By Siddarth Sheth, VP - Networking Interconnect-Inphi
It's no secret the semiconductor industry has gone through dramatic changes in the last decade. Pick an industry's automotive, mobile, consumer electronics and countless others'and we've seen how semiconductor companies have invented new ways to imagine greater power, speed and efficiencies. From my viewpoint, I've been able to witness and am a part of creating many of these dramatic changes especially within the enterprise and cloud data centers.
I'm often asked "what's next?" for this industry. Before we can discuss what's next, we should take a quick look at what's happened to this point.
One fact is true about what's taken place in the last few years. Venture capital led investments in the semiconductor industry, especially in fabless semiconductor companies in North America,and is now down to a trickle. While there is healthy venture backed activity in markets, such as China and Israel, the fabless semiconductor industry still remains predominantly based out of North America where start-up activity seems to be almost non-existent. Most of the innovation, as a result, is now the domain of small-cap, mid-cap and large-cap semiconductor firms, which continue to invest in their target markets.
This fact has led to a consolidation trend as larger-cap firms that look to grow and innovate are turning to synergistic merger and acquisition options of their smaller peers. And frankly, the cost of research and development continues to increase with CAD, lithography, mask sets and the arrival of FinFET-based process technology, which is leading to much larger team sizes to get to first pass silicon. This is drivingthe industry to become the domain of companies that have the scale to take on these expensive research and development projects
This has driven furious merger and acquisition activity in the semiconductor space to allow companies greater scale and is a trend that is likely to continue. In fact, I believe we will also see increasing amount of vertical integration at consumer and cloud companies, such as Apple, Google, and Amazon, which are increasingly looking to do their own integrated circuit development to gain more control of their supply and cost structures, while also protecting critical IP that allows them to differentiate from the competition.
Another trend that's been taking shape is the rise of cloud computing, cloud networking and cloud-based storage. These are very powerful trends that will fundamentally change the IT landscape in the next few years. Through all of this, the incessant need for more bandwidth will continue to be driven by the creation of big data, social media, machine-to-machine traffic, internet of things, person-to-person transactions and e-commerce.
In the next few years, cloud data center operators are undertaking a major upgrade to theirdatacenter infrastructure to scale-up and accommodate these big changes. Most of the infrastructure within the current cloud data centers is migrating from 1G to 10G/25G on the servers and will be upgraded to 40G/100G in the switches. The network infrastructure connecting data center to data center will then be upgraded to 200G/400G.
Inphi is very well positioned to take advantage of these trends with its emphasis on 'lightning fast' high-speed interconnects. These interconnects help move data across a cloud-based network from computer nodes to storage nodes to the end consumer. And essentially, these optical interconnects, network interconnects and memory/storage interconnects will further enable the fast, efficient and secure movement of all this data.
While mentioned earlier, I also see the trend around 100G and beyond as a very exciting transition that will pave the way the to terabit era of networks in the future. But no company can go at this alone. It's critical for the semiconductor industry to work together through strategic alliances with customers and industry partners to make this future a reality.