Kurt Shuler, Vice President
Arteris
It’s a vertical world after all
November, 6th, 2013
Semico IMPACT 2013, 6 November 2013
Copyright © 2013 Arteris, Slide 1
Semico IMPACT 2013
It’s a vertical world
after all
Kurt Shuler
VP of Marketing, Arteris
Semico IMPACT 2013, 6 November 2013
Copyright © 2013 Arteris, Slide 2
Design IP
Vendor
Semiconductor
Vendor
System House
or OEM
Service Provider
or Channel
Market
Rank
Search
Commerce
Social
Networking
Video
Gaming
Mobile
Phones
#1
#1
#1
#1/#2
#1
NSA slide
Percent of Power (%)
33% of Datacenter Power is Used for Cooling
Source: Arif Khan and Osman Javed, “Software and System Solutions Drive Datacenter Energy Efficiency”, Electronic Design Magazine, 3 Oct 2013
Market
Rank
Search
Commerce
Social
Networking
Video
Gaming
Mobile
Phones
#1
#1
#1
#1/#2
#1
Multi-touch interface
App Store
Visual Voicemail
Dual cameras / FaceTime
Digital compass / magnetometer
Accelerometer
64-bit processors
Source: Ben Evans of Ender’s Analysis, Apple, Samsung
Market
Rank
???
Search
Commerce
Social
Networking
Video
Gaming
Mobile
Phones
#1
#1
#1
#1/#2
#1
Cash on Hand
Design IP Vendors, Billions ($B)
ARM
$0.91
Synopsys
$0.89
Cadence
Imagination
$0.72
$0.08
Sources: Morningstar, Forbes, Yahoo Finance
Cash on Hand
Semiconductor and Design IP Vendors, Billions ($B)
Intel
$18.16
Qualcomm
$13.28
TI
$3.96
AMD
$2.94
Toshiba
$2.59
STMicroelectronics
$2.49
Broadcom
$2.37
Renesas Electronics
$1.60
ARM
$0.91
Synopsys
$0.89
Cadence
Imagination
$0.72
$0.08
Sources: Morningstar, Forbes, Yahoo Finance
Cash on Hand
Systems Houses, Semiconductor and Design IP Vendors, Billions ($B)
Apple
$147.00
Microsoft
$68.31
Google
$48.09
Samsung
$35.16
Sony
$19.07
Intel
$18.16
Qualcomm
$13.28
Amazon
$11.45
Ebay
TI
$9.41
$3.96
AMD
$2.94
Toshiba
$2.59
STMicroelectronics
$2.49
Broadcom
$2.37
Renesas Electronics
$1.60
ARM
$0.91
Synopsys
$0.89
Cadence
$0.72
Imagination
$0.08
Sources: Morningstar, Forbes, Yahoo Finance, Wikinvest
Operating Margin (%)
Operating Margins Over Time Determine
Sustained Investment Capability
Make
Buy or Exit
Commoditization
Time
High Operating Margins Enable Cash
Accumulation
Operating Margins, Q3 2013, Percent (%)
40%
30%
20%
10%
0%
-10%
-20%
Sources: Wikinvest, Yahoo Finance
Applications
Middleware
OS
HAL / Drivers / Firmware
Hardware
Applications
Middleware
OS
HAL / Drivers / Firmware
Hardware
Many Business Models Between
Semiconductor Vendors and System OEMs
OEM inputs IP
Semi Sells to OEM only
100% Custom
No Semi
OEM inputs reqs
Semi Sells to All
OEM inputs reqs
Semi Sells to OEM only
Microsoft Xbox
with AMD
Custom ASIC
COTS
Intel Xeon with
Facebook, eBay
Implications for Semi Vendors
1.
Decide where to play in the design spectrum, and for which markets and
customers
2.
Work upstream to elicit better requirements, get your technology designed in
3.
Be very flexible, focus on differentiation and time-to-market
Semico IMPACT 2013, 6 November 2013
Copyright © 2013 Arteris, Slide 22
Implications for IP Vendors
1.
Work with System Houses and Service Providers to elicit requirements, get
designed in or specified
2.
(Re-)Engineer your business model: License upstream, get specified
3.
Re-think revenue sources: IP licenses, software licensing, patent licensing,
services
Semico IMPACT 2013, 6 November 2013
Copyright © 2013 Arteris, Slide 23
So what?

Systems Houses / OEMs designing chips is more than a pendulum
swing

Strategy is reserved for the most profitable and best capitalized

But that is the only place where the money is

Focus on value chain members who need to differentiate, and who
have cash

Understand your true differentiation

Be flexible in your business model
Semico IMPACT 2013, 6 November 2013
Copyright © 2013 Arteris, Slide 24
Semico IMPACT 2013, 6 November 2013
Copyright © 2013 Arteris, Slide 25