Despite the severe shortage of chips, chip innovation is still hot
The global semiconductor shortage has cast a shadow over the plans of automakers and other companies. But for Silicon Valley executives like Aart de Geus, there is a silver lining.
He is the chairman and chief executive officer of Synopsys, the largest software supplier that engineers use to design chips. This position enables Ghaith to maintain accurate insights into a 60-year-old industry that has only recently discovered its roots.
Now, everyone seems to want Geus’s opinion, as shown in the dozens of emails, phone calls, and comments he received at a recent online customer gathering. Synopsys said that 408 companies participated in the online seminar, which is more than twice the number of people in the last face-to-face meeting held in 2019, and many companies are not traditional chip manufacturers.
They come from cloud services, consumer electronics companies, defense contractors, auto parts suppliers, U.S. government agencies, universities, bitcoin mining machine companies, and furniture manufacturers. Their first question is: How to develop chips faster?
Even if the shortage of chips brings trouble to all walks of life, the semiconductor field is entering an amazing era of innovation. From industry giants to innovative start-ups, venture capital funds that have traditionally avoided the use of chips are proliferating.
For example, TSMC and Samsung Electronics have solved the problem of packaging more transistors on each silicon chip. IBM announced the launch of 2nm chips on Thursday, marking that the United States continues to maintain its strength in the technology race.
Perhaps the most striking thing is that new chip companies are emerging in large numbers. CB Insights data shows that for many years, stock investors have believed that the cost of establishing a semiconductor company is too high, but by 2020, 407 chip-related companies have raised more than $12 billion in venture capital.
As of the last quarter at the end of March, there was a high demand for chip companies’ profitability. For example, NXP Semiconductors’ revenue increased by 27%. NXP Semiconductors is a large automotive, communications and industrial chip manufacturer, although two factories in Texas were temporarily closed due to the cold.
Historically, the industry has been notorious for booms and busts, usually due to fluctuations caused by the purchase of specific products such as personal computers and smartphones. According to estimates by research company Gartner, global chip revenue fell by 12% in 2019 and rebounded at a rate of 10% last year.
But people are increasingly optimistic that this kind of cycle should be eased, because chips are now used in a variety of ways. Philip Gallagher, CEO of Avnet, a large electronics distributor, cited some examples, such as sensors that track cows, taps in beer barrels, utility pipe flow meters, and thermometers. He and other executives said that the number of chips for major products such as cars and smartphones has been growing.
NXP CEO Kurt Sievers said: “This is a continuous growth cycle, not a short peak.”
Handel Jones is a long-term industry observer and head of international business strategy for consulting firms. He predicts that by 2030, total chip revenue will steadily increase from about 500 billion US dollars this year to 1.2 trillion US dollars.
With fundamental changes in the industry, this growth may come. More and more companies believe that software running on standard Intel microprocessors is not the best solution to all problems. Therefore, companies such as Cisco Systems and Hewlett-Packard Enterprise have long been designing dedicated chips for products such as network equipment.
Giants such as Apple, Amazon and Google have all recently joined this initiative. Google’s YouTube department recently released its first internally developed chip to accelerate video encoding. Volkswagen even stated last week that it will develop its own processor to manage autonomous driving.
Pierre Lamond is a 90-year-old venture capitalist who joined the chip industry in 1957. He said: “The chip design team is no longer just working for traditional chip companies. They have created a new situation in many ways.”
Keller and others said that without Synopsys and its biggest competitor Cadence’s advancements in design software, it would be almost impossible to carry out any activities.
Chip design software became popular in the 1980s to simplify the task of engineers carefully drawing transistors and other components on the chip using pencils and drawings. Geus said that software tools are constantly evolving, and now some automakers use the simulation functions provided by Synopsys to simulate the working status of future chips in order to write software for them in advance.
Synopsys, which he co-founded in 1986, has grown steadily through acquisitions, and its valuation has reached 36 billion U.S. dollars.
Geus said that the new growth seems to come from a problem: Moore’s Law is slowing down, and some companies are using Synopsys tools to design entire systems and smaller sets of chips that work like a single processor.
In a recent speech, Ghaith demonstrated how artificial intelligence enhancements enable Synopsys tools to automatically determine the best locations and connections for circuits on a chip. Mr. Gass said that through artificial intelligence, a system managed by engineers can work two to five times faster than a team of designers.
“It’s cool to design artificial intelligence chips with artificial intelligence, just like science fiction.” He said.
Silicon Catalyst founder and industry veteran Rick Lazansky (Rick Lazansky) said that EDA software is the biggest expense faced by start-ups. The incubator aims to provide donated design software and other services to start-ups in exchange for equity.
The company estimates that it has evaluated more than 400 such companies and selected 38 to provide assistance. Gary Spitle, CEO of one of the companies, Sonical, said that the company is developing a chip to power an earbud computer that uses artificial intelligence to combine the sounds around the user with those emitted by devices such as smartphones. The sound is mixed.
Spittel said that despite the success of start-ups, he still finds it difficult to attract venture capitalists who continue to favor businesses such as software. Semron CEO Aron Kirschen also expressed this view. Semron is a German start-up company that is developing an augmented reality chip that can be mounted on contact lenses.
He got help from Berkeley SkyGoad, a business accelerator at the University of California, which helps 130 start-ups every six months. So far, the company has only selected seven semiconductor-related technologies, but as more and more investors are keen on the field, the company hopes to speed up.