Companies Seeking Product and Service Differentiation Through Custom SoCs

November 23, 2021


Companies Seeking Product and Service Differentiation Through Custom SoCs

Technological innovations that demand smaller, highly-integrated devices are leading hardware makers and software cloud service providers to realign their business models to help differentiate their offerings. In many instances, custom silicon becomes the optimal solution.

A Significant Shift in Big Tech’s Business Trajectory

There are clear potential long-term cost savings for companies using home-grown chips rather than third-party product. So many tech companies are applying strategies to build their own hardware. These changes are reflected by the following:

A. Building hardware devices first with the primary goal of selling the devices bundled with the company’s software.

Example: Tesla’s recent announcement of the “Dojo” chip to train artificial intelligence networks in data centers. The custom chip was designed specifically to carry out the processing and training of algorithms by using images captured from vehicles' sensors. Tesla started producing cars with these custom AI chips to help on-board software make decisions in response to changing situations on the road. Rather than using standard chips with inherent limitations, the custom chip is optimized for carrying out specific types of operations and specialized analysis.

B. Building a proprietary device that is targeted at a particular market or function and locks in the customer to the firm’s ecosystem.

Examples: Apple announced it was moving away from Intel’s x86 architecture to make its own M1 processor, which now sits in its new iMacs and iPads.

Google is getting closer to rolling out its own central processing units for its Chromebook laptops. Google plans to use its CPUs in Chromebooks and tablets that run on the company’s operating system starting in 2023, according to a report from Nikkei Asia.

C. Building hardware devices whose primary intent is to drive usage and revenue of its core software and services products.

Example: Amazon is developing its own networking chip to power hardware switches that move data around networks. If it works, it would reduce Amazon’s reliance on using standard CPUs.

Regardless of what a company’s core capabilities are, the ultimate goal is to increase sales and revenue by developing a mutually beneficial relationship between its hardware and software products.

What Companies Should Consider When Selecting a Design Partner

Creating a proprietary chip requires a complex, highly structured framework and support system for addressing each step of the development process. Most companies seeking to design their own chips do not have the full capabilities in-house. They need highly specialized companies with extensive engineering skills, along with the knowledge and experience to support system-level design, SoC design, software design, and mass production quality assurance.

Good design houses provide the right expertise and experience with a proven portfolio, strong relationships with multiple tier-1 foundries, package, technology, and test partners.

An added advantage for working with a fabless semiconductor vendor is that customers aren’t restricted to the manufacturing partners. That is a decision usually determined by the process node needed to develop the custom ASIC and the cost structures that are targeted.

A good ASIC supplier will work side-by-side with the customer at every step of the design cycle to help set long term objectives. Each ASIC customer will have a program manager to coordinate with them, and a dedicated design team to ensure there is information exchange throughout the process.

Customers want open and transparent communications. The discussions aren’t only focused on the current product being defined, but also on looking at roadmaps for the future.

What Sets Socionext Apart from Other ASIC/SoC Design Firms

Traditional ASIC providers that focus their business on logic design often do not have the experience and knowledge to meet such requirements. And due to the significantly larger scale of development, it is becoming more difficult for traditional ASIC providers to keep up with the required engineering resources.

Projects that require open-source-based software development for operating systems and middleware translate to a greater need for partnering with SoC providers who have the right capabilities.


Do it Right the First Time

Leading-edge systems and products require the most advanced ASICs and SoCs (System-on-Chips).

Because a well-designed custom SoC requires substantial upfront investments, customers need to find a reliable and time-tested semiconductor infrastructure provider for ensuring on-time delivery of the SoC done right the first time.

Finding the right semiconductor partner is crucial as that will not only reduce time to market but save companies substantial costs in the long haul.