Search This Blog

Thursday, February 04, 2010

Tien Wu Enjoys Life in the Jungle

One of the best speakers in the semiconductor industry is Tien Wu, COO of ASE, the assembly and test leader. His day 2 keynote at SEMICON Korea was an inspirational mix of insight and intellect. We’ve heard many of the concepts (the chip life cycle, the next big wave, etc.) but rarely packaged and delivered so articulately.

Wu began his talk with claiming that “2009 was a great year…we will always remember it,” and with that contrary perspective he began to ask why anyone would choose to remain in this crazy business. A look at the boom and bust cycles over the last 20 years—basically delivering a long term growth rate of 4-5%, about the same at the global GDP—confirms the industry is in chaos. The only growth comes at your competitor’s expense. Price is used inappropriately; sustained profit is elusive. It’s a 0-sum game; value isn’t created by innovation, it come from someone’s loss.

“It’s a jungle out there,” says Wu. Survival goes to the fittest. The laws of natural selection are more important than Moore’s Law. Not just company’s fight for survival, but countries: we fight against Japan, Japan against Taiwan, Europe against everyone, and everyone against China. Why would smart people and smart money choose to enter this primitive battlefield where long term returns are elusive and survival threatened?

But Tien Wu, like the rest of us, enjoys life in the jungle. He’s not a banker or day trader comfortable moving his money from winter wheat to pharma, from one good bet to another. He sees the bright side. “World PC penetration is only 17%.” Every wave from innovation from computers, to the internet, and now information is bigger than the next. He is excited and challenged by the “long tail.” He’s not afraid of consolidation because its part of the long tail process he’s seen unfold in PCs, communications and information. A few giants dominate those industries, but Apple and Samsung have proven that companies can move from one wave to another.

So what’s next? Life sciences, bio med, green energy, intelligent appliances? Tien Wu doesn’t know or he won’t say. He will point out, however, that with a logo like ASE’s (Sun-Moon-Light) “we are destined to do solar cells.”

The future of the industry will be characterized by the long tail and who can survive serving the increasingly hard-to-reach customers entering the market. It will go to those that can make “the hyper jump” into the new wave, such as solar, robotics, and solid state lighting. It will also go to those who leverage the new regions of China, India and other countries. Semiconductors are only 0.5% of the world’s GDP. Is this where the industry stops? Hardly, it’s where it begins.

Wu concluded his presentation with pointed criticism of the semiconductor industry. “Too nationalistic,” “too functionally limited,” “too insulated.” The industry suffers from the “curse of IT.” Successful companies must break out of the boundaries of IT and find new frameworks to understand and serve the world. The new domains will be understood through the perspectives of art, medicine, energy, culture. His populates his own staff with multiple disciplines and he has strong opinions about maintaining truly global perspectives.

For someone who saw 2009 as a “great year,” it’s no surprise that Wu sees a bright future with a long tail, an evitable hyper jump, and the emergence of immense of new markets in an ever-prospering world. At only 0.5% of GDP, semiconductors “remain the most exciting, dynamic, and yes, chaotic industry.” And out of this chaos, heroes will emerge.

No comments: