The semiconductor industry is splitting into three parts: Commodity – including discretes etc; Highly specialised – including analogue, power management etc; Solutions – where companies provide much of the final solution, integrating all the analogue, processors etc. This was the opening statement of Freescale CEO Rich Beyer at the International Electronics Forum 2010 in Dresden this morning.
Whereas semiconductor companies used to produce parts which customers then had to figure out how to use, now the third segment of the semiconductor companies have to provide a complete, integrated product which provides the functions which customers want in their systems.
To achieve this, companies which were fierce competitors now have to collaborate, said Beyer. An example he gave was the Freescale-TRW-Denso DSI Consortium to accelerate innovation in the automotive industry.
"Increasingly we have to provide applications software", said Beyer, "we recently acquired VortiQa a company with 200 software engineers, to do more and more of the applications work for customers."
The problem for the chip industry is that it hasn’t found a way to charge for its software. "We’ve not figured out how to get paid for virtually any software", said Beyer, "we try but keep failing. The fact of the matter is that customers say that: ‘If you want us to design in your chips then software is something you’re going to have to throw in’."
This trend is militating to the advantage of big companies, argued Beyer. "This is why bigger companies will succeed better in the industry, and smaller companies will struggle", said Beyer, "it will play into the hands of the larger companies."
Multicore architectures are adding to the investment required for software, added Beyer. Asked if Freescale had cracked the problem of writing software for multicore architectures, Beyer replied: "We are working on it. The solution will come from our partnerships with other companies. We don’t claim to be the world’s greatest experts on operating systems. It’s a major challenge – no question about it. It requires new expertise."