Innovation is the cornerstone of the semiconductor industry and as history has shown, the majority of semiconductor innovation has come from fabless companies. Apple computer is my favorite example since they went from selling mother boards to computer hobbyists in the 1970’s to being one of the largest and most influential fabless semiconductor companies today.
Apple is also responsible for some of the most disruptive products including the Macintosh, iPod, iTunes, iPhone, and iPad just to name a few. Apple also set the semiconductor industry on its heels with a 64-bit SoC (A7) inside the iPhone5s. Here is my favorite quote from QCOM:
“I know there’s a lot of noise because Apple did [64-bit] on their A7,” said Anand Chandrasekher, senior vice president and chief marketing officer at Qualcomm, in an interview. “I think they are doing a marketing gimmick. There’s zero benefit a consumer gets from that.”
Mr. Chandrasekher lost his CMO title after that. Even more interesting, he spent his entire career at Intel prior to joining QCOM in 2012 including a five year stint as Senior Vice President of the Intel Mobility Group. And you wonder why Intel missed mobile?
This quote came out later which matches what I heard around Silicon Valley:
“The 64-bit Apple chip hit us in the gut,” said a Qualcomm employee. “Not just us, but everyone, really. We were slack-jawed, and stunned, and unprepared.
Here is QCOM’s formal response:
“The comments made by Anand Chandrasekher, Qualcomm CMO, about 64-bit computing were inaccurate. The mobile hardware and software ecosystem is already moving in the direction of 64-bit. And, the evolution to 64-bit brings desktop class capabilities and user experiences to mobile, as well as enabling mobile processors and software to run new classes ofcomputing devices.”
As soon as the 64-bit A7 news hit, all of the 32-bit SoCs being designed at 20nm were immediately re-architected for 64-bit. From what I know today there will be no 32-bit 20nm SoCs from the big fabless companies. In fact, I would be willing to bet that Apple is the only company shipping a 20nm 64-bit SoC this year. Of course the Intel fan club blames yield for the delay in 20nm SoCs but now you know the truth. Apple disrupted the industry yet again and when you see what the A8 powered iPhone6 is capable of you will be astonished, absolutely.
“To throw good money after bad is to spend more and more money on something that will never be successful.“
This brings me back to Intel’s SoC challenge. There is an interesting presentation titled “Intel’s New Category of SoC Designs, Products” circa 2008. It outlines how Intel is “poised to lead” this category which I find quite interesting. Six years later Intel is still singing the same tune while losing BILLIONS of dollars with little to show for it. This is the most expensive game of “catch-up” that I have ever seen. Meanwhile fabless semiconductor companies like Apple continue to innovate and change the world.
* This is the second of a three part series. Also read Intel’s Manufacturing Lead Explained.