Facts Support New Emergence in Semiconductor Landscape

As we left an exciting year 2014 which is poised to record 7+ % increase in semiconductor revenue (~ $338 B) compared to 2013 (~ $315 B) and entered into another promising year 2015 for semiconductors, I looked back over the year bygone and collected inferences from some of the major important events which clearly convey how 2015 can be pivotal to provide momentum to some of the newer areas ushering semiconductor landscape into newer territories. Although we hear about many hot topics on our way, but few make it to the finishing line; that’s a reason I tried to assimilate things in the complete ecosystem, see how they have performed in the past and how they connect together to ascertain real completion to finish lines for some of the larger goals in the industry.

Before I get into details, to sum up there are a few areas which will see maximum activities and they can provide enough thrust to transform semiconductor industry to newer heights – these are IoT (Internet-of-Things), I would say internet of everything market, smartphone market and system level EDA (we may call it ESL) including IP to support those markets. Well these are not new things I am talking about; we have seen these on our way. What is interesting is that when I looked at how things have progressed so far, they convince me that there is a great momentum, technically as well as businesswise, pushing these three areas to finishing lines. They are going to transform semiconductor industry into newer growth zone for at least next decade. Let’s see how things are folding into these three major dimensions which are interrelated.

On the macroeconomic front, with a few consecutive years of consistent, nominally increasing semiconductor revenue (in 2013 it was 5+ % increase compared to 2012) on top of significant investment in newer technology and process nodes, we can safely assume that we are on the side of growth curve in semiconductors.

The businesses responds according to macroeconomic scenario after taking into account the forward earning cues. Consolidation and expansion are typical of businesses in particular areas based on their life cycle stages. When the semiconductor economy was in decline or trying to come out of recession, we saw mega consolidation in existing EDA and design spaces including foundries (we have seen GLOBALFOUNDRIESacquiring IBM’s foundry business even in 2014) and semiconductor equipment arena. Now we are seeing business leaders expanding in newer areas such as IoT related technologies, IP and system level EDA that includes system prototyping, verification and reliability. Smartphone market remained in the middle with large scale consolidation as well as new entrants eyeing to capture the remaining low-price-point market. Below I will talk about both businesses as well as technical angles for each of these three areas – smartphone, IoT and system level EDA (including IP).

Smartphone – Lenovobought Google’sMotorolaunit, Microsoftbought Nokia; those are towards consolidation. We see a major expansion side too with Xiaomi, OnePlus, Huawei, Gionee, Google Android1 phones and many others. The smartphone market will keep on seeing major revenues. The technical angle to this is that smartphone will play a pivotal role in the expansion of IoT devices in several sectors including personal, home, social, industrial, health, automotive, and so on. Most of the IoT devices will be controlled through smartphones, and therefore the companies who provide best IoT enabled smartphones will be the winners.

IoT – This is a major expansion space at different levels – enterprise, medium and low scales. Google bought Nest Labsthat provides home automation technologies such as thermostat and smoke detection; CEVAacquired RivieraWavesthat specializes in IP for connectivity with smartphones through WiFi and red-hot Bluetooth; MegaChipsacquired SiTimethat has 80% share in MEMS timing solution; NXPis to complement its IoT portfolio with Quintic’sassets and IP related to wearable and Bluetooth Low Energy (BTLE) business; Qualcommis buying CSR(a pioneer in Bluetooth wireless technology to connect devices to smartphones) to expand in technology for connected appliances; earlier Qualcomm bought Wilocity, which makes WiFi products for home internet routers and appliances that connect to the web. Qualcomm also developed an open source platform, AllJoyn for connected devices to work together.

This is not all, there are major activities going on in this space in several companies, either in-house or through acquisitions. We are going to see major technological moves to solve security issues, large data management (storage, filtering, secured transmission, access, privacy, and so on), communication protocols, standardization in software, o/s, devices optimized on several parameters and so on.

System level EDA – Last year has seen EDA leaders getting into ESL related and system level reliability, verification, optimization, and application areas with renewed fervor. Cadencebought Forteto strengthen HLS solution and Jasperto expand complex system verification solution. Mentorwent on to further expand its automotive section, acquired Mecel Picea AUTOSAR Development Suite from Mecel AB; acquired XS Embedded GmbH, a leader in creation of automotive system architectures and hardware reference platforms. Mentor strategically eyed on system reliability space, acquired Nimbic, a leader in 3D full-wave electromagnetic simulation solutions that provides signal integrity, power integrity and EMI analysis for systems on scalable cloud compute platform. To strengthen SoC design and verification flows further, Mentor acquired Certus ASIC Prototyping Debug Solution that addresses challenges in FPGA prototyping. Also Mentor acquired Berkeley Design Automation to advance nanometer AMS verification. Synopsysis not behind in acquisitions, it acquired Target Compiler Technologies that strengthens its ARC Designware family by enabling design and programming of ASIPs (Application Specific Instruction-set Processors).

Synopsys and Cadence have already made strong portfolios in IP. While providing system level automation for SoCs, it’s strategic advantage for them to have IP portfolios. Cadence went ahead buying high speed interface IP assets from TranSwitch. ARM, being an IP leader, went ahead acquiring Duolog to strengthen its IP configuration and integration capabilities addressing increasing SoC complexities and sub-system functional verification.

There are many other activities happening around the world in IP, system level automation, and connectivity between things and internet. It’s clear, EDA and IP providers are vying to fill the gap between chip design and system design by providing robust and reliable IP and seamless automation for prototyping, optimization and integration of SoCs; the design houses are striving towards providing complete and secure systems of connected devices; smartphone makers will be gearing up to catalyze the IoT phenomenon by enabling connections between devices and the web through their smartphones; and foundries are already on their march towards providing light weight, low power, high performance devices suitable for IoT.

Let’s watch for more trends evolving in this direction in this year. Wishing the semiconductor community an exciting 2015!!

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