Monday, November 17, 2014

marketing custom silicon without aiding your competition

I have, on several occasions, remarked that it would be nice if certain, unnamed chip design houses (on at least one occasion I imprecisely used the word "vendors") would make their chips available to the startup/DIY/hobbyist/education market, in lot sizes appropriate to that market.

So what, you might ask, would prevent other companies from scooping up those chips and using them in competing products? There are two answers to that question.

First, you don't market your latest designs this way, particularly not when your own products are parts-supply constrained. Rather, as each design reaches the end of its life in your own product lineup, you let the fabrication line run for just a bit longer to produce a few extra parts (thousands, tens of thousands, or hundreds of thousands), for use in repairing returned devices and for sale, at a significant mark-up, to alternative markets, as to the producers of small circuit boards like the Raspberry Pi, or even as single parts to supply houses like SparkFun.

That "significant markup" is the second reason why this would not aid the competition. While you may be able to cost parts included in your own products at a slim margin above the cost of production, there's no need to apply this practice to parts sold into the open market. You can charge several times, even ten times, the cost of production, and still be doing your customers a favor.

The only party who would stand to lose from this, so far as I can see, is Atmel, who has the lion's share of the market for processors used in boards sold to individuals and in small lots. However, since they already have the relationships for serving this market, as well as some potentially useful processor-design related IP, a great first step would be to buy Atmel.

In any case, as the size of this business grows, and it's sure to, it will become more reasonable to create custom designs better suited to it, combining cores honed for highly-competitive mass markets with more generic i/o circuitry. It will also become more reasonable to make one's software development tools available for use in programming devices into which one's chips have been incorporated.

Not saying who I'm talking about/to here, but, if the shoe fits, please try it on.

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