The old adage of “If you build it, they will come” might be translated into chip design better as, “You can’t build it, since they don’t exist.” The small but crucial profession of chip design used to be a quieter niche within the broader semiconductor market, with just a handful of companies hiring PhD grads. Now, with trillion-dollar companies like Apple, Google, Meta and more all looking to develop custom silicon, securing chip designers is suddenly an ultra-competitive business — and wages are soaring.

At its source is the rise of artificial intelligence and the need for custom silicon to improve the performance-to-power ratio in contexts ranging from mobile devices to data centers. Apple’s launch this week of its new iPhone 16 line is a case in point: years of design work have afforded Apple the ability to deliver its “Apple Intelligence” product with on-device inference with relatively minimal effect on battery life. Now, dozens of more companies want to compete in this bubbly market and beyond.

Lux general partner Shahin Farshchi and host Danny Crichton talk about the evolution of chip design and how an incumbent oligopoly of electronic design automation companies are now facing new competition from AI-driven competitors. We talk about the history of the EDA market and why custom silicon is really a reversion to historical norms, why designing chips hasn’t changed much in decades and is now rapidly changing for the first time, how large tech companies are using chip design to vertically integrate, the growing exponential complexity of modern chips, and finally, how startups are poised to have access to this market for the first time in a generation.

Produced by ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Christopher Gates⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠

Music by ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠George K