How IoE Will Alter Supply Chains

A candid discussion with Microsemi’s CTO on the fundamental changes ahead for design through manufacturing.

Tomorrow’s supply chain will segment into two or more distinct and individual vectors. On the production side, today’s model is well understood and much of that will port nicely to the new model. However, the engineering side is going to change. It will emerge as a unique and critical element that will require its own understanding, especially with semiconductor components.

To dig into what will change, Semiconductor Engineering sat down with Jim Aralis, Microsemi’s CTO.

SE: What’s your vision for how this model will unfold?

Aralis: The semiconductor business is changing in some very fundamental ways. A lot of what used to be standard semiconductor products, even SoCs, are becoming IP for larger platforms of integration. The chips are becoming more complex, hence the cost of these chips will increase dramatically. That will condense the foundries to a small concentration. And, this will change the traditional model of a fabless semiconductor company. Building the design from scratch, assembling it, doing verification, test, and the rest of the process, and then feeding it off to a fab and packaging house and finally receiving the product, will change in some very fundamental ways.

SE: What’s the big shift here?

Aralis: The entity that controls the IP will be where the fabless semiconductor companies will flock to. Simply put, the semiconductor manufacturers will no longer be able to afford to build future 10 billion transistor circuits from scratch. So this segment will need to acquire the building blocks as components.

SE: So what does this mean for the engineering supply chain?

Aralis: If you look around, you’ll see companies like Intel, Broadcom, Synopsys, Cadence, even Microsemi, and many others are building IP libraries. Foundries like TSMC are acquiring IP at phenomenal rates. So there is this movement within the industry, almost like a race to acquire the best and biggest IP library. That raises an interesting issue. Going forward, will the CAD companies be the ones who will control the IP and choose the foundry? Or will the semiconductor companies control the strings and the CAD companies deliver IP to them, almost like a service? This is a somewhat of a confusing issue. Will it be fabless semiconductor companies that own the IP, or will it be CAD companies that will enable a different type of fabless semiconductor company that will get the majority of the IP from them? Or will the foundry be the one that has the ability to do system-level integration and buy IP from the semiconductor vendor? That future version of the supply chain has yet to produce a definitive model, and the landscape might be a bit bloody before the smoke clears and we know how it will shake out.

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