GaAs electronics & optoelectronics at FhGIAF

R E V I E

s you'll see from this c o n v e r s a t i o n Lou underscores the necessity for s o u n d market strategy in the high performance computing and telecom niche Vitesse has carved for itself. Corporate, as well as product success in that silicon dominated field is heavily dependent on c o n t i n u o u s improved functionality. Little else matters. Vitesse is o b v i o u s l y f u n c t i o n i n g very well these days, as investors in Vitesse's recent initial public offering (IPO) will happily testify...now that they understand that high performance digital devices are not the same as D R A M s . As we embark on a new, and hopefully more economically prosperous year for all, Vitesse S e m i c o n d u c tor's story should serve to encourage entrepreneurial c o m p a m e s to f o r m u l a t e their own workable strategy, defined as one that adds true value to a customer's system. a M : Vitesse has been consistently profitable since March of 1991, during economically difficult times in the A m e r i c a n semiconductor industry. On top, Vitesse issued a successful IPO. LT: Yes. It's all done, e f f e c t i v e I1 D e c e m b e r , 1991. We sold 3.2 million shares at $9/share on that Wednesday, and by that Friday it had closed at $11, so people who bought are already doing well. a M : What were potential investors responses toward GaAs? LT: Interesting; the hardest thing to explain to them was that what we're doing is unique. It required education as to the nature of the market we serve; the high p e r f o r m a n c e market where y o u get paid for having a better process. Unlike D R A M S , it's not a commodity w h e r e five other companies can sell the s a m e p a r t into the same socket. We had to convince them that we can find the 10% of the customer base that pays

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Lou Tomasetta, has a way of breaking critical issues d o w n to simple common denominators that allow one to clearly focus on that fraction of any issue which should be relevant, leaving customary hype and absurdity behind. He's also a very outspoken, common sense type of person.

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for Dottel + p e r l o r m a n c e . Selling into that market is a ver~ different business: there arc no other semiconductor companies that basically have u majority, or even a big fraction of their business in this market. J M : How does an investment in Vitesse c o m p a r e with others'? leT: There really haven't been any companies focusing on this high performance market. You'd think some oF these small

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I..(L c o m p a n i e s w o u l d have been able to tell the story, but none have actually g o n e public. S o m e investors picked up on the importance o f at least a part of a system necessarily n e e d i n g high perfor+ m a n c e devices. But the majority really hadn't thought through the fact that therc are different markets for semiconductors° and that everything isn't driven by D R A M s and distributi~m, book-to-

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~licting no Iurther Otll lhaD {otlr months. Fhe nature o1 the business we're in is really not \ o r \ different f r o m the I ( l . business, or even the high end ol the non-con> modity Bi('M()S ASI(" be+ ',,incss,

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select, and pa,~ for a techm~logy on the basis o f some kind of p e r l o r m a n c c ad\ a n t a g e . ()nee the A S I ( ' market is understood, then the question people ask is how do you make lllonc x, on the development side'? J M : How profitable arc development revenues? I/f: Quite frankl}, xer\ profitable, not only for us and for E('I+, but also Ik,r the high end B i C M O S /XSIC players. It is not possible to be profitable at the Io\~ end. \~here you have nine companies {hat can d r o p ~nt{~ the same socket. W h e t h e r y o u r c ~,elling EC,'L, (iaAs, or BiCMOS. you're selling on a differentiated process. So, for any.' ECI+ or B i C M O S cotnpanies entering this IPO stage, at least the invest-ment connnttnit 5 will nov, have heard the stor 5 a M : Building on a successful formula, 1 assume your next strategic t+nove is {ncreased m a n u f a c t u r i n g capability" leT: As v,c told the lures/ors, we're going to take about ~I2M of the $30M \~e raised and basically use it to double our capacity over the next six to nine months, m tertns of equipment. We'll be able to get up to about 2000 to 2500 wafer starts per month by the end of the year+ If you look at what w e \ e been successful at doitlg oxer the last se\.cra[ veats~ it's taking a different view o f ','+hat it l o o k to be successful in G a A s . We p u t a ilew process t e c h t l o log x, m place that allowed us to break this barrier of building high l'unctionality parts in a high performance I o c h n o l ~ g } . which quite

