With more and more MCU suppliers pouring onto the battlefield, the entrenched players found themselves under siege. Would MCUs be forced to surrender to the same fate that DRAMs did years earlier in the commodity wars? With so much at stake, MCU suppliers were determined to not let this happen to them, and to not take this onslaught lying down. After all, they still represented the dreadnoughts of the industry with big guns and even bigger R&D budgets. Smaller MCU companies instinctively knew not to engage this fleet head-on, or be obliterated. But they were becoming more successful and more emboldened at outflanking the bigger MCU battleships in the niche corners of the market where agility was more important than sheer firepower. As a result, several strategies were initiated by the established MCU players to keep them ahead of the pack:
1. Powerful New Cores: To prove that the concept of the proprietary core was not dead, and to combat the plethora of different cores that were flooding the market, established MCU players developed application specific cores designed to excel at certain types of calculations. Perhaps the most notable example of this is the C2000 core from Texas Instruments. With its Harvard architecture, single-cycle multiply-accumulate capability, and new vector math instructions, it is a perfect fit for real-time control applications such as digital power, motor control, closed-loop control, etc. Once a core has proliferated to the extent that the C2000 has, it starts to take on a life of its own, and becomes very difficult to uproot as an incumbent choice for new designs.
2. Continuous fab process innovation: Unlike power semiconductor products where price is dictated by how many acres of silicon are required to support a given power level, MCU costs are heavily impacted by Moore’s law, which eats away at revenues every year like a cancer from the inside out. Last year Intel demonstrated a laptop containing a processor built using 14 nm geometries. The semiconductor industry is forecasting 10 nm geometries for 2016, 7 nm for 2018, and 5 nm by 2020! As geometries shrink, so do the prices, which is undeniably a good thing for the consumer. But does shrinking fab geometries translate into a sustainable competitive advantage for the manufacturer? This question is particularly relevant when you consider that many third-party fabs offer geometry capabilities that rival the proprietary fabs. It’s kind of like steroids. As long as you are the only one taking them, you have a competitive advantage. But when everyone is taking them, it levels the playing field again. While remaining engaged in the fab war is important, it does not represent a sustainable competitive solution. If DRAMs have taught us nothing else, it should be that shrinking the geometry only provides a temporary “fix” to keep you ahead of your competitors.
3. Innovative New Peripherals: Older MCUs were considered innovative if they simply incorporated the uP core with some memory, and maybe some GPIO. But today’s powerful MCUs incorporate everything but the kitchen sink! Reaching out into the system to gobble up support silicon and auxiliary functions is a common strategy for MCU designers. But in order for this strategy to work effectively, you must have broad shoulders to support a large family of MCUs, since the integrated peripherals you need are different for different applications. As a result, this strategy works well for larger MCU companies who can afford to do this.
Not only are there more peripherals, but the peripherals are becoming more powerful. In some cases, the peripherals themselves contain independent processor cores, like the Control Law Accelerator (CLA) from TI. For much of my career I designed MCU peripherals for the motor control industry. I was convinced that the best way to establish a distinct competitive advantage was to add unique features to these peripherals. But I was quickly disillusioned when I realized how short this distinction lasted before someone else had the same or comparable feature. And if you patented your improvement, all it did in many cases was broadcast your idea so that competitors could develop a work-around solution with the same or similar functionality. Don’t’ get me wrong…peripheral innovation is crucial, and I am very proud to work for a company that prizes its leadership position in peripheral development. But as I look at the motor control MCU market, I am compelled to admit that the peripherals from different manufacturers are all very similar in their basic functions with only subtle differences. Therefore, I would again argue that in and of itself, fancy peripherals are insufficient to keep MCU suppliers ahead of the competition.
But there is one more super-weapon yet to be unveiled which has the potential to keep MCU manufacturers out of the gaping jaws of commoditization for years to come. It has already been deployed by various MCU companies with varying levels of success. Can you guess what it is? I will discuss this in my next and final blog on this topic.
