The semiconductor industry is going through an interesting time. The market is once again flooded with cheap offshore silicon reminiscent of the DRAM market of the late '80s. Consumer electronics technology in general has reached a point where it is deployed at incredibly low cost, creating a U.S. demand for-as well as a dependency on-cheap foreign silicon. This is similar to the beginning of the energy crisis of the late '60s and early '70s, when a barrel of oil sold for under $3 to an oil-hungry nation. Eventually, the U.S. became so dependent on outside resources that domestic production was virtually shut down.

There are more new fabless semiconductor companies in Taiwan, China and India than there are in the United States, which at one time led the world in semiconductor startup companies. U.S. semiconductor companies, under extreme pressure to find cheaper alternatives to drive down the high cost of R&D, are moving their technology development to low-cost, offshore sites. While this is happening, the industry as a whole is at an inflection point, looking for the new "killer app" to grow it to the next level, or at least to regain those enjoyed in the late 1990s.

To some extent, the U.S. government is aiding in this quest by spending billions of dollars for research in nano- and biotechnologies for defense and homeland security. Moving to sub-50-nanometer geometries will create new opportunities for many companies. Sub-50-nm geometries will enable cost-effective devices that will be deployed in the billions (not millions) each year.

In the next decade, the average person will have hundreds of system-on-chip (SoC) devices either on them or very near them at any given moment. Such devices will weigh next to nothing and require very little power, but they will have a huge functionality impact.

What all this means is that the semiconductor industry must figure out new and innovative ways to develop multibillion-gate devices with power dissipation of less than 1 milliwatt. The resulting systems will not require such things as cooling fans, because new nano-bio cooling technologies will make fans as archaic as the old icebox of the 1920s. By the same token, a battery charge will last for years, not hours. What's more, rather than simply plugging them into a wall socket, users will be able to recharge them using solar, thermal and kinetic power.

The deployment of nano-biotechnology will also have a positive effect on the semiconductor intellectual-property business. As these SoCs are developed, several hundred IP blocks may be needed to complete a single design.

Just as we can't imagine designing and verifying chips today without the aid of EDA tools, a few years from now, as these SoC devices are specified and developed, we will not be able to imagine how we'll build these complex chips without commercially available IP blocks and configurable SoC platforms. From this demand, the IP industry will grow rapidly in the short to midterm, creating opportunities for new IP business and licensing models.

Jauher Zaidi, President and Chief Executive Officer, Palmchip Corp.,San Jose, Calif.