SIP Entrepreneurs: Hal Barbour says opportunities abound

Monday at DAC 2014 in San Francisco was IP Day. Part of the day’s program included a panel featuring entrepreneurs pursuing the business of third-party IP: CAST’s Hal Barbour, Truechip Solutions’ Shishir Gupta, IPextreme’s Warren Savage, Methods2Business’ Marleen Boonen, and Recore Systems’ Dirk Logie.

After the panel, I had a chance to speak with Hal Barbour, CEO at CAST. I asked him if the received wisdom is correct – most innovation in silicon IP comes from small companies.

Hal said, “Traditionally, almost all innovation in the SIP business has come from small entrepreneurial companies. Large companies have gained their position through aggressive acquisitions, and not through internal development. Unless things change in unforeseen ways, it’s going to be difficult for the large companies to dramatically change this model.”

Noting that it’s expensive to fund a semiconductor startup, hence few new entries are visible in the market today, I asked Hal how that situation compares with starting up an IP company.

He said, “From a financial point of view, the barriers of entry to the SIP business are much lower today than the semiconductor or fabless ASSP business, although not as low as they used to be 10 years ago. Nonetheless, they’re still low enough for new entrepreneurs to try to jump over them, and the industry should welcome those who have the courage to do so.”

When you say ‘the industry’, I asked, do you mean the customers? How do they benefit from the presence of new startups in SIP?

Hal replied, “It’s always been true that Tier 1 customers have a built-in resistance to ceding a major portion of their development processes to just one or two companies, because often with size come less flexible business terms from the IP vendors and more time is required to connect with an actual expert to respond to concerns.”

“As a result, today we’re seeing more, not less, willingness from the Tier 1’s to license IP from privately held entrepreneurial businesses.”

Given there are clear opportunities for entrepreneurs in IP, I asked Hal what specific advice he would offer those brave enough to jump in.

He said, “The SIP business is very support intensive and because of that, fairly hard to scale. Therefore, designing bullet-proof, well-documented, intuitive-to-use IP blocks is a must if you want to grow your IP company.”

Finally, given that our conversation was housed at DAC, I asked Hal to compare and contrast the IP and EDA businesses.

He responded, “Unlike EDA, where the basic tools everyone needs to design SoC’s are limited to few dozen items, and sometimes even less than 10, people need hundreds of different IP blocks to build their SoC’s.”

“This diversity in the range of functions and requisite types of IP – everything from digital IP, analog IP, and mixed-signal IP, to soft cores, firm cores, and hard cores, all with patent licenses included under the SIP umbrella  –  means it’s just impossible for a single company to achieve technological leadership across all these disciplines. This is very good news for SIP entrepreneurs.”

“In addition, the need for new IP blocks always come out as a result of the evolutions of standards, interfaces, performance, low power requirements, and so on. Therefore, no matter the consolidation and no matter the efforts of the big guys to dominate, there will always be openings for smaller guys!”

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Tags: 51st Design Automation Conference, CAST, DAC 2014, Dirk Logie, Hal Barbour, IPextreme, Marleen Boonen, Methods2Business, Recore Systems, Shishir Gupta, Truechip Solutions, Warren Savage

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