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The Butterfly Effect; A Falling Snowflake Leads to a Massive Semiconductor Opportunity

by Eric Higham | 2月 26, 2015

I’ve always found it very useful to try to understand how events in the past influence developments in the present and trends for the future. Sometimes it’s easy to connect the dots, but oftentimes you get the “butterfly effect” where a simple event may lead to something completely unforeseen. My “event” for this blog starts on a much more pedestrian level.

 

I was looking at my last blog where I was lamenting the big snowstorm that had hit the Boston area. Well, silly me!! What I didn’t anticipate at the time, was the additional three feet of snow that inundated the area in the four weeks that followed that blog. I lost my broadband access for about two hours during one of the storms and it was obvious how dependent I am on connectivity. Imagine how frustrating it would be to lose broadband access for days! The best, most viable option might be to curl up around a fire with your pets! While that option is undoubtedly a great change of pace, it certainly has some implications for technology and semiconductors. This got me thinking about broadband infrastructure and the future of semiconductor market.

 

The dominant trend influencing all electronic markets is the extraordinary increase in data consumption. I’ve written about how DOCSIS3.1 and fiber in wired broadband networks and LTE and smartphones in wireless broadband networks are enabling and benefitting from the blizzard of data. The logical connection of these dots gets us to networks that will need to provide even more capacity and higher data rates. To this end, the FCC in the United States just upped the definition of “broadband” from 4 Mbps download and 1 Mbps upload, to 25 Mbps download and 3 Mbps upload. Interestingly, I’ve seen reports claiming that the current average download speed in the US is 10.5 Mbps and estimating that 55 million people (17% of the US population), along with 35% of schools will not have access to service with this speed!

 

However, speed isn’t the only issue. We are in the early stages of the Internet of Things (IoT), with estimates of 50 billion devices interconnected in some fashion. We think of these IoT applications and sensors as being very low data rate, but phones, tablets, PCs, etc. are also part of this connectivity and these devices are enabling much more significant data consumption. Future data forecasts estimate the IoT ramp, but the actual timing and deployment could dramatically alter the forecasts. I listened to a good IoT webinar from the IEEE earlier today and the speaker referenced some astounding Internet-related numbers. He also mentioned how Cisco is touting the IoT as a $19 trillionopportunity!

 

So, I think the very large revenue number starts to bring the semiconductor opportunity into focus. What is not so clear is how networks will handle the requirement for faster speeds and more capacity. The wireless industry is expending significant resources to investigate the evolution of current networks to meet these challenges. The term “5G” is a very hot topic these days and while the term is not really defined, the goals are disruptive. Teams of industry heavyweights like Alcatel-Lucent, Fujitsu, NEC, Ericsson, Samsung and Nokia are exploring methods to increase data rates, data capacity, battery life and the number of connected devices by one to several orders of magnitude! Many of the techniques involve higher frequencies, MIMO, beamforming, wide bandwidth transmission and remote radio heads. All these activities are music to the ears of the compound semiconductor industry and represent an enormous potential expansion of the market.

 

I’ll go back to my original thought; what happens if you lose connectivity for a couple of days? In this future scenario of 50 billion connected devices, wearable sensors monitoring everything, connected cars, faster internet speeds, smart homes and cities, a network outage would be catastrophic! Maybe the butterfly effect is a snowflake falling leads to a much more robust and ubiquitous network and a $19+ trillion boost to the global economy!

 

This will be interesting to watch!

 

In a shameless plug, I had the pleasure to write an article for my friends at High Frequency Electronics magazine. It’s a retrospective of the humble beginnings of the RF semiconductor industry and it touches on some of the things I’ve discussed here. If you take the time to read the article, I hope you enjoy it.

 

-Eric

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