In brief

• This report examines As-a-Service (AaS) as an increasingly relevant competitive growth model for the semiconductor industry.
• AaS enables an agile and dynamic business model with on-demand and plug-and-play services targeted to both consumers and businesses.
• The top 6 reasons for adopting an AaS model along with the right questions to ask when considering an AaS business model.
• Download the AaS Quick Reference Guide to determine the different advantages to each model.

Semiconductor companies can learn from and adopt well-known practices and models of other AaS providers and achieve outcomes.

Driving semiconductor growth through as-a-service models

Executive overview

For more than 50 years, the semiconductor industry has enjoyed a level of growth unparalleled to many industries. Moore’s Law dictated that processing power would double every two years at the same cost. The resulting innovation and growth that this spurred globally has been undeniable and has lasted more than five decades. However, today’s semiconductor companies are finding themselves in a completely different landscape. Moore’s Law is slowing, chip development costs have skyrocketed, competition is coming from non-traditional places, and customers are demanding exponentially more power and functionality to support exciting new applications such as the Internet of Things (IoT), artificial intelligence (AI), and soon, quantum computing. As a result, semiconductor companies are thoughtfully exploring new ways to grow and compete more effectively to secure new revenue streams and develop innovative ways to capture additional margin. This report examines As-a-Service (AaS) as an increasingly relevant competitive growth model for the semiconductor industry. Originally successful in the software realm, AaSbusiness models are poised to help semiconductor companies fuel growth, boost revenue, innovate faster, and deepen relationships with customers. When planned and implemented correctly, AaScan substantially increase shareholder value and improve predictability of revenue. However, if executed poorly, it can negatively impact a company’s bottom line.

What is AaS AaS, also referred to as Everything-as-a-Service(XaaS,) can be defined as the extensive variety of services and applications emerging for users to access on demand as an operational expense instead of outright purchase of the underlying software or equipment as a capital expenditure.1With new AaSbusiness models, market leaders can now be more agile and dynamic, with on-demand and plug-and-play services precisely targeted to both individual consumers and businesses.2 By moving to an AaSmodel, semiconductor manufacturers can gain both a captive audience and recurring revenue. This is in stark contrast to the current monetization model that is typical across the value chain, involving one-time revenue generation from the sale of semiconductor intellectual property (IP), manufacturing equipment or end product(s). AaSalso promotes high customer retention and higher switching costs by lowering the barriers to purchase. These additional services can then feed back into traditional sales models because companies stay top of mind for future revenue opportunities