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Texas Instruments will extend outsourcing model. Will more people lose jobs?
News of Texas Instruments are intriguing. The world's largest maker of chips for mobile phones has just posted good fourth-quarter earnings. Despite the gains, the company said it will further increase efficiency and profitability by extending the model of outsourcing. This time it will include development of certain chips. The news on the Internet is rather terse. Will the company drastically reduce its research and development activities? Will many people lose jobs?
Quite a few mechanicians have been either working in the semiconductor industry or working closely with researchers in these companies. Stay tuned with this new development.
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Texas Instruments cuts jobs and exits process development race
This news is all over the web this morning. Here is an example.
TI cuts research
Zhigang,
This is an interesting if somewhat unusual development in the grander scheme of things. Normally, manufacturing gets outsourced while research and development remain here in the US. It seems that TI has decided to outsource R&D and keep manufacturing local. Soon, though, both manufacturing and research will move off shore.
This, of course, in addition to the consideration, that IBM and Intel are now the only major CMOS manufacturers left in the US that still develop their own processes - at least as far as I know.
Joost J. Vlassak
New materials will enable chips run faster, using less power
A New York Times article today reports on a new generation of Intel Chips. Company researchers said the advance represented the most significant change in the materials used to manufacture silicon chips since Intel pioneered the modern integrated-circuit transistor more than four decades ago.
Here are several sources of comments I found online on the sad decision of TI. By the end of the year 500 people at TI will lose jobs. The long-term impact of this decision is also very uncertain.
The use of high-dielectric-constant material in chips
I find a short explanation of the physics underlying this advance. The essentials of this explanation go something like this:
As clock speeds increase, the electrodes in computer chips must reduce in size. This has allowed electrons tunnel through insulating barriers and cause current to leak. To combat leakage, manufacturers now use high-dielectric-constant materials as the insulating layers, which can be made thick enough to combat tunneling while maintaining the fast clock speeds.
The traditional dielectric is silica. The new dielectric is a hafnium-containing material. More technical details. Please let me know if you know anything about this, particularly any mechanical issue involved in this new integration of materials.
Update on 4 February 2007: IBM has also announced a similar technology.
R&D consolidation in IC industry
The R&D capital expense for the state of art IC technology (process, material and integration) has gone up along a curve similar to Moore's law. A brand-new 300mm fab typically costs 2.5-3 billion US$. There is hardly any company other than Intel that can sustain building new fabs every year.
From where I see, currently only Intel as a single company, has the ability to develop the technology all the way to 22nm. IBM has to form a broad alliance with AMD, Sony, Toshiba, Charter, very soon Freescale and maybe TI to gather enough money to support their R&D. In a few years, I believe there will be Intel vs. the rest of the industry.
Just as we speak, Intel and IBM camp (ASTA, etc) announced Hi-K/Metal Gate for 45nm.
It's a great time to be an engineer...
It may be an interesting coincidence. I just noticed that, a couple days after the big news about TI, Rich Templeton, the President and CEO of TI, is scheduled to give a presentation at the University of Texas at Austin College of Engineering. See below for the title and abstract.
Building Products that Matter: The Global Demands for Engineering Talent
It's a great time to be an engineer, maybe the best time in history. As the global demand for faster, smaller, multi-function, high-performance electronics devices continues to grow, so does the need for people who can push the limits of semiconductor technology. As a result, engineers are leaving behind their pocket-protector reputations to lead the world into a new era in design innovation.
6:00 pm -7:00 pm, Thursday, January 25, 2007
Avaya Auditorium (ACE 2.302)
TI funds research in universities
SRC, Texas Instruments and the State of Texas Launch World-Class Nanoelectronics Research Initiative
"Unprecedented Level of State's Collaborative Resources Applied to Shaping Future of Electronics"
"Over $30M to Fund Alternatives to Silicon Semiconductors at Universities in Texas, Arizona, Indiana and Maryland"
Would this be a good trend for us in univerisites?
There will be inevitable changes in Technology Landscape
The technology and the economy are changing, as we have been assured before. Engineering, enginners, and research programs are only small elements of the industrial chain. We have seen the Japanese expansion to the North America and Europe through research labs and production facilities, and US technology centers and Bangalore and lately Shanghai and Beijing.
Personally I know there are many changes in research programs in multinational corporations, and I would not be surprised if some programs in the US are phased out and new programs are created in other countries.
Unilever just closed its research labs in the US and set up new ones in China.
Many companies I have close relationship told me that they want to enhance the research and design capabilities in China and new programs have been initiated.
The whole thing is part of the globalization stated about ten years ago it has not been peaked yet, in my opinion.
