At the Core of R&D Efficiency
Maximizing return on development in semiconductor research and development
It’s no surprise that in the semiconductor industry the cost to innovate is rising. In fact, the need to create efficiencies in semiconductor research & development has perhaps never been greater. Is your company adeptly managing all the moving parts of the development machine and is it accurately measuring the performance factors needed to achieve financial growth? Explore a number of effective management techniques, processes and other metrics that semiconductor companies can utilize to jumpstart product development performance.
Meet our subject matter experts
Supply Chain and Manufacturing Operations
Principal, Deloitte Consulting LLP
Semiconductor Practice Leader
Partner, Deloitte & Touche LLP
Scott Angel: It is no surprise that in the semiconductor industry, the cost to innovate is rising. In fact, the need to create efficiencies in semiconductor R&D has perhaps never been greater.
Is your company adeptly managing all the moving parts of the development machine and is it accurately measuring the performance factors needed to achieve financial growth?
Mark Davis: With the embedded systems market playing a more important role alongside the more familiar mobile and computing markets, many semiconductor companies are now finding that they are in a much more competitive situation, having to deal with multiple products in multiple markets in multiple geographies. When you take into account this complexity along with the ever-persistent Moore’s Law, the cost to innovate is eroding margins.
In a recent survey, global semiconductor companies reported that upwards of 17 percent of revenue is devoted to research and development activities. There are a number of effective management techniques, processes and other metrics that semiconductor companies can utilize to jumpstart product development performance.
First, companies should ask themselves — are you applying useful financial tests to your portfolio before committing and continuing the spend? Before a single development dollar is spent, adopt consistent workable models for financial analysis of multitier development even if they are not perfect for every use case, enforce a culture of hitting cost targets on new products, be willing to penalize the business case of laggard projects appropriately, implement processes that clearly delineate the progress from requirements to design and revenue launch, be willing to terminate projects whose value proposition has faded and reinvest teams’ time into higher return efforts.
Secondly, do you have the right processes in place to ensure your resources are efficiently working on the right things to reduce time and effort? Focus your best resources on the sole task of nailing core design to reduce engineering churn; establish smaller teams to focus on derivative requirements; increase the time each engineer or designer is actually able to devote to core value-added tasks instead of administration, cross checking, error correction or sorting through disorganized information; combat the trend of the ever-existing requirement stage to focus your value proposition and reduce time.
Finally, think more creatively and boldly about new and less tested techniques to reduce the cost to development. Have your explored design collaboration with customers and suppliers? Are you thinking about the next generation products when allocating spend? Perhaps the most untapped opportunity to move the needle on return on development is in focusing investment and creating greater platform capability and versatility. Taking a cue from the auto industry, semiconductor companies should start thinking about how to better use a single platform concept to support multiple products. If companies can reduce the frequency of platform refresh so they can instead allocate investment on the derivative products that spin off the platform, there may be enormous opportunity to reduce the 17 percent R&D investment.
Increasing return on development may be simple to visualize, but no single improvement lever will increase your bottom line more. Focus is required on every aspect of operational management processes and product development.
Companies that can adeptly manage all the moving parts of the development machine while accurately measuring the performance factors needed to achieve financial growth are more likely to weather the storm of the impending market disruption.