Fabless ecosystem in the era of channel 2.0

  • 2007년 April 19일
  • News

On the entering of the Web 2.0 era, the center of power between manufacturers and retailers has shifted. In the past, manufacturers ordered the conditions of inventory, price and marketing to retailers. That’s because consumers purchased brands of manufactures such as Kodak, Craft and Coca Cola. Nowadays, however, consumers purchase brands of retailers such as Walmart and Target. Retailers which have all information on customers naturally order conditions of inventory, price and marketing to manufacturers.

‘Channel 2.0’ is becoming a sensation. In the channel 2.0 era customers are expected to purchase brands of solution providers(SP) rather than those of vendors. In the meantime, SPs have relied on the power of brands of vendors, proudly boasting of the relationship with vendors (e.g. MS Gold Partner, HP authorized reseller) in their marketing materials. However, from now on SPs will alternatively choose competitive technologies of various vendors in order to develop a solution which enables to create the best added values, not depending on particular vendors.

What customers want are customized services such as solution, additional technical support and consulting. In the channel 2.0 era, SPs which offer solutions and additional customized services to customers are expected to order conditions of inventory, price and marketing to vendors. This is exactly the way that in the Web 2.0 era retailers in possession of all information on customers order general conditions to manufacturers.

Moreover, SPs are expected to become globalized quickly through mega mergers for the next five years. Although there are currently more than 100,000 of channel companies in the U.S., we foresee that only 10 mega VARs (Value-added reseller) will take up 75% of the relevant market, and that mid-sized local VARs will take up the remaining 25% of it. Meanwhile, more specialized SPs should form supply chains through solidarity, in an attempt to compete against mega VARs and enhance the negotiating power.

Generally, the next-generation semiconductor is defined as SoC (System on Chip), literally referring to a bundle of reusable intellectual property (IP). Lately SiP (System in Package) takes precedence for its shorter time and cheaper cost in developing.

If then, what kind of chip vendor would be better to own a value chain with SPs in the channel 2.0 era? I would say ‘platform’. That’s because SP can create an added value by developing a solution in a way of laying various software applications over the platform. Then, what chip has characteristics of the platform? The most presentative case is the host processor ship like CPU. Intel and ARM dominate the market. Another is the network coprocessor chip which offloads the processing of internet official protocol standards from CPU. This becomes the IP communications platform of various embedded internet devices in the ubiquitous age. This is the field of infrastructure led by Korea, a powerful country of the IT industry.

Recently, the point is made that SiP should be vitalized by creating clusters in order for fablesses of tender age to stay competitive in the global market. In addition to that, fablesses should have the ability of mixing well with a value chain in SPs’ gigantism and globalization as a result of shifting power to SPs from vendors; this is to say that a structured approach connected to the marketing is necessary. I’d like to suggest one method. SiP which can lay applications certified in a particular application field over the platform with market-leading infrastructure characteristics should be realized in many different ways. As the market grows, the platform enables to participate in a bigger value chain at the same time and can be chosen in a variety of segmental markets. Furthermore, having equipped with market-leading infrastructure which becomes value chain initiatives required in the channel 2.0 era, the ecosystem of Korea’s fabless semiconductor industry is expected to advance spontaneously,

[Source] [E-Paper] ET Opinion – Fabless ecosystem in the era of channel 2.0|By Lee Woon-Bong