New Electronic World Order

The move to SoCs has made semiconductors suddenly much more interesting. It also has changed the stakes in technology.

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By Frank Ferro
Analysts agree that much of the semiconductor growth over the next few years will be in the mobile market segments—smart phones, tablets and ultra-books, in particular. At the recent CES, there was no lack of these devices on display, all which are competing to cash in on the cachet that Apple has developed around these products. Although ultra-books will eventually just be notebooks in their final form (I can’t wait to get rid of this heavy block I carry around), this thin, light, long battery life device will add new life and enthusiasm to the notebook PC market. This is a positive sign of the times and a welcome technological progression we all await.

It was also interesting to see how quickly companies, namely dominant players just one year ago in the mobile market, now struggle to simply remain relevant. This was clearly evident when wandering by the RIM and Nokia booths and seeing the lack of traffic in what was otherwise a jam-packed show floor (I could hardly move in most booths). In fairness, Nokia did have a lot of interest in its Lumia smart phone running Windows, but it felt like they were playing catch-up and not setting the pace as they once did. Other giants like Intel and Microsoft are now working to gain a foothold in the mobile market. Both have been largely unsuccessful up to this point, but are finally gaining some traction.

However, the most fascinating dynamic of the show for me was to see how much interest and traffic was driven by the semiconductor companies. The Qualcomm and NVIDIA booths, for example, were a constant mass of people and were demanding a lot of interest. Yes, this is somewhat satisfying as a long-time semiconductor person, but the reality is that chip companies and semiconductor technology are now the global drivers for the most popular CE devices.

So what is it that has generated so much intrigue in semiconductor companies? The answer, hands down, is SoCs. It has become clear that the companies that control the SoCs to a large degree control the platform for these hot mobile devices. As the system companies shed their semiconductor resources over the last few years, much of the knowledge base and control was given to the semiconductor companies. Is it any surprise that Apple reversed this trend and is becoming more vertically integrated with respect to processors? The numbers speak for themselves. In fact, in 2011 alone, Apple was the single largest chip buyer in the industry, surpassing Samsung and HP. The discussion now has turned to how fast the applications processors can go, how many cores they will have, how fast is the graphics processor, and will the baseband be integrated along with all the other radios? The discussion then quickly jumps to the process technology—will this be 28nm, or 22nm or 14nm?

Of course, IP companies are also a critical and essential part of the SoC discussion. IP companies, for their part, are making a “land-grab” by trying to control more of the silicon content by providing a systems solution as opposed to individual IP blocks. Clearly for device manufacturers to stay relevant they have to be able to execute a successful go-to market SoC strategy, which means dealing effectively with both silicon and IP companies that are central to the SoC. In order to differentiate products with new features that the consumers want—and to deliver ahead of or on schedule—it is critical to know how to get the most out of both the IP and silicon that is available. IP providers in particular are driving SoC innovation with processors, GPUs, DSPs and NoCs—to name only a few critical IP blocks.

As we’ve all seen since 2008, the market is unforgiving and the rapid descent of yesterday’s leaders in the market is unmistakable. There are no do-overs, so you better be right and aim high the first time—and hit your target. Most companies today, however, do not want to become, or at least can’t afford to be vertically integrated, but with well-managed relationships with IP vendors they can maintain an innovative edge in spite of that challenge. I think the companies that learn how to take advantage of the investments that are already being made in critical IP will remain relevant and perhaps even be part of the New Electronic World Order.

–Frank Ferro is director of marketing at Sonics.


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