Downturns have a way of changing things forever—sort of like the earthquake of 1812, which permanently re-routed the Mississippi River in three places. And while the common thinking is that things will go back to where they were before, they never do.

For one thing, the trend isn’t just smaller, faster, cheaper. It’s also shorter development cycles. Incredibly complex chips now take 12 to 18 months to design, verify and produce, versus three years a decade ago.

The only upside is that the basic designs sometimes last longer before they become completely obsolete. Moore’s Law is slipping, if it even applies at all. Trying to fit the formula into multicore chips and, in some cases, stacked die, is a stretch. And many companies have abandoned the Moore’s Law approach altogether, saying that older process nodes are sufficient for getting the job done.

Another change that is irreversible is globalization. There are more opportunities, more markets, and more trained people around the globe. The downside is more competition for skilled engineers at all levels—and that trend will only grow.  What used to be done in the United States, Europe or Japan can now be done using global teams.

The silver lining is that the cost of labor is less of a deciding factor. Global companies are paying the same wages around the globe for top talent. Instead of being reduced to the lowest common denominator, some companies are paying top dollar for engineers no matter where they are. IBM is a case in point. Experts say that will become more common over the next few years.

That also will fuel new market growth in some densely populated areas, such as India and China, where the opportunity for growth dwarfs the market for every piece of electronics that has ever been sold. 

In the system-level design space, where engineers live and breathe complexity, that also means the creation of new approaches and tools. While many companies still develop their own tools, best of breed is becoming a necessity rather than an option. And black-box strategies, such as TLM 2.0 and IP-XACT, will become necessary evils among engineers who were trained to understand every step of every action they take. And like the other irreversible trends, once these are tried and implemented there is no turning back.

Once a year editors take on the job of setting the following year’s agenda and mapping significant changes before they happen. The nice thing is that by the time the year is over, most readers don’t remember what we said. Frequently, even we don’t remember what we said, but that’s beside the point.

Here are a half-dozen predictions for the upcoming year, reflecting changes in both technology and business:

1.     Companies will finally admit the multicore approach works better as a virtualized platform for multiple applications than a multi-threaded platform for single applications. And they will be forced to admit that after 40 years of work on parallelization, there are limits to just how far threading can be extended. The result will be more standardized platforms with innovations in the software rather than innovative platforms with standardized software.

2.     Silicon-on-insulator will begin nudging out CMOS first because of current leakage and power efficiency reasons, and then for performance reasons. CMOS has a lot of life left in it, but not at the leading edge of Moore’s Law.

3.     The incoming administration in Washington will push technology as the solution to a more stable and responsive infrastructure, which will create a flood of projects and creative thought in the system-level design world. Energy conservation and intelligent machinery will be an important part of this reconstruction, but bottlenecks will remain in getting enough qualified help and enough bandwidth to do the job right.

4.     The downturn will continue to squeeze R&D budgets, and pure research will remain a to-do item for the incoming administration. With Bell Labs and Xerox PARC gone, and funding to schools already in trouble, this couldn’t happen at a worse time. No one in government has had their eyes on this ball for decades, though, which is why Lucent (replete with Bell Labs patents) was allowed to be sold to Alcatel, a French company.

5.     Investors will continue to undervalue chip companies, in part because they don’t understand the technology and in part because they understand the modus operandi of the people running them. Chip companies will continue to get less than is necessary for their technology, which will force other changes such as re-usable platforms and global development teams that can take advantage of lower-cost labor outside of the United States, Europe and Japan.

6.     Engineers will continue to do battle over the meaning of ESL. We just want them to know, at System-Level design, we’ll be watching. 

Where are the weak links in the ESL ecosystem?

That question isn’t idle speculation. With complexity in many SoC designs reaching well beyond the level of human comprehension—even beyond the capabilities of the most brilliant engineers or architects—chip developers on all levels need to know what can go wrong from both a technology and a business standpoint.

No company can develop everything itself and still get to market on time and on budget. That means various pieces of IP are almost essential to build a chip. Sometimes that involves code, sometimes it’s a reference design. Understanding the capabilities of the IP vendors, not to mention their sustainability, is just as critical as understanding how to build a complex system.

In the chip world, this is the equivalent to a supply chain in the manufacturing world. In the consumer electronics market, in particular, this is a proven hazard. One well-known company, which shall remain nameless, is now trying to rebuild its reputation after outsourcing much of its development work. What it discovered, after thousands of customer complaints, was that its top contractors had subcontracted to other subcontractors, and from there it was further subcontracted. It looked like some derivatives scheme, and by the time the pieces were assembled they discovered some problems—but not before the products ended up in the hands of consumers. The seller’s reputation suffered. It’s still suffering, in fact, several  years later.

Ecosystems are like supply chains. They can be customized, depending upon the parts that are needed. And they can cause problems if all the parts don’t adhere to the same standards, or if they were developed with different languages or tools, and if the project specs aren’t tightly defined.

Products are only as good as the pieces used to create them, but if anything goes wrong the entire ecosystem suffers. Understanding the potential pitfalls used to be relatively simple when everything was built under one roof. It’s a lot harder, and requires a lot of extra up-front planning on the front end and testing on the back end, to make up for the loss of in-house oversight.

Economics and design generally are one step removed from each other, but the compression effect of the current design process, combined with extremely low stock prices and a shortage of hard cash are pushing these areas together like never before.

This is new ground, so the ultimate result is somewhat speculative. But given all the factors at play, it appears this downturn coupled with changes in design will have deep and probably long-lasting effects on the semiconductor industry.

Normally, the biggest decisions in system-level design focus on the ability to deliver a competitive system for a reasonable—or in many cases unreasonably low—price in a fixed market window. And while costs increasingly enter into the picture at each process node, those costs generally are well known. Either a company invests in the tools at a new process node and it has enough volume to warrant that investment, or it re-uses an existing process. Even at the leading edge of the technology curve, companies often consider skipping a node altogether because it’s too costly to hit each steppingstone.

Given the rising cost of developing systems on a chip, these are routine business decisions even if they aren’t always pleasant ones. Companies buy IP or they develop it themselves, depending upon similar decisions. And they buy or develop their own tools for the same reasons.

The rising costs are a function of rising complexity, which has forced all companies into doing business in an ecosystem. These ecosystems—and there are a number of them—now stretch from the architectural level all the way out to the verification, debug, test, packaging and manufacturing.

The problem is that in an ecosystem there are weak parts and there are strong parts, and those weak parts can dilute the value of the whole system. Weaknesses are particularly pronounced during downturns, particularly where capital is tight and markets are unstable, because many of the players are small companies.

Unlike in the past, when IDMs would simply move money around from one department or business unit to another in down cycles, small companies in the ecosystem don’t have that option. A second option is to buy up the small companies that are in trouble, but even that isn’t happening now. Acquisitions are rare, despite depressed prices, because there simply isn’t enough credit or capital floating around to make these purchases.

When a critical piece in an ecosystem fails, the whole chain breaks. This isn’t something most companies considered, because it’s cheaper to let startups handle some tasks than to do it in-house. But getting back on track in the event of a failure, or in the event that investments are delayed, could take months if not years. And it could spell the end, at least in the short term, to allowing startups to play critical roles in system-level ecosystems.