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Tuesday, January 24, 2012

Head and the Heart Served at ISS

When you’re in the event business, it’s easy to suffer from the euphoria affect: the tendency to over-rate the quality of an event based on the immediate relief that everything went as planned and nobody screwed up. In my position, its important to congratulate the staff for a job-well-done and be thankful for the valuable information you receive and opportunity to network with old and new friends--so all well-attended, reasonably-interesting events receive a generally positive appraisal. Nobody wants to nitpick or scrutinize the odd speaker choice in casual post event conversations. Its also easy for organizing committees to self-congratulate themselves on event quality because the hotel performs to expectations, speakers showed up, and no fatal errors were encountered. And of course, as an organizer, attendees and speakers seek you out and congratulate you on job well done and rarely complain about their hotel room thermostats or how they were disappointed in the crème brulie. Attendee surveys typically don’t help much; they are invariably positive (people are polite), inconclusive (people differ on speakers, topics, amenities) and infrequently point to obvious improvements.

Saying that, I think this year’s Industry Strategy Symposium was the best I’ve attended. The reason it was a great conference is primarily because these are uncertain times and ISS did a great job of framing that uncertainty for executive analysis and debate. I believe this was the Committee’s objective in organizing the conference and they had a lot to work with. Past conferences focused on the basic questions of chip market growth and capital spending with a smattering IDM and new technology stories. Today, uncertainties permeate technology challenges, the customer questions, and the economic outlook.

William Holt from Intel and Bernie Myerson from IBM did a great job in illustrating how scaling to the next node has become so complex. Enormous amount of science and process development is now required to fix all the problems produced by the next generation of nanoscale structures. FinFETS, III V materials, graphene, CNTs are all being used to address the secondary effects of scaling and the enormous R&D is for big boys only. John Chen from Nvidia showed data that demonstrated that scaling was becoming less economical and the engine of profitability that worked so well for leading edge chip manufacturers hasn’t been running so well. It was nice to hear the science guys confidently explain that “we’ve always solved unexpected problems” but I wonder if I was the only one who thought that the challenges are mounting in cost and complexity maybe the past won’t repeat itself.

Complicating the supplemental requirements to make next generation chips work, we have the great uncertainty of EUV itself. James Koonmen from ASML spoke directly to the issue of EUV availability, giving a roadmap of sorts that had the audience straining to understand the probabilities of EUV throughput improvement in 2013 and beyond. It may have been the first time I heard the word “industrialization” used in the equipment arena and thought, like India and Africa, sometimes the word “industrialization” means more hope than promise.
Market outlooks ranged from another modest grow year to “global economic collapse.” Duncan Meldrum from HIS and Robert Fry, senior economist at DuPont, saw a flat-single digit growth year ahead, but a promising 2013. Handle Jones saw 2012 more optimistically, but thought 2013 would be a downer. But what’s a little a softening in chip demand when David Townes, managing director of Needham & Company, says “we are past the tipping point in liabilities…the macro conditions for future real capital appreciation is dire.”

This picture of technical and economic uncertainty—this mosaic of incertitude—served as the perfect backdrop to the 450 mm discussions, and other points about the semiconductor industry structure. How we did things in the past are no longer a guide to how to we will progress in the future. Companies have to work together differently now. Negotiations will be complicated and delicate. Executives in our industry will have to make enormously important decisions on where to spend money, how to work with their customers and whether an exit strategy is the best option.

It is exactly in this environment--where the industry direction is not certain, when the right answers are not clear, and the strategic choices are so important-- where a strategic executive conference like ISS becomes most valuable. And in this environment I thought the critical data, informed analysis and key player participation were expertly constructed by the ISS program and Committee.

But heady strategic brain candy does make a great conference alone. I was thrilled to see so many attend the Zone 5 wine party on Tuesday night. It was a big time networking affair with serious conversations being conducted in an elegant space, lubricated with delightful liquids. And finally, a good helping of heart was also served at the gala dinner where Stan Myers was honored for his long, steady, invaluable service to the industry. Seeing James Morgan and Ken Levy speak of Stan and their many years of SEMI engagement and support reminded everyone of the powerful connections we all have to this great Information Age and how we follow in giants footsteps, enabling the future and making the world a better place.

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