What's next for Taiwan's IC industry?
08/01/2004
Faced with the threat of mainland China's growing silicon foundry and chip manufacturing segments as well as its low-cost labor, Taiwan's IC industry is under pressure to transform itself into a high value-added, design-driven industry in order to remain competitive in global markets. Recognizing this need, Taiwan's government has launched an ambitious initiative called the "Si-Soft Project" ("silicon software") to create a range of technologies and new development centers with the goal of establishing a rich domestic market for silicon intellectual property (SIP) within the next three to five years.
While the Si-Soft project expands, Taiwan is also pursuing the "Challenge 2008 — National Development Plan," which was initiated in 2002 by the government's Executive Yuan cabinet to increase the value of key industries facing greater competition in the region and mainland China's "magnetic effect." Under that initiative's guidelines, the Ministry of Economic Affairs (MOEA) has formulated the "Two Trillion, Twin Stars Plan," in which Taiwan's semiconductor industry is expected to generate NT$1.59 trillion (US$48 billion) in production value in 2006. In fact, it was estimated that the production value of Taiwan's semiconductor industry will exceed NT$1 trillion this year.
To attain the goal of NT$1.59 trillion in production value and to realize the vision of Taiwan becoming a global IC design center, MOEA's Industrial Development Bureau have launched a number of critical programs. These include the IC Design Park Network, the Semiconductor Institute, the Semiconductor Industry Promotion Plan, and the Nankong IC Design R&D Center.
The overall aim is to transition Taiwan's IC manufacturing industry into new design-driven growth with three semiconductor companies in the global top 10, based on annual revenues. Projections by MOEA's Industrial Development Bureau (IDB) show it is realistic to expect Taiwan to become the world's third-largest IC supplier by 2006, behind Japan and the United States. Also in 2006, Taiwan will be home to the world's largest concentration of highly productive 12-in. (300mm) wafer fabs. More than ten 12-in. fabs capable of processing wafers with sub-0.1µm technology are expected to be operational in Taiwan by 2006.
Taiwan's current IC industry has outperformed the global industry, even in the major swings of market conditions since the last boom period. For example, in 2000, when the worldwide semiconductor industry had one of its best growth years, the growth of Taiwan's IC output was 69% vs. 37% for global chip sales. Taiwan's IC industry suffered its first decline in growth in 2001, dropping 26.6% compared to a decline of 32% for the entire world. In 2002, Taiwan's IC industry grew 24% while revenues worldwide edged up 1.3%.
In 1Q03, Taiwan's worldwide market share in silicon foundry, testing, packaging, IC design, and integrated device manufacturing were 73%, 38%, 32%, 28%, and 8.5%, respectively. For 2003, the total production value of Taiwan's industry was about US$25 billion. Taiwan's foundry and chip-packaging industry segments are both ranked no. 1 in the world, and the IC design sector is no. 2, just behind the United States. Taiwan's fabless IC design revenues accounted for 28% of the worldwide total in 2003 (Fig. 1).
 Figure 1. How Taiwan's IC design revenues compare to worldwide totals. (Source: IEK-IT IS Project/ITRI) |
To help promote a new level of design-driven growth, the Si-Soft project in 2002 embarked upon two paths of development. One is focused on infrastructure for education, regulations, and the overall environment needed to promote more design activities and reusable SIP. The second area of focus for the project is the National SoC Program (NSoC), which targets system-on-chip capabilities. This program is the engine for the Si-Soft efforts.
Building silicon IP centers
Taiwan is aiming to expand its IC leadership by creating more silicon intellectual property with greater value and increased reusability. The effort aims to build Taiwan's reputation as a well-placed center for the protection and distribution of SIP. To establish a rich market for SIP, the NSoC program will support the integration of electronic design automation (EDA) software, and provide an outstanding design environment for global systems design firms. The SoC design initiative also is intended to strengthen Taiwan's manufacturing niche.
To achieve these goals, NSoC has identified key products, or "killer applications." Resources — such as SIP, EDA flows, and platforms — are set up or developed so that firms will readily use SIP to facilitate on-the-spot integration and verification of products (such as PDA plus wireless products). The aim is to deploy new resources, which will increase the number of customers using Taiwan-developed SIP in product applications worldwide. For effective execution, five working groups have been set up in the NSoC program office to manage core areas:
Human resources. Three programs have been established to cultivate SoC engineering design talent: the VLSI circuits and systems educational program, the SoC talents enlargement educational program, and SoC industrial talents training program. One of the main missions of ITRI's SoC Technology Center is to help cultivate SoC design talent for the future.
Innovative product design plan. This effort aims to develop forward-looking technologies for designing SoC-based products for wireless and broadband communications, optical electronics, processors, and other key product-driven SoC technologies.
Innovative platform development. This effort will encourage companies in Taiwan to develop design platforms for reusable core technologies, and will also encourage research of SoC design-related key technologies, including EDA, testing, and verification tools.
Innovative IP development. This activity is focused on building comprehensive IP technologies and applications, including cores for IP modules, system-level IP, and IP software.
Emerging industry technology-development program. This effort will encourage a Taiwan-based design service industry with the goal to "incubate" comprehensive service companies.
As a nonprofit R&D organization, STC has launched three projects covering the innovative product design plan, platform development, and IP development core areas. STC has also achieved research results in baseband, media access controller, dual-band radio-frequency IC SoC technologies, wireless local-area network ADC/DAC verification, on-chip bus verification model, and IP check-in criteria.
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From 1998 to 2003, the compound annual growth rate of Taiwan's IC design industry was 32.3%. In 2003, the number of IC design companies in Taiwan reached 250 and the business volume was estimated at NT$190.2 billion, or US$5.76 billion (see table). It is estimated that IC design production value in 2005 will exceed US$9 billion but could surpass US$10 billion. In order to meet demand and create new opportunities, the IDB is planning a network of seven IC design parks stretching from northern Taiwan to the southern end of the island (Fig. 2). Each of these parks will develop specific IC products, based on local industry.
 Figure 2. Taiwan's IC design park network comprises seven parks from northern to southern Taiwan. |
The Semiconductor Institute will leverage government resources to offer training courses to IC design professionals and other engineers wanting to develop a second expertise in specialized design technology. Another effort, called the Semiconductor Industry Promotion Plan, is being managed by the Semiconductor Industry Promotion Office to provide domestic companies with a so-called omni service that exploits government resources to enhance information services for the IC industry. This program is also aimed at encouraging integration of up-, mid-, and downstream vendors.
The Nankong IC Design R&D Center was founded in 2003 and is the first SoC design center to provide one-stop service for Taiwan's IC design houses. It offers a design R&D environment for new or mid-to-small IC companies. Three functions are included in the R&D Center: an "incubation center," open lab, and service office. Companies with fewer than 30 employees and no more than NT$120 million (US$3.6 million) in capital value are qualified to apply and rent space in the center at a low price. In the incubation center, designers can obtain technical support and consulting services from STC researchers. In the open lab, designers can pay for access to EDA tools, testing/simulation/verification software, and equipment based on hourly rates. Established on March 1, 2003, STC has been commissioned to manage the Semiconductor Industry Promotion Office and the Nankong IC Design R&D Center for IDB.
Chien-Wei Jen received his PhD from National Chiao Tung U. He is the general director of the SoC Technology Center at Industrial Technology Research Institute, STC/ITRI, Rm 203, Bldg 9, 195, Sec. 4, Chung Hsing Road, Chutung, Hsinchu, Taiwan 310 R.O.C.; ph 886/3-591-9112, fax 886/3-591-0232, e-mail [email protected].