One year ago this week I wrote that SiTime had cumulatively shipped 20 million units, and now I can write that we have cumulatively shipped 50 million units. Each year we ship more than we have shipped to date. This is quite exceptional in an industry that compounds at five to ten percent a year on the whole. Of course the reason SiTime is succeeding is because MEMS is displacing quartz.
The incumbent quartz oscillator companies did not see this coming; they did not expect this could happen. I understand their thinking though, since it would seem highly unlikely that a strong industry with an entrenched technology could be displaced. But actually it is common; in fact it is the rule rather than the exception.It happens in every human endeavor, in every technology we invent, and in every industry we build.
One example I have recently been thinking about is the steam locomotive industry, and in particular Baldwin Locomotive Works. Baldwin was a hugely successful locomotive manufacturer founded in the 1830’s. In my opinion it built the most beautiful steam locomotives ever designed. Baldwin built the first locomotives in the United State and refined its technology to where it had an intrinsic beauty.This was a pinnacle of high technology and was responsible for tremendous socioeconomic change in the United States. Standing near these engines today I am always impressed, and to be near an operating one is an experience that one remembers.
But Baldwin didn't understand how diesel locomotives could replace steam. In the early 1900's it failed to grasp the key thing that made diesel important: Diesel was supported by a huge and growing industrial infrastructure forming around the internal combustion engine. This infrastructure included vast investments in engines and fuel. The steam infrastructure was dwarfed by comparison. Since Baldwin could not leverage the internal combustion engine it chose instead to emphasize powerful mainline steam engines, developing ever larger brutes to compete with the new yet still smaller diesel engines.
But within a few decades diesel engines grew in power, exceeded steam in durability, and became less expensive to operate. The story ended poorly for Baldwin when it eventually tried to transition to diesel but hedged too much and moved too late. It finally failed unceremoniously in the 1970’s. This happened to all the American steam locomotive manufacturers: Baldwin, Alco, Lima, Porter, and others, all gone or parted out.
A similar thing is now happening in the quartz oscillator industry.They can’t leverage the growing strength of CMOS and the silicon fab industry, and they are not making the transition. In one sense, what SiTime is doing is revolutionary – we are replacing an industry. In another sense what we are doing is common – we are turning the page on an old way of doing things and starting a new page with a better way of doing things.
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