CEO interview: Staying independent at Nordic Semiconductor

Interviews | September 1, 2023

By Nick Flaherty

Nick Flaherty talks to the CEO and CTO of leading IoT chip designer Nordic Semiconductor on its fortieth anniversary on its plans for the post-Covid, AI future and staying independent.

Over the last forty year, Nordic Semiconductor has become the market leader in Bluetooth Low Energy connectivity chips, and has a growing portfolio of WiFi and cellular LTE-M and NB-IoT chips. These are used in a wide variety of applications, including wireless PC peripherals, gaming, sports and fitness, mobile phone accessories, consumer electronics, toys, healthcare and automation.

Earlier this month it announced plans to buys the assets and staff of always-on AI startup Atlazo in San Diego in a deal that is typical for the company.

“The vision for the company is to be a European leading semiconductor dedicated to wireless IoT,” said Svenn-Tore Larsen, CEO since 2002. “Staying independent is a challenge,” he said. “We have a common customer base with companies that would like to acquire Nordic and the important thing for us over the last two years which has been difficult for the semiconductor industry is a strong relationship with our main shareholders and keeping our staff motivated.”

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“Ultimately it’s the shareholders that have the decision, Obviously the board has to approve any deal but the board in a public company represents the shareholders. So we need to keep motivating our staff, and the shareholders need to believe in the story.”

This is particularly important in 2023. The Covid-19 pandemic saw a boom in sales of consumer and medical equipment, but that has slowed down dramatically this year.

“We have had organic revenue growth, but it decreased in the first quarters of 2023,” said Larsen. “We have been extremely tight on wafers and the growth we saw was driven some by Covid, as medicare understood they have to use wireless more, and there was significant higher usage during Covid and now it has calmed down. But what we and our competitors have seen is there has been a significant drop in the export of IoT products from China.”

This is the result of customers shifting production back to the US and Europe in response to the US-China trade war. “We have been switching our customer base to Europe and the US, and these are just catching up the loss from Asia,” he said.

The trade war has also driven the US and EU to stimulate the local semiconductor supply chain with their respective CHIPS Act legislation, but this is more focussed on supporting capital expenditure for chips fabs such as ESMC and Intel’s Madgeburg fab.

“The EU CHIPS Act is very capex oriented and fabless companies like ourselves don’t find a lot of opportunities in that pot of money,” said Svein-Egil Nielsen, CTO.

“These are good initiatives, and when you build new fabs you are always looking ahead, but these are not for mixed signal processes so we have to stick to our existing vendors for quite some time ,” said Larsen.

“We had been restricted in the second half of 2022 and its starting to ease up, and now we don’t have capacity limitations on wafers but we are moving to multiple vendors,” he said.

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One of these is GlobalFoundries, with Nordic using the 22nm FD SOI process (22FDX) for the first time for a chip with multiple ARM Cortex-M33 processors, clocked up to 320 MHz and multiple RISC-V coprocessors

“Our nRF54H20 SoC is our first major design on 22FDX at GF,” said Neilsen. “Right now we are thinking 22nm is a good node to design in right now but we are looking at smaller geometries from a research point of view. It’s getting hard to calculate the way back on the return on investment (ROI) and our devices will have to be bigger before it makes sense.”

That can be machine learning (ML) accelerators, was well as more compute engines and more multiprotocol support. “ML can consume as much memory as you want,” he said.

“But we have been conservative. It would be very expensive for us to use 10nm,” said Larsen. “Instead we have always been looking at what value we bring to customers. We can look at competitors looking at as low cost as possible, but we look at what the customers of Nordic need for the next generation and use this as the specification. Added value is vital to keep the customer for the next generation of products.”

A clear indicator of this is how the average selling price (ASP) is developing, he says. “Our ASP is significantly higher than two years ago and we work hard to differentiate the products and bring value. More of this is adding value in firmware.“

Software is key, with 40% of the R&D staff at the company now working on software rather than hardware.

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“More and more we see customers spending less time on hardware and more on firmware and back end on cloud connection, so we need to build security which needs a lot of work and functionality and the software, and that is a big counter to the commoditisation of the parts,” said Nielsen.

“We have said that Bluetooth is not a commodity, its about the interoperability and the software stack. At the end of the day that matters to customers, especially those that have been burnt before with other suppliers.”

The company has branched out from Bluetooth into cellular IoT with support for LET M and NB-IOT, and more recently with WiFi through the acquisition of a UK design team from Imagination Technologies.

“By revenue BLE is top but we look at where the market is evolving,2 said Larsen. “We spent a lot of effort on LTEM and NB-IoT and that has been a slower rollout than we expected but there are many more stakeholders than there are for standard Bluetooth. But as operators start seeing the earning potential of NB IOT we think it will really take off.”

Nordic teams for IoT software SIM

The company is also looking at the newer versions such as the reduced capacity (Redcap) technology that provide higher bandwidth than NB-IoT.

“There is concern in the cellular space that players developing the specifications aren’t thinking about the use cases so we are aiming to be simpler than a mobile phone and at a cost point where it is acceptable,” said Larsen.

WiFi fills out the multiprotocol coverage. “If you look at WiFi what’s important for Nordic is you have BT for short range, WiFi for medium range and cellular for long range and there are combinations emerging,” said Larsen. “We are the only company that can offer such combinations on our roadmap.”

Generative AI

Like every other semiconductor company, Nordic is also looking at how to use AI and machine learning in its designs and to speed up its design process using large language models such as Co-Pilot.

“We are looking at LLM for faster development,” said Neilsen. “We have engineers using copilot and we are running studies on using AI on our development processes but there’s not a lot of open source RTL so we will have to run our databases into our own models and we are exploring that for analog layout, documentation and test benches.”

The company is also developing its own cores based on the open RISC-V instruction set architecture and is part of the recently announced global RISC-V joint venture.

“The 54 has both ARM and RISC-V cores, the RISC-V are more embedded for housekeeping, and the major functions are handled by the ARM cores,” said Neilsen. “Going forward the same strategy applies and we have options to configure our own cores to solve problems in a different way, it gives us options.”

The joint venture is focussed on more availability of cores and software. “Yes it is heavily driven by automotive application but all the development that the automotive sector puts in will eventually benefit IoT as well, such as building more functional safety that benefits the IoT.”

Nordic Semiconductor buys its memory supplier

Despite some high profile deals, the company is more interested in acquiring design teams rather than whole companies, says Larsen. This was highlighted by the Atlazo deal, which is set to complete by the end of 2023.

Rather than buying the company it has acquired the IP portfolio and core team of eight for an undisclosed sum. This gives Nordic ownership of cutting edge low energy AI/ML technology and advanced sensor front end technology for health-related applications. While this is seen as a small bolt-on acquisition for Nordic, it is strategically significant an, giving Nordic its third R&D site in the US after the acquisition of Mobile Semiconductor in Seattle alongside its office in Portland, Oregon.

“Adding this group of highly experienced engineers and their intellectual property is an excellent fit with Nordic’s ongoing product development. We are confident that this integration will accelerate our progress towards ultra low-power AI/ML, and anticipate that we will begin to see the initial benefits of this acquisition within 12-18 months of closing the transaction.” said Larsen.

But it’s more about keeping customers, staff and shareholders happy by adding value than pushing for growth by acquisition.

www.nordicsemi.com