I had a conversation with an older investor, he talked about how one company used to manufacture and then held the for the chips that went into all the hearing aids at one point. What was that company? Why did it evolve away from this market structure towards vertical integration of the few companies dominating globally? Thank you so much, I would love your thoughts.
TI became dominant because they were specialized in ultra low power ( that’s probably the company you heard about).
Many SoC (system-on-chip) device companies have become vertically integrated because controlling more of the stack gives them big advantages in performance, power efficiency, cost, and product differentiation.
One key thing about SoC devices, unlike windows PCs, is that SoCs require a tight integration between software and hardware. For example, an iPhone requires tight software <=> hardware integration for power management . Sonova can tailor their hardware according to their DSP needs instead of having to create “magic” software to make a generic CPU do what they need (and deal with the inefficiencies associated with this). This integration is crucial for devices that must be both powerful and extremely power efficient .
Just look at Apple: they got tired of paying exorbitant royalties to Qualcomm and decided to do their SoCs at home, which saves them tons of money .