In January, IC Insights released a study showing that the four largest semiconductor vendors in 2002 were Intel, Samsung, Texas Instruments, and STMicroelectronics. Last month, these same four companies all announced processors targeting wireless products like cellular phones and wireless PDAs. Is it a mere coincidence that the world’s largest semiconductor vendors seem to be in lock-step pursuit of wireless products, or is this a sign of a fundamental shift in semiconductor markets?
To answer this question, consider three key trends in the semiconductor industry. First, there is a longstanding trend of migration away from expensive, centralized computing towards inexpensive, decentralized computing. History has already recorded the progression from mainframes to minicomputers to PCs; PDAs, cell phones, and smart displays are the next logical step in this sequence.
Secondly, electronic systems are increasingly characterized by their communications capabilities. Consider the impact of file-sharing networks on the PC. For music lovers, a PC that can access libraries of digital audio from the Internet is far more compelling than a PC that can access only a few locally stored songs. Consequently, the speed of the Internet connection has become more important to many users than the speed of the processor. Wireless communications promises to cause similar realignments of priorities across a wide range of electronic systems.
While these trends suggest wireless communications holds huge opportunities for chip vendors, a third trend, increased complexity, suggests these opportunities are available only to a few vendors. Wireless communications standards are becoming more complex, and wireless communications is increasingly combined with other complex features. For example, early cellular phones offered simple features like a basic address book. In contrast, today’s high-end phones include powerful features like Web browsers and built-in cameras. Crafting processors that meet the needs of these complex products requires enormous engineering resources—resources that may only be available to the largest semiconductor vendors.
Taken together, these three trends suggest that it is no coincidence that the world’s four largest semiconductor companies are increasingly focused on wireless applications. Indeed, success in wireless products may be the factor that separates leading companies from also-rans in the coming years.
Add new comment