High costs, risk and complexity fuel new strategies
By Ed Sperling
Santa Clara, Calif. –There are three new buzzwords you’ll be hearing a lot about in coming months: ecosystem, reusability and platforms.
We’ve all heard them many times before, of course, but we’re about to be barraged with them. As the price of developing SoCs continues a race for the stratosphere, the table stakes for getting into the business, doing something wrong that could put you out of business, or doing everything right but miscalculating the payback are potentially career-limiting moves.
ARM joined hands with the Common Platform last week, and today at the opening of the ARM Developers Conference the company—with the help of Common Platform member Chartered Semiconductor–began detailing just how ugly the convergence of technology and business has become.
ARM sees an upside in all of this, of course. Its partner base is growing, which means an increase in IP licensing and an emphasis on reusable, integrated IP blocks. Complexity feeds into the IP licensing model, particularly when the IP is integrated with other IP blocks and verified to work as a package.
Warren East, ARM’s chairman, said the macro market changes are opening vast new opportunities for those who can take advantage of them. The difficulty is mapping the changes to the right features, the right form factors and the right market segments, some of which are still ill-defined.
“In Web 2.0, there is no typical consumer yet,” East said. “There in lies lots of opportunity and excitement.”
ARM’s focus on energy efficiency, which years ago was considered a plus, is now considered “the killer feature,” East said. Adding the ability to assemble devices relatively quickly using integrated and tested off-the-shelf parts—which includes IP—to help shield system developers from some of the complexity only makes the package more attractive.
But none of this totally gets around the growing complexity and rising risk, which accounts for the interdependency that has sprung up in the electronics industry. Kevin Meyer, VP of industry marketing and platform alliances at Chartered, said it now requires 5 million units be shipped to recover design costs—and that’s providing you’ve done everything right. The cost of a missed market window has risen from 8 percent two decades ago to 24 percent, which is enough to kill many companies.
“The smart companies will figure it out and offset up-front fixed costs by taking advantage of recurring costs,” Meyer said. “That means greater design re-use.”
He said companies also have started to do business differently. While foundries are creating new processes every two years, keeping pace with the Moore’s Law road map, many of their customers are skipping process nodes. “The 40nm to 45nm process node is not one that everyone will take advantage of.”
He said some companies are moving directly from 65nm to 32nm, and will likely ride that process a half node to 28nm to minimize costs and risk. “If you make an incorrect choice, it’s difficult to get back,” he said.
