VDC Research: Embedded Microprocessor, Board & Systems Market Blog

2012 – Opportunities and Challenges for Embedded Semiconductor Suppliers

Thanksgiving is over and the 4^th quarter of 2011 is rapidly drawing to a close.  2011 was a more modest year than 2010, with some companies posting lower revenue volumes than the prior year.  Texas Instruments, for example, is down 1% over the first three quarters.  Certainly, this could be recovered in the fourth quarter though.  Intel Corporation has been a notable exception, recently reporting a 28% year-over-year revenue increase.  The question is now, what will 2012 hold in store for the semiconductor market?

The global macroeconomic environment remains uncertain however.  The debt crisis in Europe remains an issue, with contagion threatening to spread even to France and Germany.  Postponements of projects in this area, particularly around telecom infrastructure, could threaten the growth of processor shipments in EMEA.  Likewise, a slow-down in China could dampen semiconductor shipments there as well.  So far, growth seems on-track in the US, but as we now live in a global economy, it is questionable how long the US can hold out if things really sour in Europe. 

In terms of vertical markets, a number of changes can be expected.  The great days of military expenditure are likely over for the immediate future, and defense companies will likely be competing over smaller budgets with more stringent delivery requirements.  The communications and networking segment will likely see continued strong growth, as Next Generation Networks (NGN) must be built to meet the needs of tomorrow’s smartphones and other connected devices.  Industrial automation can be expected to grow through the development of M2M technology and upgrading of legacy hardware.  The energy and medical markets should also have strong growth opportunities, due to smart grid expansion and aging populations in developed countries worldwide, respectively. 

In the end, regardless of whether the global economy gets better or worse, we can still expect the continued innovation and discovery within the semiconductor market to present opportunities to suppliers across the embedded ecosystem.

Natural Disaster in Thailand Floods HDD Market with Disruptions in Both Supply and Demand

Severe flooding in Thailand has left players in the semiconductor market reeling as companies struggle to assess the full damages and impact of this natural disaster.   Thailand has developed into a strong base for hard disk drive (HDD) manufacturing companies.  Companies such as Western Digital, the leading player in the HDD market, lost significant inventory and supplies in plants affected by the floods.  These companies will also see significant long-term effects of the flooding, as factories and infrastructure may take years to fully rebuild.  Even companies not directly affected by the flooding, such as Seagate – the number two player behind Western Digital – project difficulty meeting increased demand levels due to disruptions across the HDD supply chain.  We will not have a clear understanding of these repercussions until the floodwaters begin to clear.

We also see the effects of this flooding reverberate across the market, affecting both suppliers and buyers of these IT peripheral manufacturing companies.  Suppliers are seeing reduced demand for their products and rising inventory levels.  Customers of these peripheral companies, such as Dell, Apple and Hewlett-Packard, have seen significant shortages in supplies and thus rising prices for these components.  

VDC expects the effects of this crisis to continue through the first half of 2012 before we see HDD manufacturers recover to pre-flood levels.  Until this time, we can expect to see shortages in the HDD market cause delays for companies producing devices that use this component.  Semiconductor companies outside of Taiwan – particularly in India and China – may see rising demand in coming months, as companies work to offset the limited supply available from Taiwan – these companies will likely increase production for the first half of 2012 to satisfy this demand.  

As with the tsunami in Japan, the local effects of the flooding have strongly impacted individuals and companies native to these areas.  These companies’ customers have been monitoring the flooding situation and continue to implement significant efforts to adapt business operations and financial projections.  However, even as we expect HDD manufacturers and affected markets to rebound more effectively in mid to late 2012, the lingering impact of the recession will likely suppress overall market growth in 2012 as affected regions gradually return to normal supply and demand run rates.  

Telco Systems Targets the 40G Market Opportunity

Telco Systems, a subsidiary of the company BATM, is a developer of carrier Ethernet solutions for products between the core and the edge of the network.  Telco’s flagship products are its T-Metro family of multi-service switches for traffic aggregation, which are relied upon by a number of leading communications & networking infrastructure customers, such as Nokia, Telefonica, etc.

