The new demand for chips brought by the Internet of Things

Oct 13,2021

   Looking back at the development of the chip industry in the past years, whether it is the mainframe era, PC era, or cell phone era, they all show one characteristic, that is, they are single species, large-volume products. Especially in the cell phone era, single product shipments can reach a 1 billion level. That means developers can target these single product markets, focus on the chip. It is also because of such a huge volume of shipments to support the developers to have enough financial resources to invest in the next generation of product development.

    As we all know, IoT is a market overlapped by countless segmented and fragmented applications. Although the scale is huge, the TAM of each segment is relatively small (over 100 million is rare), and at the same time, because of the miniaturized nature of most IoT products themselves, this makes it more sensitive to the cost of the chip.

   For chipmakers, they also need to face the industry's customers from the top 10 cell phone manufacturers, the top 10 computer manufacturers into thousands of small and medium-sized smart hardware IoT hardware manufacturers. The diversity of customers again makes chip makers lose the opportunity to define future product specifications with customers, research and development need to let people who can hear the gunfire make decisions. Diversified customers also hope to enhance their product differentiation and competitiveness through differentiated chips, putting forward a variety of customization needs. Such customization, on the one hand, increased investment in research and development; on the other hand, it also limits the scope of application of the product, further fragmenting the market and reducing the number of shipments of each custom chip.


   But even so, the end customer demand for chip processing power has not weakened. At a time when Moore's Law is slowing down, this has brought them new troubles. Statistics show that after 2015, it will take 10 years to double the performance of the chip, which is not the same as the past 50 years can use the same money every 18 months to be able to buy back double the arithmetic power.

   Because the IoT does not alleviate the need for performance, and custom design, advanced nodes mean higher R&D investment, IP, and flow costs. As mentioned above, the fragmented market reduces the shipments and profits of a single product. The paradox of investing more and more and making less and less money becomes the bottleneck that restricts the popularity of IoT chips.

   Finally, how to efficiently capture this fragmented market is another huge challenge posed by IoT to the profitability model of traditional chips.

   There is no doubt that the chip industry has encountered unprecedented new challenges in the IoT era.



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