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frankly nobody, outside of us, is able to do right now. Now that we've created the market and given everyone the road map, if we don't put into place the manufacturing capacity we need, then we too will go the route of a lot of US companies. Those who basically do the hard stuff, but because they can't get access to capital, they end up either partnering with a foreign company or they just end up giving the business away, in terms of m a n u f a c t u r i n g , and become a design house, which is nice, but it's really giving away most of the real, long term value added f r o m these b r e a k throughs. JM: How will your strategic alliances with Fujitsu and Thompson further develop? LT: Those are two very different companies, and in both cases the relationships are proceeding very well. But there are d i f f e r e n t objectives in each relationship. Thompson is, in fact, truly a partnership, where we're helping them set up the p r o c e s s t e c h n o l o g y they'll use, for the most part, for internal use and for the European defence market. It wouldn't have made sense for them to m a k e the investment if they didn't have an outlet that would buy a big fraction of their capacity. For Vitesse, it's a way of getting our process technology installed in another factory, and gives us the ability to buy wafers and leverage our manufacturing capacity with a company that, from a worldwide standpoint, isn't principally a semiconductor company. Thompson CSF, is an aerospace company, and doesn't have a worldwide presence in digital ICs. Thompson found a strategy that allows it to have access to the technology to get leverage in systems, and not have to take the entire cost. We'll buy a lot of their output, so its a great deal for us, and a great deal for them. F r o m a p r o d u c t

standpoint, i'm sure they'll do some stuff we're not doing. F r o m a process standpoint, the objective is to keep the process technology at least locked together. We've had people out there, and t h e y ' v e had people working in Camarillo (Vitesse headquarters in Southern California) to try to learn everything there is to learn to make the process transfer work. It's a paid up license, so its very simple: no royalties. It's a relationship that has benefits to both companies and, for the most part, probably not a real compe-

process for, and the HG a A s II1 is the 0.6~tm process for the FX Family JM: As we move onto your relationship with Fujitsu, explain your viewp o i n t on r e l i n q u i s h i n g marketshare through these alliances. L T : In the c a s e o f Thompson, I would suspect most of it is business we'd have a very difficult time winning on our own anyway. In the case o f Fujitsu, certainly there we will give up some marketshare also, but the expectation and the reality of how things have worked out

Now that we've created the market and given everyone the road map, if we don't put into place the manufacturing capacity we need, then we too will go the route of a lot of US companies. titive situation, in terms of marketplace. Typically, the strategy is that we will bring up a p r o c e s s t e c h n o l o g y at T h o m p s o n , typically six months after we have it in p r o d u c t i o n . W h a t we're installing in Thompson at the Grenoble lab is basically our H-GaAs II process technology, which has now been in production almost two years, and is wellunderstood. The intention would be to start putting our new H-GaAs III process in place there in late '92 or early '93. I think it makes sense for them to exercise H - G a A s I1 for awhile and really get the bugs w o r k e d out on a reasonably mature process before they go on to the next advanced stage. J M : The H - G a A s III process will be formally announced February 10th, and is the process under which your new 350 000 gate ASIC was built. How does H - G a A s III differ from H-GaAs II? LT: H-GaAs II is 0.8 lam, the F U R Y Family of gate arrays, which is the product line that we designed that

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over the past few years, is that the credibility in the marketplace that Fujitsu has provided has dramatically expanded the market. So it's a case of yes, we have a smaller piece of the pie, but the pie is a lot bigger than if we had it all. In any marketplace, it's alright if you have two competitors. What you d o n ' t need is ten. One player only raises the issue of: is it real? And, if it's so great, why isn't someone else doing it? I think Fujitsu has pretty much put that issue to bed now with almost all customers. JM: That reminds one of the days where no second sourcing was available, and a common complaint by prospective customers. Your announcement of Fujitsu as your second source made a significant difference. LT: It isn't whether or not you have second sourcing, it's whether you have a worldwide credible manufacturer who agrees that it's the right answer. We could have had all the second sources within the s t a r t u p s r a n k s , a n d it