Telco Systems recently announced a new version of its ATCA hub blades, which now enable 40G, giving customers another tool for the tackling the challenge of highly variable bandwidth and surging video traffic over their networks.  These ATCA hub blades utilize silicon technology from Broadcom and allow Telco to bring what it believes is one of the first 40G solutions.  The hub blades, which the company packages with their BiNOS networking operating system, features dynamic load balancing and is intended for use in wireless LTE gateways, security, IPTV, cloud applications and more. 

VDC believes that companies like Telco Systems, which offer products with dynamic load balancing are gaining a competitive edge.  Load balancing allows for maximum throughput and lower latency in the network.  Combined with the 40G capabilities, VDC believes Telco Systems has developed a compelling product for the evolving network infrastructure.  With more 40G solutions now appearing in the market, one is left to wonder how the broader implementation of 100G will impact the embedded hardware supplier competitive landscape in the future.

Advantech and LSI Announce Platform Collaboration to Enable Secure Mobile Applications

On November 16, Advantech and LSI Corporation announced the availability of a new Advantech-branded Packetarium platform powered by the LSI Axxia Communication Processor. The Packetarium NCP-2110 Network Appliance is designed for caching gateways, enterprise routing, unified threat management and radio network controllers, providing enhanced scalability and integrating seamlessly into systems.

Advantech’s Packetarium brand of dedicated networking modules and carriers are available in multiple form factors for both standard and customized platforms and share common design features in order to accelerate system design and maximize hardware and software re-use. The Packetarium product line streamlines integration of x86 and multi core NPU elements along with the latest switching technologies to provide flexible system configurability.

Technically, the NCP-2110 Packetarium system is a 1U rack-mountable design that accommodates two front-loadable network interface cards with one 10GbE Ethernet port each. The throughput capabilities of the dual Axxia Communication Processor board allow OEMs to deliver applications such as enhanced security and in-content aware routing. The NCP-2110 has 20 Gbps of IPSEC throughput and 6 Gbps of deep packet inspection performance for protocol analysis to extend service and network integrity. Additionally, I/O expansion is made possible via a standard PCIe x8 slot, making the Packetarium NCP-2110 an extremely flexible platform for network equipment OEMs requiring a broader range of connectivity options.

According to both companies, the Packetarium NCP-2110 leverages Isis expertise in networking silicon, allowing OEMs to deliver a networking acceleration solution with increased intelligence and faster time to market. The Axxia Communication Processor features four PowerPC cores that deliver packet classification, low latency, advanced traffic management and greater deterministic performance. The Axxia Communication Processor's Virtual Pipeline technology delivers deterministic line rate performance for security processing and deep packet inspection (DPI).

VDC believes the continuous growth of network traffic through this decade will influence many carriers to invest in building out their global networks with secure next-generation technologies. At the platform level, these technologies will be enabled by embedded processors, embedded boards, embedded systems, and software - all integral components of a comprehensive, integrated solution.  Additionally, collaborative efforts (i.e., leveraging intellectual property, and R&D, similar distribution channels, etc.) between industry leaders - such as Advantech and LSI - to produce advanced products and services can create a compelling competitive market advantage.

Prototypes of the Packetarium NCP-2110 are expeced to be available Q1, 2012.

MILCOM 2011: GE Intelligent Platforms and Juniper Announce Collaboration to Develop Family of Network Routing and Security Appliances

On November 7, GE Intelligent Platforms and Juniper Networks announced at MILCOM 2011 (November 7-10, Baltimore, Maryland) that the two companies will collaborate to develop a family of rugged, highly secure routing and network security appliances designed for military/aerospace deployment in harsh environments where security of data is a mission critical requirement.  The resulting solutions will be sold by GE Intelligent Platforms.

