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The Future Of Semiconductors: What The Kodak Story Teaches Us

Forbes Technology Council

CEO of AIoT chip company XMOS, Mark Lippett is a technology leader with 25 years’ experience in start-up, scale-up and blue-chip companies.

In the years since the downfall of Kodak, its strategic mistakes have been well documented: “There are few corporate blunders as staggering as Kodak’s missed opportunities in digital photography.” That’s blistering criticism, but most corporate blunders look obvious with the benefit of hindsight. The trick is to anticipate disruptions with vision and act with courage.

In 1980, Kodak celebrated its 100th birthday, by which time it had established an unassailable lead in the production of photographic materials. Although photography equipment was becoming increasingly accessible, fabrication of the photographs themselves was a costly and time-consuming process, sometimes taking weeks for a developed film and prints to be received.

This meant that the time it took to see the results devalued the satisfaction of the user’s experience, as, by the time you received your prints, the event you were attempting to capture was firmly in the past. Cost and lack of feedback affected behaviors — in simple terms, people feared failure. They were conservative and formulaic about the photographs they took for themselves and employed professionals with specialist skills and costly equipment to reliably capture those unrepeatable life events.

Snapshot

Instant cameras (made popular by Polaroid in the 1970s and 1980s) directly addressed these problems — the self-developing film created a print shortly after the photograph was taken. Although the materials were expensive and the quality was relatively poor, instant cameras offered the opportunity to get immediate satisfaction and feedback, enabling adjustments to be made if necessary.

These devices found a niche and can still be bought today. But they didn’t dominate the market. Kodak’s core business continued to thrive, reaching its all-time high share price as recently as 1997.

Ultimately, Kodak’s business was derailed by the widespread digitization of photography — a technology Kodak engineer Steven Sasson developed in 1975. Kodak failed to appreciate the speed of innovation and the transformative effect that digital media would have on its user base, disrupting the cost of taking a photograph while also delivering immediate satisfaction and the opportunity to review, refine and retake without penalty.

In short, Kodak had the keys to the technology that would ultimately spell bankruptcy for its business. They resolutely failed to capitalize on that advantage.

Mirror Image

Today, with smartphones offering ever greater quality, professional-grade photography is democratized and film is a distant memory. So, what relevance does the Kodak story have now?

I believe that there are parallels with another creative pursuit that, ironically, relies upon photographic techniques for fabrication: the semiconductor business, which is flush with creative and supply challenges that suggest it’s poised for similar disruption.

Currently, semiconductor design is expensive and time-consuming — orders of magnitude more than photography. Its users — highly specialized professionals — must wait years to determine success, and the economics preclude taking multiple “shots.”

At the same time, the costs of failure are huge — there’s no going back, and opportunities are missed forever. The traditional design dynamics are becoming increasingly problematic in the fastest-moving consumer markets, but even traditionally slower segments like the industrial and automotive industries are starting to strain.

Semiconductor businesses that sleepwalk into the same strategic paralysis as Kodak are likely to fail. The resulting story may be all too familiar.

Overexposure

An industry reaction is the field-programmable gate array (FPGA), which, for more than two decades, has provided the flexibility of a blank canvas and — for a small group of specialist designers — addressed the time and expense of getting a semiconductor product to market. Fast market feedback enables adaptation, which increases the likelihood of commercial success.

However, the devices themselves are expensive, and the quality of results isn’t good enough for many uses. In our analogy, the FPGA is like an instant camera: It’s found its niche, but as of yet has failed to disrupt the mainstream.

Are You Ready For Your Closeup?

Digital photography enabled one of the largest creative communities worldwide through accessible, affordable technology. The instant results that the technology offers have drastically shortened the feedback loop, maximizing the chance of success.

The future of the semiconductor industry belongs to platforms that can emulate that effect. Software engineers represent the largest creative community in the semiconductor world — a community at least an order of magnitude larger than the hardware engineering community required to develop chips and FPGAs.

So, to disrupt the traditional semiconductor model, we need a medium that maximizes the breadth and speed of expression for the software programmer. This can come in the form of a flexible off-the-shelf platform for delivery of their creations that’s low-power and affordable to produce — essentially defining the behavior of silicon purely in software.

The successful realization of such a vision may well deliver a seismic effect comparable to the digitization of photography. In a semiconductor market that’s widely predicted to exceed $600 billion in 2022, the rewards to those with the courage and creativity to deliver it will be great. Just as businesses other than Kodak were able to compete for the crown in the photographic industry, so can the organizations in pursuit of the chips that could dominate the semiconductor market in the coming years.


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