  Commentary:
Electronics IP Industry - A February 2008 Updateby Dr. Russ Henke and Dr. Jack Horgan Henke Associates In their September 2003, December 2003, February 2004, May 2004, August 2004, November 2004, February 2005, May 2005, August 2005, November 2005, February 2006, May 2006, August 2006, November 2006, February 2007, May 2007, August 2007 and November 2007, Electronics IP Industry Commentaries, the authors examined the recent financial histories and future outlooks of the remarkable phenomenon of Electronics Intellectual Property (IP) providers, a niche that has emerged in its own right to claim a substantial amount of revenue in the world of Electronics Design Automation. We had arbitrarily selected eight (8) publicly-traded companies originally (then called the “Group-of-8” or “G8”), as representative of the current financial state of the Electronics IP industry. At the end of 2004, ARM completed its acquisition of Artisan Components, Inc., thereby reducing our “G8” to “G7”. Accordingly, in this February 2008 Commentary, we look at the financial performances of the “G7” Electronics IP vendors during the fourth quarter and the full year 2007. Group-of-7 ("G7"):
For the “G7” companies above, we assume that all of their revenues are Electronics Intellectual Property (IP) sales and directly related IP services. Recent Electronics IP News Highlights On January 10, 2008, the Global Semiconductor Alliance (GSA, formerly FSA) released the CYQ3 2007 version of its Global Semiconductor Financial Report. Semiconductor revenue totaled $71.9 billion, with fabless and IDM revenue accounting for 20% and 80% of the CYQ3 2007 semiconductor sales total, respectively. North American semiconductor companies represented 52% of revenue, followed by Asia with 37%, Europe with 11% and India with less than 1%. The top 15 semiconductor companies by CYQ3 2007 revenue accounted for $42.3 billion, or 59% of total semiconductor revenue.
How did the Electronics IP G7 perform in the Fourth Quarter of 2007? On the revenue front, Table 1 below reveals that the G7's combined Q4 2007 performance was $225 million, up a marginal 6% from the $212 million in the fourth quarter of 2006, and up 3.1% from the $218 million in the third quarter of 2007. These revenue performance increases are small and not encouraging. On a year-over-year basis, MIPS and Virage Logic were the percentage revenue growth leaders at +26% and +22%, respectively. MoSys and Rambus had the largest percentage declines at -42% and -23%, respectively. The rest of the G7 had single digit growth. On a sequential quarterly basis, MIPS was again the percentage revenue growth leader at almost +19%. ARM and Virage Logic had modest growth while Rambus, CEVA and LogicVision had small percentage declines.
Figure 1 below provides a bar graph of each vendor's revenue for Q4 2006, Q3 2007, and Q4 2007 in sequence. The relative flatness is evident.
ARM continues to dominate the G7 with 58% share. Rambus was a distant second at 18%, with MIPS close behind at 12%
As Table 2 shows, the earnings picture for Q4 2007 is quite dismal. The G7 IP Providers had a combined net loss of $11.2 million, compared to net income of $26 million in the year ago quarter and net earnings of $691K in the just prior quarter. In absolute terms, Rambus and MIPS had the largest net loss after having net income in the same quarter a year earlier, and smaller losses in the prior quarter. ARM had more earnings than all the others combined. Only ARM and Virage Logic had positive net earnings in the current quarter and improvement relative to the comparison quarters. Q4 2007 Results of Individual Electronics IP Providers:
Total dollar license revenues in Q4 2007 decreased by 11% to $49.2 million, representing 38% of group revenues, compared to $55.5 million in Q4 2006. License revenues comprised $38.4 million for PD and $10.8 million for PIPD. Total dollar royalty revenues in Q4 2007 were up 10% versus Q4 2006, and up 14% sequentially at $57.5 million, representing 44% of group revenues. Royalty revenues comprised $48.8 million for PD, a 15% sequential increase, and $8.7 million for PIPD (including $0.3 million of “catch-up” royalties), a 9% sequential increase. Underlying royalties of $8.4 million for PIPD were up 9% sequentially, consistent with higher foundry utilization levels. Sales of development systems in Q4 2007 were up 10% versus Q4 2006 and up 26% sequentially to a record level of $15.5 million, representing 12% of group revenues. Service revenues in Q4 2007 were down 2% year-on-year at $8.1 million, representing 6% of group revenues, compared to $8.3 million in Q4 2006. The Processor Division (PD), formerly the original ARM, had total revenues of $87 million accounting for 67% of total revenue. This was an increase of nearly 9% year-over-year and 2.6% sequentially. During the quarter ARM 14 signed licenses for Cortex™ products, including 3 lead partners for the next-generation Cortex-A9 processor, bringing the total number of Cortex licenses to 37. PD unit shipments in Q3 (partners report royalties one quarter in arrears) increased 19% sequentially to a record 828 million units in the quarter. The Physical IP division (PIPD), the Artisan division established after the acquisition at the end of 2004, had total revenue was $19.5 million, accounting for 15% of total revenue. This was a decrease of 30% year-over-year and a decrease of nearly 6% sequentially. PIPD signed a further 21 licenses in Q4, mostly for earlier generation technology. In the quarter three IDMs signed physical IP licenses, bringing the total number of license deals with IDMs to 7 in 2007. Of the 202 licenses signed since the acquisition of Artisan, 42 licenses have been signed for technology that ARM has developed since the acquisition.
 Be the first to review this article
|
|||||||||||||
|
|||||||||||||
|
|||||||||||||
