After many years in the industry watching customers try to do their own design and coming back asking us to do it for them, I think Google will probably fail at their quest to build their own. They will probably under estimate the cost and under resource the effort. Just throw a few software guys together and have them design the chip we need. Seems like a good idea to get what we want. Problem is that they will have to make and learn from all the mistakes that the large semi companies have been through over the years. The delays and costs will eventually kill the effort.
It's not design. As you have mentioned his quote in your para 1 "....based on expected advances in process technology are over...." Process Technology is the keyword here. His views are perfectly in line with other articles appearing these days about Moore's law coming to an end. Double-digit growth can not be sustained indefinitely.
I had several conversations with chip, EDA and IP people at EE Live and the one thing I got out of it is very few know what is going on in the market. There are EDA guys that have built great tools, but they rely on marketing practices that died 20 years ago, so no one really know what they have (including them). The semi guys are squeezing their tool and material suppliers to cut costs and, at the same, time, killing technology advances that could do the cost-cutting job for them, and the IP guys are chasing after each others customers and ignoring potential new markets for thier ideas.
I think Sanghi is probably right about the future, but it doesn't have to be that way.
Microchip CEO Steve Sanghi said "The days of forward-pricing chips based on expected advances in process technology are over. The industry has to change its practices -- you have to make money today, because no one will let you make it tomorrow."
Intel recently announced job cuts of over 5,000 employees and closed Fab 42 in Chandler, AZ for the foreseeable future. Intel stated the reason was they could not respond to the customer's requirements for tablets and low-power systems on a chip (SoC). In a recent job posting Google said "Our computational challenges are so big, complex and unique we just can't purchase off-the-shelf hardware. We've got to make it ourselves." Really.
I think it is a sad day when chip companies are mothballing fabs, laying off employees and eeiking out miniscule rasies to their design engineers while their potential customers are designing their own chips. I disagree with Steve Sanghi's comment when he says "The go-go days of double-digit revenue growth are over as the chip business settles into a middle age measured by mid-single-digit annual growth." Why can't Intel, Microchip and all the other chip makers respond quickly, creatively and cost effectively to the changing demands of the chip market? Is it because they are still using the chip design tools and processes of the past?
Gabe Moretti commented in his article The Approaching Discontinuity, "The world of EDA is about to change. The subtle signs are there for all to see, and the coming reality is so different to be scary to some. Thus better not to talk about it. The changes will include how ICs are designed, developed, and verified. They will involve designers, tools developers, and manufacturers, and force an integration that the EDA industry has not experienced so far."
So why aren't EDA companies building better tools? Everyone in the industry knows this is needed, but where are the solutions? Do the entrenched EDA tool suppliers simply think they don't need to change? Are the chip design teams and CAD groups so focused on saving their jobs today that they don't see how this will damage the bottom line tomorrow? When Google announces it is going to circumvent the entire industry and do it themselves, shouldn't chip makers hear a voice in their head saying "Danger Will Robinson. Danger!"?
Without pressure on EDA companies to start building software the chip designers need to stay competitive sales will continue to erode and more layoffs will ensue. If the chip companies are going to survive they are going to have to make big changes immediately including dragging their current EDA suppliers kicking and screaming into the 21st century . . . or find one who is already there.
Rick great piece as always. First off, I'll say Sanghi has been a rain cloud for some time, but his success as a CEO is unquestioned. I think he's correct in saying there will be more mergers among established semiconductor companies. Companies in general get to a point where they have so much culture and history that they lose the ability to take risks. This is not just in the semiconductor business.
Will there be a very interesting world of semiconductor development in the coming years? Absolutely! Think about it: One data point right now is systems companies in the cloud and consumer electronics spaces are building their own semiconductor design teams because they can (and must) optimize silicon for their own vast and enormous businesses.
At the other end of the spectrum, there are startups. After I bumped into Sanghi at the ACE Awards Tuesday night I then bumped into Andreas Olofsson, CEO of Adapteva. You've written extensively about him and his company and its Kickstarter funding story.
Sitting in between are EDA and IP companies, whose businesses need to change. They're acting on it because everyone knows we need silicon and systems innovation and everyone knows engineering teams need to be more productive. We abstract more, shift value propositions from one sector to the next as the industry matures.