Bridging the Frontier
Bob Smith, Executive Director
Bob Smith is Executive Director of the Electronic System Design Alliance, formerly the EDA Consortium. He is responsible for the management and operations of the ESD Alliance, an international association of companies providing goods and services throughout the semiconductor design ecosystem. … More »
Semiconductor IP Revenue Surges into Double Digits
January 20th, 2016 by Bob Smith, Executive Director
Let’s tip our glass of champagne to 2016, which started off on a high note for the EDA industry. The EDA Consortium’s Market Statistics Service (MSS) reported revenue for Q3 2015 increased 7.1 percent to $1957.5 million compared to $1828.1 million in Q3 2014.
Coverage of our news was positive on our industry onlines and elsewhere, though there was an interesting “first” in the numbers that deserves highlighting. In Q3 2015, the Semiconductor IP (SIP) segment showed the highest revenue out of all categories tracked by the MSS at $653 million. For the first time, SIP exceeded Computer Aided Engineering (CAE) at $635 million.
What a difference 20 years makes! Back in Q3 1996, SIP was the smallest revenue category being tracked and showed $15 million in revenue. Taken over the past 20 years, the SIP segment has grown, on average, at 20% per year –– a seemingly remarkable achievement. Or is it?
The IP revolution has been underway for quite some time and has had a profound impact on electronics design. Chips now are a collection of small and large blocks of IP stitched together along with value-added circuitry created by the chip design team. It is not uncommon to find that IP blocks make up 60-70% or even more of the real estate on these large chip designs.
The wide-ranging availability of all types of IP for a variety of applications offers differentiation, as does the way in which the numerous building blocks are fitted together. An oversimplification, of course, but the Lego analogy is one the industry has embraced and continues to use.
Chip complexity, cost, schedule and risk reduction are all driving the growth of the SIP segment. Today’s chip designs may contain billions of transistors, yet product cycle times are under constant competitive pressure for time-to-market advantages. Design teams must choose carefully where they will invest and where they can take advantage of IP already designed, tested and proven. This allows the design team to be able to focus on developing the value-added differentiating circuitry that can give the chip a competitive edge in the market. The growth trend in SIP shows that the market has realized that “reinventing the wheel” makes no sense as there is a large and growing market for SIP to solve many common design needs.
In response to this, SIP vendors continue to expand their IP portfolios to address the needs of different markets. Business models used for licensing SIP vary greatly depending on both the complexity of the IP and the delivery models –– typically referred to as “soft IP” or “hard IP.” Less complex soft IP is typically sold “off-the-shelf” based on a relatively simple licensing model. Complex, high-performance hard IP is often very expensive and may even include a service component that is required to tailor the IP to a specific application or performance. Complex IP may also include technology licensing fees as well as royalty requirements.
Given the wide range of business models, it is hard to generalize about the SIP market except to say that IP has become a very important part of the design ecosystem. Its continued revenue growth seems assured as design teams rely on the availability of SIP to help them achieve time-to-market goals and reduced risks in their challenging chip design projects.
The quarterly MSS, available to EDAC members, offers details on EDA, IP and services revenue data collected and aggregated by a major accounting firm. Individual company revenue is kept confidential.
Once again, let’s raise our glasses to 2016 and to EDA and IP as well. The longtime debate over whether IP is EDA is over, especially within EDAC. It is clear that EDA and IP are both key components of the chip design ecosystem.
All EDA and IP vendors are encouraged to join EDAC. After all, EDAC is “Where Electronics Begins.” To learn more about EDAC and how to become a member, contact me at firstname.lastname@example.org or visit www.edac.org
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