Foundry Capacity Shortfall Stifling IoT Growth, Says Silicon Labs President

Lack of foundry capacity is hampering growth in an “exploding” IoT market, Silicon Labs President Matt Johnson told Consumer Electronics Daily Wednesday as part of the fabless chip company’s virtual Works With 2021 conference. Silicon Labs expanded the Works With IoT developer conference -- its second -- beyond the smart home this year, to include lighting, commercial, industrial and retail.

The challenge to increase capacity in the semiconductor industry is exacerbated by the long lead times required for tooling and installation in fabrication plants, Johnson said. Demand has been increasing and capacity hasn’t grown at the same pace. “Assuming there’s not a macro shift in demand, we’re looking at least a couple of years here of demand-supply imbalance,” he said.

The volatile supply chain phenomenon is the result of several years of demand and supply imbalance, Johnson said. “It’s hard to order anything right now and have it not be delayed,” he said, calling the situation “painful” for semiconductor companies. Johnson, due to become Silicon Labs' CEO when Tyson Tuttle steps down Jan. 1, wouldn’t quantify the revenue hit to the company due to constrained capacity at a time when IoT demand is spiking, saying only that IoT is going through a “megacycle” and “hitting its stride in multiple areas.”

Commenting on the delay of the Matter standard's launch to mid-2022 (see 2108300053), Johnson called the cross-industry effort “fairly unprecedented,” with companies the size of Amazon, Apple, Google and Silicon Labs working so “collaboratively and with so much diligence to really get this thing right.” The work to solidify the Matter standard is “complex,” Johnson said, “but we all agree it’s important, and we all agree it must happen for our industry because we all want this better interoperability, this better user experience for IoT devices.” Matter means “alliances changing” in their missions and charters and companies that compete with each other working together, he said. That “hasn’t broken down,” he said.

Johnson isn’t discouraged by the delay, he said: “The industry’s leaning into it to make it work.” When things have gotten difficult -- “which they always do when you’re trying to define something like this -- people aren’t stepping out of the way,” he said: “They’re doubling down to make it work, but sometimes it takes more time.” It isn’t often in the electronics space that companies are willing to work together “to make something this big and this important happen.”

When Matter was first discussed publicly in May (see 2105110064) there was speculation the initiative couldn’t work, that companies would “revert to their home turf and their own solution,” said Johnson, “but the thing is, their own solutions haven’t worked.” The biggest surprise for Johnson is that Matter continues to build momentum between the companies driving it and customers that want it, he said. For Silicon Labs, Matter’s success is huge. It’s the largest code-contributing semiconductor company to the Matter initiative, contributing over 20% of the source code, he said: “We’re all in on this.”

That’s the impetus behind a new Unity software development kit Silicon Labs announced at Works With 2021. Unity, for gateways and access points, is designed to allow customers to develop more efficiently and improve the consumer experience, Johnson said. The SDK enables translation among different wireless protocols, so developers don’t have to write as much code, he said. It can enable Z-Wave and Zigbee networks to communicate through an access point, for instance, and share commands and control “without the customer even knowing it’s happening.”

IoT developers can use the Unify SDK to advance their products and platforms before the expected industry adoption of Matter, enabling cross-platform wireless communication with Matter devices, Johnson said. “From a consumer perspective, all the devices are just working and talking with each other,” something that doesn’t currently exist in the IoT, he said. If a consumer were to buy a Matter device next year and found it wouldn’t work with an existing home network, “That’s a no-go,” Johnson said. To spur adoption, Silicon Labs made Unify open-source and available on GitHub “in the best interests of the industry in helping Matter and these other technologies be successful.”

Another focus of the Works With event is Silicon Labs’ expansion of its Series 2 wireless IoT platform that combines silicon, software, tools, customer support, security and machine learning. The company added to the platform a multi-protocol sub-GHz wireless system that offers long-range wireless connectivity -- over a mile -- with up to 10-year battery life from a coin cell battery, along with security. Applications include garage-door openers, water and gas meters, home security systems and smoke detectors. It supports Amazon Sidewalk, Z-Wave, mioty and Wireless M-Bus. The SoCs also support proprietary IoT networks.

The third Silicon Labs announcement covered implementation of Zero Trust security architectures to meet emerging cybersecurity standards, Johnson said. The architectures complement the company’s Secure Vault technologies with a custom part manufacturing service for wireless SoCs and modules. The service allows customers, through a portal, to access and customize their products during the late stages of manufacturing. They can customize part numbers and add public or private keys for security, inject certificates, change security configurations and secure debugging software “before they leave our factories,” he said.

That’s important during the current supply chain crisis, where there’s “a lot of counterfeiting, a lot of gray market,” said Johnson. Customers can simplify their supply chain with the service because they don’t have to ship to a contract manufacturer “to flash the device, ship it to their offices or factories to inject certificates and have these devices go all over the world for these steps. They can be done in the original manufacturing line.”

That type of capability will be “expected and required” of companies to show they have taken responsibility and managed the security of their devices “throughout their life cycle,” Johnson said. They support global cybersecurity and communication standards, such as President Joe Biden’s May 12 executive order mandating the implementation of Zero Trust security architectures, along with Matter and Wi-SUN requirements for secure identities, he said. The security services make it easier for developers to implement custom hardware identities and trusted over-the-air security stack updates to reduce the risk of software, hardware and wireless access vulnerabilities, he said. In addition to protecting against security breaches, they guard against intellectual property compromises, he said.