Viewpoint: How will the chip wars be won? -- Part 2

Dynamics in the emerging silicon landscape

Part 1 of this 2-part series discussed emerging trends and inflection points reshaping the semiconductor manufacturing industry. System-on-Chip (SoC) technology is coming of age and is poised to overshadow Central-Processing-Unit (CPU) technology as the primary driving force for technology innovation within the industry.

At the same time, the economics of the technology are shifting in such a way that rapidly making the transistor smaller offers diminishing returns in a cost sensitive, mobile SoC driven market.

The slowdown in the pace of Moore’s Law, the emerging importance of the SoC and the rapid growth of the mobile market all tend to favor an open, plug-and-play foundry and design ecosystem. One could expect that the ecosystem developing around ARM will continue to nip at Intel’s core markets as the development of ARM-based processors for laptops and servers accelerates. This emerging threat to Intel and Intel’s response to it will define the industry over the coming decade.

The post-PC era: Intel in an open ecosystem
The operating system (OS) war between Microsoft and Apple in the 1980s came to define the PC and software industries. Microsoft’s open ecosystem model won as Windows became the de-facto OS for machines made by all kinds of PC makers.

While Microsoft promoted an open ecosystem in the larger PC industry, ironically it spawned a closed ecosystem within the semiconductor industry. The Wintel alliance ensured that Windows only ran on x86 architecture which was pioneered and owned by Intel. The closed ecosystem hugely benefited Intel as it went on almost unchallenged to win the desktop, laptop and server space (AMD also used x86 yet could never match Intel’s scale or manufacturing expertise). A hallmark of the post-PC era is the emergence of an open ecosystem within the semiconductor industry.  

Unlike the Windows/x86 dominance of the past, the post-PC era is being defined by competing OS options (iOS, Android or Windows 8) and competing processor architectures (x86 or ARM). Today, the momentum is in favor of ARM-based operating systems as exemplified by iOS, Android and Windows 8 all running on ARM, while only Android and Windows 8 will be compatible with x86. The chip wars will be fought in this fragmented and open ecosystem on three fronts – SoC/system integration, CPU/processor architecture and silicon/foundry technology.

The choice of transistor architecture will strongly influence the outcome on each of these battlefronts. While performance and power will continue to be important benchmarks, the open ecosystem supporting a worldwide consumer market will make cost a key success metric on each battlefront.

Battlefront #1 – SoC/system integration
In the mobile SoC space, the battle for processor architecture will be between Intel on the one hand and the incumbents, the likes of Qualcomm/Samsung/TI on the other. In the mobile, power constrained space, it is more efficient to integrate a variety of hardware accelerators on a single chip to deliver custom functionality as opposed to implementing a general purpose core serving most functions.

Low power cores are supplemented with elements as disparate as an on-chip radio, global positioning system (GPS), modem, image and audio/video processor, universal serial bus (USB) connectivity and a graphics processing unit (GPU). Figure 1 illustrates the difference between a traditional CPU and an integrated SoC. An open ecosystem is more cost-effective for such modular, plug-and-play system-level integration.



Historically, Intel, being an integrated device manufacturer (IDM) has independently designed most of the functional IP blocks, while ensuring that each uses Intel transistor technology and process design rules. Intel’s move to tri-gate transistor architecture will benefit it enormously in the CPU space giving its designers access to best-in-class transistor performance.

However, Intel’s ability to compete in the mobile SoC space will be determined by how well it can re-engineer the tri-gate transistor to meet the diverse needs of a complex mobile SoC.

If Intel can successfully design and manufacture tri-gate transistors that span the full range of the performance-power spectrum, it will have a huge edge over the competition. But for Intel to compete effectively in the mobile SoC space, it will also need to offer a cost advantage. Average Selling Price (ASP) in the SoC space is a fraction of that in the CPU space. The compatibility of tri-gate in analog and RF applications remains unknown and may necessitate a more costly system-in-package (SIP) solution as opposed to the cheaper and more desirable SoC solution. While fabless Qualcomm can drive the best possible deal from foundries, IDM Intel needs to ensure that its ASPs are high enough so it can recoup its own development and manufacturing CapEx. Intel may try to enhance its functionality
offering by way of more acquisitions like Infineon Wireless.

But post-merger, porting Infineon’s foundry standard design rules to Intel’s proprietary design rules will be non-trivial. By contrast, the Qualcomm acquisition of Atheros would prove to be more seamless since the IP was from the open ecosystem and already foundry compatible. The low-cost, mobile SoC is for Intel a Segment Zero Phenomenon (1) with potential to become a strategic inflection point – in much the same way that the budget-PC category was in the late 1990s.