Innovation and Industry Structure: How Silicon Intellectual Property Revolutionizes the Semiconductor Industry

bentgalaxySemiconductor

Nov 1, 2013 (3 years and 9 months ago)

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Innovation and Industry Structure:
How Silicon Intellectual Property Revolutionizes
the Semiconductor Industry
DISSERTATION
der Universitat St. Gallen,
Hochschule fur Wirtschafts-,
Rechts- und Sozialwissenschaften (HSG)
zur Erlangung der Wiirde eines
Doktors der Wirtschaftswissenschaften
vorgelegt von
Matthias Kastner
aus
Deutschland
Genehmigt auf Antrag der Herren
Prof. Dr. Li Choy Chong
und
Prof. Dr. Theodor Leuenberger
Dissertation Nr. 2717
Difo-Druck GmbH, Bamberg 2003
III
Table of Content
1. Introduction 1
1.1 Context of research 1
1.2 Objectives of the Study 2
1.3 Research Methodology 3
1.4 Structure of the Study '. 5
2. Specific, Empirical Part 7
2.1 Introduction to the Semiconductor Industry 7
2.1.1 Value Creation in the Semiconductor Industry 7
2.1.2 Semiconductor Manufacturing Technology and Feature Sizes 9
2.1.3 Moore's Law 12
2.2 The Vertical Disintegration of the Semiconductor Industry 13
2.2.1 1960s: The Era of Fully Integrated Device Manufacturers 15
2.2.2 1970s: The Growth of Independent Equipment Manufacturers... 17
2.2.3 1980s: Independent Electronic Design Automation Companies.. 20
2.2.4 1990s: Independent Wafer-Foundries 24
2.2.5 IC Design Methodology Summarized 29
2.2.6 Strategic Groups in the Semiconductor Industry 31
2.3 The Next Step: Semiconductor Intellectual Property 32
2.3.1 The IC Design Gap: A Continuing Challenge 32
2.3.2 Introduction to Semiconductor Intellectual Property 34
2.3.2.1 Definition of Semiconductor Intellectual Property 34
2.3.2.2 Legacy IC Designs: An untapped IP portfolio? 35
2.3.2.3 The Cost of Creating Reusable IP 35
2.3.3 The Silicon Intellectual Property Industry 37
2.3.3.1 The Current State of the SIP Industry 38
2.3.3.2 SIP Market Size Estimation „ 40
2.3.3.3 IP Revenue Streams 40
2.3.3.4 Characteristics of the IP Business Model 43
IV
2.3.3.5 The Economic Role of Commercial IP 44
2.3.4 Intellectual Property Categories 47
2.3.4.1 Classification of IP According to the Form of Delivery ..48
2.3.4.2 Classification of IP According to Functionality
and Value 51
2.4 Effects of SoC and SIP on the Semiconductor Industry Players 56
2.4.1 Standard Product Manufacturers and the IP Business 57
2.4.1.1 Challenges for Standard Product Manufacturers 58
2.4.1.2 Opportunities for Standard Product Manufacturers 63
2.4.2 ASIC Manufacturers and the IP Business 65
2.4.2.1 Opportunities for ASIC Companies 66
2.4.2.2 Challenges for ASIC Companies 68
2.4.3 Fabless Semiconductor Companies and the IP Business 69
2.4.3.1 Opportunities and Challenges for Fabless Companies 69
2.4.4 Silicon Wafer- Foundries and the IP Business 70
2.4.4.1 Opportunities for Silicon Foundries 71
2.4.4.2 Challenges for Silicon Foundries 72
2.4.5 EDA Companies and the IP Business 73
2.4.5.1 Challenges for EDA companies 73
2.4.5.2 Opportunities for EDA companies 74
2.4.6 OEMs and the IP Business 76
2.4.6.1 Challenges for OEMs 76
2.4.6.2 Opportunities for OEMs 77
2.4.7 Contract IC Design Service Providers and the IP Business 78
2.4.7.1 Opportunities for Contract IC Design Service
Providers 79
2.4.7.2 Challenges for Contract IC Design Service Providers 79
2.4.8 Merchant IP Providers 80
2.4.8.1 Opportunities for merchant IP Providers 80
2.4.8.2 Challenges for Merchant IP Providers 80
2.4.9 Summary: Impact of Commercial IP on the Semiconductor
Industry 82
3. Building Theory from Evidence 85
3.1 An Attempt to Explain the Emergence of the SIP Industry 85
3.1.1 Scenarios for Endogenous Change in Industry 85
3.1.2 Specific Conditions in the Semiconductor Industry 86
3.1.3 Drivers and Prerequisites for the Development of the
IP Industry 8 7
3.1.4 Generalization and Theory Building 90
3.1.5 Testing the Assumptions 92
3.2 An Attempt to Describe and Explain the Impact of IP on the
Semiconductor Industry 9 4
3.2.1 Fighting the Industry's Most Pressing Problem 95
3.2.2 Boosting Competition 96
3.2.3 Improving the Economic Efficiency of the Semiconductor
Industry 9 7
3.2.4 Destroying Value and Core Competencies ....„ 98
4. General, Theoretical Section 101
4.1 Innovation, Economics and Strategy 102
4.1.1 Introduction to Concepts and Theories 102
4.1.1.1 Evolutionary Economics and Technological Change.... 103
4.1.1.2 Organizational Ecology and Technological Change 105
4.1.1.3 Strategic Management and Technological Change 106
4.1.1.4 Typology of Innovation 107
4.1.1.5 Technological Paradigms and Trajectories 109
4.1.1.6 Dominant Logic 110
4.1.2 Application to the IP Case 110
4.1.2.1 Introducing "Methodological Innovation" Il l
4.1.2.2 The Impact of Moore's Paradigm on the Research
Agenda of the Semiconductor Industry 115
4.1.2.3 Explaining the IC Design Gap 116
4.1.2.4 Established Semiconductor Firms, IP and
Dominant Logic 117
VI
4.1.2.5 Applying Industrial Economics to the Semiconductor
Industry 119
4.2 Resource-Based Theory 123
4.2.1 Introduction to Resource Based Theory 124
4.2.1.1 The Resource Based View 125
4.2.1.2 Core Competencies and Capabilities 126
4.2.1.3 Core Rigidities •;. 126
4.2.1.4 Dynamic Capabilities 127
4.2.2 Applying the Resource-Based Approach to IP 129
4.2.2.1 Explaining the Emergence of Commercial IP
Providers: An Attempt 130
4.2.2.2 Explaining the Value Erosion of In-House IP 131
4.2.2.3 Established Semiconductor Firms, IP and
Core Rigidities 133
4.3 Transaction Cost Theory 134
4.3.1 Introduction to Transaction-Cost Theory 135
4.3.2 Applying Transaction-Cost Theory to the IP Business 137
4.3.2.1 Transaction Costs that Limit the Growth of the
IP Industry 138
4.3.2.2 Reducing Limiting Transaction Costs 141
5. Conclusion and Outlook 145
5.1 Why the IP Industry Exists 145
5.2 How IP Impacts Individual Industry Segments 147
5.3 How IP Affects the Industry Structure 148
5.4 Advice and Lessons from IP 150
5.4.1 Recommendations to Semiconductor Vendors 151
5.4.2 Recommendations for IP Providers 152
5.5 Suggestions for further Research 152