Programmable Logic, The Next Generation of Semiconductor Design

May 12, 2008, Semiconductors, Tech Investing — Tags: , , , , , , , , , , , , , , — @ 2:36 am

I recently finished a paper on investment opportunities in the next generation of semiconductor design and how it favors Xilinx, Altera, and to a lesser extent Microchip. Since this is a blog I will micro-chunk the papers content over several posts. The thesis of this paper is that semiconductor design will be based more around an integrated design and manufacturing platform than the historical approach of cobbling together various vendors’ offerings based on best of breed research. Similar to how IT departments have consolidated around only a handful of vendors semiconductor designers are consolidating around the major vendors’ platforms.

Since the bursting of the .com and telecom bubbles in 2000 the technology infrastructure market has evolved from a high growth industry into the cash cow phase. Winners such as Cisco, EMC, and Xilinx have tremendous free cash flow. While losers like 3Com and LSI are struggling to survive. With technology products especially there is little value purchasing second tier products so the leading companies only grow stronger until the next major secular inflection point. New startups are reduced to only attack market niches. For digital semiconductor chips as well as IP networking and storage the next secular inflection point is probably a decade or more in the future.

In this paper (and subsequent blogs) I will explain how the structure of the semiconductor market is going vertical due to the dramatic increase in semiconductor complexity requiring semiconductor design integration and how this favors the two leading FPGA (Field Programmable Gate Array) companies. The next generation semiconductor products will be designed using Xilinx and Altera’s platforms.

A major acceleration in growth of the FPGA market should occur in 2010 based on several factors listed below. The two companies that control approximately 85% of the FPGA (Field Programmable Gate Array) market are positioned to exploit this inflection point in growth.

  • When 65nm devices go mainstream
    • FPGA’s as SoC (for embedded systems), especially with ARM and MIPS soft-core processors
    • The continued acceleration of FPGA’s stealing market share from ASICs and ASSPs
  • FPGA’s in new markets
    • x86 servers and PCs
    • Industrial & Automotive
    • Consumer devices
  • Beginning of construction for the next generation communication network driven by
    • The communication equipment is nearly half of the FPGA end market
    • The glut of dark fiber from the .com bubble will be in use
    • The explosion of true mobility due to 802.11n, WiMax, LTE, etc
    • The explosion of interactive TV (through high definition video over IP) enabled by fiber to the home
    • The virtualization of the data center, including desktops
  • The end of the global slowdown, re-invigorating world-wide growth of capital goods products, which are increasingly designed with digital devices like FPGAs

Real Time Location Systems (RTLS) – 2007 A Year in Review

March 14, 2008, Wireless — Tags: , , , , , , , , , — @ 1:05 am

The year 2007 saw major improvements in RFID reader technology, edge server capability (especially with the release of the latest Microsoft BizTalk server software), and RTLS (Real Time Location Systems) solutions. All of these are improving the solutions available for yard management. All of these are improving the solutions available for yard management and decreasing the costs. Now deploying a yard management solution for a mid-sized yard can often cost in the $100,000s not the $1,000,000s; providing a straightforward ROI. These solutions no longer require using proprietary protocols, but work on industry standard protocols (WiFi or ISO 24730).

Below is an overview of the top RTLS and yard management solution providers. These solution providers all advertise successful implementations and offer the flexibility of using tags that are permanently or temporarily mounted (usually using a magnet). It is also possible to buy temporary tags directly from manufacturers such as Premo Group.
 

Solution Provider Tag Technology

Frequency

 Comments
Aero Scout WiFi 2.4GHz Standards based.
WhereNet ISO 24730 / WiFi 2.4GHz Standards based. Has a reputation for having the best technology, but being expensive.
Fluensee Passive RFID / GPS UHF Browser based UI. RFID hardware dependent on partner offerings. Hardware agnostic (Motorola is their preferred provider; for Identec would have to write a new driver)
PINC Solutions Passive RFID / GPS 905-925 MHz Offers temperature monitoring, powered by the reefer, for Thermo King and Carrier reefers.

PINC Solutions claims that ROI is usually realized in less than one year; with Aero Scout making a similar claim. Fuensee claims to be a third the cost of WhereNet. Although WhereNet, acquired in February 2007 by Zebra, is lowering prices now that its’ technology has been accepted as an industry standard. Below I’ve outlined the major RFID developments affecting RTLS and the intermodal container industry.

RFID in the Intermodal Container Industry

  • Jan 2007, Dow Chemical is piloting a RFID project to track intermodal containers with hazardous chemicals
  • March 2007, Oracle, Savi, and EPCglobal completed a pilot project to track intermodal containers in Asia
  • April
    2007,     WhereNet’s RTLS solution became a global standard (ISO standard 24730)

    This is the first global technical standard for RTLS. A major target of this standard is the international intermodal shipping industry and its more than 18 million containers in use around the world. The standard defines an API to share location data over a network using web services. It also defines an air interface standard in the 2.4GHz spectrum for tags and readers. The asset’s location can be determined by multiple 2.4GHz readers or by low frequency (120 kHz) exciters.

