Monday, January 12, 2015

Monday Food for Thought

What are companies in the semiconductor industry going to do now that they face soaring development costs, product commoditization and the end-game for a decades old manufacturing process?    

There's a dynamic I have mentioned in several, all-too-infrequent, missives and speeches over the past few years and it finally appears to be playing out in tech land.  This has taken years to build momentum and to this day I am sorely lacking a more cerebral or whizzy appellation to describe what is happening.   Boringly I have labeled this trend as one that moves companies toward the development of total systems. Because of this I believe the tech industry sits on the cusp of some serious verticalization. 

Let’s assume that soaring development costs (NREs) and weak pricing will flush a lot of the chip design houses and chip commoditization, due to lack of differentiation, grips the few players remaining at the leading edge.  Last but not least, let's go out on a limb and suggest that we are entering the final innings for Moore’s Law (did I just say that?).  If that is the case every aspect of the chip manufacturing process must, to differentiate their offerings and maintain viability, extend its purview beyond the construction of transistors.  Right now the pioneers in "system development" are marching out to the pins, the circuit board, through and to the bazillion points connected to the network - and back and forth and back and forth – ad infinitum.  Every aspect will be considered.  One could go as far to suggest that the meme of the day, the IoT, is a poster-child for this tipping point.

The signs of this happening are everywhere and a number of companies are embracing the transition. All the big names are all in play.   

If you are reading this you probably have insightful things to add so please feel free to chip in,    (To prevent spam comments will be moderated)

Call this, in addition to a new start for this blog, $0.02 for the jar.  


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