Commentary: Electronics IP Industry - A November 2004 Update


Commentary: Electronics IP Industry - A November 2004 Update

by Dr. Russ Henke and Dr. Jack Horgan
Henke Associates

In their September 2003, December 2003 and February 2004, May 2004 and August 2004 Electronics IP Industry Commentaries, the authors examined the recent financial history and future outlook 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 (hereinafter known as the "Group-of-8" or "G8"), as representative of the current financial state of the Electronics IP industry. In this November 2004 Commentary we look at the financial performances of these same vendors during the third quarter of 2004.

Group-of-8 (G8):


ARM Holdings plc
Artisan Components, Inc.
Ceva, Inc.
LogicVision, Inc.
MIPS Technologies, Inc.
Monolithic System Technology, Inc.
Rambus Inc.
Virage Logic Corp.
Cambridge, UK
Sunnyvale, CA
San Jose, CA
San Jose, CA
Mountain View, CA
Sunnyvale, CA
Los Altos, CA
Fremont, CA

For the G8 companies above, we will assume that all of their revenues are Electronics IP sales and directly related IP services.

IP News Highlights

On August 23, 2004 ARM Holdings plc and Artisan Components, Inc. announced that they had entered into a definitive agreement under which ARM will acquire Artisan. On the same day Mentor Graphics announced it had acquired Palmchip Corporation's complete Parallel and Serial ATA Intellectual Property (IP) business. On October 11, Synopsys, Inc. announced that it has executed an agreement to acquire Integrated Systems Engineering AG (ISE), a leader in Technology CAD (TCAD) software products and services. And on October 18, Synopsys announced the acquisition of Cascade Semiconductor Solutions, Inc., d.b.a "Cascade IP," a provider of PCI Express digital IP solutions.

How did the Electronics IP G8 perform in the third quarter of 2004?

On the revenue front, Table 1 below reveals that the G8's combined Q3 2004 performance was up 7.4% sequentially and an impressive 34.4% year-over-year. The percentage winners year-over-year were LogicVision (82%) and Virage Logic (55%), both over 50% growth. Strong performances were also put in by MIPS, ARM, Rambus and Artisan. The major decliner was MoSys still reeling after the terminated merger with Synopsys. On a sequential basis, five of the firms had high single digit or low double digit growth. Artisan headed the list with 14% growth. MoSys had the biggest revenue drop (50%). Ceva and MIPS had only modest revenue growth.

Table 1 Quarterly Revenue of the Group-of-8 (G8) IP Providers
($ thousands)

Figure 1 below provides a bar graph of each vendor's revenue for Q3 2003, Q2 2004, and Q3 2004 in sequence.

Figure 1 Quarterly Revenues of the Group-of-8 (G8) IP Providers
($ millions)

The largest relative market share in Q3 2004 went to ARM at 40%, with Rambus in second place at 22%. ARM's market share will jump next year when the acquisition of Artisan (currently in third place at 14%) is completed.

Figure 2 IP Vendor Relative Market Share (3Q 2004)

As shown in Table 2 below, in Q3 2004 the combined earnings of the G8 rose $13 million sequentially and almost $37 million over the period a year earlier. All of the firms did better when compared to last year. ARM improved the most in absolute terms (+$9.6 million) with MIPS a close second (+$8.8 million). LogicVision was the only IP provider to lose money in the quarter. All the firms improved earnings relative to the prior quarter except Artisan, which dropped $1.7 million due to acquisition related expenses. MoSys had the largest jump in sequential earnings ($9.1 million) but $10 million of this amount was a termination fee related to the abortive merger with Synopsys.

Table 2 Quarterly Earnings of the Group-of-8 (G8) IP Providers ($000)

Q3 2004 Results of Individual Electronics IP Providers

On October 9, ARM Holdings plc announced its results for the third quarter. Total revenue was $39.4 million, up from $36.9 million in Q2 2004 and £31.7 million in Q3 2003. License revenue of £14.6 million was up 11.5% year-over-year and 14.6% sequentially. Twelve licenses for microprocessor cores were signed in the quarter. Royalty revenue of £16 million with record unit shipments of 341 million units was up 45.5% year-over-year and 14% sequentially. In terms of US dollars, total revenue was $71.7 million, up 40% from $51 million a year ago and up 7% from the previous quarter.

Net income for the quarter was £9.5 million (US$17.3 million) compared to £4.8 million (US$7.7 million) last year and £8.7 million (US$15.8 million) last quarter.

"We are encouraged by the 7% quarter-on-quarter increase in total dollar revenues in the seasonally weaker third quarter. The robustness of ARM's business and broad reach of our technology, underpinned by strong ARM11 family licensing activity and continued royalty momentum, provide a solid platform on which to build with the proposed combination of ARM and Artisan."

In August 2004, ARM announced the acquisition of Axys, a provider of fast, accurate, integrated, processor and system modeling and simulation solutions.

On August 23, 2004, ARM and Artisan announced the signing of a definitive agreement under which ARM will acquire Artisan. On September 30, 2004, the US Federal Trade Commission (FTC) and Department of Justice (DoJ) granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. ARM and Artisan shareholder meetings to vote on the transaction are likely to occur in late December 2004 or early January 2005. Artisan revenue the past few quarters has been above $20 million per quarter.

On November 1, 2004 Artisan Components, Inc reported results for its fourth quarter and the fiscal year 2000 which ended on September 30. Total revenue for the quarter was $25.1 million, an increase of 29% year-over year from $19.5 million and a sequential increase of 14% from $2 million. This is the 13th sequential record revenue quarter. License revenue of $15.6 million (63% of total revenue) represented a decrease of 5% year-over-year and increase of 10.5% sequentially. Royalty revenue of $9.5 million (37% of total revenue) grew 212% year-over-year and 21.5% sequentially. On a geographic basis, Taiwan comprised 45% of total revenue, North America 20%, China 18% and ROW 17%. There are 600 companies licensing 9,000 Artisan products, more than half from 130 nm and 90 nm. In the quarter, there were 20 royalty producing partners, 2 of whom were new in the quarter.

1 | 2 | 3 | 4  Next Page »

Review Article Be the first to review this article
Featured Video
Currently No Featured Jobs
Upcoming Events
CDNLive Japan 2018 at The Yokohama Bay Hotel Tokyu Yokohama Japan - Jul 20, 2018
MAPPS 2018 Summer Conference at The Belmond Charleston Place Charleston SC - Jul 22 - 25, 2018
International Test Conference India 2018 at Bangalore India - Jul 22 - 24, 2018
SRTC-2018 at The Leela Ambience Gurugram NEW DELHI India - Jul 25 - 26, 2018
TrueCircuits: IoTPLL

Internet Business Systems © 2018 Internet Business Systems, Inc.
25 North 14th Steet, Suite 710, San Jose, CA 95112
+1 (408) 882-6554 — Contact Us, or visit our other sites:
AECCafe - Architectural Design and Engineering TechJobsCafe - Technical Jobs and Resumes GISCafe - Geographical Information Services  MCADCafe - Mechanical Design and Engineering ShareCG - Share Computer Graphic (CG) Animation, 3D Art and 3D Models
  Privacy PolicyAdvertise