All Programmable Platforms: Foundation for Profitability

2014年7月15日 | By News | Filed in: News.

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By Mike Santarini, Publisher, Xcell Journal

 

When I first started covering the IC design industry as a trade journalist, the merchant ASIC market had already had its heyday and the custom digital IC business was rapidly turning to ASSP SoCs as a way to improve profit margins. Merchant ASICs came to dominance when differentiation of an end product’s performance and feature set relied mostly on its hardware—performance, power as well as unique functionality hardwired into the gates of a device. But the merchant ASIC business was short-lived.

 

Why?

 

Tom Hart, chairman and former CEO of Quicklogic, summarized it best at meeting we had years ago. “The key to making money in the semiconductor business is selling a lot of one type of chip to a lot of different customers,” said Hart. “The ASIC business is a crummy business. It is a bet on a bet. You have to bet that the customer you are building an ASIC for has built the right product for the right market.”

 

 

By the early 2000s, silicon process technology and gate counts had advanced to the point where companies could embed microprocessors and other IP into their custom digital designs, creating what quickly became known as systems-on-chip. These SoCs allowed semiconductor companies to build a single device and sell it to a broader number of customers—a business we call today merchant ASSPs. With ASSPs, the on-chip hardware typically meets a minimum hardware requirement and any and all customer differentiation occurs in software. While still popular, the ASSP business model also has flaws—but mainly for the customer.

 

The biggest problem is that semiconductor vendors generally do not build an off-the-shelf ASSP until standards are nailed down and a market is already established. So if you as a customer want to be first to market, get the highest product ASP and maximize profitability, you still need to create custom hardware as well as software for your own differentiated chips. Further, to maximize the time you dominate the market and maintain your first-to-market price point, you need end-product differentiation. This fact points to yet another flaw in the off-the-shelf ASSP model: If you can buy it from a vendor, someone else can too. Arguably, it is relatively easy and fast to differentiate the software functionality once your ASSP is available. But it is also relatively easy for your competitors to create lower-cost knockoffs of your design or even improve it using the exact same hardware. As such, ASSPs have proven great for companies that want to build “me-too” products and get the leftovers of a given market opportunity’s carcass before it is completely picked clean.

 

In the face of daunting silicon costs, many companies are turning to a platform business model to maximize profitability. That is, you create a first, custom chip at a given silicon process node and then build less-expensive derivatives leveraging IP and design reuse. Companies can build platforms with ASICs, their own ASSPs or merchant ASSPs, but those options are still weighed down by issues I pointed out above. So a growing number of customers are taking the next step in the semiconductor evolution and building platforms with Xilinx’s award-winning Zynq-7000 All Programmable SoC. As you will read in the cover story (Xcell Journal, Issue 88), the Zynq SoC is by far the wisest business as well technological choice available today for building a differentiated product platform and maximizing bottom-line profitability.

 

Note: This editorial by Mike Santarini appears in the latest issue of Xcell Journal, the sister publication of Xcell Daily. It’s such an outstanding analysis that I wanted to make sure that Xcell Daily readers saw it too. Click here for the latest issue of Xcell Journal. Read it online or download the PDF.


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