This new family of GE products responds to the adoption by military forces around the world of a network-centric approach to battlefield operations and systems design, according to both companies. With this solution, converged data, voice and video are carried over an IP-based network, and routers form the core of such a network. Cybersecurity also represents a significant concern, as well, as the coexistence of allied forces through multi-national battlefield engagements underscore potential language barriers and security concerns. This results in a requirement for purpose-built rugged routers with advanced security capabilities since commercially-available routers are not designed for harsh environments encountered in most military combat situations.

The RTR8GE, the first product to be announced, is a battle-ready, rugged, and security-focused network router, featuring Juniper's Junos operating system. Its firewall, intrusion prevention and detection, and quality of service capabilities enable secure IPv4/IPv6 connectivity for military vehicles, aircraft and forward operating bases supporting net-centric operations. The RTR8GE is designed to have eight Gigabit Ethernet ports integrated in a SWaP-optimized enclosure that meets the demanding environmental requirements of military and aerospace applications.

The RTR8GE router also supports radio-aware router protocols that monitor network efficiency, available bandwidth and regulate traffic flow, choosing the most efficient network route in mobile, ad-hoc battlefield network environments. It also includes anti-tamper protection and information-assurance technologies in recognition of the sensitive nature of the data it is designed to transport.

For the remainder of this decade, improved routing performance, for traffic load balancing, for countering radio channel performance disturbance and for inter-domain routing in the heterogeneous networking environment will grow in importance.  VDC believes collaborative technology agreements such as this between GE and Juniper represent a best-of-breed approach to network-based embedded design and development projects, for any number of real-world applications, including military and defense.  

By bringing together Juniper's network technology and its Junos operating systems for mission-critical, rugged, and net-centric military applications, GE Intelligent Platforms will be better positioned to participate in programs where C4ISR/electronic warfare interoperability specifications are an integral component of the ultimate solution. However, VDC also believes even with the obvious technical benefits of a GE-Juniper combined communications platform, U.S. military expenditures on advanced net-centric technology will be rationalized - just as virtually every Department of Defense program receives extensive reviews in 2012.  Adjustments in U.S. military strategy and global posture are likely, and could result in large budget savings that could contribute to deficit reduction, a key priority for the current administration.

IBM and Eurotech Advance Next-Generation M2M Concepts with MQTT

On November 3, IBM and Eurotech announced that they are contributing software to accelerate and support the development of a new generation of smarter wireless and mobile devices. The technology, which could become the basis for a new standard of mobile connectivity and interoperability, will be contributed to the Eclipse Foundation open source community.

Originally developed by IBM and Eurotech, the contributed Message Queuing Telemetry Transport (MQTT) protocol is in use today among some industrial, mobile, and consumer applications, providing reliable device connectivity in industries such as transportation, energy, military, financial, social media and medical. Uses of MQTT range across projects as diverse as real-time monitoring for oil pipelines, to a new lightweight mobile messaging application for social media sites.

Enabled by the rapid growth in wireless broadband connectivity, billions of embedded devices – from RFID tag readers, smartphones and cardiac monitors to GPS-aware systems, thermostats and smart appliances – are being interconnected to one another. While estimates of the number of embedded connected devices globally vary (from 5 billion - 10 billion), VDC expects that number will grow exponentially through this decade.   

VDC agrees that driving open standards, such as IBM and Eurotech’s MQTT contribution to Eclipse, represents a definitive strategy for rapid and widespread industry adoption. In addition, such a scalable protocol also has the potential to bridge a wide range of platforms and devices including embedded, mobile, Web 2.0 and Enterprise IT.

However, there is still much more to be done before M2M will become truly ubiquitous. Product certification, coordination among mobile standards, ISO 27001 information-security certifications,   software, data analytics, data management, etc. all must be better aligned in order for machine-to-machine (M2M) solutions to deliver optimal value.  

Finally, if fully supported by the open source community, MQTT could conceivably allow embedded hardware designers, embedded software developers, system developers and integrators to build the foundation for the next generation of applications with higher levels of innovation, connectivity, and functionality that can create "smarter" buildings, industries, and cities. 

Two popular current and next-generation M2M solution concepts for the uility and transportation segments are highlighted in the table below.

