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[Panajev2001a]

The market research (Scottsdale, Ariz.) said Sony jumped three spots in its 2005 rankings to ninth while NEC fell four spots to 13th. Sony is forecast to reach the highest annual growth rate on the list19 percent.

All companies on IC Insights' top-20 list are expected to record chip sales of at least $3 billion this year.

Three of the five suppliers expected to drop in the rankings are Japanese, the researcher predicted.

By contrast, Sony's chip sales are being driven by growing demand for video game consoles, MP3 players, digital TVs and other consumer systems. IC Insights added that Sony's internal semiconductor use is expected to surge by about 50 percent this year.

For the complete article go to: http://www.eetasia.com/ART_8800382726_499486_0d5e6aa8_no.HTM

 

[Striek]

Good news I guess. But that growth is probably due to the addition of the PSP.

 

[soundwave05]

EDIT: Wrong thread

 

[Rhindle]

You're replacing a product with a cheap-ass six year-old chipset with a product with an expensive new processor. Hence the value of your semiconductor shipments increases. Not much strategy involved.

We'll talk about successful strategies when all those wonderful third-party Cell-based products are announced.

 

[Chittagong]

You're replacing a product with a cheap-ass six year-old chipset with a product with an expensive new processor. Hence the value of your semiconductor shipments increases. Not much strategy involved.

We'll talk about successful strategies when all those wonderful third-party Cell-based products are announced.

Speaking of which, what have we got. Rack servers?

 

[Panajev2001a]

You're replacing a product with a cheap-ass six year-old chipset with a product with an expensive new processor. Hence the value of your semiconductor shipments increases. Not much strategy involved.

We'll talk about successful strategies when all those wonderful third-party Cell-based products are announced.

Why wait ?
http://www.mc.com/mediacenter/pr/news_details.cfm?press_id=2005_11_14_1845_075941_997391pr.cfm


The big point in the article was this IMHO:

IC Insights added that Sony's internal semiconductor use is expected to surge by about 50 percent this year.

Make more IC's in-house since you have the technology and Fab capacity and buy less from 3rd parties (thus helping them pay THEIR R&D costs ).

This kind of strategy, if done well (that includes Sony's sub-division co-operating and helpign each other as well as trying to use internally designed solutions whenever possible), can work as Samsung has shown during these years.

 

[Rhindle]

The big point in the article was this IMHO:



Make more IC's in-house since you have the technology and Fab capacity and buy less from 3rd parties (thus helping them pay THEIR R&D costs ).

This kind of strategy, if done well (that includes Sony's sub-division co-operating and helpign each other as well as trying to use internally designed solutions whenever possible), can work as Samsung has shown during these years.

Once again, that's simply an indication of a cheap chipset (on which they are making a nice profit) being replaced with an expensive one (on which they will be taking a big loss). It's easy to sell an expensive product cheap, but that's not an indication of success.

 

[antipode]

Once again, that's simply an indication of a cheap chipset (on which they are making a nice profit) being replaced with an expensive one (on which they will be taking a big loss). It's easy to sell an expensive product cheap, but that's not an indication of success.

I think you're misinterpreting the quote - IC is forecasting an increase in internal transfers from 2004 to 2005. They didn't predict 2006 in the release and I doubt Sony is using Cells produced in Japan yet.

 

[Rhindle]

I think you're misinterpreting the quote - IC is forecasting an increase in internal transfers from 2004 to 2005. They didn't predict 2006 in the release and I doubt Sony is using Cells produced in Japan yet.

Fine, then it's not related to Cell, but to the fact that the semiconductor content of TVs and other CE devices in general is going up.

 

[Panajev2001a]

Once again, that's simply an indication of a cheap chipset (on which they are making a nice profit) being replaced with an expensive one (on which they will be taking a big loss). It's easy to sell an expensive product cheap, but that's not an indication of success.

No, that is not just that.

The over-all strategy was to replace outsourced or third party developed IC's inside Sony's products. This would enable Sony to distribute the R&D costs over more products and over more sub-divisions: improoving profit margins is still something their management has in mind.

Sony understood they migth need more advanced IC's, such as CELL, and to develop those efficiently that the modle SCE used pushing the EE and GS chips for the PlayStation 2 console was not a poor one as it allowed good cost control and reduction over time.

They invested money on R&D, new equipment, advanced strategies with key partners (such as Toshiba, IBM and Transmeta) and new production facilities.

This part of the strategy is not enough on its own: if this increased manufacturing technology and fab capacity does not come with an effort to design and manufacture in-house more of the IC's Sony's sub-divisions use for their products.

Substituting for example LSI's designed PlayStation 2 I/O CPU (the CPU of PSOne) with a custom IC plus emulation software (which might explain the compatibility problems the latest PSTwo revision brought up) is one element in that journey: stop paying big license fees to LSI for active use of their chip design and use unused fab capacity in your own plants. Yet, it is just a single example of the over-all push for INCREASED in-house chip design and manufacturing.

