Decipher the Meaning of Silicon-as-a-Service

Jin Zhang, VP of Marketing, Algodone, Jun. 20, 2018 – 

Decipher the Meaning of Silicon-as-a-Service

Jin Zhang, VP of Marketing


Recently, I attended several top events in our semiconductor industry.

In each of these events, I asked our industry leaders what they think of the Silicon-as-a-Service business model. In particular, I wanted to know their outlook for when they plan to implement this business model. Through the discussion and conversation, however, I soon realized that the concept of Silicon-as-a-Service was not well known. There were different interpretations of what it meant and hence different opinions to my question.

This is not surprising as most semiconductor companies are still selling silicon as a product rather than deploying it as a higher revenue and higher margin service platform. However, the concept of "xx-as-a-service" is not new. In fact, using hardware as a service platform has existed for years. According to Wikipedia1:

Platform as a Service (PaaS) or application platform as a Service (aPaaS) or platform base service is a category of cloud computing services that provides a platform allowing customers to develop, run, and manage applications without the complexity of building and maintaining the infrastructure typically associated with developing and launching an app.

The "xx as a service" business model offers great value to users because

Moreover, it enables "pay-per-use" revenues or recurring revenue generation for businesses. A clear win-win for all stake holders.

In fact, this win-win business model is perfectly applicable to silicon. Despite lacking of a proper definition in Wikipedia on silicon-as-a-service, industry pioneers have already adopted this innovative business model. The first key player is not a typical member of our semiconductor industry, it is Google2! As stated in a recent article on CNBC3:

According to Google's pricing calculator4, 1 hour of a single TPU instance will generate $6.5 for Google, which means potential revenues of $57k per TPU per year. This is far above the revenue generated by the sales of one single TPU device, a win for Google. At the same time, it allows companies who otherwise cannot afford to build their own AI chips to access latest AI technology through Google, a win for its customers.

Other examples of Silicon-as-a-Service include AMD with their RadeonTM Pro Graphics5 and NVIDIA with their NVIDIA GPU Cloud (NGC)6. Both have started to offer services on their silicon in the Cloud for AI, and Deep Learning applications. AI has become a key driving force of the "Silicon-as-a-Service" model in the Cloud.

In addition to AI applications, the growth and the economics of the IoT also naturally leads to this service oriented business model, as evident by the following two articles:

Last but not the least, Accelize, a French start-up company, has developed a market place where acceleration functions such as GZIP compression or video encoder for FPGAs in the cloud can be accessed in a pay-per-use model. At the heart of this new business model is the silicon licensing scheme that protects the intellectual property as well as metering usage so as to allow pay-per-use subscription. This is where Algodone comes in. Algodone's Silicon Activation Licensing TechnologyTM (SALT) is the enabling technology to realize the Silicon-as-a-Service business model9.

Above are all the examples of Silicon-as-a-Service at play.

The Algodone's vision of Silicon-as-a-Service is broad. We believe Silicon-as-a-Service is a silicon licensing and delivery model where silicon innovations generate revenue beyond initial point of sales, either through a subscription licensing model or feature reconfiguration or upgrades later in field. Silicon-as-a-Service can be applied to all vertical market segments, beyond the ones mentioned above. How this is done will deserve a blog on its own.

We welcome industry thinkers to participate in the discussion and definition of Silicon-as-a-Service. To us, there is no mystery. Silicon-as-a-Service is about value generation throughout the device life cycle. The definition is simple, yet the doing requires courage as it will disrupt the current way of business in the semiconductor industry. But as the benefits shown by other industries and the early adopters of our own semiconductor industry, it will be a win-win for all stakeholders. We are proud to be an enabler for this disruption and transition.


1. https://en.wikipedia.org/wiki/Platform_as_a_service
2. https://cloudplatform.googleblog.com/2018/02/Cloud-TPU-machine-learning-accelerators-now-available-in-beta.html
3. https://www.cnbc.com/2018/02/12/google-makes-tpus-available-to-other-companies.html
4. https://cloud.google.com/tpu/docs/pricing
5. https://www.amd.com/en/graphics/workstation-virtualization-solutions-csp
6. https://www.nvidia.com/en-us/gpu-cloud/
7. http://www.ioti.com/strategy/silicon-service-new-revenue-and-differentiation-opportunities-iot-chip-vendors
8. https://www.eetimes.com/document.asp?doc_id=1332969
9. http://www.prweb.com/releases/2018/04/prweb15427652.htm


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