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wouldn't have solved anything, because that didn't address the issue. In our case, since we had targeted our products directly at ECL, which was different f r o m w h a t some o t h e r people had done, what the ECL guys were going to do became a big customers issue. If GaAs is so good, why aren't the ECL guys doing it? Well, Fujitsu is the world's largest commercial supplier of ECL, so that certainly answers the question. More recently you've seen Motorola do a similar sort of thing, and they're the largest ECL manufacturer in the US. So all those issues have been put to bed as to whether GaAs is real, and how GaAs is going to be the long term winner. The approach we've taken, with the self-aligned gates, a high temperature VLSI approach, has proven to be the one that both Fujitsu and Motorola have selected. I think they've done their homework right and they came to the right conclusion. JM: When they compare the two internally how is it dealt with - do they rationalize it as simply more choice for a customer? LT: I think long term, it's one or the other, because these two t e c h n o l o g i e s (GaAs and ECL) really are not c o m p l e m e n t a r y . One is going to replace the other, or one is not going to make it. If GaAs is successful, it will be at the expense of ECL. You can see exactly that mentality in the two largest compames. Fujitsu is involved with a lot of technologies, and is a very customer-oriented company. W h e n some o f its customers selected us to do GaAs as a replacement for ECL, Fujitsu took a h a r d l o o k at why o u r GaAs replaced their ECL. Having a very large R&D activity in GaAs for a long time, besides being a very large m a n u f a c t u r e r o f ECL, I think Fujitsu came to the same conclusion: that the real issue of ECL

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wasn't making it faster, which everybody knows is possible, but rather, that the real issue was making devices of higher complexity and lower power, which was sort of the Achilles heel of all these bipolar technologies. Fujitsu knew the customers were picking Vitesse GaAs because they wanted higher function-ality. We can make ECL faster, but we can't make it with 50 000 gates at under 20W. aM: With Fujitsu coming on strong, what are your Asian m a r k e t plans and your continued and projected relationship with Fujitsu. LT: Our marketplace in Asia is principally in Japan, because that's where the high performance computer and telecom business is, and those are really the principal uses of our technology. That market has been there for a long time. We (on our own) have done very well there. We have a really g o o d d i s t r i b u t o r there, with a full design centre, which is what you need to support the customer base. Fujitsu entering the marketplace has, again, made it credible for Japanese suppliers to use GaAs, so I think we've done very well through our relationship with Fujitsu. We still collaborate on improving the F U R Y Family. We have the possibility of doing some foundry work with Fujitsu, as well as other things. Obv,ously, we're at the stage where we're both probably the two largest users of wafers, packages, etc. so we still have ongoing discussions about setting I/ O levels, etc. aM: With such big plans for GaAs, what is Fujitsu planning for ECL? LT: I don't know what they're doing internally but Fujitsu p r o b a b l y builds three or four times (their commercial output) for internal use inside computers. Look at the size of the ( G a A s ) facility t h e y ' r e building. It would be irrational to justify that purely

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arc t~bviousl 5 iustilying 11 to ~i large degree on the basis o[ internal p|oductiol~ and internal usage, ~ { would think that, mucl~ like CMOS took about 10 years 1o really replace a lot o[ the TT[., it will lake GaAs through the '90s to really have a significant fraction of that recurrent ECL market, but I think its inevitable. aM: You clearly write ECt.'s epitaph but imply its viability. LT: Every time one of a systems comes up for rede-

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!~cinclpally talking abou! thc l S l a n d Vl.Slcomplex i'~ nlarkel It> lhe same thing witi~ ~,iaA~ l'hesc people thai a~c m ~ hyping the hell ~ut ~,f digital HBTs art, dreamers. HBTs are never going lo be a Vt, S! techno.logy. T h e p h y s i c s just doesn't allow it to happen. 1 don't care whether it's MBE or M O C V D , they are just p l a y i n g g a m e s with themselves. It may be useful for little multiplexers to run at 10 G H z , and

