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Still dreaming of a plug-and-play IP

Posted: 13 Feb 2009 ?? ?Print Version ?Bookmark and Share

Keywords:IP plug play? DesignCon Intellectual property?

Frustrating for users
In fact, the evolving business models employed by IP vendors appear to be one of the sources of frustration for users. Last fall at a GSA IP event, Walter Ng, vice president of design enablement alliances with Singaporean foundry Chartered Semiconductor Manufacturing Pte Ltd, said customers were "aggravated and frustrated with the business models" of IP vendors.

Customers have been notoriously opposed to paying royalties, which enable IP vendors to cash in on designs that make it to very high-volume. Deals are typically done on a case-by-case basis through negotiations, with both customer and vendor trying to strike the optimum balance of upfront fees and royalty revenue.

But many at DesignCon noted that royalty revenue is essential for IP vendors to thrive and be incented to help customers succeed after the initial purchase order is signed.

"Whoever wants to be successful in IP and the semiconductor business in general has to find a way to grow along with the industry," said Buric. The EDA industry, where Buric spent the bulk of his career, has not grown along with the semiconductor industry because it does not have a culture of royalties, he said. (This assertion was contradicted by a DesignCon presentation given by Mentor Graphics Corp. chairman and CEO Walden Rhines, who said EDA revenue has consistently been 2 percent of semiconductor revenue.)

"I believe that every successful IP company is successful in getting royalties," Buric said.

According to Luis Ancajas, a vice president at Faraday Technology Corp., market forces dictate that complex IPs like processor cores can get royalties, while analog IP vendors have a more difficult time. "The market has already established who gets royalties and who doesn't," he said.

Rajendiran said one of the problems with the evolution of IP business models is that there is a significant falloff in the size of vendors after the first- and second-tier vendors, a group that includes ARM Holding plc, Cadence, MIPs Technologies Inc., Rambus Inc., Virage and Synopsys Inc. The smaller players are "kind of in a thrashing mode," he said. These companies are placing too much emphasis on growing quickly through adding more products, which distracts their focus and puts a strain on their R&D budgets.

"In my opinion, it's the wrong way for smaller companies to go," Rajendiran said. "They end up with too many products to support and can't be the best in every area. The smaller companies don't have the deep pockets for R&D. Everyone wants to become too big."

- Dylan McGrath
EE Times


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