Electronic Design

Welcome To The New Millennium—And A Shaky Start

As we start the new year (and what most people acknowledge as the real beginning of the new millennium), we can hopefully put all of the legal issues regarding our presidential election to rest and prepare to administer the oath of office to our next president. While we do that, I wonder if the market unrest of these last few months will ease and allow us to get the high-tech industries back on track.

Although market ups and downs are commonplace, prolonged down periods will often herald the collapse of highly leveraged companies. Such companies depend on the daily sales of products to produce a sufficient cash flow for meeting various financial obligations. Some PC manufacturers tend to fit that description and, therefore, may not be able to weather long periods of slow system sales. If any of them should call it quits, there could be a ripple effect on the OEM suppliers who provide the DRAMs, chip sets, disk drives, power supplies, and other components that make up the PC.

Even though we usually think of the systems and component industries as separate and distinct, many interdependencies now exist between the component and system manufacturers. Some of these dependencies start during the component design cycle when engineers from both companies frequently discuss design optimizations that could lower cost or add features to improve the functionality.

The enhancement of the Intel Pentium instruction set with the multimedia extensions (MMX) is a good example of how the end-system manufacturers, software suppliers, and Intel can work together very early. The resulting solution provided the system suppliers with a long-term path, allowing them to lower system cost and improve system performance in communications and media applications.

Industry collaboration has been on the rise over the last decade, very often due to the increasing specialization and complexity of the chips that must be designed to drive new applications. No longer can a chip supplier design a "generic" product without at least a few specific customers prepared to purchase production quantities. The multimillion-dollar chip development costs won't allow ifs or maybes when it comes to initial market sales. One misdirected product could spell the end for a new company, or even sorely impact the bottom line of a large organization.

How much closer will component and system manufacturers have to get? The market has recently seen a plethora of fabless chip suppliers start up. Systems companies desiring the novel technology developed by some of the new companies acquired a few of them. Will this lead back to more vertical integration in the system companies and a resultant reduction in the number of startups? Or if uncertain market conditions prevail, will fewer companies be able to start? What do you think? Send me your comments or predictions.

TAGS: Intel
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