ICs enable almost everything and get almost no respect.
SAN FRANCISCO--The semiconductor industry's problem is a $10 hinge.
The Wall Street Journal's
Worthen wrote that the success of the new Microsoft Windows 8
operating system hinges (pun intended) on the ability of
designers to incorporate touchscreen features into evolving laptop
designs. This means new and better mechanical parts such as hinges
In some cases those hinges cost $10. And while Worthen points out
that microprocessors cost around $100, these are the glam devices on
the printed circuit board. The nameless, faceless component workhorses of the
PCB often cost pennies (the ones that prevent system meltdown, for example). And here's the problem: An
industry with an average selling price of $1.37 can't extract the
value of a hinge.
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This is where the irony comes in. It costs billions of dollars to
make trillions of semiconductors. The world doesn't evolve without
them, yet their cost must be continually reduced if the market TAM
is to expand. And not everybody is Intel or ARM. Microsoft Windows 8
takes advantage of touch applications and can't do it without
capacitive touch technology. A Cypress Semiconductor PSoC 3
CapSense Plus device can cost as little as $4.29; a
SmartSense device? As little as $1.23.
I know, I know:
whaa-whaa...cry me a river. Electronics probably
take up at least 25 percent of any system BOM, so the
industry is extracting value. But individual vendors, in an hugely
capital-intensive business, in some cases are not.
Bill McClean at
IC Insights earlier this year re-examined some of his data and found
that ASPs are forecast to enjoy a rare rise from $1.37 in 2011 to
$1.51 this year. I wouldn't reach for your pointy little party hats
just yet: The industry ASP was $2.49 in 1996.
There's no right answer, of course. Higher component costs would
prevent a lot of end products from ever seeing the light of the
consumer day. And without the intense competition the industry
grapples with every day, innovation likely would come more slowly.
But still... a $10 hinge? Is it because you can touch and feel it?
That it's not invisible to the user and not produced in a way that's
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