Services To Render

Tools companies, value-chain producers and IP providers have fared pretty badly in the past when it comes to services. They’ve been paid for their products, but even software was considered a giveaway. And services were an extra that no one even considered charging or paying for, except in body-shop types of arrangements for hitting tapeout deadlines and last-minute debugging.

That’s changing, for several reasons and in several different ways. Expertise is no longer the loss-leader it once was for selling tools. It’s valuable in its own right—more valuable than ever before. And it’s not always available in-house anymore, even in the largest companies.

Reason No. 1: There aren’t enough experts left. The fact that the largest IDMs are now using off-the-shelf standard IP may be the biggest indication that times have changed. The recession of 2008 started things rolling in that direction, and three years later companies still haven’t hired back engineers to pre-recession levels. There simply aren’t enough engineers with deep expertise to go around inside these companies. That’s reason No. 1.

Reason No. 2: Chips are more complex. A chip with 100 million or 1 billion gates at 20nm with multiple power islands, multiple voltages, and possibly built as a 2.5D or 3D stack with legacy analog subsystems created at older process nodes, is beyond human comprehension. It’s well beyond the skill level of even trained teams of engineers who haven’t been working with the latest tools and techniques and doing this stuff day after day. As every engineer knows, getting a feel for a technology takes time and practice. Unfortunately, there are so many different technologies and methodologies in place that no one can get good at all of them. Outside help can fill in the gaps.

Reason No. 3: Time-to-market pressure is escalating. Shorter market windows and compressed internal schedules mean that design teams need to focus on what they can do best and outsource where they add no value or where they’re not considered best-in-class. It’s no longer enough just to buy third-party IP. Someone has to debug it, make sure it’s characterized properly, and integrate it into the design. With a fixed power budget, physical effects to contend with, and lots of other issues to wrestle with, outsourced services are the most cost-effective solution.

External services have changed themselves. They’re not just consultants who used to work in big companies. A lot of these services offerings are tied in with the tools and IP being sold. That’s where the real expertise is. Functional verification expertise is so limited that the real experts in that field know all the other experts. It’s the same for power, packaging, architecture, integration, IP and DFM. The list goes on.
These services also are much more marketable as the industry completes the move from aggregated IDMs to disaggregated to virtual re-aggregation. Supply chains need to move quickly and efficiently, and knowing where to find expertise quickly is essential for survival. And finally, they’re also much more available as discrete offerings than ever before—and specific enough that competition won’t pound down the prices to the point where it isn’t worth charging for.

For decades IBM gave away services while it made its money first on hardware and then on software. Now it makes most of its money on services. The IC tools industry now has a very large opportunity to follow a similar path.

—Ed Sperling