System-on-chip technology comes of age

Collision course


Early indications are that the SoC is very clearly on a collision course with the CPU. The Surface tablet from Microsoft highlights the choice that OEMs now have when choosing processor architecture. This tablet will be made in two versions – one using an ARM-based SoC processor (Nvidia Tegra 3) and another using an Intel x86-based CPU processor (Ivy Bridge). Table 1 compares the relevant specs of these two versions while Figure 1 shows a die-photo and block diagram of the two chips. It is evident that the SoC based design is better suited for the ultra-mobile consumer form factor where light weight and long battery life are valued more than having the highest raw performance.


Click on image to enlarge.

Table 1 Comparison of SoC (NVIDIA) and CPU (Intel) based MS Surface tablets. It is clear that the tablet with SoC is more amenable for mobile use while the one with CPU would be less amenable as a mobile device. (Source: Microsoft Surface website)

The CPU based design relies on extra chips to achieve the necessary hardware integration and consumes more power, resulting in a 30% heavier and 40% thicker product form factor. It is also interesting to note that the NVIDIA SoC design is made using lagging 40nm lithography while the Intel CPU design is made using the two generation more advanced 22nm lithography. The comparison will only get more interesting next year when the SoC players move to 28nm technology with hi-k/metal gate transistors. The Surface tablet will serve as an important benchmark since it will provide a direct comparison between the incumbent/leading-edge CPU and the disruptive/trailing-edge SoC – not only in terms of functionality but also in terms of cost.

The unique cost structure enabled by the SoC has the potential to truly disrupt the business model in the semiconductor industry. The ASP for the NVIDIA Tegra SoC chip is in the range of $20 while the ASP for a leading edge Intel IvyBridge CPU chip is in the $150 range.  The CPU chip will also need to be supported by other chips to provide the functionality that is provided by a single SoC. When OEMs compete on price, it will be very difficult for the CPU product to compete while retaining historically high profit margins. As the SoC gets better and encroaches into the ultrabook and laptop space, the cost differential will have an even larger impact. The rising influence of a low-cost, low-end technology (SoC) and its potential to eat into the profit margins of a high-cost, high-end technology (CPU) is an example of the classic segment-zero phenomenon articulated by Andy Grove (1).

The NVIDIA Tegra 3 SoC and the Intel Ivy Bridge CPU are both best-in-class products – but they are designed for different form factors and cost and value metrics. While it is conceivable that the low-margin SoC may be able to serve the high-end laptop market well, it seems unlikely that the high-margin CPU will be able to serve the low-end mobile market as well.

Click on image to enlarge.Figure 1 A typical CPU design (Intel Ivy Bridge) dominated by core/graphics compared to a highly integrated SoC (NVIDIA Tegra). The integrated SoC design has obvious advantages in the tablet and ultrabook formfactors (Source: Intel/NVIDIA websites).

Intel has a significant lead in CPU process technology and is at the forefront of Moore’s Law. However, radical changes to architecture (e.g. Tri-Gate) may actually slow down the integration of on-chip functionality. In spite of acquiring baseband technology from Infineon in 2011, it is unclear when Intel will be able to integrate it with Tri-Gate transistors on Atom cores. Intel’s SoC product offering has traditionally lagged its mainstream CPU offering by 1-2 years. That gap is expected to narrow in the coming years as Intel addresses the growing need for on-chip integration and the growing threat from seemingly low-end product offerings which are rapidly becoming more competitive and cost-effective in the high-end.