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Chip Revenues Grow, but Software is the Future

The headlines look promising for the semiconductor industry. In the latest news, Texas Instruments (TI) and Xilinx are prospering amid a rising demand for chips. TI reported that it grew 19% from a year ago, while Xilinx expects revenues to rise between 16% to20% compared to it’s second period. Other chip companies enjoying rebounds include Marvell Technology, Altera and Microchip, as recently reported in the Wall Street Journal. Intel is also doing well with its revenue sharing hitting a four-year high, as indicated by a recent iSuppli report.

Which markets reflect the largest share of this growth? Those details are a bit sketchier. Early last year, TI did  shift a large percent of its business to low power and analog mixed signal (AMS) technology rather than digital chips – especially in the areas of medical, data storage and industrial equipment.

Xilinx continues to increase market share against traditional ASIC vendors, especially as economics favor standard products over customized ASICs in global recession markets. (Has anyone plotted Makimoto’s Wave beyond 2007?)

These happy economic tidings are in contrast to the acquisition trends that have occurred this year. The most noticeable trend in the later is the move by major chip (and EDA) venders to purchase software companies – from embedded operating systems to application development. As Ed Sperling points out in a recent blog; “Not all parts of the industry are poised for significant growth in the future …The value has shifted from just hardware or software to hardware and software.” [5 Reasons For Change]

What does this all mean? For the immediate future, the semiconductor industry is experiencing a rebound. In the long run, though, hardware alone will not be enough. Software must be part of the total long term revenue and technical picture.

2 Responses to “Chip Revenues Grow, but Software is the Future”

  1. Yariv Says:

    Hi,

    I believe that the meaning of the “The value has shifted from just hardware or software to hardware and software” in the coming future in the COM business is the long awaited Software defined Modem/Radio/PHY.

    If you will scan the web you will see more and more companies advancing to this field. Some are doing research on the subject as IMEC some even have products ready as Sandbridge, Icera and ASOCS (Although the HW architecture is different).

    This type of products requires a complete merge of the SW ,HW , algorithm design teams. From the first stages of the architecture they need not only answer the question does the HW is powerful enough to do LTE/Wimax/CDMA etc but also:
    1. Can my SW team write a modem with it?
    2. What type of compiler do I need?
    3. How complex is it to write a full modem?
    4. How can I get the advantages of SW into the HW?
    5. How can I give the SW the complete power over the HW so I can get a solution which is like a dedicated HW?

    And there are probably more questions which pass between the two worlds of HW and SW.

    I believe that the market is heading that way from many different reasons:
    1. Time to market.
    2. NRE.
    3. Verification.
    4 Product life span (SW can be always modified).
    etc.

    Yariv.

  2. VLSI Training Institute Says:

    Indeed headlines look promising but results of this quarter will only tell how much depth is there in recovery. One thing is for sure that semiconductor industry has stopped layoffs or reduced the rate drastically. But we yet to see any consistent hiring trends in Industry.

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