Next Gen Semi Design (part 7) – Risks

In the next four blog posts on the next generation of semiconductor design I will go over the potential risks to Xilinx and Altera’s platform. In this post I’ll review the risks stemming from potential competition from other platforms.

Who has the best platform for the next generation of semiconductor devices: Intel, TI, IBM, Xilinx, Altera, ARM Holdings, Analog Devices, Microchip Technology, etc? What platform will large companies and entrepreneurs use to build the next generation of products?

One-time programmable processors are one source of competition for embedded system solutions; with Microchip Technology’s programmable microcontrollers and TI’s DSP platform.

Many entrepreneurs love Microchip Technology’s one time programmable processors and their straightforward API. Microchip has roughly a 50% market share for 8-bit processors and over 90 of its microcontrollers ship with some analog component. It also ships a microcontroller with flash memory. It has built a good developer community with over 3,000 embedded designers attending its’ thirteen separate 2007 conferences held in four different languages in seven countries.

It released a 16-bit product in 2003 and a 32-bit product in December of 2007; which both use the same development tools as it’s widely used 8-bit version. Microchip is the only microcontroller vendor supporting 8-bit, 16-bit, and 32-bit products on one development environment. Its 32-bit microcontroller, the PIC32 Family, uses the MIPS the MIPS architecture and was on EDN Magazine’s prestigious list of “Hot 100 Products of 2007″.

Microchips generic processors will never come close to the performance of PLDs, but it should continue to see success in products with lower performance requirements.

ARM Holding’s processors are the dominant processor for mobile phones and the most widely-used 32-bit microprocessor family with over 75% of all 32-bit embedded CPUs. Arm processors are soft core IP designs that can be embedded in ASICs or FPGAs and are really complimentary to hardware provider’s offerings.

Intel’s x86 processor has a large community, but an inherently slow architecture that has not seen very much success outside of the mainstream PC and server marketplace. Intel is creating a multi-purpose “programmable Intel architecture machine” called Larrabee for high-performance computing and discrete graphics. Larrabee will be Intel’s first “many-core” product” and is expected to be available in 2010. It is debatable how competitive this device will be with the devices in the market two years from now. In the meantime, how much embedded systems market share can the PLD vendors capture?

Texas Instruments‘ is the leading DSP platform with over 50% market share and is also a leading player in the high performance analog chip market. TI risks losing market share from several diverse competitors nipping at its heals such as platform PLDs targeted at DSPs and mixed signal devices, lower end device providers from China such as Vimicro incorporating custom and 3^rd party IP, end market specific mixed signal competitors such as Sigma Design’s DSP, and finally seeing competition for its single chip mobile phone solution (integrated application processor, baseband, and support pieces).

Analog Devices nascent and somewhat beleaguered DSP processor platform Blackfin has some strong advocates and Microsoft’s .Net Micro Framework, which is targeted at embedded systems, was recently ported to Blackfin; increasing the toolset available for devices built around Blackfin

A 3rd party EDA tools vendor may develop a strong integrated meta-platform that can act as a neutral party and potentially support building devices on top of several different vendor’s platforms. Granted this sounds more like a pipe dream.

While Altera and Xilinx have great platforms with strong communities there are concerns that that the business model for intellectual property (IP) is poorly positioned. A considerable amount of IP is given away by the FPGA vendors which undercuts some potential IP vendor’s offerings. The FPGA vendors will have to regulate themselves to providing the framework IP allowing 3^rd party IP companies to provide important add on intellectual property.

As with any company developing a platform there are conflicts of interest that must be adroitly managed. Battles for platform supremacy often have winner take all outcomes with all other competitors left as niche players. The next decade will see further consolidation around very few design platforms.

Top Semiconductor Companies

In conjunction with the micro-chunking of my paper on the next generation of semiconductor design I’ve compiled a list of the top semiconductor companies based on their market capitalization at the end of 2007.

I have not included vertically integrated companies like: Samsung, Toshiba, IBM, Hitachi, Sharp, Philips/NXP, etc. I’ve also excluded companies not listed in the West like: Renesas, Hynix, and Freescale. Based on how poor the memory market has been and typically is I’m not sure Renesas and Hynix would make the list and Freescale’s market share has been dropping so they would not be in the top 20.

