Rethink embedded and semiconductor engineering services portfolios to cater to customer needs

With the advent of new-age technologies, enterprises across industries are increasingly looking for automated systems, real-time connectivity, and intelligent decision-making functionalities for different use cases. As a result, many developments related to processing, memory, and device intelligence are happening in the embedded and semiconductor engineering space in both hardware and software segments. Leading semiconductor companies are also investing in R&D, design, development, and testing of these cutting edge technologies, creating opportunities for service providers to increase their scope of work. In this PoV, we highlight some of the global semiconductor players’ interesting projects and recent developments in the semiconductor and embedded engineering landscape, including client engagements, partnerships, and acquisitions. We also recommend the areas that service providers should focus on to cater to clients’ requirements in this space.

We have identified some of the critical levers that are enabling the development in embedded and semiconductor engineering, as described in Exhibit 1.

Exhibit 1: IoT, 5G, and AI (artificial intelligence) are fuelling the demand for advanced embedded and semiconductor engineering

Source: HFS Research 2020

Leading global semiconductor companies are also investing in advanced component, chip, and system design

Leading semiconductor enterprises are developing chipsets and intelligent systems related to lower geometry design, 5G, cloud computing, and autonomous machines. Some of the examples include

• Intel is developing a strong portfolio for 5G network infrastructure.
• Qualcomm Technologies is bringing AI expertise to the cloud with the Qualcomm Cloud AI 100, enabling distributed intelligence from the cloud to the client edge and all points in between.
• Nvidia designed a software-defined platform for autonomous machines. The platform can handle a large number of applications, including high-end computing for autonomous vehicles and robots.
• Samsung developed a prototype of a 3nm chip. Samsung claims that compared to 7nm technology, its 3GAE process (3nm gate-all-around [GAA] process) is designed to provide up to a 45% reduction in chip area with a 50% lower power consumption or 35% higher performance

The deal flow has picked up in embedded and semiconductor engineering services space

Service providers have begun engaging with semiconductor clients in the last few quarters. Some of the examples include

• TCS was selected by a leading semiconductor and computer components manufacturing company to validate IoT platform development kits to increase market competitiveness, reference solutions implementation, and customer support base, enabling the manufacturer to increase both widespread use of its IoT-based Edge products and customer experience.
• HCL was selected by a leading US-based high-tech company to work on complex, high-performance chip design in an advanced technology node. As part of this engagement, HCL will work closely with the customer on the complete silicon development lifecycle, from architecture to GDS2 (end-to-end silicon design). HCL will also help the customer address the challenges that come with accelerated development while maintaining timelines and quality of deliverables to ensure first-pass success (Source: HCL Technologies Q2 FY 2020 Investor Release).
• LTTS was awarded a two-year program to set up a center of excellence in the embedded systems space. The program is extendable by an additional two years after completion of the first phase. In the CoE, LTTS will provide VLSI design services to support the next-generation product development requirements of the customer in the semiconductor domain.
• LTTS has been selected by a global semiconductor OEM to set up a center of excellence as part of a two-year embedded systems program with a value of $15 million in the first phase of the project.

Service providers have started to expand their ecosystem presence

We have observed several partnership announcements and acquisitions in this space in the last few quarters. Some of the examples include

• IBM Japan has partnered with Panasonic to improve semiconductor manufacturing processes. They will focus on developing a new high-value-added system to reduce engineering costs, stabilize product quality, and improve factory productivity.
• HCL Technologies acquired Sankalp Semiconductor (Sankalp), a technology design services provider offering comprehensive digital and mixed-signal SoC (system on chip) services and solutions from concept to prototype, in the semiconductor space.
• Cyient Europe acquired AnSem N.V., a leading fabless, custom analog and mixed-signal application-specific integrated circuits (ASICs) design company. AnSem specializes in advanced analog, radiofrequency, and mixed-signal integrated circuit design and provides custom ASICs across key industries, including automotive, medical, and industrial.
• L&T Technology Services acquired Bengaluru-based Graphene Semiconductor Services, a provider of end-to-end semiconductor services. Graphene’s expertise in complete VLSI (very large scale integration) chip design and embedded software will enhance LTTS’ capabilities in the semiconductor and product OEM space.

Three areas service providers should focus on in the embedded and semiconductor engineering space

Service providers can focus on vertical and industry-specific strategy along with manufacturing excellence, as Exhibit 2 describes.

Exhibit 2: Exhaustive portfolio including value chain, industries, and manufacturing-related solutions and services is the key for service providers

Source: HFS Research 2020

The Bottom Line: Service providers should focus on developing both hardware and software capabilities to succeed in this market

As AI is getting embedded into semiconductor devices and hardware components, capability in embedded software is becoming of paramount importance. Thus, service providers need to focus on the embedded software space along with emerging hardware concepts like mechatronics.