August 16, 2010
The State of IP
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The title of this issue of the EDA WEEKLY is,
“The State of IP.” With apologies to the advocates (or opponents) of statehood for current United States' commonwealths or territories, this is not an article about candidates for the next (51st) US state. Nor is this article focused on the United States alone.
It is rather an article about the rapidly growing segment of the electronics industry called, “Electronics Intellectual Property” or “Electronics IP” for short.
So here are the questions to be answered:
What is Electronics IP?
How big is its market niche & profitability?
How fast is the IP niche growing?
(1) What is Electronics IP? Wikipedia provides a workable answer as follows:
In electronics design, a
semiconductor intellectual property core, IP core, or
IP block is a reusable unit of logic, cell, or chip layout design that is the (legal) intellectual property of one party. IP cores may be licensed to another party or can be owned and used by a single party alone. The term is derived from the licensing of the patent and source code copyrighted intellectual property rights that subsist in the design. IP cores can be used as building blocks within ASIC chip designs or FPGA logic designs.
IP cores have had a profound impact on the design of systems on a chip (SoC's). By licensing a design multiple times, IP core licensors spread the cost of development among multiple chip makers. IP cores for standard processors, interfaces, and internal functions have enabled chip makers to put more of their resources into developing the differentiating features of their chips. As a result, chip makers have developed new innovations faster.
The licensing and use of IP cores in chip design came into common practice in the 1990's. Many of the best known IP cores are soft microprocessor designs. Their instruction sets vary from small 8-bit processors, such as the 8051 and PIC to 32-bit processors such as the ARM architectures or MIPS architectures. Such processors form the "brains" of many embedded systems.
IP core developers and licensors range in size from individuals to multi-billion dollar corporations. IP development and licensing are less common in nations with lax enforcement of laws against the infringement and theft of intellectual property.
A partial list of current IP core licensors has been compiled in Wikipedia
So that's a decent answer to question (1).
The answers to questions (2) and (3) are not quite as straight-forward, and they require some more background as follows.
As previously implied, Electronics IP is a worldwide phenomenon; the largest independent Electronics IP supplier today is headquartered in Cambridge, England (ARM Holdings plc). While the United States is headquarters for most of the other corporate participants, virtually all of the leading Electronics IP suppliers have operations all over the world.
Of course, the well-established Big 3 Electronic Design Automation players (Synopsys, Cadence and Mentor Graphics) are very active in the Electronics IP field, and they each have recently become even more active with highly-visible IP acquisitions. Each of the Big 3 is headquartered in the United States and each has operations all over the world. Each is huge in total sales. Last year's Big 3 combined revenues were $3,015,404,000.
But with the Big 3, we encounter the first roadblock in trying to scrutinize the overall size, growth and impact of the worldwide Electronics Intellectual Property phenomenon.
The problem is simply stated - the revenues and profits of the intellectual property businesses of the Big 3 are not unbundled and reported in public! Not their own IP activity that each may have started from scratch; not their acquired IP businesses either. Once an acquisition is absorbed by any of the Big 3 organisms, performance information about that acquisition ceases.
This non-disclosure practice has given rise to the wry alternative definition of Big 3 IP - namely, Big 3 “IP” equals “Invisible Performance.”
So for purposes of answering questions (2) and (3) above, we will not focus directly on the IP activity of the Big 3. To better explain looking elsewhere, a little more historical background is warranted and follows here.
Around the time that George W. Bush launched his ill-conceived IRAQ WAR with the pre-emptive Shock and Awe attack on Baghdad (i.e. March 2003), the writer received an (unrelated) phone call from Mr. Sanjay Gangal, vice president of IBSystems, Inc. and publishers of Internet newsletters such as EDAcafe.com and MCADCafe.com, among others. (Sanjay had been a key member of the engineering team at the San Jose-based PCB Division of EDA vendor Mentor Graphics Corporation during the 4+ years that the writer was VP &GM of that division in the early nineties. Sanjay was likewise aware of the writer's 20+ years of MCAD/MCAE experience prior to Mentor. The writer had departed Mentor in 1996
after six+ total years of service at MGC, to form Henke Associates. Sanjay had departed from Mentor in 1994, also after nearly six years there, taking three other positions in the SF Bay Area before joining IBSystems in 1999).
In his March 2003 phone call, Sanjay suggested that the writer and his team at Henke Associates might launch quarterly commentaries on the financial progress of leading public EDA vendors in EDAcafe.com and of leading public MCAD and/or MCAE vendors in MCADCafe.com. Sanjay offered the writer no financial incentive to encourage this effort, but rather he hinted that the ongoing exposure to the subscribers of IBSystems' publications would surely lead to future consulting assignments for Henke Associates.
Thus was the genesis of the quarterly
EDA Industry Commentary and the quarterly
MCAD Industry Commentary, which began to appear in May 2003. We had quickly identified nine (9) public EDA vendors along with a separate nine (9) public MCAD/MCAE vendors, to cover initially.
As if this were not enough, a few weeks later Sanjay further suggested that his readers might also be interested in a relatively new segment of electronics design called, “Electronics Intellectual Property” or “Electronics IP” for short. Since the team at Henke Associates strongly agreed that this emerging segment was indeed under-reported, we quickly acceded. In his naïve enthusiasm, the writer identified a further eight (8) public vendors in Electronics IP for launching coverage in a separate quarterly Electronics IP Industry Commentary.
Back to the Present:
Seven-plus years later, both the IRAQ WAR  and the quarterly EDA, MCAD and Electronics IP Industry Commentaries are still going on, the latter combined total of quarterly commentaries having just recently passed the 90-issues milestone.
The preparations of all three sets of the ninety total quarterly commentaries over the years have at once provided Henke Associates many informative, provocative, frustrating, enlightening, addictive, humbling, satisfying, and occasionally grueling hours of effort, and have resulted to date in precisely two (2) consulting assignments that can be traced directly to the efforts.
During the last seven years, four (4) of the originally-selected nine EDA vendors for the EDA Industry Commentary have since been acquired by other vendors:
… thereby leaving for continuing coverage the current Group-of-Five (G5) EDA vendors:
By the way, the most recent quarterly EDA Industry Commentary was posted on July 8, 2010:
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-- Russ Henke, EDACafe.com Contributing Editor.
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