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Year of writing: 2021
Author: Tony
Related stocks: TSMC (2330) , UMC (2303) , Creative Electronics (3443) , Faraday (3035) , MediaTek (2454) , Samsung (KRX: 005930), Qualcomm (QCOM) , Intel (INTC) , Nvidia Hui (NVDA) , Synopsys (SNPS) , Cadence design system (CDNS)
IC Design Integrated Circuit Design Part 1
Comprehensive analysis of the IC design industry chain
IC (Integrated Circuit) is ubiquitous in life. From mobile phones, computers, home appliances, and washing machines, multiple ICs are needed to assist. The functions of various ICs are very different. Common types of ICs include CPU, touch IC, Netcom IC, DRAM, mobile phone SOC, etc., have also nurtured thousands of IC design companies. As the name suggests, IC design companies are mainly responsible for designing the functions, code, components, and circuits between components on each chip; besides, they also need to design photomasks for IC manufacturing. IC design company "Design House", also known as "Fabless", because IC design companies will not build their own factories to manufacture chips, but instead entrust wafer manufacturers such as TSMC, UMC, and Global Foundries to come Production. Such as Samsung and Intel, which have both the ability to design chips and fabs, are called IDM (Integrated Device Manufacturer). In the early stages of semiconductor development, this type of vertical integration was mostly used; Therefore, a large number of asset-light companies specializing in chip design have emerged. Also because of the increasingly high technical thresholds for the miniaturization of IC manufacturing processes, the substantial increase in costs, and the annual capital expenditures of tens of billions of dollars, since the 1970s, IDM-based vertically integrated IC companies have gradually become the mainstream professional division of labor. .
1. Semiconductor industry chain
The IC design part in the figure below includes SIP Silicon Intellectual Property, EDA Electronic Design Automation, IC design company, and IC design service company. Each type plays a different role. This series of articles will focus on in-depth analysis of these contents.
1. SIP Silicon Intellectual Property
As the functions of a single chip are becoming more and more complex, and the difficulty of design is gradually increasing, IC design companies can no longer design every unit and every circuit on the chip by themselves. Therefore, Silicon Intelligence Corporation came into being. The role of Silicon Intelligence is to sell the complete functional unit (Funtion Unit) or block (Block) design drawings to IC design companies in an authorized manner and integrate them into their own chips. According to the market research agency Verified Market Research, the scale of the silicon intellectual property market reached 5.33 billion U.S. dollars in 2019. It is expected to grow by 4.58% annually in the future and reach 7.44 billion U.S. dollars in 2027. Although the growth is not fast, the silicon intellectual property market is small. Occupying the market, the world's largest silicon intellectual property company is Amou ARM, and other companies include Synopsys, Imagination Technologies, etc. In the future, System on Chip SOC (System on Chip) that integrates more functions will need to rely on the assistance of Silicon Intelligence to have the opportunity to design a powerful and multi-tasking chip.
2. Electronic design automation (EDA)
With the increasing complexity of ICs, IC design companies can no longer rely on manual design for all details. Therefore, automation tools will become very important. EDA tools provide simulation, analysis, synthesis, automatic configuration, winding, verification and other functions. Arrange in the best position to achieve the highest performance. According to statistics, the output value of EDA is approximately US$9.7 billion. The main players are Synopsys, Cadence and Mentor Graphics acquired by Siemens in the United States. These three companies include EDA's market share of more than 70%. In the EDA industry, there is no uniform standard among softwares. Therefore, when IC design companies adopt one of the EDA tools, it is difficult to switch to another. The high customer switching costs also bring high customer loyalty to these companies. Therefore, when the United States began to impose economic sanctions on China in 2018, EDA became an important weapon because the relevant software was almost in the hands of the United States and it was not easy to convert.
3. IC Design Service Company
IC design service companies mainly customize chips for enterprises, which are usually divided into commissioned design and commissioned manufacturing. Entrusted design NRE (Non-Recurring Engineering) When a small number of companies have special needs that cannot be met by standard chips, IC design service companies will be entrusted to assist in customizing their application-specific integrated circuit ASIC chips. Entrusted manufacturing is also called Turnkey. Because it takes a lot of time, cost and experience to bring the designed chips into the factory, it is not easy for small IC design companies to obtain production capacity; customers who entrust IC design are also because of the cooperation in mass production with wafer foundries I have no experience and I need to ask an IC design service company to commission the manufacturing. Therefore, Taiwan’s famous IC design service company Creative and Zhiyuan have two major fabs, TSMC and UMC, to provide capacity and technical support. Usually such companies will also look for the services of SIP modules for their clients as a platform for silicon smart transactions, but they currently account for a relatively small proportion.
2. Introduction of key companies
1. ARM
The world's largest silicon intellectual property company, founded in Cambridge, England, is now owned by Japan's SoftBank. In 2020, Huida Nvidia announced that it would acquire ARM for US$40 billion. This sought-after company mainly provides various SIPs. The ARM architecture is characterized by high performance, low energy consumption, and low cost. Although it does not launch its own chips, it is extremely important in the chip world. In the era of smart phones, every phone is All chips with ARM architecture, Qualcomm, MediaTek, etc. all need to buy silicon intellectual property from ARM. Now this war is spreading from mobile phones to laptops and desktop computers. In the past, computer CPUs based on x86 architecture were mainly used by Apple. In 2020, Apple launched the ARM-based M1 chip for Mac; Nvidia is also in 2021 GTC (Nvidia Annual Technology The conference) announced that it will launch Grace CPU based on ARM architecture, which can be used in data center AI computing. It can be well matched with GPU. It is claimed that the performance will reach 10 times that of today's CPU; these applications will make ARM grow in the future.
2. Synopsys
A few silicon intellectual property and EDA listed companies are listed companies. Synopsys is the number one player in the EDA field and has the most comprehensive product line. It has a market share of more than 90% in some products such as semiconductor process simulation TCAD (Technology Computer Aided Design). It has also acquired a large number of small and medium-sized EDAs. Companies, such as Siyuan Technology, an EDA factory in Taiwan, have also built a moat to maintain their leading position in the industry. Synopsys has a very high gross profit margin, about 75%, because its main expenses are mergers and acquisitions and R&D expenses.
Reference: Industry Analysis (by Xu Zuosheng and Chen Renshuai)