Tracking trends

November 14, 2012

Ken.Wada-November 14, 2012

It's important for embedded systems developers to watch basic semiconductor-market trends in our industry. Here's what Ken Wada tracks. What trends do you track?

I have always been interested in trends since my early days living on a farm in Central California. Being raised in a farm family, one of the earliest trends I remember we would always track was the weather. I suppose crop prices were the 2nd most important trend. I didn't pay too much attention to prices; I left that worry to my Dad. He always told me that there was a gambling element to farming. If you picked too early, the sugar content (we grew raisins) would be too low, and we could not fetch a good price for all that hard work. If we picked late, the sugar content would be much higher, and we could get a very good price. However, this came with a severe risk that the California weather would bring rain. The rain would ruin the crop, and we'd be left with nothing.

Technology and especially embedded systems also have their trends. In my view, it's very important to at least be aware of these trends. What goes on in the greater scheme of things is very important to what we do, and especially the decisions we make in our projects and careers. Of course, embedded system design and development is a vast, multi-disciplinary endeavor. What trends we watch depends on our interests and most importantly what industry we work in.

I'll share with you some of the trends and data that I tend to keep my eye on. At the end of this I will get to the fun stuff of sharing anecdotal information. That is I will share some of my thoughts and opinions of what I see out there. I am very interested in hearing what you're seeing in your respective fields. Of course, we should talk about general topics. Many of us work on projects where we will get into trouble if we openly discuss specifics of the technologies we're currently working on.

Semiconductors and silicon
As farmers track the up and downs of market prices, so should engineers follow the semiconductor market. Here in Silicon Valley, we tend to think we're the center of the Technological Universe. I can definitely tell you that Silicon Valley is NOT the center. The heart of the market--and of embedded systems--is the silicon. Since the integrated circuits we use are now manufactured and marketed worldwide.

One of the indicators I look to is the semiconductor equipment book-to-bill ratio. This is the ratio of bookings to billings of the large semiconductor capital equipment used to manufacture semiconductor devices. Figure 1 shows the trend of this very important ratio for approximately the last eight years. The trend here appears to show a general weakness in 2011. In the short term, we may see a bounce from 0.80 to over 1.00 into 2013. One of the most important factors that may influence this is the fact that semiconductor manufacturers are actively considering migrating to the 450 mm wafers in the very near future.




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Figure 1: Semi equipment book-to-bill ratio. Source: SEMI industry trade site. See SEMI's www.semi.org/MarketInfo/Book-to-Bill page for information about this type of report.

Another important silicon trend is the production of ICs. The SEMI organization represents this in MSI units. The MSI stands for millions of square inches. Figure 2 shows the MSI for all silicon, except for solar cells for the last eight years. The MSI appears to have stabilized between 2,000 and 2,500 for the past two years or so.



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Figure 2: Worldwide shipment of silicon in MSI per quarter. Source: SEMI industry trade site.

It is also interesting to note is that there are approximately seven MSI per football field. A 2,250 MSI is equivalent to the 321 football fields of silicon ICs that are shipped globally per quarter!

Communications and traffic
Another very important trend is the growth of the Internet. This is especially important to me since I currently do a lot of work in IP communications technology. Figure 3 shows the growth in the global IP traffic for static, (desktop, backbone, servers) and mobile, (cell phones, tablets) for the last seven years or so. The growth in this area appears to be of the log-exponential type. This can be seen by the nearly linear trend using a semi-logarithmic plot.



Click on image to enlarge.

Figure 3: Global IP traffic in petabytes per month. Source: The data for the Internet traffic comes from the Cisco Visual Networking Index and Wikipedia.

Clearly, this chart in Figure 3 represents a pretty decent rate of growth. We can also see that mobile devices are currently experiencing less traffic than fixed devices. However, the mobile devices rate of growth is expanding at a much higher rate than that for fixed devices.

A petabyte is 1015 bytes of information. This is equivalent to 1,000 each of a 1-terabyte hard drive of information being passed per month! Cisco estimates: "It would take over 6 million years to watch the amount of video that will cross global IP networks each month in 2016." That is a ton of irrelevant YouTube and Skype videos, no?

Also, of interest to me is the general rail traffic in the U.S. I watch this because this tells me how much goods are being bulk shipped throughout the US. Watching this trend gives me a perspective of how things are doing overall. The general rail traffic trend is shown in Figure 4. Here we a slow and steady growth of all rail traffic for the last eight years or so. In my opinion, this tells me that we are in general growing slow, but in general are probably doing OK overall.



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Figure 4: Intermodal railroad traffic from FY2009 to FY2012. Source: The data for the intermodal rail road traffic comes from Railfax.

In general, it appears as if things are stabilizing in hi-tech land. There appears to have been a "soft-patch" in 2011 that we are just overcoming for all things silicon. However, the growth in all things Internet is still very strong and shows no real signs of abating. The rail data appears to show overall growth in goods being transported across our land. Even though the trend is weak, it still appears to be growing.

As to anectdotal evidence, I am seeing a lot of folks working on some of the following technologies in their products.

1. Embedded Ethernet and USB interfaces
2. Video
3. Medical devices
4. Sensors and control technologies
5. Electo-optics including lasers and detectors
6. Wireless communications

So, what are you seeing out there? Are you seeing any interesting trends or observations? Post your comments below.

Ken Wada is president and owner of Aurium Technologies, an independent product design and consulting firm in California's Silicon Valley. Ken has over 25 years of experience architecting and designing high-tech products and systems, including the FASTRAK vehicle-sensing system for toll roads and bridges. His expertise includes industrial automation, biotechnology, and high-speed optical networks. Ken holds four patents. You may reach him at krwada@cs.com.

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