The EDA & Electronics IP Almanac: Q3 2010


We experienced record sales this year due to strong global demand across a broad range of end markets,” said SIA President Brian Toohey. “We expect more moderate growth through 2012 as the economy recovers and consumer confidence restores,” Toohey concluded.

About the SIA Global Sales Report

The SIA Global Sales Report (GSR) is a three-month moving average of sales activity. The GSR is tabulated by the World Semiconductor Trade Statistics (WSTS) organization, an independent, non-profit organization established by the global semiconductor industry to compile industry statistics. The moving average is a mathematical smoothing technique that mitigates variations due to differences in companies' financial calendars.

SIA self description

The SIA is the voice of the U.S. semiconductor industry, America's number-one export industry over the past five years. SIA seeks to continue U.S. leadership in this critical sector that employs 185,000 people in the U.S. and provides the enabling technology for America's $1.1 trillion high-tech industries with a U.S. workforce of nearly 6 million people. More information about the SIA can be found at www.sia-online.org. We begin our review of the Q3 2010 Electronics IP G5 performances by looking at the lP summary revenue list (Table 3) below.

It appears that the Total G5 IP Revenue for Q3 2010 was a virtual tie with sequential quarter Q2 2010, at ~$227 million. However, the total G5 IP revenue for Q3 2010 did score a formidable ~70% year over year increase compared to Q3 2009.

To achieve the tie between Q3 2010 and sequential Q2 2010, ARM improved over 5% in revenue and CEVA improved less than 1%, but MIPS decreased 3%, MoSys dropped nearly 12%, and Rambus sank over 18%.

The more delightful Q3 2010 total G5 revenue increase of 70% over last year's Q3, was fueled by double-digit percentage revenue gains by all five vendors, led by MIPS' 51% YOY gain, and by ARM's YOY 28.5% increase on seven times the sales volume.

To the extent that the G5 IP revenue numbers and the EDAC Semiconductor and IP (SIP) revenue numbers are compatible, the G5 IP vendors represented ~76% of the EDAC SIP total revenue in Q3 2010, but only ~65% of the EDAC SIP total revenue in Q3 2009. (Exploring these details further would require access to the source data for the EDAC SIP numbers). [ Note: For more details on ROS %'s and Market Caps for nine of the ten vendors covered herein, please see Table 5 in the sequel (far below)].



Table 3: G5 Public Electronics IP Companies’ Quarterly Revenues (US$ millions)



Turning now to the earnings of the G5 IP vendors in Q3 2010 ( Table 4 below), we see more of a mixed bag than Table 3 revealed.

Indeed, the earnings for the G5 in Q3 2010 fell to only 31% of the earnings achieved in sequential Q2 2010 ($7.189 million vs. $22.960 million), as Q3 2010 losses by MOSY and RMBS almost obliterated the combined profits of ARMH, CEVA and MIPS.

Still, the meager $7.189 million total G5 black ink in Q3 2010 was more than enough to erase the $18.807 million of red ink amassed by the G5 a year ago in Q3 2009.

While all but MOSY did better in earnings year over year, only CEVA and MIPS managed to deliver more sequential profit in Q3 2010 than in Q2 2010.

Return on Sales (ROS) percentages still vary widely among the G5 IP vendors. For Q3 2010, for example, MIPS' ROS was nearly 34%, CEVA delivered nearly 28%, while ARM's was just over 14%. MOSY's net loss was 164% of its revenue figure for Q3 2010, and RMBS... well...one wonders whether ROS is even relevant for Rambus. [In Q3 2010, Rambus' net loss was - 64.9% of its revenue, but as recent as Q1 2010 Rambus' net ROS was over +93% ($150.4 million net income on $161.9 million in revenue), a result of being heavily in the technology licensing business].

G5 IP earnings comparisons to EDAC figures are not possible here, because EDAC does not release earnings data to non-members.



Table 4: G5 Public Electronics IP Companies’ Quarterly Earnings (US$ thousands)

G5 IP Vendor by Vendor Details for Q3 2010





On October 26. 2010 ARM Holdings plc announced its unaudited financial results for the third quarter and for the nine months ended September 30, 2010. Continuing adoption of ARM technology by leading semiconductor companies in a broad range of end-markets continued delivering strong revenues, profits and cash.

Financial Review (IFRS unless otherwise stated)

Total Revenues

Total revenues in Q3 2010 were $158.1 million, up 28.5% versus Q3 2009 revenues of $123 million, and up 5.5% vs. sequential Q2 2010 revenues of $149.9 million.

Three quarters year-to-date dollar revenues amounted to $451.7 million, up 29% on 2009.

License Revenues

Total dollar license revenues in Q3 2010 increased by 33% year-on-year to $52.7 million, representing 33% of group revenues. License revenues comprised $42.2 million from PD (PD = Processor Division = the original ARM) and $10.5 million from PIPD (PIPD = Physical IP Division = originally the Artisan company).

Royalty Revenues

Total dollar royalty revenues in Q3 2010 increased year-on-year by 31% to $81.7 million, representing 52% of group revenues. Royalty revenues comprised $70.4 million from PD and $11.3 million from PIPD.

Royalties are recognized one quarter in arrears, with royalties in Q3 generated from semiconductor unit shipments in Q2.

PD royalty revenues in Q3 2010 increased 33% year-on-year. This compares with industry revenues increasing by about 25% in the shipment period (i.e. Q2 2010 compared to Q2 2009), demonstrating ARM's continuing market share gains over the last 12 months.

Total PIPD royalties of $11.3 million included $0.6 million of catch-up royalties. Underlying royalty revenues increased by 16% year-on-year.

Development Systems and Service Revenues

Sales of development systems in Q3 2010 were $15.6 million, an increase of 11% year-on-year and representing 10% of group revenues. Three large software tools deals were signed during the quarter and, given that deals of this type are infrequent, development system revenues in Q4 2010 are expected to be closer to Q2 2010 revenues of $13.4 million.

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