CNET también está disponible en español.

Ir a español

Don't show this again

Christmas Gift Guide
Tech Industry

System-on-a-chip design a hassle

Companies that add audio, 3D, and modem technology to chips face incongruous development cycles and a bad business model.

SAN FRANCISCO--As the semiconductor industry increasingly turns toward "system-on-a-chip" processors, manufacturers will become more reliant on a shrinking number of companies to provide intellectual property, industry experts said today.

At the same time, likely intellectual property (IP) providers such as Advanced Risc Machines (ARM), Rambus, and LSI Logic will be hard pressed to keep up with the treadmill of development until and unless standards can be put in place.

Facing long development cycles but quickening demand for new designs, they may strike gold once or twice, but will struggle to repeatedly supply large chipmakers with technology that can be reused in hundreds of chip designs, executives told a panel at the BancAmerica Robertson Stephens "Summer of Tech 3" semiconductor conference at the Ritz-Carlton Hotel in San Francisco.

John Bourgoin, chief executive of MIPS Technologies, said testability and getting different technologies to blend together more easily are major roadblocks for the growing intellectual property industry.

"I think more robust standards will be an important part of moving the IP industry forward," Bourgoin said.

Others said the business model must change.

System-on-a-chip processors are all-in-one devices which can contain audio, 3D, modem, and microprocessor functions on one piece of silicon. Their main virtue is that integrating functions into a single silicon chip reduces costs, which is increasingly attractive to PC vendors struggling with the low-cost phenomenon. Compaq's low-cost Presario consumer PCs, for example, incorporate MediaGX system-on-a-chip made by National Semiconductor's Cyrix arm.

Because of the wide array of technologies, development can be a problem since each of these fields follows a different cycle. For example, graphics chips seem to advance radically every six months or so, faster than the 18-month cycle of the main microprocessor. Thus, a computer vendor could get stuck with less-than-cutting edge graphics technology in an otherwise high-performance chip.

Intel faced a similar problem years ago with a special, integrated version of the 386 processor. Eventually the company abandoned this strategy.

"The [design process] is not keeping up with the growth in silicon complexity," said Doug Fairbairn, general manager for Cadence's embedded software systems division.

Fairbairn believes the industry needs to think more about making systems and less about making just chips.

IP pricing models must also mature. Some systems integrators contend that if they use technology from ten different third-parties and pay them five percent each, there is no profit left over, noted Dan Niles, the senior semiconductor analyst at Robertson Stephens who moderated the panel.

"IP should be a more economically effective way for people to get what they need," Bourgoin seconded.

Analysts believe the model will likely evolve to a per-unit price, much like components (such as memory or hard drives) are priced now.

Wilf Corrigan, chief executive of LSI Logic, noted that IP leaders MIPS, ARM, and Rambus each took a great deal of time to establish themselves at the forefront. The three companies have been in the third-party technology business for at least ten years, a long incubation period at odds with today's rapid design demands.

"Starting an IP company today, getting to the point where you have provable products and putting them in a reusable form, is a very difficult business proposition," Corrigan said.

MIPS and ARM provide microprocessor cores to other manufacturers, although MIPS makes its own chips. Rambus licenses a memory interface which speeds up the data flow between the processor and main memory.

Conference goers agreed only a handful of semiconductor IP companies will be successful long-term and the industry, much like the biotech sector, will undergo much consolidation.

"It will be hard for them to replicate, even if they are successful the first round in coming out with some hot piece of intellectual property. It will be difficult for them to replicate that success on an ongoing basis," said Cadence's Fairbairn.

Jennifer Smith, an electronic design automation analyst with Robertson Stephens, said the coalescing will provide investors with opportunities to cash in on IP stocks that "have sensible models, clear alliances, and some core technology that's been developed for a few years."

CNET News.com's Michael Kanellos contributed to this report.