The semiconductor market is thriving again — and the future looks bright. Worldwide semiconductor revenue totaled US$235 billion in 2005, a 6.9 percent increase from 2004, according to Gartner Group data. It was the first time the semiconductor industry surpassed its record-setting year in 2000 when revenue reached $223 billion.
Of course, there are still plenty of challenges for the semiconductor industry to overcome as it races to accommodate new trends in the consumer and corporate markets. While the NAND flash market drove growth last year, for example, concerns over power consumption are pushing the industry toward virtualization solutions.
The participation in high-growth device markets such as NAND flash and gaining share in existing markets are major trends running through the semiconductor industry, according to Gartner. How does AMD see the opportunities and challenges?
TechNewsWorld caught up with AMD’s Marty Seyer, senior vice president, commercial business and performance computing, microprocessor solutions sector, to discuss what segments of the industry will be hot this year, the challenges that will dominate the landscape, and how the industry will look five years from now.
TechNewsWorld: What are the biggest business trends for the semiconductor industry that you see this year?
Marty Seyer: When we started focusing on the enterprise about three or four years ago, it was predominantly a technology requirement, in other words we focused on solving the 32-bit and 64-bit dilemma that customers were faced with. But we also had to focus on establishing price performance leadership. What we’re seeing now, actually, is a shift more towards the solution side than the technology side. Some of the technology issues are being resolved, such as 32- and 64-bit dilemma, and we’re actually seeing a shift toward technology being brought to bear to solve customer problems.
So the CPU vendors are being asked to step up and solve virtualization type issues, security type issues, manageability type issues, as well as power-related issues. If you stand back at the macro level, those aren’t CPU issues. AMD is focusing on those issues with our server as well as our client products. So that shift into a solution approach as opposed to a technology approach is a key trend.
Another trend spans both the commercial as well as consumer customers. That’s in the area of digital rights management; the protection of IP initial property assets by the movie producers, the audio producers, and the artist. That maps directly into protecting the content inside the enterprise. Everyone from the pure microprocessor company to the chipset companies to the consumer electronics manufacturers are focusing on trying to provide solutions for this. So that’s a dramatic shift as well.
TNW: What segments of the industry are going to be hot?
Seyer: Gaming continues to be hot and we’ve seen recent acquisitions of gaming companies by some global OEM names out there. Dell bought Alienware. There may be more of that in the industry because gaming is so hot. The generation that grew up on the game consoles and PCs are used to a certain class of experience when they interact with their platform. I believe that is going to carry over into the commercial enterprises, into businesses, and that generation is going to expect something more than just a simple GUI that provides ease of use on e-mail and word processing and presentations. There is going to be a new level of experience that is going to be required across the board, across multiple segments here. So, imagine the gaming experience translated into something in parallel in the commercial space. That’s an interesting trend that I see but also an interesting challenge for the semiconductor industry.
TNW: What challenges will dominate the semiconductor industry this year?
Seyer: I will speak of this from a microprocessor vendor perspective. This is the year for the competition to show what they’ve been working on. So I think the biggest challenge is at the end user level. How are they going to sort this out? You’ve got the big players coming out with three to five potential new architectures and architecture solutions. The end user is going to embrace that and try to sort it out.
AMD is going to have a simple message and that is upgrade-ability, longevity, and stable architecture. AMD 64 has been stable and is providing us the capability to bring new technology like virtualization, security, and manageability into the existing platform. We don’t have to reinvent the platform. The big challenge is going to be at the end user level. Of course, we want them to look at us because we do have a simple message — AMD 64 is, we think, the only architecture they’re going to need. But I think there’s a potential for confusion, and they should refuse to be confused, by asking about things like upgrade-ability, stability, longevity, etc.
TNW: What big developments are on the horizon?
Seyer: Virtualization is going to be big in 2006. We’re going to hear a lot about it … we already are hearing a lot about it. Virtualization is going to be broadly analyzed and adopted in 2006, but the ramp is 2007-2008 for real virtualization. So on one hand, it’s hot.
TNW: What about labor and employment? Is it difficult to find skilled labor in the U.S.?
Seyer: Fortunately for us if you follow our company ramp, in terms of quarter-over-quarter growth and profitability, we’re setting records out there. We’ve found that over the last 18 months it’s been much easier to attract great talent to our organization as a result of the company’s performance. We’ve made significant increases in our development, design and engineering staff here in the United States as well as abroad. We have not had a problem finding talent.
TNW: What technical capabilities need to be developed for the industry to continue trends such as scaling? Where does the industry need to see breakthroughs?
Seyer: One of the key areas we must solve is the power issue. The industry has offered scaling, but it’s been at a huge price called power. We’re on that power treadmill. In order to solve the scaling needs that are around the corner, we have to provide technology to address the power issue.
TNW: What role do universities play in the semiconductor industry’s success?
Seyer: We’re working very closely with universities. We think there’s a lot of security research going on inside the universities. There’s a lot of scaling research on interconnects occurring at the universities. We get a lot of benefit from that.
TNW: What lies ahead for AMD?
Seyer: We led the industry to multicore. We are continuing to lead in multicore. AMD 64 is going to be enhanced even further with greater numbers of cores, greater features such as security, virtualization, and manageability. That will allow us to set new records on stability, longevity, upgrade-ability. We’re going to continue focusing on that with our products. AMD is going to be the leader in performance per watt per dollar. We’re going to be the undisputed leader, solving those customers’ issues around total cost of operation, energy consumption, the utility bills, etc. You’ll see some amazing things from AMD around thought leadership on power.
TNW: Will the industry look much different five years from now?
Seyer: Definitely. We are going to see a potentially different model of delivering client experiences. Today we think of clients as the fat PC that we’re all used to. You’re going to see broader uses of silicon in a greater number of devices focused on enriching the experience for both consumers as well as businesses. Expect us to drive new commercial clients and drive choice to the enterprise customers like they’ve never had before.