Electronics Production | May 12, 2011
Exposing the hidden costs of using off-the-shelf analog ICs
With the demise of industry wide second sourcing and the move to developing purely proprietary designs, Analog IC companies have raised the profit bar to new heights. Less affected than their digital brethren by the cyclical nature of the chip industry, Analog IC companies have successfully carved product niches to weather the financial storms.
With the notable exceptions of cellular phones, notebooks, and other highly competitive consumer driven applications, Analog product designs can easily last for years, even decades without change. While the world cries out for "cost down" in nearly every application, most Analog IC companies respond with more expensive, feature rich choices for next generation designs. Great news if you want to redesign your product every couple of years. But who can afford that? Once a product is in production, it's difficult to implement lower cost manufacturing and procurement strategies when the chip average selling price remains constant. Our customer's engineers, who at one time were charged solely with designing to a specification, are now challenged with meeting ever-shrinking cost targets as well. The engineer has in fact become a part-time cost accountant, relying on his own technical shrewdness to seek suitable substitutes that can shave pennies from a product's cost. There are many hidden costs associated with using off the shelf Analog solutions. As you will see shortly, the biggest hidden cost is the cost of the off-the-shelf product itself. In the early years of Analog ICs, there were a handful of big players, each with a unique niche. National was the king of op amps, Fairchild the ruler of regulators, Signetics championed the timer market and Motorola controlled the communications chip sector. With only a few companies and a few Analog chip designers, each company selectively second sourced the best products of their competitors to broaden their own product offerings, ultimately giving all of them a somewhat similar product portfolio. Without product differentiation, price, service and support played an important role in winning orders. Pricing was aggressive and ASPs dropped rapidly once a second source was available. Flash forward a few decades and the landscape looks quite different. The legacy companies have changed quite a bit; Philips consumed Signetics, Motorola split into Freescale and On Semiconductor, while National ate Fairchild, then spit it out again years before TI gobbled up National. Many of their old mainstay Analog products remain, augmented now by thousands upon thousands of newer, sole-sourced, proprietary devices. Additionally, many new players have joined the Analog fray. Dozens of Analog chip companies have grown up or sprung up in the ensuing years, spurred on by the semiconductor foundries (independent wafer fabrication facilities) that have helped lower the barriers to entry by avoiding the burdensome capital costs of building a dedicated fab. Nearly all have bestowed us with more proprietary IC designs, rich in features and benefits, and not cheap. Bipolar processes, once the mainstay of Analog ICs, pretty much reached their limitations and have been supplanted by various CMOS, BiCOMOS and BCD processes that are better able to meet the more stringent power and speed requirements of today's customers. The products offered by the Analog players have changed dramatically. As Voltage Regulators like the uA723 and uA7805 evolved into more sophisticated products, the term Power Management arose, creating a whole new category of Analog chips, adding control, protection, high efficiency, watchdog timers, multiple outputs and more. Many authors have opined that competing on price is a suicide strategy, calling it a going out of business strategy. In the early years, semiconductor processes were not as stable as they are today. Yields were dicey. Second-sourcing protected the customer if their primary vendor had a manufacturing problem, and everyone did at one time or another. Second sourcing a competitor's Analog chip was never easy, always problematic. Unlike digital, where the rules are well defined in terms of what voltage a logic "1" and "0" represented, Analog chips use critical external resistors and capacitors and a second-sourced chip had to exhibit exactly the same performance with the identical external components as the original. As simple as it seems, this is not an easy feat. Many chip engineers used to argue that it was more difficult to create a second source product than it was to develop a new proprietary device. This may account, in part, for the demise of second sourcing. Nonetheless, some second sourcing was very successful and customers benefited greatly. Take for example the NE555. Sourced by some 15 different companies at one time or another, the ubiquitous 555 timer cumulatively sold in the billions of units at prices approaching ten cents. Will we ever see the likes of the 555 timer again? Not likely. In his book, "THE LONG TAIL: Why the Future of Business Is Selling Less of More," Chris Anderson addresses the dynamics of choice and explains why. The gist of the book is that the more choices we have, the less of any one item will be sold. Look at the IC Master and investigate DC to DC Converters…1'214 pages, with 25 parts per page…over 30'350 DC-DC converters from which to choose. Most assuredly, there are no billion-unit devices here. The Need for Analog ASICs With so many standard products to choose from, is there really a need for Analog ASICs? The answer is unequivocally, yes. According to market research company In-Stat, ASICs represented 59% of the Analog market in 2010, while Dataquest places the figure closer to 54%. Regardless, it is evident that the demand for Analog ASICs far exceeds that of standard Analog ICs. Why? A. Differentiation B. IP Protection C. Cost D. All of The Above ----- Author: Bob Frostholm, JVD Inc.. The rest of the whitepaper can be found under http://www.jvdinc.com
MixComm scores USD 8+ million in series B round New Jersey-based fabless semiconductor company MixComm has secured USD 8.6 million in series B funding led by existing investor, Kairos Ventures.
SIA elects 2020 leadership The Semiconductor Industry Association (SIA) Board of Directors has elected ON Semiconductor CEO Keith Jackson as its 2020 Chair and Qorvo CEO Robert Bruggeworth as its 2020 Vice Chair.
Si wafer shipments recede for fourth straight quarter Worldwide silicon wafer area shipments slid for the fourth consecutive quarter of 2019, according to the SEMI Silicon Manufacturers Group (SMG) in its most recent quarterly analysis of the industry.
Decline in Q4 DRAM contract prices lessens as buying momentum recovers According to the latest analysis from the DRAMeXchange research division of TrendForce, Q4 DRAM ASP is as of yet undergoing a slight QoQ decline, but this decline has shrunk down to 5%.