These people that are now hyping the hell out of digital HBTs are dreamers. H BTs are never going to be a VLSI technology. sign, a bigger fraction of it will go to GaAs. it will p r o b a b l y take two generations of redesigns, and a design cycle is about five years, so it will take ten years for GaAs, from a design standpoint, to really h a v e r e p l a c e d E C L . From a production standpoint, it will probably take another three to five years beyond that. It's amazing, because you would have t h o u g h t by now that C M O S would have replaced T T L , but it's only been in the last year that total T T L sales have actually started going down. The same drivers that made CMOS replace TTL, in terms of simpler manufacturing, higher density and lower power,~'are exactly the same drivers that will make G a A s replace ECL. Bipolar is a tough IC technology. Bipolar transistors, in Si or GaAs, are difficult to connect to build a costeffective IC. T h e r e are some things that the bipolar ECL is the best answer for, like Motorola's Eclipse logic. There's no way G a A s is going to compete with that. So these small, very

that's fine, a good market for them to be in. But the problem is, if you can't build V L S I c o m p l e x i t y parts, you just don't have enough business. That's what all the rest of the G a A s companies event u a l l y f o u n d out. T h e Gains and GigaBits, and T r i Q u i n t s and Gazelles found you can make a few nice parts, but the problem is, you can't build a company. Building 500 or 1000 gate parts doesn't provide enough business. You have to get into c o m p u t e r s , otherwise you can't build enough base to build a fab. On the microwave side, the economics are entirely different, and a whole different world. On the digital side, if you can't build parts over 10 000 gates, you can't be a long term player. aM: Convex is obviously in GaAs for their high end machines for the long haul. Anyone else in the queue we can discuss yet'? LT: There are several I can't discuss. As a compa. ny gets bigger and has so many competing projects, it's hard to know which will go into production. That's why the real targets for us are companies like Convex

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,,,>,,, like u~. are belting i~e~ whole company on a ~cchnology. They have no choice. They only build one ~nachine. If it's GaAs, they !mvc to do what it takes to nmke it work. Convex has now shipped four or five g8(){) systems, which cleariv . more than exceed the benchmarks they had set for it. h will be a very successful machine. Conxex has been successful and could ship more machines if we could ramp up our production even faster. IPO monies should remedy that problem. We're sort of doubling our shipments to them every quarter, but they're winning more machines then even they forec a s t e d , ,o i 1% a g o o d problem to have. h is a problem though, m the sense that if it stays that way' too long. you eventually have to give business away t o ~2ujilsu or Thompson...Thompson less in the near term because their lab is just c o m i n g up, but certainly we're trying desperately to try to take advantage of most of the design wins we have already won. Fhe customer,,, have to get what they need. l f y o u can't supply it, it will have to come from another supplier. J M : Expanded capacity, and the new H - G a A s II1 process that addresses the new trend towards a total s y s t e m on a chip. No wonder I have referred to Vitesse as the moving target silicon now tracks. W h a t will H - G a A s I11 offer the industry'? LT: An H-GaAs Ill will be another tactor of four in terms of usable gates. It's functionality. As you go to higher and higher speed clock rate systems, you actually can gel a bigger bang at the system level by being able to triple or quadruple the amount of functionality on a chip than by increasing the performance of transistors by a factor of two. If you really look at what happens, .if you put things even Jn normal packages on a pretty sophisticated board, it's

not uncommon to spend half a nanosecond or even more interconnecting between chips. That's a lot of gate delays. The faster you make your stuff, the more gate delays you lose with interconnects. JM: How best do you deal with the issue of interconnects'? LT: There are two ways. The best, and the most simple way, from an economics standpoint, is to put more and more functionality on a single chip. So, as you go to higher and higher speeds, particularly in complex systems like computers, the ability to put more and more functionality is even more critical than increasing speed. If you look at H-GaAs III and II, where it affects the FURY, it is four times the functionality, the power per equivalent function is down by a factor of two, the speed per equivalent function is up by 30% or so, so it's a real big win. Typically you should be able to make a system that is three times faster with an EX family than with a F U R Y family. That's the kind of performance hit you have to provide the customers every three or four years. J M : How does H-GaAs II1 differ from 11? I saw mention of sea of gates architecture in H-GaAs 1II. LT: The process is basically the same. The architect u r a l d i f f e r e n c e s were driven principally by our decision on how mature the tools were. Routers are an example. When we looked at sea of gates architectures back in 1989 with F U R Y , the reality was that sea of gates had just started in C M O S . The tools t h a t were used were principally internal tools, so there was no commercially available tool for routing sea of gates. We felt that, in 1988, when we were planning F U R Y , that the tools weren't really there to do a sea of gates. By 1990, the CMOS sea of gates architectures had been around

