Semiconductors: Where is the innovation?

You may have noticed that I have not been talking about marketing and media in EDA and semiconductors for a few months and I've been struggling with how to talk about it for some time.  It's finally reach a head, though, so I might as well say it.

Innovation in the semiconductor sector is so rare now that it virtually does not exist.  That may be why no one in the semiconductor industry, outside of the giants, does any marketing.  But then, if you don't do marketing you won't know what needs to be innovated.  Vicious circle, that.

I've had a love/hate relationship with EDA and semis for a long time.  I've always thought they were incredibly important sectors and a source of great innovation.  I've worked with some of the most innovative and groundbreaking companies in both sectors and I always hoped to be a part of it.  But in the past few months I've come to understand what the VCs, entrepreneurs, government agencies and regional development agencies have been trying to tell me.  There is no longer any there there.

In the past year I have seen three significant innovative technologies absolutely crushed because their market -- semiconductor design and manufacturing -- was just not willing to change how they do things.  All they want to do is "reduce respins."  That's it.  Every VC I talk to has told me for the past three years that they know of no one in the industry that has a good idea anymore.  What's more, they tell me, all the truly innovative people in the EDA industry have left it for completely different niches.  

Last Wednesday I was attending a panel on worldwide innovation, sponsored by Silicon Valley Link and Eurocal Group.  On the panel were executives from SAP and they were discussing how their company encourages innovation within and without.  A lightbulb came on.  these guys said their company doesn't set a budget for innovation.  Their entire culture is based on innovation and as a result innovation happens.  By contrast, EDA and semiconductor guys brag about the percentage of their budget dedicated to R&D and, as a result, they just make incremental advances on 20-year-old technology.

So what I have seen in the past few months is where all the innovation is coming from.  And it is in software, not hardware.  Apple has been successful in creating software-enabling platforms and when they could not find a semiconductor company to listen to them and make what they needed, they went out and bought a couple of them.  Problem solved.  Don't need EDA at all anymore.

Cadence is making noise about innovation through software with their EDA360 program. I wish them luck, but the rank and file of the industry doesn't get it.  I know because I have talked to more than 60 EDA companies this year, desperately searching for some start-up that gets it and none of them do.  i have found maybe three semiconductor companies that get it, but they can't get funding... because the VCs know that the tools they need don't exist.  Even EDA Analyst Gary Smith says Cadence has a hard road in front of them because they lack the tools to make the vision happen, and no one is funding innovation in EDA so where will the tools com from?

So is this a bad thing?  Not really.  I've also been finding companies, that are getting funding, that are figuring out how to deliver functionality on off the shelf-hardware or letting their product reside on the cloud.  The semiconductor and EDA worlds are quickly just becoming a convenience store to technology; a place where you drop in when you need an overpriced bottle of milk at the last minute.

So I have found the innovation centers I have desperately wanted to support.  I will still look fondly back to my technology roots and will even take a meeting now and then, but the world has passed my old stomping grounds by.  Time to move with it.