Internet of Things big waves hit the global chip industry was in recession

The semiconductor industry needs to think about a kind of open-source hardware, reprogrammable chip “function as a service” (Features-as-a-Service) based on new business models, in order to help promote the next phase of growth.

After continued growth and innovation of half a century later, the semiconductor sales and profits in consumer trends, market momentum and the pace of innovation is beginning to slow down significantly. If the industry is gradually losing its magic, then thereby caused the whole series and also left a lot of exclamation points.

According to market research firm Gartner data show that in 2015 global chip sales of approximately 3,337 billion US dollars, fell 1.9%; the World Semiconductor Trade Statistics (WSTS) forecast, 2016 is expected to see a rebound to $ 3,410, a slight growth of 1.4 %. Meanwhile, Morgan Stanley (Morgan Stanley), pointed out that the chip industry in 2015 initial public offering (IPO) accounted for only 5% of all US technology IPO’s, compared with 25% a decade ago has been a substantial decline.

Internet of Things (IoT) rapid development is expected to become the chip industry to revive growth “next big thing.” However, in the chip development costs rising profits and less conventional model, internet of things can not play all of its potential. Even internet of things strive to meet the optimistic forecast, design and build up to $ 1 chip sensor to monitor the temperature of the refrigerator or city parking spaces and other applications, it can not generate much profit.

Semiconductor companies need to seriously explore how to change its business model. Specifically, they must embrace open-source hardware for the commercial IP using reprogrammable chip, in order to help avoid the mask costs rising, and amplified chip sales to lucrative downstream earnings.

The success of open source software for the semiconductor industry has turned an important precedent. Face prohibitively expensive development costs, companies can choose from unnecessary expense through greater emphasis on open-source hardware IP functional blocks (IP block) and the board, thereby creating a service-oriented revenue sources.

Reprogrammable chip also brings a lower development and manufacturing costs and create new sources of income opportunities for the semiconductor industry. Chip manufacturers can sell a single configuration with minimized function requires OEM or end user to add additional features to pay, rather than for every application inventory different chip versions. By providing “function as a service” (FaaS) system architecture that significantly expand the market reach for each chip design, but still in line with customer requirements.

Undoubtedly, there are many different ways to be able to build this new business model. However, for many chip manufacturers, downstream industries to get more revenue, apparently it is the real beginning of the transition of change.

For decades, chip manufacturers have established a trillion dollars to create several patterns for the company and the consumers to use its chips. However, chip makers are not yet sufficient to explore the potential of this evolving ecosystem.

To be sure, the semiconductor industry has been focused on the most innovative hardware and work than to ignore the development of software. Now, it is time for a change.