Michell Prunty's blog

This year's CES had a few themes to take away, but the one that seems to define the rest is that the old model is dead. We are firmly at a new frontier of technological development, and whatever new age we're entering, it's being shaped by Apple Inc.  Everyone else seems to still be struggling out of the rigid digital ecosystem developed in the 1980s.

For example, Kurt Smith, a VP of Verizon Communications Inc., believes a mature supply chain requires three levels: the content creators/manufacturer, the distributer, and the retailer -- for no other reason than that's the way it's always been done.

Verizon is already behind. This is a lag built upon a generational gap that we can only vaguely understand. For those of us who didn't grow up with the Internet, the texting of the newer generation is confounding. Worse, today's toddlers are using iPads in the cradle, so in 10 years the gap will be even larger and more confusing.

And yet, the majority of the panel sessions at CES were filled with old white men. I saw no minorities on the panels. There were two women in the sessions I attended, one older woman who wasn't even familiar with the panel she was moderating, and another who seemed more afraid of technology than anything else, a disturbing lack of diversity that didn't reflect the audience in any way.

On the show floor, it was shown just how this disparity is playing out.

The semiconductor industry likes to think it doesn't have to worry about software or Digital Rights Management (DRM). I'm often told "those things will work themselves out on their own."

But the truth is, DRM defines how a user will interact with technology. And it defines how different devices are able to communicate. Can you play that movie you downloaded on your tablet, smartphone, or TV? That's DRM, and it's also the digital ecosystem from a consumer's point of view.

One of the themes from this year's Consumer Electronics Show was that we've moved beyond devices. Moore's Law has ensured that we've reached an age where one notebook or another is pretty much the same. So the struggle for the hearts of consumers is now about convincing them which ecosystem, or user interface, is the best for them. That will decide what phone they buy, which TV, which tablet, etc. And all of this is built upon DRM.

So what did CES tell us about DRM? That it's going to be a long, hard battle for our rights as consumers during the next five years. I say this, not because anyone at CES told me, but because of how the security sessions went. Led by a Department of Homeland Security moderator, the mobile security panel showed that they're afraid of technology, and that their solution to all the security problems out there is to tether us more firmly to the grid. Every step you take will require authentication.

As we head into November, Semico's forecast of a weak second half is showing to be accurate. June, July, and August all had poor performance and according to the IPI, we will see that trend continue into 1Q12. February of 2012 is still forecasted to be the bottom as OEMs are currently burning off inventory while foundries cut back on capital expenditures.

This month, we are making a section of that report available to you as a free download.  Included in the White Paper is our IPI chart along with a section of the Mobile Devices: Analog discussion.  We invite you to download this free informative report, and contact Jim Feldhan with any questions about our forecast.

Semico Forecasts 2011 Revenues will be Down 1.4%

The semiconductor market may be experiencing a downturn, but that doesn't have to mean all news is bad news. Analog, within the Computing, Consumer, and Communications markets, will see some strong growth over the next few years, growing 13.8%, 8.6%, and 12.8% in 2011, 2012, and 2013 respectively.

These numbers are pulled from our MAP Model database, Semico's way to track semiconductor migration within end-use markets. This method accounts for about 80% of the overall market.

Our overall Analog numbers include the following categories:

• Standard Linear
• Amplifiers
• Interface
• Voltage Regulators and Reference Circuits
• Data Conversion Circuits
• Comparators
• Application Specific Analog ICs (Small Scale Complexity)
• Application Specific Analog ICs (Medium Scale Complexity)
• Application Specific Analog ICs (Large Scale Complexity)

All of these categories combined will reach $61.9 billion, a 7.9% increase over 2010's $42.4 billion.

Breaking this number out farther, we can see that in 2010, the consumer market accounted for 33.3% of the Analog market, but in 2015, it will only account for 23.4%. Where is that Analog migrating?

To smartphones.

