The amount of innovation driven by semiconductor companies over the last several decades has been phenomenal. This industry has never stood still, with each generation of products and technologies being smaller, faster, and better than the ones that came before it. While semiconductor companies have clearly played a key role in powering the cloud market, they have yet to fully take advantage of the cloud themselves.
The Need for Cloud Transformation
The cloud is the key to unlocking significant cost savings, innovation capacity, and strategic advantages. As depicted below, there are several key trends driving the need for cloud adoption in the semiconductor industry.
Because this industry is cyclical, the cloud can help semiconductor companies transition to a more flexible cost structure for IT infrastructure and in-house servers where usage can be dialed up or down as needed. These benefits also apply to new market expansion due to the cloud’s unique ability to scale faster and smarter. Semiconductor companies can gain access to key capabilities without investing in costly critical infrastructure, which helps relieve the rising pressure and cost of R&D.
Another benefit is cybersecurity as the cloud is now more secure due to enhanced security and automation technologies made available by cloud providers. With data and IP being the secret sauce to nearly every semiconductor company, this is a very strong argument for cloud migration.
Beyond technical advantages, moving to the cloud also helps with recruitment and retention because it signals to potential new hires and existing employees that they will have the opportunity to work with the latest technologies, which is key for advancing their technical expertise and careers.
Cloud Migration Drives Innovation Capacity and Ecosystem Advantages
A strategic cloud migration can drive innovation and improve R&D capabilities on top of the added benefit of cost savings. The money freed up by migrating to the cloud can be channeled into R&D, which currently represents 15 to 20% of semiconductor companies’ spending. This can provide an easy path to expand into new growth areas and new business models such as silicon-as-a-service.
It’s important to note that cloud transformation provides benefits across the entire ecosystem. When one semiconductor company starts taking advantage of the cloud, the connected ecosystem of suppliers, partners, customers, and even competitors can benefit as well. Following are some key examples of this cascading effect:
- IP Designers: Since they don’t produce physical products, the cloud is a powerful, more affordable means of handling and analyzing their engineering and data-driven tasks, while also providing IP security
- Fabless Manufacturers: While the benefits of outsourcing production are widely known, these same companies can realize even more savings by also moving their infrastructure to the cloud. This can provide deeper analysis and product improvements that can be passed on to their manufacturing partners
- Equipment Manufacturers: IP security is extremely important to manufacturers, and by collecting, storing, and analyzing data in the cloud they can increase security and improve processes and logistics
- Foundries: By leveraging the cloud to store and analyze data, contract manufacturers can make information readily available to customers for more insightful production and performance analysis
- IDMs: Similar to fabless manufacturers and foundries, vertically-integrated semiconductor companies can achieve a more variable cost model by moving their infrastructure to the cloud
Moving to the cloud does not have to be all or nothing. In fact, many semiconductor companies stand to gain substantial benefits by taking small, incremental steps. For those unsure of where to start, below are some of the most impactful use cases in terms of quickly-realized ROI.
- Deep Learning ML for manufacturing, test, and quality — The cloud excels at handling large amounts of data from multiple sources for analytics and AI around interpreting and connecting manufacturing, as well as test data to create relevant product and engineering insights for improving product development and manufacturing quality.
- EDA cloud compute — Cloud compute allows companies to scale up and down for various design cycles, as opposed to relying on in-house servers that require significant up-front capital investment and sit idle for extended periods. This is a significant advantage for simulating complex models on IC and circuit designs to ensure they meet customer and product requirements.
- Application and data security — The cloud not only offers comparable or enhanced security compared to on-premise solutions, but it can also easily expand with the business without increasing costs, which can get expensive when scaling on-premise security.
- Fab process automation — The cloud’s analytical power can inform and accelerate decision making on processing time by providing a consolidated platform for management. This ensures proper levels of compute and data aggregation across multiple sites, staging, raw material management and more, ultimately automating manufacturing and maximizing throughput.
- Customer facing support — The cloud provides standardization across customer-facing engineering and product applications — customer engineering, configuration, customization and RMA/quality troubleshooting. This allows companies to consolidate information and provide faster, more insightful and effective customer management across manufacturing sites and to different customers, ultimately improving the customer experience.
Ready to Migrate? Four Steps to Take
Below are four initial steps required to make your cloud transformation journey a success.
The time for semiconductors companies to begin this necessary transformation is now. Your business can accelerate and sustain a faster pace of innovation than ever before, and benefit the entire ecosystem for many years to come.