ULP Wireless Update

Over the horizon: what next for the semiconductor industry?

Over the horizon: what next for the semiconductor industry?

Open source hardware—such as the Arduino Primo—could be the final frontier for the semiconductor sector

The Internet of Things and open source hardware are the great hopes for a revitalized semiconductor industry

It is eighteenth century English physicist Sir Isaac Newton who is widely credited with coining the phrase “what goes up, must come down”, and while Newton may have been trying to make a point about gravity, you don’t need to be an economist to know the principle holds equally true for industry.


Few sectors can claim to be immune to the business cycle, and semiconductors are no different. Rapid growth has been accompanied by periodic corrections and times of volatility in its relatively short 50 year history.


Earlier this year Rambus Inc., a semiconductor and IP vendor, and the Global Semiconductor Alliance (GSA), an organization comprising some 400 member companies in 35 countries throughout the semiconductor industry supply chain, released a report entitled “Charting a New Course for Semiconductors”, which acknowledged that, despite sometimes difficult market conditions in the broader economic landscape in the last 20 years, the global semiconductor industry had largely managed to expand and innovate. Key to the sector’s health was identifying and adopting a variety of new business models, the most notable of which was the advent of fabless chip companies such as Bluetooth low energy chip vendor Nordic Semiconductor.


“This innovative approach has dramatically lowered the barriers to entering the semiconductor industry by enabling design-oriented companies to outsource most or all of their chip production needs to contract suppliers, which can spread the high cost of building and operating chip fabrication, assembly, and test facilities across numerous customers,” says the report.


To that end, fabless chipmakers now account for nearly 40 percent of all semiconductor revenue, which peaked at $340 billion in 2014. That’s the good news. Today, however, the industry is negotiating another period of slowing sales, tightened margins, and consolidation, and it has left some observers to question whether the semiconductor sector is finally losing its mojo.


“Even as semiconductors continue to contribute to a wide array of revolutionary, potentially transformative technological advances ... long-time industry watchers have begun to suggest the industry is moving into a new era of slower growth, increasingly commoditized products, diminishing profits and, inevitably, fewer competitors,” notes the report.


The question now, the report suggests: “is whether chipmakers will be able to respond to these latest challenges by once again developing new business models and fresh revenue streams to reignite growth?”


IoT leads way

If the answer to this question is to be “yes”, then, the report claims, salvation is less likely to be found in the existing PC and mobile markets, but from new verticals across multiple industries from the automotive and medical sectors, to industrial operations and security, headlined quite possibly by the fledgling Internet of Things (IoT) sector.


“The so-called Internet of Things may very well be the industry’s long awaited blockbuster technology platform capable of driving yet another generation of explosive semiconductor growth,” asserts the report. “Indeed, the IoT is expected to usher in a plethora of new technologies and business models – helping to steer industry growth back into the fast lane.”


Industry experts appear to agree. the report cites Morgan Stanley analyst Mark Edelstone who predicts the IoT will “drive semiconductor demand for years” as it evolves from networked consumer electronics products, to networked industries, and beyond to “networked everything”.


It’s a prediction firmly backed by Nordic Semiconductor, from the top down. “I’ve been preaching the IoT almost before anyone used the word,” says Svenn-Tore Larsen, Nordic’s CEO. “We all know the IoT is a massive opportunity for wireless. HBR [Harvard Business Review] believes there will be more than 28 billion sensors in 2020. Some people might be skeptical but we firmly believe in that number.


“Nordic is already the leader in the Internet of ‘my’ things, but the bigger opportunity is in the Internet of Things around us.”


It’s an opportunity not lost on Nordic’s customers either. Swedish industrial IoT system provider, Free2move, is now in its twelfth year of working with Nordic, and while the company began life as a Bluetooth module provider, it is now in the process of transforming into a pure IoT play.


“In total we’ve deployed approximately 100,000 devices using Nordic architectures, from airport trolley tracking, to gas cylinder tracking, to military ordnance security, and laptop tracking,” says Anders Due-Boje, Free2move’s CEO. “It might be a small number compared to consumer applications, but with our new IoT approach we hope to go an order of magnitude higher.”


The company recently launched its Nordic nRF52832- powered 2Connect IoT platform that monitors a host of industrial environmental variables using a layered analytics and decision architecture, analyzing real time information and taking corresponding, automatic wirelessly-triggered remedial actions.


“We are more concerned with realizing true automation than the presentation of big data, and we are a subscriber to the philosophy that the IoT should operate without screens,” continues Harnevie. “We believe successful IoT systems should take action based on set-policies rather than having to ask humans for decisions for every action.”


The Rambus and GSA report claims another possible solution to the semiconductor sector’s growth predicament may be to take a lead from the software industry’s trend towards open source. The report quotes Eric Weddington, an open source architect for GPS technology vendor, Trimble, who claims “integrated circuits could be the final frontier of open source.”


Inspired by open source

The report notes several hardware initiatives inspired by the open source concept have launched in recent years, primarily for students, hobbyists, and independent developers, or makers. Among the leaders of the Maker Movement is Arduino, an open source platform for developing microcontroller- based prototypes.


Arduino recently launched a low cost IoT-targeted programmable single board computer (or ‘base board’) called the Arduino Primo, at the heart of which sits Nordic’s nRF52832 System-on-Chip (SoC).


“It has been estimated that the number of connected devices worldwide will increase from today’s approximately 15 billion to 200 billion in 2020,” says Federico Musto, CEO & President of Arduino S.r.L. “These numbers are astonishing ... makers, entrepreneurs, small and large companies, kids, and venture capitalists are paying close attention, and the playing field is very broad. From smart homes, to data analytics, to security, the applications are endless.”


“One of Nordic’s strategies is to closely support the maker and hobbyists communities so that they can painlessly incorporate Bluetooth low energy wireless connectivity into their electronic development projects,” comments Geir Langeland, Nordic’s Director of Sales & Marketing. “Because Arduino-based electronics make up around 70 to 80 percent of amateur engineers’ projects, it was an easy decision when Arduino asked us to supply the nRF52832 SoC to form the heart of its first native Bluetooth low energy wireless base board.”


Indeed, the future of the semiconductor sector looks bright, notwithstanding the set of challenges it, as any industry in its relative infancy, faces. The IoT looms as a potential ‘killer app’, while forward thinking companies look to tap into new markets slowly, but increasingly, built on open source. Collaboration will be key, but semiconductor companies know it, and are progressively embracing innovation models built on interdependence, as the sector as a whole moves towards a sustainable and bright future.


Rambus and GSA’s “Charting a New Course for Semiconductors” report is available from the GSA Global website at gsaglobal.org.