  • April 2007, Navis and Identec picked to design Georgia Port Management System
    • Includes installing active RFID tags on over 7500 trucks at the Georgia Port Authority’s Garden City Terminal in Savannah where a huge WhereNet active tag system already orchestrates the positioning of intermodal containers
  • May 2007, the e-seal standard (ISO 18185) was ratified

RFID Marketplace – Current State & Forecasts

Frost & Sullivan (May 2007) - North American RFID market

  • The passive RFID tag market generated revenues of $124.6M in 2006
    • Predicts $486.6M in 2013 - compounded annual growth rate (CAGR) = 21.5%
  • The RFID reader market generated revenues of $23.1M in 2006
    • Predicts $241.6M in 2013, CAGR = 40%
    • The reader market still primarily driven by Wal-Mart and US Department of Defense compliance
  • Frost cautions that read accuracy is still imperfect and represents a hurdle to wider adoption

In-Stat on WiFi RTLS (May 2007)

  • WiFi RTLS tag shipments hit 135,000 in 2006, up from 20,000 in 2005
    • Predicts CAGR of 100% through 2010
  • Unit price of WiFi tags has decreased from about $50 to $45 (expected to fall to $30 in 2007)
  • G2 Microsystems has the best chip
  • AeroScout has well over 50% market share in terms of number of tags shipped because of two advantages
    • A Close relationship with Cisco
      • WhereNet also has a close relationship with Cisco and in August 2007 entered the WiFi RTLS market through a new dual-mode device (previously they had not been using WiFi)
    • Its technology can serve large outdoor environments where other WiFi RTLS technology might not perform well.

RFID Reader & Ede Server Advancements

  • March 2007, Intel’s release of a new chip for RFID readers that simplifies reader design allowing reader manufactures to accelerate price cuts, add features, shrink form factor, and increase reader compatibility.
  • April 2007, EPCglobal’s ratification of the Low-Level Reader Protocol (LLRP) standard
    • This will increase reader interoperability, allow technology providers to extend RFID reader capabilities
  • May 2007, Cisco and WhereNet announced an active WiFi tag that supports the industry standard ISO 24730 transmission signal or IEEE 802.11b; these tags will be available in August for $55
    • Cisco’s Unified Wireless Network version 4.1 gives WLANs the ability to format and read data from sensors
  • September 2007, NEC has introduced an RFID reader that operates at three different frequencies: 13.56 MHz (HF), the UHF band, and 2.45 GHz. The device, which NEC indicates is the first of its kind, is novel because typically readers operate at only one frequency. For example, a Gen2 reader (Gen2 operates on the UHF band) would not read HF tags.
  • September 2007, Microsoft announced the availability of its RFID software, BizTalk Server 2006 R2

Zebra Technologies as Industry Consolidator

Zebra Technologies is the largest seller of bar-code, plastic ID, and RFID printers and a major seller of readers. The sell their products in 90 countries and more than 90% of the Fortune 500 companies use Zebra printers. In 2006, about half the company’s revenue was outside the United States. In 2007, Zebra made a major push into the RTLS and intermodal transportation market by purchasing three companies.

In January 2007, it acquired WhereNet for $126 million in cash. At the time WhereNet anticipated 2007 sales of fifty million dollars. In October 2007, Zebra acquired both Proveo (a German company, for 16.3 million in cash) and Navis (for $145 million in cash).

Proveo developed a GPS- and WiFi-based RTLS solution for airport ground handlers with installations in some of the world’s major airports such as: Frankfurt, Munich, London, Singapore, and Dubai. Navis provides logistics solutions for marine terminals and other operations that manage supply chain inventory and cargo; such as port operating systems, yard management systems, warehouse management systems, and asset visibility systems. Founded in 1988, it has installations at over 450 customer sites in 50 countries. It is the leading provider of marine terminal management software with installations at 200 ports (there are 850 ports worldwide). It expected 2007 revenue of $60 million which would be double digit growth.

If Zebra is able to successfully integrate all these assets it should be a major player in the RTLS market

Glossary & Notes

Companies are far from automating their inbound and outbound containers; 58% of companies’ distribution center yards still manage inbound and outbound traffic using clipboards and spreadsheets. Of the 42% of companies using software to manage traffic most do so using a stand-alone application that is not integrated with the rest of the company’s systems.

RTLS – Real Time Location Systems

  • Solutions to track and identify the location of objects in real time using tags attached to the objects and readers that receive the wireless signals from these tags to determine their locations. WiFi and Active RFID are the two most common wireless technologies used in RTLS solutions.