Telescope: Cores, Silicon and Wafers-What's on CIOs' plate?

The war around cores keeps getting hotter.  As processor companies continue adding more cores every quarter, how does it impact software licensing costs?

Software is something that is sitting on top here. So, it has to be that much efficient and with so much functionality as the number of cores necessitate. Software licensing costs can go up when the bar is raised up this way.

What ripples can the core-game leave for decisions around servers and data centres?

The more the number of cores, the higher the performance level. Performance spikes are good, but the adjunct is that there is a lot of energy consumption and that, is not very good for the data centre aspect. But companies are trying to come up with relevant servers, like those based on ARM.

AMD had released its Opteron 6100, at the same time facing the move of Intel Xen 7500 chip. What way is the legendary rivalry in this industry going to shape up?

The competition is going to heat up quite a bit. Interestingly, 2008 was the year of smartphones and 2011 is going to be the year of tablets, as will accentuate in the second half for us to see. That is going to be the clincher for many battles. Lot of competition is going to continue. Smartphones or media tablets, we have seen stuff based on ARM. What happened in PC side of the industry, will not necessarily happen in case of media tablets. ARM architecture is pretty strong. But Intel is announcing 8-frame processor and AMD is not going to miss the bus either.

So much is being speculated about how Japan’s disaster is going to shake the component supply for the industry. With Japan manufacturing 65 per cent of the world’s semiconductor silicon wafers, and Japanese vendors selling about 35% of all semiconductor equipment worldwide; how acute would be the impact and for how long will the carry-over affect the industry?

Yes, Gartner has published a lot of reports. Initially a serious supply crunch will be there and will exist for two to four months. After this period, things would result to normalcy in about one or one and a half months. Though, I still won’t comment in terms of exact numbers here.

What should IT spenders read into this?

Due to supply constraints, prices will shoot up. Companies that have sourcing plans over the next five to six months, will watch and wait. By this time, some of the companies would have redrawn plans of procurement. Spending will be affected due to temporary rise in prices. But after a period, it would be a stable scenario.All the same, critical projects will continue.

Your recent report on Semiconductor sector highlights the growth paths of different pieces — royalty revenues, service revenues, license revenues, design IP revenues etc. Can you share in detail about the trajectory ahead for service, license and royalty revenues?

There is a stronger growth next for services. Lot of service vendors buy from IP vendors and they do not want to spend on integration work but rather focus on innovative action. So service revenues will go up. Chip vendors will ask for that. But at the same time, licensing revenues will turn better too. Companies are trying to attempt things in a faster manner so design costs have to come down, while time-to-market has to be better, as per their expectations. They will buy IP from vendors directly then. On the other hand, royalty revenues will depend on the final electronic equipment sales. Higher the number of unit shipments, higher the royalty revenues.

Would it adversely affect the territory of captive IP?

Captive IP will still continue to be there, because it is a differentiator to a lot of chip vendors. For instance- Nvidia is based on ARM but they differentiate on graphics; Intel takes graphics from Imagination but it microprocessor is its own captive area; TI’s own platform is based on ARM but their own focus area is different.