‍Brains for the Built World: The Embedded Systems Supercycle

‍We believe embedded systems are the next great compounding platform. What the internet did for information, embedded intelligence will do for the physical world.

‍From tractors to turbines, wearables to water systems: "everything is a computer" now, as Ryan McEntush from a16z presciently observed. We’re watching a new stack emerge that ties sensors, compute, connectivity, and software into integrated, modular subsystems. It’s happening across every industrial surface area, from fighter jets to meatpackers.

‍The embedded systems market, already $100B+, is expected to nearly double by 2030. More important than the market sizing is where the value accrues. It will be found in the “modular middle": the rugged, adaptable, production-ready subsystems that bridge commodity components with real world deployments.

‍This layer is where the action is and where the leverage will be.

Why Now: The Embedded Moment

The cost and size of sensors, radios, and computers have collapsed. Thanks to the smartphone supply chain, we now have access to production-grade MEMS, power systems, batteries, and AI-capable microcontrollers at absurd scale and price.

‍As McEntush puts it: lithium-ion perfected for phones powers EVs; smartphone cameras are the eyes of drones; mobile GPUs became AI engines.

‍These primitives are now being reused across sectors. The same accelerometer or Wi-Fi chip can show up in a military UAV, a wearable health patch, and a factory robot. But stitching them together reliably, securely, and with real-world constraints requires deep embedded systems Expertise. And that’s where the opportunity lies.

What’s Changing: Embedded as a Strategic Layer

The shift is happening across every sector:

• Defense: Drones, battlefield networks, electronic warfare, all depend on hardened embedded compute and edge AI.
• Industry: Predictive maintenance, real-time control, and digital twins need high fidelity data from rugged, connected systems.
• Energy: Microgrids, EV chargers, and smart inverters are impossible without embedded controllers and edge decision-making.
• Healthcare: Devices are shifting from dumb tools to intelligent, connected assistants delivering real-time insight at the patient edge.
• Ag/Food/Water: Sensor networks, robotics, and precision control are driving yield and sustainability. Embedded is the interface.
• Each of these sectors has its own hype cycle, but the underlying common denominator is embedded.

Where Value Will Be Captured:

‍This new wave favors companies that master complexity at the edge:

• Full-stack integrators that own hardware + software + field reliability
• Module builders who dominate high-leverage subsystems (e.g., AI camera modules, secure connectivity packs)
• Productized platforms that collapse complexity for OEMs
• Trusted suppliers who can navigate compliance, ruggedization, and scale

‍Just as Apple captured value by controlling the full iPhone stack and Tesla did the same in EVs, industrial markets will reward those who build vertically integrated, modular platforms that ship. And most of that value will accrue to the quiet builders in the middle of the stack.