025. But many customers don’t need to transition to ultra-dense nodes to maintain competitiveness. Nodes of 28 nanometers and higher will have remarkable staying power.

  • GROWTH VS. PROFITIABLITY Design costs for newer nodes have grown by 1300 percent from 65nm to 10nm. Today, the two-year projected average cost per thousand gates of 20nm and 16nm technology nodes are actually higher than the 28nm cost.

  • QUALITY VS. COST The requirements for manufacturing advanced nodes have more than doubled since 2005. This has increased exposure to quality incidents by nearly 500 percent.

Given these factors, semiconductor companies must think carefully about where—and whether—to invest in advanced chip production.

SLIDESHARE

RECOMMENDATIONS

As they develop their competitive strategies, semiconductor companies must:

Choose carefully

Choose carefully. Understand the costs, benefits and requirements of becoming an advanced node leader. A diverse product portfolio comprising traditional and advanced node technologies is likely the best strategy.

Leverage design cycles

Leverage design cycles. Generate as much value as possible from existing investments. Continue producing older nodes for existing applications—and develop new applications for older nodes.

Be more vigilant

Be more vigilant. With advanced data analytics, establish four lines of defense to detect quality issues earlier in the product lifecycle. That shift produces significant savings.

FABLESS SEMICONDUCTOR COMPANIES

Inefficient manufacturing and testing of chips is costing fabless companies millions of dollars and eroding competitiveness.

The semiconductor industry today faces a monumental challenge: putting the brakes on a ballooning cost structure that is making many fabless companies uncompetitive. According to Accenture Strategy analysis, as much as 80 percent of a fabless company’s revenue is eaten up by the cost of goods sold (COGS)—and the situation is only getting worse.

Learn about the three actions fabless companies should take to restore competitiveness and profitable growth in our report, “Fabless semiconductor companies: Is your manufacturing sourcing strategy eroding competitiveness?”

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AUTHORS

Syed Alam

Syed Alam

Managing Director – Accenture Strategy, Communications, Media & Technology

Greg Douglass

Greg Douglass

Senior Managing Director – Accenture Strategy, Communications, Media & Technology


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James Wildenburg

James Wildenburg

Managing Director – Accenture Strategy, Communications, Media & Technology



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