4 Economics 10

4 Economics 10 - Economics Our goal is to exploit scaling...

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Economics Our goal is to exploit scaling opportunities but… Who needs it? Can they (or we) afford it? How do we do it? P erformance, P rice and P hysics!
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Kaa-ching! Electronics as an economic engine Lower cost per function Cheaper systems New products and markets More cash to invest Technology enhancements Electronic systems are a rising % of the world economy The driver The creation of cheaper systems via technology enhancements in microelectronics drives this
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Business economics 101: Cost # produced $ Income Total cost Fixed costs Break-even Where does time come in? What are fixed and variable costs? Variable costs Profit
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Cash flow ($/unit time) Time + = flow IN - = flow OUT Break-even at A1 = A2 Area 1 Area 2 Business economics 102: Cash flow Why is there a delay? Project ramp-up When do we make money?
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Market position and growth Total market = $300B Our market share Multiple products Total costs Process costs Profit Distribution Increase market share by introducing new/better products Develop new capability and reduce process costs by capital spending Is it better to invest in process or product ?
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0.01 0.1 1 10 100 ASP ($) Invest in which product? Discretes Opto Digital bipolar Analog MOS MPU MCU MOS logic DRAM SRAM Other memory Other products 1000:1 ratio Before diving into a market, consider the ASP and then how many components you would have to sell to break even …
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More parts do not mean more income 1970 1980 1990 2000 2010 Year 0.001 0.01 0.1 1 10 100 1000 10000 Tbits sold Cost/bit (mc) The declining cost per component means that you have to sell way more to grow income!
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http://www.semiconductor.net/article/CA6653981.html http://www.electronicsweekly.com/Articles/2008/07/23/44177/ic-insights-lowers-2008-semiconductor-capex-expectations.html Investing in the process: Capex
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2007 2008 2009
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This note was uploaded on 05/11/2010 for the course EEE EEE-530 taught by Professor Kozicki during the Spring '10 term at ASU.

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4 Economics 10 - Economics Our goal is to exploit scaling...

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