Cost an issue for chip industry

RISING COSTS, a demand for more energy-efficient products and increasingly complex requirements are some of the challenges facing the semiconductor industry, an international conference has been told.

With the rapid evolution of the mobile phone, businesses in the chip industry are also being forced to adapt to their customers’ needs as a more complete solution is demanded.

Northern Ireland played host to international standards body the IEEE’s 22nd System on Chip Conference this week – the first time the conference has been held outside the US.

Christoph Kutter, vice president of technology and innovation in Infineon’s wireless solutions division said the event was relatively small in terms of delegates, but was of a high quality, with a large number of papers presented at the conference.

“There are two big growing fields in microprocessors,” said Mr Kutter, who also delivered the keynote speech at the event.

These two markets, he said are smartphones, such as the iPhone and Blackberry, and the lower-end, lower cost products that have limited internet browsing features.

While many people are focusing on the higher-end smartphones, there is still a demand for low-cost products in emerging markets, such as regions of Asia and Africa.

“There are 3.5 billion people who have mobile coverage but do not have a mobile phone,” said Mr Kutter. “It’s a growing field.”

However, the conference heard that one of the challenges facing the chip industry is rising prices, with the increasingly complex design of the devices inflating the cost of design and verification of new products.

“The complexity doubles every 2 ½ years,” said Mr Kutter. A large number of engineers and man hours are required to develop these products, contributing to spiralling costs. The lower end of the market is particularly sensitive to cost movements.

“One of the challenges is providing chips for these two sides of the spectrum,” said Mr Kutter.

Power consumption is also an increasing concern for the industry. The chips need to be powerful and able to handle the latest standards in the industry.

However, while both the high-end smartphones and lower end devices are growing, Mr Kutter said the middle of these markets will experience a squeeze.