 

Size	2007 Results	Symbol	Mkt Cap	Revenue	Profits	Industry Segment
1	Intel	INTC	113	37.3	6.3	Processors
2	Taiwan Semiconductor	TSM	45.5	9.7	3.9	Fab
3	Texas Instraments	TXN	41	13.7	2.6	Analog & DSP
4	Applied Materials	AMAT	24.2	9.7	1.7	Assemby & Test
5	Freescale Semiconductor	(private)	16.5	5.7	n/a	Semiconductor Devices
6	MEMC Electronics Materials	WFR	14.9	1.8	0.6	Assemby & Test
7	Nvidia	NVDA	13.5	3.8	0.7	Graphics
8	Broadcom	BRCM	12.5	3.7	0.4	Networking
9	STMicroeletronics	STM	11	9.9	0.8	Semiconductor Devices
10	ASML Holdings	ASML	11	4.5	0.8	Assemby & Test
11	Analog Devices	ADI	8.3	2.6	0.55	Analog
12	KLA-Tencor	KLAC	7.9	2.8	0.5	Assemby & Test
13	United Microeletronics	UMC	7.7	3.4	1	Fab
14	Infineon	IFX	7.3	10.2	-0.5	Semiconductor Devices
15	Sandisk	SNDK	6.4	3.8	0.1	Memory
16	Marvell Technology	MRVL	6.4	2.7	-2	Semiconductor Devices
17	Maxim	MXIM	6.4	1.7	0.5	Analog
18	Xilinx	XLNX	6.2	1.8	0.4	Programmable Devices
19	Linear Technology	LLTC	6.2	1.1	0.4	Analog
20	Microchip Technology	MCHP	6.2	1	0.3	Processors
21	Altera	ALTR	5.9	1.3	0.3	Programmable Devices
22	LAM Research	LRCX	5.4	2.4	0.6	Assemby & Test
23	Micron	MU	4.9	5.7	-0.7	Memory
24	National Semiconductor	NSM	4.9	1.9	0.3	Analog
25	Advantest	ATE	4.8	2	0.3	Assemby & Test
26	Advanced Semiconductor	ASX	4.5	3.1	0.6	Packaging & Testing
27	Siliconware Precision	SPIL	4	1.8	0.4	Packaging & Testing
28	AMD	AMD	3.9	6	-2	Processors
29	Novellus Systems	NVLS	2.9	1.7	0.2	Assemby & Test
30	Intersil	ISIL	2.9	0.7	0.1	Analog
31	LSI	LSI	2.8	2.4	-0.4	ASIC
32	ARM Holdings	ARMHY	2.8	0.5	0.1	Processors

Real Time Location Systems (RTLS) – 2007 A Year in Review

The year 2007 saw major improvements in RFID reader technology, edge server capability (especially with the release of the latest Microsoft BizTalk server software), and RTLS (Real Time Location Systems) solutions. All of these are improving the solutions available for yard management. All of these are improving the solutions available for yard management and decreasing the costs. Now deploying a yard management solution for a mid-sized yard can often cost in the $100,000s not the $1,000,000s; providing a straightforward ROI. These solutions no longer require using proprietary protocols, but work on industry standard protocols (WiFi or ISO 24730).

Below is an overview of the top RTLS and yard management solution providers. These solution providers all advertise successful implementations and offer the flexibility of using tags that are permanently or temporarily mounted (usually using a magnet). It is also possible to buy temporary tags directly from manufacturers such as Premo Group.
 

Solution Provider	Tag Technology	Frequency	Comments
Aero Scout	WiFi	2.4GHz	Standards based.
WhereNet	ISO 24730 / WiFi	2.4GHz	Standards based. Has a reputation for having the best technology, but being expensive.
Fluensee	Passive RFID / GPS	UHF	Browser based UI. RFID hardware dependent on partner offerings. Hardware agnostic (Motorola is their preferred provider; for Identec would have to write a new driver)
PINC Solutions	Passive RFID / GPS	905-925 MHz	Offers temperature monitoring, powered by the reefer, for Thermo King and Carrier reefers.

PINC Solutions claims that ROI is usually realized in less than one year; with Aero Scout making a similar claim. Fuensee claims to be a third the cost of WhereNet. Although WhereNet, acquired in February 2007 by Zebra, is lowering prices now that its’ technology has been accepted as an industry standard. Below I’ve outlined the major RFID developments affecting RTLS and the intermodal container industry.

RFID in the Intermodal Container Industry

• Jan 2007, Dow Chemical is piloting a RFID project to track intermodal containers with hazardous chemicals
• March 2007, Oracle, Savi, and EPCglobal completed a pilot project to track intermodal containers in Asia
• April
  2007, WhereNet’s RTLS solution became a global standard (ISO standard 24730)

  This is the first global technical standard for RTLS. A major target of this standard is the international intermodal shipping industry and its more than 18 million containers in use around the world. The standard defines an API to share location data over a network using web services. It also defines an air interface standard in the 2.4GHz spectrum for tags and readers. The asset’s location can be determined by multiple 2.4GHz readers or by low frequency (120 kHz) exciters.

