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THE REASONS TO DEVELOP CUSTOM SEMICONDUCTOR CHIP IN-HOUSE

As technology is progressing and touching every aspect of day-to-day life, the dependence on semiconductor solutions is also growing. These solutions are often made by semiconductor companies and can power several things from sensors to a smartphone to cars to satellites to name a few.

One of the most critical infrastructures that the semiconductor industry powers are data centers and portable computing systems. These two systems are interconnected as one cannot do without the other. Today, majority of the request a smartphone users sends ends up in one of the numerous data centers around the world. The data centers then quickly crunch the request and send it back to the requesting user. As the customer base and internet users grow, there is a surge in demand for power-efficient computing systems (both data centers and portable computing systems) by the software or data-driven companies/industry.

Data-Driven Industry Is Getting Into Custom Semiconductor Chip Development

The big software and data crunching companies are often dependent on specific semiconductor solution providers who have been powering their data centers and portable computing systems for decades. The silicon chip these semiconductor companies design often falls in the category of the general-purpose chip, so the same is used by different customers even though their requirements might differ. So far, general-purpose strategy has worked wonders. However, as the software industry explodes (due to data), the big giants are realizing the importance of powering their data centers (and in some cases portable computing systems too) by developing custom chips in-house.

This change in landscape is mainly because the data crunching companies understand the need, purpose, and features that they require to drive bottleneck-free solutions for their customer. This can only be possible by starting chip development in-house so that software companies can deploy custom chip solutions across their data centers to drive services more efficiently. This is evident from the fact that YouTube has deployed its chip for video transcoding for faster processing of videos, and even Microsoft’s Pluton secure chip solution for its Windows platform.

While providing better solutions is certainly the main goal of developing the custom chip, there are several other reasons too. All these reasons ensure the in-house chip development by non-semiconductor companies is a win-win idea or not.

Cost: One of the major driving factors of developing chips in-house (at lead the designing part) is the cost. Having control over what chip needs to be designed and how to deploy it (as per the features) can potentially enrich user experience while bringing in savings. Savings are captured mainly in the form of usage when different computing systems within the company start utilizing the custom solutions. In many cases, the benefits can also be gauged based on how much power savings are achieved (data centers) compared to the traditional outsourced general-purpose solution.

Time-To-Market: Another benefit of designing custom semiconductor chips is for companies whose end product is a smart solution. This can range from kitchen appliances to television to desktops and many more. Having the ability to design and create chips in-house can allow greater control over launching products and takes away the uncertainty that general-purpose solutions provide. This is very true for data centers that heavily rely on x86 architecture solutions to drive future data centers.

Flexibility: Software changes very quickly and can demand new features out of the silicon chip. If there is no in-house development, then all these requests will eventually have to go out of the company in form of outsourcing. If there is a dedicated silicon development in-house team, then the software team can work in collaboration with the internal team (safeguarding IPs) to drive better hardware-software systems to power emerging solutions.

Features: If a company is selling laptops and relies on an outside vendor for chip development, then it makes them vulnerable due to dependency. Incorporating chip development in-house can provide a way to balance the chip requirement that can drive better systems. This can also push outside vendors to bring new features and in the long term, the competition helps the industry at large.

Applications: Developing in-house semiconductor chips can also provide avenues to expand the application area. This can be very true for smart device providers who often have to build systems based on what is available in the market. In-house chip development activities if planned well can allow companies to expand their portfolios by driving new end-products for their customers.

Dependency: Companies that are into data centers are heavily dependent on different companies for silicon chips to power their systems. Many of these solutions are not specifically designed to cater to everyone procuring the company’s request. This makes the data center companies heavily reliant on external factors to driven in-house innovation which today certainly requires custom chips.

All of the above reasons are the driving factor that is pushing several big software companies to drive in-house semiconductor chip development plan.

It is also true that not all companies have the need or focus to create such custom solutions. But in the long run, as the dependency on the silicon chip grows, the risk associated with not developing an in-house semiconductor chip might be far greater than not planning for it.

THE REQUIREMENTS TO DEVELOP CUSTOM SEMICONDUCTOR CHIP IN-HOUSE

Developing semiconductor solutions is not an easy task. Even for big software giants, it has taken years of planning and execution to come to a stage where they can deploy custom in-house developed silicon solutions across data centers and portable computing systems. This is why it is important to understand the different requirements that are the driving factor in ensuring the in-house semiconductor chip is impactful and profitable at the same time.

In-house silicon chip development requirements do take time to execute and often require tons of resources apart from the time it takes to perfect a semiconductor chip solution.

Team: The most important criteria for developing a successful in-house chip is to ensure that there is a team with an excellent set of skills to execute custom chip development flawlessly. The team often has to be a combination of excellent design and manufacturing skills. This means hiring individuals who have been in the semiconductor industry for a long time and are capable of developing semiconductor solutions via long-term research and development. A dedicated manufacturing team is also critical to bring ideas to life.

Acquisition: The team is one part of the development of in-house silicon chips. Another part is the ability to ensure that the company can acquire outside assets (IPs and patents) as and when required. This greatly pushes the in-house development activity in a positive direction and many cases reduce the efforts required to bring in-house silicon chip development to reality.

Investment: Managing teams, labs, and other resources often require a massive amount of money. If a company without a semiconductor background is entering in-house chip development activity, then the company should ensure there is a large amount of investment available for a very long time. This is why it is important to ensure that over the long period of chip development process and research, the investment activity will pay off in the long run.

Roadmap: In-house chip development also means having a clear strategy as to why the company should do it. Having teams and resources to tackle one specific feature without a plan is not a good strategy to invest time and money behind in-house chip development. Major emphasis should be on the long-term plan and how it will benefit the company. This often requires a clear roadmap is a must-have requirement.

Balance: Not all semiconductor solutions require in-house development, and that is why it is very important to balance the focus in terms of what part of the silicon requirement should be outsourced and which is worth developing in-house. It is not possible for software or data-driven companies to become full-fledge semiconductor solution providers overnight and no single company (even core semiconductor) develops everything in-house. This is why a filtering mechanism of balancing the in-house and outsourcing is important.

Bottlenecks: Major criteria of in-house development of silicon chip is also to remove any barrier in developing new products. The roadmap should allow bottleneck-free development of in-house semiconductor products as long they meet the company’s requirements.

The reasons and requirements showcase how and when the non-semiconductor companies should get into the semiconductor design segment. In-house semiconductor development has already started long back and many of the companies (Google, Microsoft, and Amazon to name a few) have already enjoyed success around it. The major reason for doing so has been the greater control of designing features that in reality removes the issues the companies were facing.

This trend of taking things in hand and designing solutions in-house is certainly going to continue, more so due to the semiconductor shortage and the impact it had on several industries.