Is the IoT "chip-making" boom a bubble?

Sep 01, 2020 Hardware HUAWEI

Foucus:

• Why do Chinese chip makers focus on the Internet of Things?

• Who are the main players in the IoT field?

• Can the IoT "chip-making" acheive breakthough?

As more and more enterprises in China start to realize the importance of making chips, the era of the Internet of Things (IoT) has come. After computer and Internet, IoT is considered as the third wave of the world information industry, which is developing rapidly in China and is the focus of current society and market.

IoT has become the focus of major chip brands and technology enterprises. It is not hard to find that most of the self-developed AI chips are serving IoT-related products and scenarios.

In this regard, industry players generally have a more optimistic prediction, by 2023, 83% of the global AI chips will supply IoT devices (such as cars, smart speakers, smart watches and agricultural equipment, etc.). Meanwhile, according to the latest data from the Ministry of Industry and Information Technology (MIIT), China's IoT market reached 1.77 trillion in 2019 and is expected to exceed 2 trillion in 2020.

This wave is also shocking in the international market as well, according to the "Mobile Economy 2020" report released by the Global Association of Mobile Communications Systems, the total number of global IoT connections reached 12 billion in 2019 and is expected to reach 24.6 billion in size by 2025.

It can be said that the coming of IoT has greatly strengthened the determination of major brand companies to make chips. In the current development, the mutual promotion of AI chips and IoT has become a trend.

 

1. Who have participated the game?

The Internet of Things (IoT) is one of the universal basic technologies that will empower all industries in the future, and the autonomy of this windfall is even more critical. 

In the field of Internet of Things, many brand companies have made a clear signal to the market that they will develop their own chips. A series of factors, such as the international situation, the need for its own development, the need for industrial transformation, and so on, are driving the giants of various industries to focus on self-developed chips.

The main players can be divided into three categories.

The first category is the home appliance manufacturers that counterattack the upper reaches of the supply chain.

The smart home is the area where the public is currently most cognizant of the Internet of Things (IoT). It can be said that under the influence of Xiaomi's AIoT strategy, the home market's awareness of IoT is gradually deepening.

And many users and manufacturers are convinced that smart home appliances will be the next windfall in the home market. For this reason, seeking the breakthrough of smart home appliances and the entrance to the Internet of Everything has become a logical direction for major appliance manufacturers.

Home appliances are no longer just simple home appliances, and the upgrade of intelligence has provided home appliance manufacturers with more professional research and development needs. Competent home appliance giants began to counterattack upstream of the supply chain, and set foot in the semiconductor industry.

In 2017, Gree established a microelectronics department, and in the following years, it invested 6 billion yuan in the field of semiconductors and set up several semiconductor-related companies. 

In 2018, Konka established the semiconductor technology department and revealed that it would invest a total of 30 billion yuan to layout the full-link semiconductor industry. So far, the semiconductor has become one of the three core development lines of Konka.

In 2019, Midea cooperated with Sanan IC to set up a joint semiconductor lab, and custom developed HolaCon, a special chip for IoT home appliances, to achieve the scale application.

Admittedly, under the urgent situation, downstream home appliance manufacturers, with the firm determination and huge capital, are increasingly pushing forward to the upstream of the supply chain in semiconductor industry.

The Internet of Things (IoT) is the first to disrupt the supply chain of the home appliance industry.

The second category is the cloud service providers that link their own solutions.

In 2018, Alibaba Cloud officially announced the establishment of chip company "Ping-Tou-Ge", and then jointly with ASR released the ultra-small size and integrated single chip ASR6501 with low-power LoRa1262, aimed at applications in the IoT field.

The so-called Internet of Things (IoT) applications are precisely the scenes that cloud services focus on, such as smart cities, smart security, smart agriculture, smart logistics, etc. In these scenarios, the Internet of Things (IoT) technology is not the only core technology, but it is absolutely indispensable basic technology.

Similarly, Huawei Cloud provides a series of cloud service solutions, including many IoT-related contents, such as open-source IoT operating system Huawei LiteOS, IoT communication modules and chips, eLTE/NB-IoT/5G wireless access network, enterprise IoT and smart home gateway, IoT connection management platform, IoT network integration services, etc. 

The logic is not hard to understand: the cloud services need Internet of Things (IoT) and the AI chips also need the support of the IoT. Under the interlocking rings, it is the logical that cloud service providers anchor the IoT field to do chip business.

The third category is chip vendors that expand the scope of product applications.

They are already a class of players in the chip field. As the IoT market expands and the demand increases, those companies start to expand the application scope of their own products and focus on chip development in the IoT field.

However, their bullseye is clearly more precise than the two categories of players mentioned above.

Also applied in the field of IoT, HDSC is mainly anchored to IoT SE chips, which are also known as security chips. At present, the company's chip products have achieved large-scale commercialization, and provide complete solutions for cloud service providers about security chips such as Alibaba Cloud, as well as terminal providers in various industries.

Admittedly, the Internet of Things (IoT) field is extremely large, and the scope of applications is also expanding, which means that it is impossible for just one chip to meet the ever-exploding demand of IoT. Therefore, the professional players put their eyes on their professional fields.

Broad IoT solutions are left to big manufacturers, such as home appliance manufacturers or cloud service providers; professional players in the chip track still anchor to professional fields and deepen subdivision modules, thus forming a friendly competitive relationship with big manufacturers to jointly push the chip development in the field of IoT.

 

2. In the field of IoT, can the three types of players complete the chip breakout?

After the U.S. cut off ZTE's supply, more and more people clearly realized the importance of the technology.

The Internet of Things (IoT) is a market with unstable technology and unsettled seating, and Chinese players all aim at the opportunity to seize the market.

However, is this really the case? The answer may be confusing.

The reason is that making a chip is not simple, from design to production, especially manufacturing, each step means hundreds of engineering and long-term processing.

From the perspective of a complete chip industry chain, the ultimate breakout demand should be the synchronization or advancement of process technology.

However, at present, the players who want to breakthrough in the IoT field are more likely to stay in the chip design and development process, and very few of them actually step into the lowest level of the manufacturing process.

To put it simply, if a company wants to achieve true chip autonomy, what he needs is definitely a professional curry in the field of semiconductors, rather than a cross-border players based on their own business to expand.

However, we do not need to be demanding, chip breakout, although more in need of independent production processes, but also need the rise of the design process.

To make self-developed chip is a long way to go, from design to production, progress in all aspects is necessary. Again, it's clearly worth a try, regardless of the field.

The IoT market is the most vocal and attractive to the major market giants to enter, and it would be welcome if the core-building process could be driven forward based on their business needs.

However, if key aspects, such as process autonomy, are not achieved, such a breakout is a bit like a bubble. Ultimately, in the chip field, what is needed is absolute professionalism, focus and expertise.

This is an article from WeChat official accounts ZhiNengxiangduilun (ID:aixdlun), written by Chen Xuanbin, translated by Chris Yuan.