Sponsored content by EsemdaContract manufacturer Esemda opens new facility in Vilnius and expands EMS The new facility has been built with reserved space for future expansions. As Esemda constantly grows, it is of great importance to be able to rapidly increase production capacity in large volumes.
Technica forms growth-focused equity fund San Jose-based Technica USA has reached an agreement on an equity investment centered on future growth for the global PCB fab and assembly supplier.
IHS Markit: 5G economy in the trillions by 2035 The IHS Markit 5G Economy Study, commissioned by Qualcomm Technologies Inc., is forecasting that 5G will generate USD 13.2 trillion in sales enablement by 2035.
ZEUS Battery partnering with Kruvand Associates ZEUS Battery Products and Texas-based Kruvand Associates Inc. have come to a formal agreement on a collaboration that began in January and covers Texas, Arkansas, Oklahoma, Louisiana, New Mexico, Arizona and Mexico.
EPP with a new owner The company announces that is has found itself an ideal buyer – Photonics Systems Group – a manufacturer of micro-materials processing machines. With this takeover, PSG is strengthening is operations in the electronics industry and also laying the foundation for further growth.
Sponsored content by SourcengineComponent Aggregators vs E-Commerce Marketplaces What is the difference between electronic component aggregators and a marketplace?
67% of a buyer’s journey is now done digitally. Learn how marketplaces emerged as full-cycle procurement platforms and challenged the traditional component aggregators.
Volkswagen starts pre-production e-mobility plant in China The new plant of the SAIC VOLKSWAGEN joint venture has been completed. It is purely built for the production of all electric vehicles on Volkswagen’s Modular Electric Drive Matrix (MEB).
Kongsberg Maritime divests KM Contros GmbH Following a strategic review, Kongsberg Maritime AS (KM) has decided to divest KM Contros GmbH (Contros) to AML Oceanographic Ltd. (AML).
SUSS MicroTec adjusts outlook for fiscal year 2019 Based on the preliminary figures for the first nine months and the updated budget figures, SUSS MicroTec is substantiating its expectations for incoming orders, sales and earnings for the current fiscal year ending December 31, 2019.
Sponsored content by NCAB Group Benelux B.V.Failure is not an option for a PCB More than 30% of the Gerbers NCAB Group Benelux B.V. reviews, have problems. However, the PCB are integrated in key end-user product with more and more High Tech PCB. We are here to support you on the new technologies growth to maintain a high reliability and quality. Contact us to review it together.
GPV's revenues soars 130% Danish EMS provider, GPV Group, announces that the company generated revenues of DKK 2.2 billion in the first nine months of 2019, a 130% year-on-year improvement driven by the acquisition of Swiss company CCS at the end of 2018.
Former GM plant now Lordstown Motors Corp. General Motors’ shuttered Lordstown plant in Ohio, which closed in March, is now in the hands of an electric truck start-up that is looking to begin production in about a year.
Chinese chip maker to U.S. firms: don’t worry On Friday, the chairman of China’s top state-run semiconductor company, Tsinghua Unigroup, had some advice for U.S. chipmakers, saying they should “relax and sleep well,” with regard to China’s semiconductor development.
POET closes the sale of DenseLight POET Technologies, the designer and developer of the POET Optical Interposer and Photonic Integrated Circuits (PICs) for the data center and tele-communication markets, has successfully closed the sale of its DenseLight subsidiary in Singapore.
HAHN Group expands its footprint in the US via acquisition Factory automation and robotics solution provider, Hahn Group, has acquired REI Automation, Inc. The takeover is effective as of 01. November 2019.
Ynvisible Interactive sells contract manufacturing services to Epishine Epishine is purchasing roll-to-roll manufacturing services from Ynvisible Production, combines solar cells with printed electronic displays.
QEV Technologies gets € 17 million from EIB The E-mobility and R&D specialist, QEV Technologies, will receive EUR 17 million funding from the European Investment Bank (EIB) for a variety of low carbon transportation projects.
Mouser pushing distribution to new (vertical) levels Mouser Electronics, global NPI distributor of semiconductors and electronic components, has expanded its multi-dimensional footprint at its distribution headquarters in Texas.
Sponsored content by Nordson ASYMTEKStart-to-finish conformal coating with reliability and efficiency Nordson ASYMTEK’s flexible, modular, Panorama™ S-Line delivers conformal coating process control in a space-saving footprint with overlapping line processes that minimize manufacturing floor space. This innovative, patent-pending line layout trims 50% of the line’s length by using the lower compartment in each piece of equipment for functional use. Combined with Nordson ASYMTEK’s global support, this complete conformal coating line delivers quality, product reliability, efficiency, and safety for all your conformal coating applications.
Micron buys FWDNXT, launches AI platform With its recent acquisition of hardware and software start-up FWDNXT, Micron Technology Inc. has launched a new set of tools for deep learning.
Isola names new president and CEO Isola has appointed Travis Kelly president and chief executive officer. Kelly most recently served as global chief operating officer at Cerberus Operations and Advisory Company (affiliate of Cerberus Capital Management).
CORE-emt to represent BTU in the Baltics BTU International, Inc., a supplier of advanced thermal processing equipment for the electronics manufacturing market, announces that it has expanded its partnership with CORE-emt to include the Baltics (Estonia, Lithuania, Latvia).
Kimball reports growth across the board for 1Q20 While the calendar year for 2019 isn’t over yet, Kimball Electronics has already completed its first fiscal quarter for 2020.Load more news