We’re in the decade of the consumer, according to Gil Amelio, semiconductor industry veteran and chief executive of Jazz Semiconductor Inc. in Newport Beach.
“I think for the first time in the history of the semiconductor industry, the technology driver for business is not the computer anymore, as it was for almost 50 years,” Amelio said to a group of entrepreneurs, investors and managers at Octane’s chip confab in Newport Beach. “It’s now moving on to communications and the consumer as the principal driver of innovation.”
Amelio, who’s logged nearly four decades in the chip industry since his early days of research at the Georgia Institute of Technology, said that consumer demand for a portable, all-encompassing gadget will keep the chip industry fresh.
“It was personal computers in the ’80s, it was the Internet in the ’90s, but the big thing this decade is a shift away from pure digital things like PCs to things that are more communications and consumer intensive,” he said.
Data from the Semiconductor Industry Association, a San Jose-based trade group, backs up the idea.
“The consumer has now become the largest buyer of semiconductors in end products,” said George Scalise, president of the association, who also spoke at the event.
Up until about two years ago, enterprises and corporate buyers made up about 60% of chip sales, Scalise said.
“That has changed,” he said. “Over 53% of what we produce today is in the products that you and I buy.”
For chipmakers to stay competitive, Amelio encourages an industrywide redefinition of the techie principle known as “Moore’s Law.”
It began as an observation by Intel Corp. cofounder Gordon Moore.
Moore said in 1965 that the capacity of a silicon chip would double every two years or so. So far, it has proved true.
That poses a problem for today’s $200 billion-plus global semiconductor industry, he said.
“With the focus on digital technology, (the industry) has become driven by smaller and smaller geometries (or chip sizes),” he said. “We are very soon going to be getting down to our mechanical limits if not in the next generation than certainly in the next 10 years or so.”
The biggest challenge for chipmakers then, is to design chips that don’t just get smaller and cheaper,”That’s kind of a brain-dead way of doing it,” he said.
New chips have to pack in more functions.
“We need to get back to the original notion that Gordon meant when he talked about functional density,” Amelio said. “There are other ways to pack more function into a piece of silicon real estate other than just making (it) smaller.”
The big driver for the next generation of chips will be consumers, Amelio said.
“If you are going to make a little gadget to carry with you, you can’t have a bunch of chips in it,” he said. “Increased functional density is becoming ever more important.”
As a result of this shift, the chip industry is likely to become more dependent on consumer spending and the economy as a whole, said Scalise of the Semiconductor Industry Association.
“In a global economy, the semiconductor industry drives most of the productivity we see in the information technology world,” he said. “The consumer represents about two-thirds of the robust drive of the economy.”
Broadcom Corp. Chairman Henry Samueli echoed Amelio’s sentiment.
The next wave of chip innovation will be pushed by soaring consumer demand, he said.
Samueli said he expects that more than a billion mobile devices will be sold each year by 2010,that means one in every five people will be buying a new cell phone, smartphone or personal digital assistant each year.
Cheap and pervasive broadband access will be a big push, Samueli said.
“Wireless has almost caught up to wired,” he said. “There will by 700 million Internet subscribers by 2010.”
The next frontier is set to be the “digital home,” Samueli said.
“Nothing has been done to solve basic home networking problems,it’s really a mess,” he said.
He pointed to all the devices in the typical home,from high definition TVs to gaming systems,that remain “unnetworked.”
“We are years and years away from that, but it’s an interesting opportunity,” he said.
