Semiconductor makers streamline with RosettaNet standards

Semiconductor companies, which have some of the world's most advanced supply chains, have been able to share information freely in particular operations and at particular times since 1997. Now these companies are sharing information about the chips under production across the entire production process at any given moment.

It lets companies respond faster to changing market conditions, said Gartner analyst Laura Cecere. "You can have agile value chains," she said, referring to the chains of suppliers involved in semiconductor manufacture.

Motorola said that was critical to its business.

"Before you had one-to-one relationships. Now we outsource a lot. There can be five or six companies in a chain. For us it's important that we have the same availability and accessibility to information about work as we do with internal sites," said Garry Christie, director for service and logistics for Motorola Semiconductors.

It also allows semiconductor companies to adopt more efficient supply chains by handing off parts of their production process to outside companies. Companies like Cisco have honed this model for great cost savings.

"It's a fairly significant deal. It allows folks like Motorola to say I no longer need these capabilities in my four walls," said Christopher Carfi, director of product marketing at Peregrine Systems, a RosettaNet member involved in the project.

Semiconductor companies want to use contract manufacturers to handle the production and free themselves to handle design and marketing. They have been unwilling to do this before because there was no reliable way to monitor production in outside companies while it was in process. The companies used different computer systems, different business forms and organized their data in different ways.

RosettaNet set out to change that, creating standards to translate information about data and processes. Integration companies like Peregrine, BEA, webMethods and Tibco have built software using the standards to link separate companies. Ten RosettaNet members committed to using the standards by July 7. They include Motorola, National Semiconductor, Agere, Taiwan Semiconductor Manufacturing Co. (TSMC), Chartered Semiconductor, UMC, Amkor Technology, Advanced Semiconductor Engineering, Silicon Precision Industries and Winbond Electronic Corp. Five used the Peregrine platform.

"This is a semiconductor first," said Mary Schoonmaker, vice president of marketing and strategic development for RosettaNet.

The process integrates different companies building chips through the "work-in-process" stage, the first part in the life of a semiconductor and the one that determines its configuration. RosettaNet ultimately hopes to integrate production as the chips are fitted first into components and then into computers, personal digital assistants and other electronic devices.

The benefits are already showing up, officials said.

"We're seeing substantial cost savings," but figures won't be clear until they have six months' experience, said Schoonmaker. Meanwhile, it would free up time for selling and product design, she said.

"Now that they can agree on standards, they can focus on quality issues, better forecasts," said Schoonmaker.

Carfi estimated that the integrated production would save millions for the companies involved, by cutting manufacturing cycle times in half, reducing inventory needs and helping companies buy supplies more efficiently.

The benefits grow as the connections spread throughout the industry, Christie said.

Industry members gain savings and efficiencies at each point where they can exchange information freely with their partners. RosettaNet tries to integrate related points of data exchange in clusters, which build up to cover the entire production process. The greatest benefits are achieved when the information exchanges freely across all parts of the manufacturing process, from silicon wafer foundry to the "assembly and test" stage, and finally through the integrated device assembly done by companies like Motorola.

"As we combine the clusters together that's when we make the real big savings. We really gain enormous benefits as an industry," Christie said.