August 16, 2010
The State of IP
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Four (4) of the originally-selected nine MCAD/MCAE vendors for the MCAD Commentary have also either been acquired or have gone private:
… leaving a Group-of-Five (G5) MCAD/MCAE vendors for ongoing coverage:
The most recent quarterly MCAD/MCAE Industry Commentary was posted on May 21, 2010:
And last but not least, three of the originally-selected eight IP vendors for the Electronics IP Industry Commentary have been acquired:
… leaving the soon-to-be Group-of-Five (G5) IP vendors:
The most recent quarterly Electronics IP Industry Commentary was posted on June 4, 2010:
The Electronics IP Industry:
For the most part, the Electronics IP niche (represented by the arbitrary 2003 G8 vendor selection by Henke Associates) is even now hardly two decades old, with only MIPS having been founded before 1990. (While MIPS was originally founded in 1984, it focused for many years on building a RISC processor within Silicon Graphics before moving toward the IP game). The current incarnation of MIPS called
“MIPS Technologies, Inc.” was officially “founded” in 1998.
For the record, below are listed all the founding dates in chronological order of the pre-acquisition members of the 2003-selected Group-of-Eight (G8) Electronics IP vendors:
Historically, UK-headquartered ARM has been dominant, often claiming almost two-thirds of the total group
revenue in any given period. But even this picture has been changing recently, as other covered IP vendors execute their own revenue expansion strategies. (Note: the pending disappearance of Virage Logic from the ranks of these independent IP suppliers above, also removes from this list of independents one of the fastest growing IP suppliers as well
The Electronics IP Industry: Now and Then…
To see how far the Electronics IP Industry has come since 2003, the year that the
Electronics IP Commentaries began to appear, let's first see where the G6 stands now in 2010, and then we'll compare the
“Now” to the
So to get started with the “Now” we provide here the Electronics IP G6 financial results for the first quarter of 2010 (and the last two quarters of 2009) that have already been published in the June 4 , 2010 IP Commentary for Q1 2010:
The Electronics IP revenue and earnings summary Tables 1 & 2 for Q1 2010 are repeated here for convenience:
Table 1 above showed that the
combined G6 total revenues had ballooned to $362 million in Q1 2010, up sequentially 63.6% compared to their total of
$221 million in Q4 2009, and fully 91.6% higher than the year-over-year Q1 2009 revenue total of $189 million.
While all 6 vendors grew sequentially from Q4 2009 to Q1 2010, an unusual occurrence in itself,
the 425.6% Q4 2009 to Q1 2010 Rambus revenue growth anomaly was primarily caused by Samsung payments to Rambus arising from Rambus' Q1 settlement of a long-running dispute with Samsung (as was explained in detail in the Rambus-only section of the Q1 IP Commentary). It was noted that the same Samsung deal allowed Rambus to overtake ARM for the most revenue among the G6 in Q1 2010, a feat that would be difficult to duplicate, since normal Rambus quarters have commonly been in the $30 million revenue class.
As it did in the previous Q4 2009 quarter, still-independent Virage Logic claimed third place in the Q1 2010 revenue race among the G6, with its $25+ million.
MIPS delivered double digit percentage sequential growth in Q1 2010, but MIPS could not match its year-over-year Q1 2009 $17.7 million performance, with both figures consistently stated after the MIPS Analog Business Group business unit is subtracted. The other three vendors also managed sequential growth Q1 2010 over Q4 2009.
Only MIPS among the G6 in Q1 2010 did not exceed its year-over-year Q1 2009 revenue mark; ARM, CEVA, and MoSys posted double digit percentage growth year-over-year, and of course Rambus' Q1 2010 was “way better” than its Q1 2009 revenue number.
Q1 2010 Earnings, Table 2 revealed that three of the six vendors (CEVA, MIPS, and MoSys) delivered slightly less profit in Q1 2010 than in Q4 2009, quarterly sequential behavior that is classic between the change of years. But the ARM, Virage Logic, and of course Rambus' improved Q1 2010 profits easily overwhelmed the others' modest sequential reductions, such that the profitability of the G6 overall improved slightly more [$175,313,000] in Q1 10 vs. Q4 09 than the profit improvement generated by Rambus alone [$174,192,000].
Indeed, four of the six covered vendors were in black ink in Q1 2010, vs. three in Q4 2009 and only two in Q1 2009. But Rambus' Samsung deal allowed it to deliver nearly 80% of the year-over-year $212,173,000 improvement in G6 profits Q1 2010 vs. Q1 2009.
What about “Then”?
Virtually all of the previous Electronics IP Industry Commentaries are available in the Archives of EDACafe.com:
One of the very first Electronics IP Industry reports in the archives is from late 2003, when the following Revenue and Earnings tables were published:
2003 Figure 3 - Quarterly revenues of the Group-of-8 (G8) IP providers for 2001, 2002, and 1H 2003 (US$ millions)
2003 Figure 4 -- Quarterly earnings of the G8 IP providers for 2001, 2002, & 1H 2003 (US$ millions)
Note that in
2003 Figure 3 and
2003 Figure 4, fully 10 quarters of Revenue and 10 quarters of Earnings were shown, starting with the first quarter of 2001. Note also that back then, (a) ARM and Artisan were still separate & independent from one another; (b) CEVA was still named “ParthusCeva” until its name change to CEVA on December 8, 2003; and (c) MoSys, Inc. was also called “Monolithic System Technology” as late as October 2002.
Note further that revenue totals for the 10 quarters show a relatively flat total revenue picture, but that total profits in 2001 were fairly handsome ($67 million for 2001 in earnings on $497.5 million in total revenues, or 13.47% on ROS. But also note that ARM and RAMBUS together accounted for $70 million of the 2001 year's $67 million earnings).
Total profits dropped to $32 million in 2002 as the first recession of the decade tightened its grip. Total 2002 G8 revenues edged up only 4.46% to $519.7 million. So the overall ROS was reduced to 6.16%. ARM and RAMBUS delivered $61 million of the total profit of $32 million, and at $326.9 in combined revenue, ARM and Rambus represented 62.9% of the of $519.7 million of total 2002 G8 revenues.
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-- Russ Henke, EDACafe.com Contributing Editor.
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