Electronics IP Industry – A May 2009 Update

Commentary:

Electronics IP Industry – A May 2009 Update


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


 

In their previous twenty-three (23) quarterly issues of the 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 May 2009 Commentary, we look at the financial performances of the "G7" Electronics IP vendors during the first quarter of 2009.

Group-of-7 ("G7"):



For the “G7” companies above, we assume that all of their revenues are Electronics IP sales and directly related IP services.

Recent EDA and Electronics IP Industry News Highlights

On May 7, 2009 Mentor Graphics Corporation and LogicVision announced the two companies have signed a definitive merger agreement pursuant to which Mentor Graphics will acquire LogicVision. Under the terms of the agreement, which was approved by the boards of directors of both companies, LogicVision stockholders will receive 0.2006 of a share of Mentor Graphics common stock for each share of LogicVision, for aggregate consideration of approximately $13 million dollars (as of May 7, 2009).

On May 8, 2009 Synopsys announced it had acquired the Analog Business Group of MIPS Technologies, Inc for $22 million in cash. The acquisition expands Synopsys' DesignWare(R) intellectual property (IP) portfolio with a new family of analog IP such as Analog-to-Digital Converters, Digital-to-Analog Converters, Audio Codecs and Power Management. It will also add HDMI TX and RX protocols to Synopsys' existing interface IP solution.

On March 11, 2009 iSuppli announced its ranking of semiconductor suppliers in 2008. From that announcement, the top ten firms were:


Note in Table 1 that only Qualcomm (15%) and STMicroelectronics (3.3%) experienced revenue growth relative to the prior year.

Total revenue from all firms surveyed by iSuppli was $258 billion, a decline of 5.2% from 2007.


On May 01, 2009 the Semiconductor Industry Association (SIA) reported that worldwide sales of semiconductors were $14.7 billion in March, a gain of 3.3% from the prior month when sales were $14.2 billion. Sales for the first quarter of 2009 amounted to $44.0 billion, a 29.9% decline from the first quarter of 2008 when sales were $62.8 billion. Sales declined by 15.7% from the fourth quarter of 2008 when sales were $52.2 billion. Note: Table 2 gives three month moving average sales.


Sales in all geographic regions except Japan showed month-to-month gains. Sales in Japan were sharply lower, reflecting a drop in the country’s economic output. All geographic regions reported lower first-quarter sales compared to the same period of 2008.

SIA President George Scalise said, “The modest sequential rebound in worldwide sales in March suggests that demand has stabilized somewhat, albeit at substantially lower levels than last year. While all major product sectors showed month-on-month growth, there continues to be limited visibility in end markets. There are some bright spots such as ‘smart phones’ and ‘netbook’ PCs, but there are no clear signs of early firming of demand in other major end markets such as automotive, corporate information technology, and consumer electronics”.

Scalise continued, “The global chip industry continues to reflect the influence of the worldwide economic slowdown. We expect economic stimulus measures in the U.S. combined with other countries will begin to impact sales as we enter 2010.”

How did the Electronics IP G7 perform in the First Quarter of 2009?

On the IP revenue front, Table 3 below reveals that the G7's combined Q1 2009 revenue performance was $197 million, a 15% decline form the $232 million in the first quarter of 2008, and a drop of 18.5% from the $242 million in the fourth quarter of 2008. LogicVision was the only member of IP G7 to experience revenue growth year-over-year. Rambus suffered the largest decline at -31%, followed by Virage Logic at -24.9% and MIPS at -16.9%. Sequentially, LogicVision was also the only vendor to see a revenue increase relative to the last quarter. MoSys was the largest decliner at -35%, followed by Rambus at -27.3%. ARM and MIPS experienced percentage revenue declines in the teens.


Figure 1 below provides a bar graph of each vendor's revenue for Q1 2008, Q4 2008, and Q1 2009 in sequence.




ARM continues to dominate with 60% of total Q1 2009 revenue with Rambus a distant second at 14% relative market share. MIPS was in third place at 12%. See Figure 2.


Relative to earnings of the G7, Table 4 reveals that G7 IP Providers endured a combined Q1 2009 net loss of $32.6 million. This compares to a far smaller net loss of $5.28 million in the first quarter of 2008 and an actual net gain of $13.4 million in the just previous quarter. ARM and CEVA were the only two firms to report net income in the 2009 first quarter. ARM’s net income increased 16% year-over-year. Virage Logic suffered the largest percentage net loss in the quarter at -26.3%, compared to net income of $632 thousand in the year ago quarter. Rambus had the second largest loss in the quarter at -$17.4 million. LogicVision, MIPS and MoSys reduced their net losses relative to the first quarter of 2008. On a sequential basis LogicVision CEVA, and MoSys experienced earnings growth. ARM’s net income dropped 46%. Virage Logic suffered the largest decline quarter over quarter due to the large loss in the quarter, mostly non-recurring charges.


Q1 2009 Results of Individual Electronics IP Providers:



On April 29, 2009 ARM Holdings plc reported financial results for the first quarter ended March 31, 2009. Total revenue for the quarter was $121 million, a 10% drop from the $134 million in the same quarter a year earlier and a 19% drop from the record $149 million in the just prior quarter. Overall semiconductor industry revenues declined about 30% in the same period.

Total dollar license revenues in Q1 2009 declined by 15% year-on-year to $40.7 million, representing 34% of group revenues. License revenues comprised $31.9 million from PD and $8.8 million from PIPD. Total dollar royalty revenues in Q1 2009 declined by 9% to $58.3 million, representing 48% of group revenues. Royalty revenues comprised $50.3 million from PD and $8.0 million from PIPD.

1 | 2 | 3 | 4 | 5  Next Page »

Rating:


Review Article Be the first to review this article

EMA:

Featured Video
Editorial
Peggy AycinenaWhat Would Joe Do?
by Peggy Aycinena
Retail Therapy: Jump starting Black Friday
Peggy AycinenaIP Showcase
by Peggy Aycinena
REUSE 2016: Addressing the Four Freedoms
More Editorial  
Jobs
Development Engineer-WEB SKILLS +++ for EDA Careers at North Valley, CA
Manager, Field Applications Engineering for Real Intent at Sunnyvale, CA
AE-APPS SUPPORT/TMM for EDA Careers at San Jose-SOCAL-AZ, CA
ACCOUNT MANAGER MUNICH GERMANY EU for EDA Careers at MUNICH, Germany
FAE FIELD APPLICATIONS SAN DIEGO for EDA Careers at San Diego, CA
Principal Circuit Design Engineer for Rambus at Sunnyvale, CA
Upcoming Events
Zuken Innovation World 2017, April 24 - 26, 2017, Hilton Head Marriott Resort & Spa in Hilton Head Island, SC at Hilton Head Marriott Resort & Spa Hilton Head Island NC - Apr 24 - 26, 2017
CST Webinar Series



Internet Business Systems © 2016 Internet Business Systems, Inc.
595 Millich Dr., Suite 216, Campbell, CA 95008
+1 (408)-337-6870 — 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 Policy