 

Source: VDC Research Group, 2011

Embedded Standards: COM Express Form Factor Expands Connectivity Options

On October 31, Emerson Network Power, Freescale and Kontron jointly announced their collaborative efforts to expand I/O connectivity options for the COM Express specification have resulted in a new pin out definition for modules that are compatible with COM Express mechanical requirements.  

The new pin out definition allows a range of implementations to take advantage of Freescale’s QorIQ AMP and P Series products, including the T4240 processor. The T4240 device integrates a host of hardware accelerators, with 12 dual-threaded, 64-bit Power Architecture cores, providing 24 threads to address high-end data plane processing applications.

Dual-threaded efficiency, improved DMIPs per thread and higher frequency deliver 4x performance gain and more than 2x power efficiency gain over Freescale’s previous-generation QorIQ P4080 device. Advanced capabilities allow for intelligent sharing and duplication of resources between threads and a larger amount of on-die cache per core.

According to the PCI Industrial Computer Manufacturers Group (PICMG), COM Express is best suited to a limited range of processor architectures. The results of this collaborative effort between Emerson,  Freescale, and Kontron should provide several board developers as well as OEM customers with wanted alternative architectures on this form factor. 

VDC recognizes that embedded standards such as COM Express must evolve with, and even anticipate, the dynamic application needs of the communications, networking, industrial automation and control, market segments.  This industry collaboration between Freescale, Emerson, and Kontron underscores the range of productive market development possibilities when leading embedded organizations combine resources to develop a new pin out definition that can increase flexibility and functionality for the incresingly popular COM Express standard.

In VDC's recently published 2010 - 2015 forecast and analysis of the COM modules worldwide market ("Mezzanine Cards / Computers-On-Modules: Volume 3, Track 2: Embedded Boards Supplier Analysis"), our analysts closely examine the opportunities and competitive landscape for this fast-growing segment of the embedded markets. 

AppliedMicro Announces 64-Bit ARM-based Server-on-a-Chip to Drive Energy-Proportioned Cloud Computing Concepts

On October 27, Sunnyvale, California-based AppliedMicro demonstrated core functionality of a 64-bit ARM processor on an FPGA platform during the ARM TechCon 2011, held October 25 - 27.  This announcement comes on the same day as ARM Holdings' announcement of its 64-bit ARMv8 instruction set architecture, and parallels AppliedMicro's launch of the industry's first 64-bit ARM "Server-on-a-Chip" solution in a single footprint, designed to deliver both ultra low power and exceedingly low cost points.

AppliedMicro's demonstration platform referenced above consists of Xilinx Virtex-6 running Server SoC consisting of ARM-64 CPU complex, coherent CPU fabric, high performance I/O network, memory subsystem along with a fully functional SoC subsystem.  In terms of future scale, AppliedMicro's 64-bit processor family is also capable of leveraging a large installed base of ARM software and hardware solutions which will likely have appeal to the open-source software community. 

VDC believes that developing advanced low-power, low-cost processor solutions will create a number of opportunities for Applied Micro, particularly with top-tier OEMs and ODMs in the cloud computing space, and especially as the platform is enabled with server-class open-source Linux distributions.  In addition, Applied Micro is believed to be working with a number of server-class and embedded Linux vendors whereby full open-source compilers and tool chains will be provided by AppliedMicro and ARM ecosystem partners. Additional optimized compilers, tool chains, and debuggers will be provided by key strategic partners.

Clearly, AppliedMicro's demonstration underscores the potential for a more sustainable, and perhaps even energy-proportioned, future of cloud computing by leveraging this new architecture to provide high-performance devices that consume less power and lower costs compared to today's server chips.

Full ecosystem support for the FPGA platform with performance metrics is expected to be available for customer evaluation by the first half of 2012. A full suite of cloud computing applications driving various target workloads, such as Web, Memcached, Hadoop, Webserver, will also be available within that timeframe, according to AppliedMicro. The company selected dedicated IC foundry company TSMC as its manufacturing partner to develop 64-bit ARM architecture SoCs on 40nanometer (nm) and 28nm process technology.