By Shannon Davis, Web Editor
Overheard @The ConFab: “I feel the best I’ve felt about semi since 2009.” –Mike Noonen, Silicon Catalyst
Monday’s research and development panel discussion at The ConFab 2014 started on that optimistic note as Moderator Scott Jones of AlixPartners led a discussion on Optimizing R&D Collaboration. Panelists Chris Danely of JP Morgan, Lode Lauwers of imec, Rory McInerney of Intel and Mike Noonen of Silicon Catalyst discussed where the next big growth drivers will come from and the ability of the industry to continue scaling and remain on Moore’s Law through the introduction of new technologies such as EUV, Advanced Packaging and 450mm. The panel also touched on the role startups will play and how increased collaboration can benefit the industry.
Here are highlights from Monday’s discussion.
How do you feel about the semiconductor cycle – is that at a positive point for innovation and small, start-up companies?
Mike Noonen: I feel the best about I’ve felt about semi since 2009. Without a doubt. When you combine that situation that we’re in with a couple driving forces, all of that has fundamental benefits to the semiconductor business at large. You take those mega trends that are not leading edge applications with the challenge of Moore’s Law – those are developing a whole host of innovation. We think this is a great time to think about how to reinvigorate startups – this is the best time to think about innovation.
From left to right: Panelists Chris Danely of JP Morgan, Mike Noonen of Silicon Catalyst, Lode Lauwers of imec, and Rory McInerney of Intel
Consolidation is a big theme right now. Is this something that’s holding us back the industry?
Rory McInerney: I don’t think the industry is consolidating for us as much as we think. The big players are still HP, Lenovo, etc. The new players are Google, Facebook, Amazon, etc. – many didn’t exist 10 years ago. Within our world, there’s the traditional space, but there’s a ton of new stuff in the cloud and server segment.
Tell us some of the most exciting areas Intel is participating in.
Rory McInerney: On the data center side, we do want our 10 and 7nm, but one of the drivers of our business is the massive amount of data being generated around the world. There are tens of billions of devices that will be connected to the Internet in the few years. The only commonality in the [IoT] numbers is that they go up. All of them will have some element of connectivity and with that comes data. And that drives a virtual cycle. In our business, we love this – my point is, there’s a huge room for innovation. The innovation isn’t just the device but the software and application side.
How do investors view the emerging markets and trends? Do they see the opportunities or are they still focusing on traditional markets?
Chris Danely: From a broad perspective, the thing that an analyst looks at – are they playing to their strengths? You might have a company that starts out very successful, but they don’t play to their strengths and start to waste money. For example, Texas Instruments has taken their R&D down, but still outgrow the industry, because they play to their strengths. Another example is Intel – in the last 3 years, they were in the foundry business – we see a lot of potential to upset the apple cart in the foundry business. Nobody else could do this, but this is an area where we see them exploiting their strengths. Is the company playing to its strengths? We also look at ARM on servers – we don’t know if this is going to work or not, but I don’t think this changing the landscape of the industry. There’s still a bright future with semiconductor stocks.
How can executives communicate their R&D strategy better?
Chris Danely: I’ll use my personal experience – you want to keep that message very simple. Identify the growth trends. Make sure the message goes out continuously. Don’t be afraid to use a few buzz words/charts.
Lode Lauwers: If I may, Wall Street is looking in the short term. Time scale [for R&D] is close to 15 years. I don’t know if Wall Street has that visibility. I think a company should consider R&D as a long term investment. We go for long term engagements.
Rory McInerney: It’s a portfolio question in terms of R&D – you’re going to have your short term and your long term investments. I don’t think Wall Street is looking at all the details of investments. I think that our investments on the product side go out 10 years, but they’re small compared to our other investments.
Chris Danely: Wall Street has to consider about things on a six month basis.
Mike Noonen: Biotech, which has a very long time to market, is the second largest venture capital in the US. Biotech has remained lucrative and interesting in the US. In this area, companies go after a single application or problem, and it’s a vibrant and healthy investment. The take away is – it’s all about the economics. It might enable small start ups to innovate and then be acquired.
How should the industry leverage a company like imec?
Lode Lauwers: More than ever, you need to build partnerships. In this industry, we used to say, “Our company can work on its own.” Now, your ecosystem needs to become wider. Ten years ago, people were still sponsoring R&D. Now we are assessed in every individual area, deliverable by deliverable, on does it benefit, is there ROI. You need to be able to deliver relevant work. A company on its own doesn’t always have these abilities in house. Using imec, it’s like building on competences.
Do you see differences in how you approach partnerships?
Chris Danely: The CEOs and CFOs of semi companies are under pressure to not increase expenses, and that’s stifled risk-taking. Some are now approaching R&D through acquisition of startups with personnel – rather than partnerships.
Do you think these companies are larger – semi is a part of a much larger landscape – do you think this might drive the industry/change the landscape?
Rory McInerney: About 70-80 percent of cloud computing today is driven by the social media. That didn’t exist 5 years ago. There is a direct link between that and the changing semi landscape.
What is the biggest risk in the industry right now?
Chris Danely: Saturation. Semi companies are profitable, but we’re starting to see a lot of them, especially as fablite and fabless models are catching on.
Moderator Scott Jones of AlixPartners