Navigating the unpredictable global semiconductor industry amidst an era of digitalization
Michael Hurlston is aveteran of the semiconductor and electronics industries and has lived through a number for boom-and-bust cycles. Since taking over the helm at Synaptics he has transformed the company into a diverse supplier of products and technologies for a wide range of consumer, enterprise, and automotive markets. His strategy has included a sharp focus on strategic mergers and acquisitions to address key market opportunities, improving operational efficiencies, and expanded investment in R&D around essential technologies for the IoT such as edge AI, wireless connectivity, sensing, voice, audio, and video processing, and video interfaces. In a recent conversation with the Editor of siliconindia, Michael Hurlston, CEO of Synaptics, shared his thoughts on the volatile global semiconductor industry in the era of digitalization.
Despite the global pandemic, a supply chain crisis, geopoliticaltensions, and a recession that threatens to impact the consumer electronics markets, he remains bullish on the prospects for the chip business. He sees it as an unrelenting necessity for the continuing digitalization of our world—transforming how we work, play, move about and communicate.
What were the Implications of the recent pandemic for the Semiconductor Industry?
During the Pandemic, there was a significant shift in spending from services to goods. And this shift from services to goods accounted for roughly 10 percent of the global economy. The PC market sales increased from 280 million units to around 350 million units, with 70 million additional PCs manufactured and sold, simply because companies adopted the hybrid work model rather than asking their employees to come work in the office. The Internet of Things is just another example. Docking stations, monitors, headsets, and other similar devices are examples of this massive shift in consumption during the pandemic.So, there was a major inflection point, and then there was a huge surprise on top of it which was the pandemic itself.
An impactful, long-term shift is already visible in the semiconductor market. And, essentially, the pandemic was what caused it; it was the straw that broke the camel's back. And when all of these things happened at once, it affected all of the semiconductor market which effectively wiped out the supply chain, as no one could keep up. And, interestingly, it wasn't the advanced process nodes that were the issue. It wasn't these nodes that were five nanometers, seven nanometers, and three nanometers; it was the trailing nodes. That is where the issue arose.It wasn't about processors or switches or advanced chips for the infrastructure, it was more about mature, trailing-edge nodes;nodes that could also handle higher power levels. These were the focus of the shortage, rather than more complicated Intel microprocessors or Qualcomm smart processors for mobile phones.
How is Digitalization impacting the automotive market?
Today's automotive industry is quickly transitioning from mechanical to electrical. This is true not just in how vehicles will be powered to move about (shifting from fossil fuels to electric)but also with things like infotainment panels inside the car. And autonomous driving, is another area, which for example uses Ethernet rather than CAN bus, which is an old mechanical situation.
What is the relevance of Intellectual Property in moving the Semiconductor industry forward?
Being a leader in developingintellectual property is essential because it is the driving force behind this industry. When one examines the value chain, it is easy to conclude that intellectual property adds probably the highest degree ofvalue to the semiconductor market. Companies in theUnited States recognized this and have focused their investment in this area, which is why the USis considered to bethe industry's leading producer of innovation in semiconductor design.
How would you describe India's Chip Ambitions?
In terms of opportunity, India has some of the best semiconductor engineers in the world.Unfortunately, it has yet to figure out how to build its own IP ecosystem, and there is far less of a startup community in hardware than there is in software.Therefore, in order to truly capitalize on this IP issue, India needs to figure out how to create its own set of companies rather than relying so heavily on multinational corporations. Today, we are aware of the fact that India has few product companies, which poses a new set of challenges for the country.There is no doubt that discussions about developing a fully indigenous semiconductor industry are taking place. In India, intellectual property firms should concentrate on developing more IP of their own, as well as providing design services rather than modifying someone else's IP.
Share your thoughts on how semiconductors have become a primary fuel for Wireless Communications and Industry's Growth Engine.
Wireless technology represents a significant opportunity because going wireless has changed the way businesses are conducted today. If you think about the need for everything to connect, to communicate, it is the most essential semiconductor technology available. Wi-Fi, Bluetooth, GPS, and ZigBee are a few examples.All of these wireless protocols are essential; everything is now linked, and wireless connectivity is used by a wide range of products. As a result, developing this capability should be a top priority for all semiconductor companies and there is deep expertise in this area in India
Where does the Indian Semiconductor Industry stand today?
In India, there are major challenges with infrastructure, power, and water, all of which are required to construct a fab. The power grid is erratic.The recent floods have put a serious strain on the water supply. So there's an issue. But, this may not be the problem that India should be attempting to solve in order to gain a competitive advantage in the semiconductor arms race. I believe success is more about the intellectual property piece. Looking at it from that point of view, everything is in the right place in India for the development of a fully developed domestic semiconductor industry; all that remains is proper implementation.
Obviously, the hiring process is the next challenge. The top engineers in the country are all in high demand.As a result, companies must take steps to differentiate themselves. And one way they can do that is to promote the concept of full product ownership, end to end. That’s why developing and owning IP is so important.
What potential does the Indian semiconductor industry hold going forward?
Once semiconductor companies have established a training ground for engineers to understand a product from cradle to grave, beginning to end, you are actually in a great position for success. So that is essentially the training ground for developing a fully developed semiconductor industry that will one day benefit both India and the Indian semiconductor ecosystem. India has very deep design capabilities and we need to leverage that. A key aspect of this is India is pushing to engage with local universities and research institutes with the subjects and also working with global universities at the same time.
Today India's budget for the semiconductors industry of US$10 billion is certainly a reasonable budget to start with. The US$10billion investment by the Government could be leveraged across a range of design activities and initiatives. This is how India can really establish itself in the chip supply chain and as a true world leader.
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