COST, COST, COST
Cost continues to be the big issue for OEMs. "In the past," says ACES's Caraccio, "an OEM would just say, here's your P.O. [purchase order] and here's a check for a quarter-million or a half-million dollars. Go build me a new product. Now, before they hand over that kind of money, they might cut loose $10,000 to $20,000 to do an initial research phase. They'll develop a true timeline cost, do a technical evaluation, look at all the tradeoffs, and flesh out all the details of the project."
Overall cost targets are not only being met, but reduced, LoPresti says, because much of the overhead for IP and EDA tools is now deferred by the silicon and/or third-party design house.
Time-to-market is another sticking point, usually ranking right behind cost in importance to most OEMs. But it's also creating new opportunities. Cadence Design Systems is developing design kits that enable system companies to produce platform-based semiconductor designs more quickly, as well as design new process technologies under development by their foundry partners. TI is working with Sharp Electronics to provide a reference design for GSM/GPRS camera phones to help its customers significantly reduce their design times and the resources required by manufacturers to introduce new camera handsets.
TriQuint Semiconductor and Agilent Technologies recently introduced a jointly designed, next-generation design kit to help accelerate TriQuint's gallium-arsenide IC fabrication processes. The IT company Wipro, which gained considerable design experience from working with TI and Analog Devices, signed a strategic agreement with Cypress Semiconductor in April to create a global development center in India dedicated to Cypress' new silicon design requirements. Wipro claims a 35% cost savings on most of its projects, with an up to 75% gain in time-to-market.
"You can never be quick enough," particularly in the fast-changing wireless market," says SMART's Ragusano. "It is clearly the reason why people are outsourcing. A lot of programs have been delayed because people are attempting to do it [wireless] in-house and don't have the technical expertise."
Testing has become another attractive revenue stream for EMS firms, particularly with consumer electronic products. OEMs ask if manufacturers who have a demonstrated ability to engineer products also have a parallel effort to test those products.
Design-cycle times are also critical, and they're being pushed. Silicon houses have been preselling their products a half to three quarters of a year prior to them ever having engineering samples. "So, the hype is in," says Ragusano. "When the silicon is first out, everyone wants the product done. That's when there has to be a reality check somewhere between the promise and the product actually hitting the road."
For both OEMs and outsourcers, hitting the road is the bottom line.