Semiconductor technology is a mass-production technology. Enormous functionality can be delivered in a chip that costs a few dollars. But only if you want to buy a lot of them. Further, to keep Moore’s Law on track, the scale of manufacture keeps increasing. Chips were originally manufactured on circular wafers that were 2” in diameter, cramming as many of die onto the wafer as possible, and perhaps building a few wafers per day. Then wafers became 4”, 6”, 8”. Today the latest fabs use 12” wafers and may manufacture 50,000 wafers a weekor more. At the same time, as the wafers have got larger the size of the elements on the chip have got smaller and smaller, going from over 10 microns to 45-90 nm today.
All the fab equipment is extremely expensive and the cost of a fab has gone from a few tens of millions of dollars to around $5-6B today. Since a fab has a useful lifetime of about three years, it depreciates at around $40/second. Taking into account all the other costs (silicon, design, marketing) means that to own a modern fab means a company must do business at $200/second or $6B/year. Few companies are this big and so not many companies, even those that call themselves semiconductor companies, can afford to own their own fabs any more. Jerry Sanders’s comment that “real men have fabs” is no longer true at all. Only Intel seems big enough to go it alone on the manufacturing side, along with TSMC and Samsung for DRAM.
None of this is particularly positive for EDA, or the non-IP bulk of EDA. Fewer chips produced in higher and higher volumes is the EDA nightmare. The EDA dream is hundreds of companies designing chips, many of which don’t even go into production, not far off the situation in the late 1980s and early 1990s when ASIC democratized design and pushed it out into the system companies. Not coincidentally this was also the heyday of EDA from a growth and business point of view.