The era of semiconductor IP is here and it’s a good sized business. (>£700M for ARM, >$400M for Synopsys, > $100M for Cadence, all annually) And without a doubt, the demand for semiconductor IP will continue to grow. Regardless of the size of the target market, all companies creating semiconductors are now using or reusing IP, whether developed internally or externally. But a variety of business factors will shape the future of the IP business.
The success of leading device manufacturers in dreaming up new, more advanced features and capabilities which consumers seem to want and buy drives semiconductors to be ever more complex and short lived. This affects the nature of IP. For example, short life cycles mean less business value which then affects investment in quality, both by the IP provider and licensee. Quality is gained through the V&V process as well as development support. It’s highly likely that IP providers and consumers that have differentiated V&V know-how and support systems will have an edge in the market. Similarly, the ability to capture and manage specs and know-how for IP block integration will be a differentiator.
The larger device designers who are market leaders will have economies of scale working in their favor, allowing differentiated advancements in power consumption and functionality through finer-grain integration of IP blocks. They can absorb the additional V&V and design costs from stitching hundreds of IP blocks into a system. And in fact it’s highly likely that these companies will continue to be the primary consumers of IP, because they can gain the most value from it. But, as advances in differentiation slow in a particular product category (witness pocket calculators), this advantage may recede. Smaller vendors who from the start become adept at on-boarding, managing and reusing IP, especially larger sub-systems may gain advantage over time through constant refinement of development and IP licensing processes to maximize margins despite smaller served markets.
In summary, there are a number of factors, some of them opposing each other which will affect the business for creation and consumption of semiconductor IP. Businesses that adapt to these factors, and implement processes and systems to streamline their IP management will fair better against the external forces that work against them. In some ways, it’s a lot like being chased by a bear: you don’t have to run faster than the bear, only faster than the guy next to you.
More information about Dassault Systemes solutions for IP Management.