This document discusses high value manufacturing (HVM) and how it can serve as a suitable model for the UK. It uses the example of CSR plc, a global fabless semiconductor company based in Cambridge. Key points made include: 1) HVM adds intellectual property and know-how to materials and components to create products for global markets, even if manufacturing is outsourced (as with fabless semiconductor companies). 2) The HVM business model involves companies focusing on design, IP, and testing while outsourcing manufacturing. 3) HVM benefits the UK through jobs, tax revenue, and retaining expertise, though more can be done to encourage it through education, tax policy

1. HVM: A Suitable Model for the UK
Dr Phil O’Donovan
Chairman, Twelve Winds
10th Anniversary High Value
Manufacturing Conference
http://www.hvm-uk.com
Murray Edwards College
Cambridge
14th November 2012
© Twelve Winds Ltd 2012 1

2. High Value Manufacturing (HVM): A definition
A definition;
High Value Manufacturing is where know-how and IP is added
to raw materials and components resulting in a manufactured
(fabricated) product designed to sell in to global markets
High Value Manufacturers = Rolls Royce, BAe, Ford
High Value (Fabless) Manufacturing (HVFM) is where know-
how and IP is added to raw materials and components resulting
in a manufactured (fabricated) product designed to sell in to
global markets but where manufacturing is not in-house
High Value (Fabless Semiconductor) Manufacturers = CSR,
Wolfson, Icera
In contrast, low value manufacturing does not require rare staff
skills or specific geographical location but there is little added
value or strategic importance.
2

3. Case study: CSR plc
CSR is a global fabless semiconductor manufacturing business
based in Cambridge;
Raised $85M pre-IPO
From start-up in April .99 to flotation on the LSE in March .04
Joined FTSE 250 in July .04
Global technology brand and Bluetooth market leader
From 9 founders to more than 1,000 staff across the world
2006 revenue of $700M and market cap around $1B
Shipped more than 1,000,000,000 chips in first 7 years.
3

4. BlueCoreTM: A truly disruptive product
BlueCoreTM Single Chip Wireless in CMOS;
Baseband
Software
Some Design Issues
• Weak analogue and strong digital signals
• On silicon frequency planning
• Uncharacterised CMOS at 2.4GHz
• Very small footprint required
• Package choices:- fpBGA and WLCSP
• Tight hardware / software coupling
Radio Microprocessor • Testability and reprogrammability.
4

5. The HVM business model
IP & Know-how Manufacturing Drop-shipping
Expertise Testing Support
Design Packaging Returns
Manufacturing £££ Depth
of
Manufacturing
Fabless Expertise
Manufacturing
££ Needed
and
Generated
Design
Services £
5

6. HV Fabless Manufacturing (HVFM)
The HV Fabless Manufacturing model is not for the faint-hearted;
standard (not custom) product comfort zone
Survival & Success
Entry Barriers Right Product Factors
Raising enough cash Industry standards IP management
Design for test and Driving legislation Apps engineers
manufacture Market need Design partners
Gaining attention of fabs Innovative design Driving down GPM
Right first time design Being in the
manufacturing loop
Developing multiple
product families
Most fabless (semiconductor) manufacturing companies fail because
they underestimate entry barriers and survival & success factors.
6

7. HV Fabless Manufacturing benefits to the UK
Why has HVFM succeeded in the UK;
Educated workforce
Attractive place to live
Manufacturing legacy
Attractive tax regime for entrepreneurs ?
Benefits that HVFM companies provide UK plc include;
Jobs
Tax revenue
Generation and retention of IP and manufacturing
expertise.
7

8. Increasing the UK HVM base
What can be done to encourage HVM in the UK ?
Education:
Schools (teach computing)
Universities (more blue sky research, less development)
Fraunhofer Institutes (link universities to industry)
Tax for start-ups:
Simple, founder & staff-friendly and stable
Industry and government:
Patent treaty enforcement
Brand anchoring
Government UK purchasing policy
National industrial strategy ?
8

9. www.TwelveWinds.com