It's an accepted fact these days that smart phones are rampaging through the handheld industry, wiping out single use products one after another.  Portable media players, GPS, satellite radio… are handheld games next? Handheld gaming has had problems over the last few years because high start-up costs keep competition at a minimum.  Microsoft, Sony, Nokia, and a score of small companies have tried, and only Sony has managed to compete against Nintendo.  This lack of competition could be a reason why this industry was so prime to be taken over by smart phones. The most popular Nintendo games can sell between 15 – 25 million units.  Angry Birds has had 200 million downloads. According to Guardian, some of the best smartphone games of 2011 (with their prices) are:

The Freescale Technology Forum was held in San Antonio, TX recently, June 20 to 23, 2011.  Freescale is a leading chip vendor focused on embedded control.  Once again the event drew a large number of attendees, about 2,000.  This is roughly the same as last year, quite impressive considering the current economic conditions.  The exhibit area was packed with numerous and wide variety of companies offering products and services tied to Freescale products.  This shows the diversity and scope of the third-party ecosystem that supports Freescale.

The theme of FTF 2011 presented by President and CEO, Rich Beyer, was connected intelligence and the “internet of things."  He pointed out that connectivity emphasizes efficiency and integration.  The data traffic continues to grow at a rapid rate. Throughout FTF presented solutions for various markets such as mobile communications and consumer products, networking and telecommunications, wireless infrastructure, automotive, smart grid, industrial control and health applications.  Embedded control is at the center of this surrounded and supported by connectivity, sensors, power and software solutions.

Highlights

The following are some of the notable products presented at FTF 2011.

Morry Marshall:  Repeating the Mistakes of the Past!

Here we go again, right back where we’ve always been.  In the 1980s the Apple Mac OS was the best operating system on the planet, and Apple was heading toward a dominant share in the personal computer market.  Microsoft MS-DOS had a text interface with arcane commands rather than an easy to use graphical interface.  The IBM PC was just getting off the ground.

But, a funny thing happened on the way to market dominance.  Apple decided to keep the MAC OS and the MAC architecture proprietary.  For some inexplicable reason IBM, historically a company that kept everything to itself, decided to make MS-DOS and the PC architecture open systems.  A series of clone manufacturers emerged; and, as the Microsoft operating system evolved, it became overwhelmingly more popular with developers.  Easy to see why!  Their potential market was much bigger.

Today, Apple has a dominant share in the smartphone market.  Apple has also created the tablet PC market and dominates it.  The Apple iOS (born as the iPhone OS) is the best smart phone operating system on the planet.  It has been ported to the iPad, and it is the interface with the Apple App store for both the iPod and iPad.  The App store has far more apps available than any other site.  The iPod, the iPad, iOS and the App store are all proprietary.

Freescale’s Senior VP and GM of the RF, Analog & Sensor Group, Tom Dietrich, joined us for another year at the Summit.  Tom is always at the forefront of what is trending in the semiconductor industry and this year was no different as he introduced us to Freescale’s vision of a sensor-based future.

Over the next few years Freescale sees the future changing the world, and Freescale will be leading the change as they focus on four growth markets: Automotive, Networking, Industrial, and Consumer while they leaverage three growth trends: The Net Effect, Health & Safety, and Going Green.

For the consumer market we can see how sensors are changing the way we interact with our electronics just by looking at the iPhone and the top ranking apps.  Games now rely on the touchscreen, some rely on tilting the phone, others respond to shaking.  Add this in with networking and we have Cloud Computing.  For example in Japan, a good way to use sensors in cell phones is to have an earthquake app that can combine data from everyone’s phone to a central hub where the data will be analyzed to predict more accurately when and where the next earthquake will occur.  And considering that seismologists are warning of another magnitude-8 quake, this is a feature of sensors that can save lives.

Joe Sawicki, VP and GM of the Design-to-Silicon Division for Mentor Graphics, joined us at the Semico Summit on Tuesday to discuss scaling and the conversion to 3D.  He focused on a motto of “Willful Optimism” for the future.

Moore’s Law has been a cornerstone of our industry for 40 years, and a trend the speakers at the 2011 Summit were discussing was “More than Moore,” an idea that we are moving away from density to integration.  Joe Sawicki addressed this idea by discussing how scaling can only get us so far with advancing our speed and storage capabilities.  By 2026, he said, if we hold to Moore’s Law, we’ll be holding half a year’s movie collection on our phone.

In the future, Mentor Graphics believes we may be seeing the “e-Cube,” where we’ll have cubes of semiconductors instead of a die.

In discussing transitioning to 3D, there are cost and thermal issues, regardless of the advantages.  As a stepping stone, the industry can obtain many of the advantages of 3D by using 2.5D, a cost effective method to swing into the next generation.