Ruminations on the electronics industry from David Manners, Senior Components Editor on Electronics Weekly.
The Five Lessons Of 2010
Warren Savage, CEO of IPExtreme, reckons 2010 taught the silicon industry five major lessons and it has emerged into a New Era.
1. Globalization found its limit.
”Companies found there was a natural limit as to how fast and how complete that transition could be. It’s not that easy to transplant 50 years of microelectronics know-how so quickly. The conveyor belt of jobs to Asia slowed way down,” says Savage.
2. The race to be cheapest ended at the bottom of a cliff.
”Turns out that semiconductors, and especially semiconductor design is not a commodity that can be driven by the market price of sand,” says Savage, “companies that played into that mindset found themselves with undifferentiated products and no cash to invest in next generation technologies.
3. Consumers became discriminating.
“Consumers are increasingly conscious of quality and value.”
4. Viva la differentiation!
“The big change I see in semiconductors is an explicit strategy shift towards differentiation through customization,” says Savage, “cheaper and undifferentiated is a provably failed strategy - not only is there no money in it, but it’s not want consumers. Semiconductor companies are finding that they need to focus on the niches where their unique specialization adds value that cheaper competitors cannot easily reach.” Examples: Apple with PA Semi and increasing use of proprietary IP in ASICs.
5. The New Era
“We are in a new era where systems level considerations together with understanding of consumer behaviours are important to the semiconductor industry,” concludes Savage, “the good news for those of us working in it is that we did not wind up in a world where the outputs of great scientific minds are rendered into a commodity when reduced to silicon.”Tags: behaviours, differentiation, generation technologies, microelectronics, niches