SCE's upgraded fabs and new fabs (fully owned and also those co-owned with Toshiba) will not kept exclusive to PLAYSTATION 3, PSP and PSTwo manufacturing... the plan, which this article is reporting (increased in-house manufacturing), is indeed to use these fabs assured left-over fab capacity to produce IC's for the rest of Sony.

 

[Panajev2001a]

Fine, then it's not related to Cell, but to the fact that the semiconductor content of TVs and other CE devices in general is going up.

Kutaragi was head of Sony's new centralized Semiconductor division and the investments Semiconductors-wise were done with an over-all strategy in mind and not just CELL which is the point I ahve been trying to make in this thread.

 

[antipode]

Fine, then it's not related to Cell, but to the fact that the semiconductor content of TVs and other CE devices in general is going up.

That's true, but still, they're predicting Sony's semi production grew 19% over last year and internal use grew 50%, so alot of the new prodcution is being used internally. It's likely that they're following through on the strategy Pana is talking about (which is how they hope to keep costs down on the PS3.)

From an eetimes article 6 months ago:

Traditionally, consumer electronics companies use "custom ASICs and software for each device, and [have] long product development cycles. All this is going out the window," said Van Baker, research director for consumer electronics at Gartner Group. "They have to move to using more off-the-shelf silicon and software and live with lower margins. Essentially they are moving to a PC industry model, though hopefully one that is not quite so bad." The CE companies, Baker said, "are at varying degrees of understanding this."

But Sony wasn't willing to live with lower margins, especially for Playstation. In unveiling the Playstation Portable in Tokyo last fall, Kutaragi said the game division relied on Sony's semiconductor operations for 50 percent of the box's component value. Aggressive pricing was only possible, he said, because key ICs were designed and fabricated internally, using a 90nm process. "You can't pull off this kind of pricing by depending on off-the-shelf components," Kutaragi said. The first-generation Playstation, by contrast, used ASICs from LSI Logic, a graphics chip from Toshiba, and memory from NEC, Mitsubishi, Toshiba and Hitachi. The only key internally developed component was a Sony disk drive, Kutaragi said.

Semiconductor companies have vastly different capital needs, planning horizons, strategies, internal disciplines, market and channel management, and target markets than CE companies. If the two are under one roof, there has to be an almost church-and-state separation, with consolidation happening only at a financial level. This is why huge companies like Hitachi, Mitsubishi, Motorola and others have effectively divested their IC operations.

 

[Rhindle]

That's true, but still, they're predicting Sony's semi production grew 19% over last year and internal use grew 50%, so alot of the new prodcution is being used internally. It's likely that they're following through on the strategy Pana is talking about (which is how they hope to keep costs down on the PS3.)

From an eetimes article 6 months ago:

All the article indicates is that semiconductor usage in Sony products is increasing, and that they are satisfying some (but not all) that increased demand internally. So if the "strategy" in question is simply to increase production capacity in anticipation of higher internal semiconductor demand, then yeah you could call that a successful strategy.

If the strategy is to produce better or cheaper semiconductors than could be sourced externally, the article offers no evidence that they have been able to do that.

 

[Panajev2001a]

All the article indicates is that semiconductor usage in Sony products is increasing, and that they are satisfying some (but not all) that increased demand internally. So if the "strategy" in question is simply to increase production capacity in anticipation of higher internal semiconductor demand, then yeah you could call that a successful strategy.

If the strategy is to produce better or cheaper semiconductors than could be sourced externally, the article offers no evidence that they have been able to do that.

It is not just a simple "better" thing for masking in-house IC's.

Technically, in a way they are better for the very definition that they are made in-house even though you migth produce them at roughly the same cost as buying it from a third party: see if you buy a $2 IC from a thrid party you are paying to the third party some of his R&D costs which it spreads over the products it makes, but if you use your own manufactured IC's you are dividing over more chips your own R&D costs.

When you outsource, you do help your competitors to compete better against you as well, so you better be careful whichever strategy you choose and how you realize it .

 

[Lord Error]

All the article indicates is that semiconductor usage in Sony products is increasing

Sony-made semiconductors are not necessarily only used in their own products. As far as I know, their CCD chips for example are used in almost all digital photo cameras, regardless of manufacturer.

 

[mckmas8808]

It is not just a simple "better" thing for masking in-house IC's.

Technically, in a way they are better for the very definition that they are made in-house even though you migth produce them at roughly the same cost as buying it from a third party: see if you buy a $2 IC from a thrid party you are paying to the third party some of his R&D costs which it spreads over the products it makes, but if you use your own manufactured IC's you are dividing over more chips your own R&D costs.

When you outsource, you do help your competitors to compete better against you as well, so you better be careful whichever strategy you choose and how you realize it .

I'm glad you pointed this out. I will bring this up @ B3D to see what they have to say about it.