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.