• April 2007, Navis and Identec picked to design Georgia Port Management System
  • Includes installing active RFID tags on over 7500 trucks at the Georgia Port Authority’s Garden City Terminal in Savannah where a huge WhereNet active tag system already orchestrates the positioning of intermodal containers
• May 2007, the e-seal standard (ISO 18185) was ratified
  • This includes an air interface protocol. It is a standard specifically targeted at the intermodal container shipping industry designed with a $10 price point in mind. Some think that DHS or C-TPAT will eventually mandate this e-seal.

RFID Marketplace – Current State & Forecasts

Frost & Sullivan (May 2007) – North American RFID market

• The passive RFID tag market generated revenues of $124.6M in 2006
  • Predicts $486.6M in 2013 – compounded annual growth rate (CAGR) = 21.5%
• The RFID reader market generated revenues of $23.1M in 2006
  • Predicts $241.6M in 2013, CAGR = 40%
  • The reader market still primarily driven by Wal-Mart and US Department of Defense compliance
• Frost cautions that read accuracy is still imperfect and represents a hurdle to wider adoption

In-Stat on WiFi RTLS (May 2007)

• WiFi RTLS tag shipments hit 135,000 in 2006, up from 20,000 in 2005
  • Predicts CAGR of 100% through 2010
• Unit price of WiFi tags has decreased from about $50 to $45 (expected to fall to $30 in 2007)
• G2 Microsystems has the best chip
• AeroScout has well over 50% market share in terms of number of tags shipped because of two advantages
  • A Close relationship with Cisco
    • WhereNet also has a close relationship with Cisco and in August 2007 entered the WiFi RTLS market through a new dual-mode device (previously they had not been using WiFi)
  • Its technology can serve large outdoor environments where other WiFi RTLS technology might not perform well.

RFID Reader & Ede Server Advancements

• March 2007, Intel’s release of a new chip for RFID readers that simplifies reader design allowing reader manufactures to accelerate price cuts, add features, shrink form factor, and increase reader compatibility.
• April 2007, EPCglobal’s ratification of the Low-Level Reader Protocol (LLRP) standard
  • This will increase reader interoperability, allow technology providers to extend RFID reader capabilities
• May 2007, Cisco and WhereNet announced an active WiFi tag that supports the industry standard ISO 24730 transmission signal or IEEE 802.11b; these tags will be available in August for $55
  • Cisco’s Unified Wireless Network version 4.1 gives WLANs the ability to format and read data from sensors
• September 2007, NEC has introduced an RFID reader that operates at three different frequencies: 13.56 MHz (HF), the UHF band, and 2.45 GHz. The device, which NEC indicates is the first of its kind, is novel because typically readers operate at only one frequency. For example, a Gen2 reader (Gen2 operates on the UHF band) would not read HF tags.
• September 2007, Microsoft announced the availability of its RFID software, BizTalk Server 2006 R2

Zebra Technologies as Industry Consolidator

Zebra Technologies is the largest seller of bar-code, plastic ID, and RFID printers and a major seller of readers. The sell their products in 90 countries and more than 90% of the Fortune 500 companies use Zebra printers. In 2006, about half the company’s revenue was outside the United States. In 2007, Zebra made a major push into the RTLS and intermodal transportation market by purchasing three companies.

In January 2007, it acquired WhereNet for $126 million in cash. At the time WhereNet anticipated 2007 sales of fifty million dollars. In October 2007, Zebra acquired both Proveo (a German company, for 16.3 million in cash) and Navis (for $145 million in cash).

Proveo developed a GPS- and WiFi-based RTLS solution for airport ground handlers with installations in some of the world’s major airports such as: Frankfurt, Munich, London, Singapore, and Dubai. Navis provides logistics solutions for marine terminals and other operations that manage supply chain inventory and cargo; such as port operating systems, yard management systems, warehouse management systems, and asset visibility systems. Founded in 1988, it has installations at over 450 customer sites in 50 countries. It is the leading provider of marine terminal management software with installations at 200 ports (there are 850 ports worldwide). It expected 2007 revenue of $60 million which would be double digit growth.

If Zebra is able to successfully integrate all these assets it should be a major player in the RTLS market

Glossary & Notes

Companies are far from automating their inbound and outbound containers; 58% of companies’ distribution center yards still manage inbound and outbound traffic using clipboards and spreadsheets. Of the 42% of companies using software to manage traffic most do so using a stand-alone application that is not integrated with the rest of the company’s systems.

RTLS – Real Time Location Systems

• Solutions to track and identify the location of objects in real time using tags attached to the objects and readers that receive the wireless signals from these tags to determine their locations. WiFi and Active RFID are the two most common wireless technologies used in RTLS solutions.