Now Everyone Wants to Design Silicon

The move my major technology companies to start designing some custom silicon components vs. buy off the shelf components from suppliers has been a long time coming. One of the biggest challenges in the competitive field of consumer electronics is when competitors all use the same components and software platforms as their competitors. Companies competing for the consumer will live and die by their ability to be different and stand out from the pack. When you use the same software platforms and components as your competition you simply swim in the sea of sameness and have a hard time standing out. This is why Apple has developed a fully mature and foundational strategy to design all of the most critical and differentiating components that give their products an edge in the market. So it comes as no surprise that Google has developed a custom SoC for the image processing part of their new Pixel 2 smartphones.

While Apple has acquired the rare capabilities to design not just their image processor but also their CPU, GPU, and a host of other critical silicon components I don’t expect Google to go so far. I also expect other smartphone OEMs to follow suit and develop any number of custom parts from a dedicated machine learning/AI chip, image sensor, FPGA, or any number of custom ASICs that suit their needs and help them create a differentiated experience. Thinking about who may jump into the waters of designing silicon I can think of Amazon and Microsoft as potentials.

This trend was foreseeable because ARM has wanted to enable it for some time. Many of these companies designing silicon are not truly doing anything incredibly exclusive but they are tweaking generic ARM IP and customizing it for their needs. ARM will let anyone acquire a standard license and use their IP like Lego blocks to start putting together a unique solution for their needs. This is exactly what most companies are doing and what will enable many more to do so as well. But this shift underlines an important shift in how we think about what underlying components make consumer hardware stand out and become differentiated.

From Chips to Solutions
Back around 2012, I had written client notes to all the major hardware brands where I outlined the need for a component strategy to move from a few key chip decisions to a broader chip solution as a whole. The industry at the time was using the term heterogeneous computing which, simply put, meant building a computing solution that required some pieces of silicon, not just one system-on-a-chip that held all the most important parts. The idea behind heterogeneous computing was the unbundling of the SoC and moving certain functions of the SoC to dedicated chips. As Moore’s Law enabled silicon to get smaller and smaller yet remain powerful, chip companies like Intel and Qualcomm found themselves having to make trade-offs to what they designed onto the SoC and what was to be left off. This opened the opportunity for heterogeneous solutions that we see now commonplace. The big difference between now and a few years ago, is companies are now looking to design the co-processors or other compute engines no longer on the SoC themselves to deliver a specific experience they have in mind.

This move means that the value is not so much in the SoC any longer but in the total sum of all the components working together to deliver a specific differentiated experience. So Google can put together a device that has the core SoC which has the CPU, GPU, modem, IO, etc., and then design or buy the co-processors they want to deliver something unique. It is in the decisions that go beyond the SoC which is now the things that will differentiate competitors.

There was a time during my career as an analyst where I focused solely on the architecture of a single chip design when I did my analysis of a design. Over the last few years, the focus has shifted from the chip itself to the entire solution (all the chips and sensors) used in a computer. Moving from the single chip design to the design of how all the chips work together in a heterogeneous computing environment is where the exciting, and challenging, work is being done for hardware manufacturers.

One could argue that this trend will require even better software engineering than at any point in computer history. While many companies will try to make specific components, the true payoff for innovation will come from those who best can make all the pieces work best together as a complete whole. Only a few tech companies do this well, and others are trying to learn. Those who do it well will fend off types of disruption easier than those who don’t.

Many years ago, it would have been impossible to predict that the future of consumer hardware brands depends on their ability to design silicon, but that is now the undeniable reality.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

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