Scott McGregor, President and CEO of Broadcom, sees some major changes for the semiconductor industry moving forward, brought about by rising design and manufacturing costs.
Speaking at the SEMI Industry Strategy Symposium (ISS) in January, McGregor said the cost per transistor was rising after the 28nm, which he described as “one of the most significant challenges we as an industry have faced.”
He said that in the past, it was a “no brainer” for a design company to move its entire set of products always forward to the next generation. “Every generation would be better than the previous one. It would be faster, it would be lower power, it would be more cost effective,” he said. “We think we’re now seeing this come to a bottom.” The reason for increasing transistor cost is the complexity of the devices, and the cost of the equipment required to produce them. McGregor said these costs are going up exponentially. “Those exponential factors are now starting to drive the cost forward. This is going to drive some change,” McGregor predicted.
Chip design cost is also increasing exponentially. McGregor showed a chart with dramatically increasing cost for each process node for such things as software, prototyping, validation, verification and IP qualification per process node.
McGregor also pointed out that the semiconductor industry as a whole is maturing. He said we have moved from a new market phase with double digit growth into an evolving market with high single digit growth to now a stabilizing market with mid-single digit growth year-on-year.
Although mature, the industry will still see some volatility, although less than in the past. “supply is easily overridden and it takes a long time to build some of these devices like scanners so that’s going to create volatility,” he said.
He also predicted that SoCs would become even more pervasive. He used a set top boxes as an example, noting that they used to be full of boards crammed with lots of discrete parts. “Today, if you open up a set top box, you’ll see a relatively small circuit board inside with a large chip that integrates almost all the functionality,” he said. “The box is still the same size because consumers perceive value in the size of the box, but it’s mostly air inside.”
McGregor said the tapeout costs to do a single device are very high. “You have to put $100 million into a semiconductor startup today to be able to get to productization.” This means that big companies will be getting bigger. “There will still be some small companies – but I think the mid-sized company in our industry, in devices, is going to dramatically go away because of the scale and other things required,” he said.
A big impact of these changes is that the process node selection is going to change. “Instead of immediately going to the next node, you’re going to stay in nodes longer. That means, for example, that 28nm is going to be a very long-lived node. There are a lot of things that probably will not make sense to move beyond 28nm for a long time. It will not automatically mean you should go to 16 or 14nm, or 10nm. There will be relatively few devices that economically make sense to do that,” he said.
He noted that Broadcom crossed the threshold where software engineers outnumbered software engineers a number of years ago and now has “significantly more” software engineers than hardware engineers. “That’s an interesting transition because we’re now delivering systems instead of just chips. The value just doesn’t come from the transistors — It comes from all the other pieces put together. One of the challenges for us as an industry is getting paid for that. Unfortunately, for many of us, the software is the ‘gift wrap” for the chip rather than something we can monetize,” he said.