As an industry analyst, I have the opportunity to assist a range of companies in developing market models. Invariably, merchant silicon vendors create models that assume ASSPs will eventually take over the world. Of course, ASIC designers often make the same assumption about ASICs. Surely both groups cannot be right. In fact, neither is. ASSPs and ASICs will co-exist in a complex economic balance.
That balance is best explored by looking at system development cost from the perspective of an OEM. Relevant costs include ICs, software engineering and hardware engineering.
First, let's explore ICs. The per-unit cost of an ASIC includes a percentage of the fixed research-and-development cost as well as the variable cost of packaged chips which includes profit for the ASIC manufacturer. The per-unit cost of an ASSP is simply the variable cost of packaged chips. Of course, underlying the ASSP price are the costs of processed and packaged silicon, R&D and intellectual property profit for the ASSP vendor.
Costs for processed and packaged silicon are similar for ASICs and ASSPs. In most markets, the per-unit cost of R&D is lower for ASSPs than for ASICs, since merchant silicon vendors sell in higher volumes. Finally, ASIC manufacturer profit is generally lower than merchant silicon intellectual-property profit. So, it comes down to trading off a lower R&D allocated fixed cost for ASSPs against higher IP fees.
ASICs become less attractive as the merchant silicon market grows more competitive and the higher the relative volume of ASSPs vs. ASICs for any given function. Hence, it makes sense that merchant silicon now dominates standards-based Layer 1 and Layer 2 functions.
It should also make sense that high-end network processors and intelligent switch fabrics will continue to have a tough time gaining momentum. I find purported ASIC differentiation advantage arguments and ASSP time-to-market advantage arguments tenuous and secondary to the raw economics.
And there are software and hardware engineering costs to consider. Although merchant silicon vendors offer rich tools and libraries, generally software engineering is less expensive for ASICs than for ASSPs. System OEMs just have so much familiarity with their existing code base.
Until there is a one-size-fits-all platform in communications, ASICs and ASSPs are both here to stay.
Jeremey Donovan ( Jeremey.Donovan@Gartner.com) is chief analyst at Gartner Dataquest.
RSS
RSS| 
Digital| 
Mobile
