The Open Source Silicon Business Model - by John Cole

The SiliconimistSubscribeSign inPlayback speed×Share postShare post at current timeShare from 0:000:00/Transcript2The Open Source Silicon Business ModelHow do you build a company on something that's free? Daniel Schultz, founder of aesc silicon explains.John ColeMay 22, 20262ShareTranscriptThe business of semiconductor design is pure intellectual property: the worlds most creative minds, building ideas that generate trillions of dollars of value. Without the minds and the ideas, the entire industry is worth almost nothing.If this business can’t own their IP there is no business. So why would anyone build a business that gave it all away? Shareaesc’s Business ModelI sat down with Daniel Schultz, founder of aesc silicon, who’s pioneering a new semiconductor business model based on open source principles. Daniel is bootstrapping his startup. The model is not entirely new: his approach mirrors Linux’s (Red Hat) success. The core IP is free (for others), but the idea is that the value comes from support, customization, and specialized services. Revenue comes less from the product, more in the support.Tim told us this (sorta), when we were discussing wafer.space’s success: similar to Linux, lots of users means lots of demand for improvement, and that ends up driving design and improvement faster than any traditional IP model could. If the success of linux is any indication, this could work.Who Buys Open Source?It’s early days for Daniel and the open-source silicon movement. But a customer is important for a business to survive . . . so who’s buying?Daniel points to verifiable security as the killer app: silicon that, because it’s open source through the entire design and manufacturing supply chain, it can be verified back-door free. Chips that have auditability (you can verify nothing was slipped into your design before it hit the fab) will have an edge in cryptographic engines must be open to be trusted.A growing source of potential customers is the increasing demand for custom chips from smaller companies. As more companies come up with more specialized chips, this has driven a benevolent cycle for fabless companies. Open source IP could drive that faster, with less time and money locked up in IP licensing. Daniel's bet is that falling tool costs (no Cadence/Synopsys seat) plus open IP lower the barrier so far that lots of small companies start making custom chips, and that's the demand wave. The Raspberry Pi example (one engineer made their own microcontroller) is the concrete proof point.IP ForgeWe got a sneak preview into some open source software Daniel’s building to support this vision, IP Forge. I actually found it snooping around the aesc github account before our interview. The concept is a package manager for open-source IP blocks. Similar to NPM or python packages (shout out to uv, my favorite python package manager!) a designer could source, compare, and download blocks of code right into their project. I like this: IP Forge seems like a crucial tool to get customers locked in to an environment like python’s pip or uv package managers, where development speed is accelerated by rapidly building on other’s building blocks.This, but for chip design. (https://xkcd.com/353/)Experimentation Gets CheapDaniel touched on one of the super powers of open-source and the tools that are growing up around it: the cheapness of experimentation. This could be the near-term factor that drives growth in the open-silicon space. The $4-7k Wafer.Space runs let companies "try and error" instead of betting the R&D budget. We see that in Tim’s experiments, and in the Tiny-Tapeout runs: the price is low enough, engineers can take some true risks. Daniel points this out to me: there are open-source FPGAs being taped out, RISC-V processors going on wafer.space, and BlenderGDS is making chip renders that double as marketing only because the designs are open. Inexpensive experimentation harnesses the power of biological evolution: change the design, experiment, try and die. Open source software further lowers the price.The founder's wager. The best part of the interview for me was talking to Daniel about why he chose to walk off on his own. He’s taking a very long view of the ecosystem, avoiding VC by choice, bootstrapped, a real legal entity, and he candidly says that "it's probably not the time to make a lot of money now, but open source will be a thing and it's fun." I admire the long-range vision Daniel has for the ecosystem, and his courage for making a bet on himself and his vision. Leave a commentFurther reading & resourcesMore from the Siliconimist:wafer.space (Tim Ansell)Tiny Tapeout (Matt Venn)InchFab (Mitchell Hsing)Why Fabless Ate Semisaesc silicon and Daniel’s projects:aesc siliconDaniel Schultz on LinkedInaesc silicon on GitHubElemRV: end-to-end open-source RISC-V microcontrollerDiscussion about this videoCommentsRestacksThe SiliconimistSilicon economics. Chips, capital, and consequences.Silicon economics. Chips, capital, and consequences.SubscribeListen onSubstack AppApple PodcastsSpotifyYouTubeRSS FeedAppears in episodeJohn ColeRecent EpisodesSemiconductors: Made in AmericaApr 27 • John ColeTiny Tapeout - Matt VennApr 7 • John Colewafer.space - Tim 'mithro' AnsellMar 27 • John ColeBringing Semiconductors to KazakhstanMar 3 • John ColeFlyingWire - Mike ChiecoFeb 23 • John ColeInchFab - Mitchell HsingFeb 17 • John ColeA Semiconductor Adventure in China - Doug SparksFeb 9 • John ColeReady for more?Subscribe© 2026 John Cole · Privacy ∙ Terms ∙ Collection notice Start your SubstackGet the appSubstack is the home for great culture

This site requires JavaScript to run correctly. Please turn on JavaScript or unblock scripts

The semiconductor design business is fundamentally based on intellectual property, as it involves the creation of ideas that generate enormous value; without ownership of this intellectual property, a sustainable business cannot exist. Daniel Schultz, founder of aesc silicon, is pioneering a new semiconductor business model rooted in open source principles, a strategy that echoes the success seen in projects like Linux. The core philosophy of this model posits that while the core intellectual property can be freely available to others, the actual value and revenue are derived not primarily from the product itself, but from providing support, extensive customization, and specialized services. This approach leverages the principle that a large user base drives demand for continuous improvement, thereby accelerating design and refinement faster than traditional intellectual property licensing models.

The potential customer base for this open source approach is defined by verifiable security and the demand for highly customized chips. A key advantage is the ability to ensure that silicon, covering the entire design and manufacturing supply chain, can be verified as free from backdoors, which is crucial for trust in cryptographic engines. Furthermore, the increasing demand from smaller companies for specialized custom chips creates a favorable cycle for fabless companies. By utilizing open source IP, companies can reduce the time and capital expenditure typically locked up in licensing fees, potentially driving this demand wave, as evidenced by efforts like the creation of custom microcontrollers.

To facilitate this ecosystem, tools are being developed to streamline the process. IP Forge is an example of such a tool, conceived as a package manager specifically for open-source IP blocks, analogous to systems like npm or python’s pip. This allows designers to easily source, compare, and integrate necessary code blocks directly into their projects, thereby fostering rapid development by building upon existing components. This mechanism aims to accelerate development speed by treating chip design blocks similarly to software packages.

A significant driver for growth in the open-silicon space is the economic advantage of cheap experimentation. Open source software and related tools enable companies to conduct extensive "try and error" experiments without committing substantial research and development budgets. Initiatives like the Wafer.Space runs and Tiny-Tapeout experiments demonstrate that low pricing allows engineers to take necessary risks, accelerating innovation through iterative design changes. This cheap experimentation harnesses the power of evolutionary change, where designs can be altered, tested, and iterated upon rapidly. Even marketing collateral, such as BlenderGDS chip renders, benefits from the open nature of the underlying designs.

Daniel Schultz’s personal approach reflects a long-term view of this ecosystem. Choosing to bootstrap the company rather than pursuing immediate venture capital funding demonstrates a wager on the future viability of open source, recognizing that while immediate high profits may not be the objective right now, the trajectory of open source technology is positive. This long-range vision reflects an admiration for the ecosystem’s potential and the courage involved in betting on the future of open source technology.