All together now: Will collaboration drive growth in the chip sector?
12/04/2019 by MRL
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It’s an exciting time to be a tech company. Many advances are capturing our imaginations, from artificial intelligence (AI) to the blockchain. It’s especially thrilling to be a chip manufacturer at the moment; the defining technology of the future is powered by chips.
Of course, with every peak, there comes a trough. For the chip sector, much of this revolves around rising costs, economic uncertainty and trade tensions. As such, Ajit Manocha, chief executive of the SEMI trade group has recommended that chip manufacturers come together to work on some of the industry’s most pressing concerns.
He has convened the first in several industry think tanks to tackle current challenges. His trade group is also lobbying the U.S. Government to increase its spending on chip research - a move that’s likely designed to take on China’s research strategy head-to-head.
Manocha is also exploring a partnership with the Imec Institute in Belgium as a further way to increase research in the sector. Many of these collaborative efforts focus on research; because the sector must find new ways to make smaller chips, that are more powerful, ideally for a lower cost, in order to take advantage of the rise in connected devices.
At the same time, the industry faces huge disruption due to the U.S/China trade war. It’s creating a significant imbalance in the supply chain and, with both sides at loggerheads, an easy resolution doesn’t look possible in the near-future. The Chinese Government, in a race to dominate AI, has invested significant sums in its chip research. It previously missed out on the last race to create chips for smartphones and tablets, so it’s investing heavily to create the next generation.
For non-Chinese companies, that creates a quandary because they aren’t competing on a level playing field. Plus, there are accusations that Chinese companies are stealing billions through corporate espionage, which has led to heavy sanctions between the U.S. and China, in an effort to stem China’s progress. However, this has a detrimental impact on the global industry. Perhaps a longer term, less disruptive solution is to offer collaboration between Eastern and Western companies.
The industry is often overlooked by investors in favour of software and technology service companies. To accelerate growth, collaboration will help chip companies to drive down the cost of manufacturing, find new business models and discover new markets. Reducing design and prototyping costs, as well as the raw cost of silicon, will make chip companies a more attractive proposition for investment.
As a potential panacea for the U.S/China tensions, in Brazil, a new collaborative effort between Qualcomm, USI and ASUS is boosting the local chip industry, notably around research. As explained by Brazil’s Minister of Science, Technology, Innovations and Communications, Marcos Pontes, “...The entire value chain starts with research and development of new technologies, making it possible to develop smartphones and IoT products in Brazil, products that can be used in many different verticals.”
Collaboration, therefore, is helping the chip industry expand to new areas, taking the focus away from the U.S. and China and offering a diversion around the current trade war.
Advancements in AI and the Internet of Things (IoT) is only possible with increasingly sophisticated chips. This is driving much of the research in the sector, but also requires new and more precise equipment, along with more raw materials. The pressure on chip companies to constantly innovate and push the boundaries of Moore’s Law is increasing, but they also have to manage costs. Again, collaboration provides a solution. Combining resources will decrease those costs. Furthermore, as manufacturing processes become more complex, no single company can provide solutions for everything. So, collaboration will become the norm.
Collaboration, therefore, is not something for chip manufacturers to shy away from. Instead, they should be embracing it as a way to drive the industry forward and resolve the issues that hinder progress. By working together, chip manufacturers can achieve higher standards, for lower cost and with greater efficiencies. Without collaboration, our dream of a smart future may remain in development.