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terms of building standard commodity RAMs, I d o n : think that:s the best wa~ to use our capability. ,IM: Lefts focus on the status o1" the L:S G a A s industry. At the GaAs I(" Symposium in Monterey. there wa~, still too much myopic vision, m regard to non-US progress, a n d a n a i v e t y r e g a r d i n g the progress of c o m p e t i n g technologies.

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If GaAs solves the problems better than Si, they'll use it. If it doesn't, they won't. LT: That's the obvious way to do it. The only reason you do it any other way is when you can't get enough functionality. E v e r y b o d y would buiid every system on a single chip if they could make it work in a cost effective way, It's so simple. JM: The issue of how to increase functionality has to be paramount in next generauon systems. LT: T h a t ' s clearly the biggest technology issue we've been addressing for the last six or seven years. We're delivering on a consistent basis, ICs with about 200 000 transistors, with r e a s o n a b l y g o o d yields, to C o n v e x a n d other people. We're trying to get up to something close to 600 000 - 700 000 usable transistors by the end of 1992. The 350K has over a million transistors on the chip, but you can't use all of them, so you have to count only the ones you actually use. With some of the R A M blocks we add in, we'll actually have, by the end of 1992, a million transistors, a M : Digital G a A s is equated primarily with logic, Where are we headed in the memory department? LT: T h e r e ' s a lot of m e m o r y mixed in with

I/F: The problem is, as you said, totally inwardly focused, and for the most part, still on winning D o D contracts, which is basically a world outside the real world. Any relationship to, what is viewed as successful m the DoD research corninanity and having any kind of application in the commercial world is basically accidental. I" get a big kick out of it when s o m e b o d y m a k e s s o m e t h i n g w o r k in an R&I) lab, then they do a press release on how it's going to revolutionize the digital IC market. They don't have the first clue as to what drives that market, let alone how to make what they have c o m m e r c i a l l y viable. a M : So you would caution people to be wary of making q u a n t u m mental leaps from lab success to applications? LT: An R&D technology means there is a lot to learn about the physics of the devices, but there's this temptation that most of the players in that world can't resist, which is to immediately make the ass u m p t i o n that, because they can make one part wiggle in a lab, that I'm about to commercialize it, when, in fact, they don't have a clue about what it

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~t kcs to commercialize any~i:ing, let a l o n e where :i:ev're going to get the money to do it, or even b o a to sustain it for more dmn 20-30 minutes. rile real misconception that all the remaining digital GaAs people still have is that there's actually a separate market lbr GaAs, and until they come to grips with the fact that there is no market ['or (iaAs, they just keep making the wrong assumptions, which is what they've been doing for the last ten years. ,IN: Not t'or GaAs specifically, just any appropriate solution for high perforlnance users. I,T: Right. That% it. If you don't build the right products, nobody's going to use GaAs. Users don't really care. Saying I have a 40 GH,' device is really irrelevant t~ how companies use l('s. They donh actually use t r a n s i s t o r s anymore, n o r do the\. care t~,r}lat the lransislors are. ,IM: But good R&I) t,, extremely unportant. l]1": I)efinitely, and important to do for Ihe 10 years out lime frame, g u i even t'ol the commercial GaAs companies, i/'s coming to grips with the realit) that building a small, but very fast widget, isn't necessarily enough to win a major design at a commercial system house, because even though you may be twice as fast as anyone elses IC, it" the functionality is one tenth as much, it may not provide the right answer tk~r the system. aM: From your perspective, where is the five-ten year horizon? LT: I still think this system on a chip kind of concept will really drive the whole semiconductor industry. Level of functionality is more important than a 20% speed a d v a n t a g e . T h a t ' s what the silicon commumty has been doing for fifteen years, and it's what we have to do to continue to compete. •