Delivering a keynote address at the Design Automation Conference here Tuesday (July 28), Hsu said a community business model with tight partnerships could enable TSMC and ecosystem partners to collectively create greater value and get better returns by collaborating to reduce waste, development costs and maintenance overhead.

"Through tighter collaboration we can share more costs and make room for more profit," Hsu said.

With semiconductor design and manufacturing costs soaring, collaboration is increasingly seen as necessary to drive profitability and technology advancement. IBM's Common Platform Alliance has been a successful model for cooperation among several chip manufacturers—including some that compete head-to-head in the market. At the recent Semicon West tradeshow, speculation was rampant that R&D collaboration, even among bitter rivals, is the way of the future.

Fu-Chieh Hsu Fu-Chieh Hsu, vice president, Design and Technology Platform, TSMC

Hsu repeatedly referenced TSMC's Open Innovation Platform (OIP), the foundry's supply-chain partnership program to promote innovation amongst the semiconductor design community and its ecosystem partners. OIP is TSMC's "humble effort" to try to kick start this type of business model, Hsu said.

TSMC unveiled the OIP program last year, in a controversial push for collaboration in the early stages of the IC design process. At the time, analysts speculated that OIP could makes waves in the industry if TSMC appeared to be encroaching on the turf of the third-party EDA, IP, packaging and test communities.

Hsu suggested that collaborative business models would be especially beneficial to the EDA industry. He presented data showing that the growth rates of EDA and intellectual property have been far below that of the foundries.

"If we increase the value to our end-customers, we can increase revenue to all of the ecosystem partners," Hsu said.

Hsu also presented data showing that annual worldwide spending on semiconductors has risen from about $10 per person in 1990 to about $35 per person in 2009. He said that declining chip prices over the same period demonstrate that the more affordable semiconductors become, the broader the spending on them.

In the U.S., spending on chips has reached about $160 per person per year, Hsu said, but is only $12 and $27 in India and China, respectively. That leaves a lot of room for growth in two countries with populations of more than 1 billion, Hsu said.

"In spite of the current economic difficulties, we are fundamentally optimistic about the future of our industry," Hsu said.