Logical move for the industry to move oversea
Even tough I am going to be on the chopping board, I can see and had predicted this outcome couple years ago from the business point of veiw to eliminate R&D. The facts are simple.
1) Admit it - they are good!! After 10 years of catching up, the Taiwanese companies have become very competitive in R&D and manufacturing. I would put them on par with Intel and IBM. Don't judge the company only based on what you read in the public domain. The progress of the company usually beyond what is on the newspaper.
2) They are very big!! You need a big company with big pocket book to support semi R&D. Intel, TSMC, and IBM has the finanical strength. Each R&D litho tool costs 10s of millions.
3) Most of the R&D works depend on the equipment suppliers which only a few left. If everyone buy the R&D technology from the same place, there is very little advantages among the companies. Increasingly, the research progress are based on the advanced equipement development rather than theory. (others may disagree). Even for the theoretician, the progress can be limited by how fast the computer and how big the hard drive run FEM models, i.e. equipment limited.
The transfer of R&D to oversea will not be limited in semi industry. In the coming years, other industries will follow and accelerate. It makes business scense! How should the students (both undergrad and grad) prepare for this?
Flexibility - This will be the most important requirement for this new world order whoever you are. Flexibility in knowledge, language skills, and job location. One must not only expert in one subject. Remember the term "double major". Once you achieve technical diversity, you will need to communicate well in diferent languages. The language skill will limit your job location. By language skills, I mean multilingual, not just 1-2 years of high school forigen language class only good enough as a tourist. One of factors to hinder job location is when you have real estate properties/mortgages. There are many colleagues of mine regretted buying houses and lost their jobs afterward.
Unfortunately, to prepare a person to achieve maximum flexibility is not easy and requires years of preparations. This globalization can be exciting as long as you prepared for it and I am enjoying it.
Logical move for the industry to move oversea
Ting,
I feel sad for all of my former colleagues at TI. The changing attitudes and observations that you express are refreshing. Embrace globalization! It is sort of the ultimate change management project. One thing is for certain, things will change. It will happen in almost every avenue of life. We have to leverage what we have as far as skills, market ourselves well, and improve in areas where we lack skills. I wish you and the other TI R&D engineers a success in finding new, rewarding opportunities. Thank you for sharing your insight! Godspeed.
Economic law?
Customers want low price. Companies want high profit. This drives the global job pattern that it eventually will override the economic gaps between areas and nations.
For us who lived in US, to keep the job here is simple. Stay on top of the competition. The day you loss advantage in your field is the day you should consider a re-location. Competition will be tighter as the economic gaps between nations shrinks.
Would that be nice if we were birds?
Xiao-Yan Gong, PhD
Impact of globalization on education
Enjoyed the discussions on this topic.
Ting pointed out an interesting and important point on the impact of globalization on education. I was reading an essay by George M. Whitesides on undergraduate education at Harvard (BTW, thanks Zhigang for pointing out the essay in his post.)
Here I quote Whitesides on globalization:
"Gobalization—the distribution of information, people, markets, jobs, and cultures across regions independent of national and geographical boundaries—has just begun to reshape the world. Our students will live in a world in which “countries” or "nations” are less and less important, and transnational corporations, religions, and ideologies are more important. Helping the students to escape the historical American indifference to the rest of the world should be a part of their education (and Harvard is beginning to move in that direction). "
-Teng
Globalization of sciences
Globalization of sciences and technologies is interesting, especially for military sciences. It is like making spears and shields. In US, military sciences are more directed to making spears to be sharp enough to pierce any shield. While in UK, military sciences focus more on making shields that can be strong enough against the penetration of any weapon. Both are against terrorists.
Is collocation of basic capabilities important for innovations?
Several comments have focussed on globalization, and the need to be flexible with jobs. I am also curious about another aspect. If much of your basic manufacturing business is elsewhere, can you really carry on as a technology leader?
Is collocation of basic capabilities significant for innovation?
Or, has the semiconductor industry already reached a stage that innovation becomes incremental and compartmentalized, that collocation of basic capabilities is unimportant?
Innovation vs. comercialization
The questions Zhigang raised are very interesting. I believe there is no unique answers.
I run into a dilemma knowing that many patents out there come from inventors from completely different field. I can hardly imagine they would have collocation of the basic capabilities. On the other hand, collocation of basic capabilities stimulates innovation as well as provides reality check on the fly, therefore it is the key to commercially profitable innovations.
Keep in mind that outsiders may see things more clear than the insiders. To some extend, basic capacities could also narrow your mind and limit your innovation.
Xiao-Yan Gong, PhD