Last April—May I visited our design centers, customers and partners in Japan, India and Europe. I noticed a positive trend in the proliferation and adoption of standard-based semiconductor-Intellectual Properties (IPs) that was accelerating development of bigger, faster and more complex chips in the marketplace. While more is known about third-party processors like ARM, MIPS and foundation libraries, I’ll focus on standards-based IPs.

The current state of third-party IP business reminds me of the state of third-party EDA adoption in the late eighties. Working at Cadence, I learnt first-hand standardization of design languages in VERILOG and later VHDL-enabled third-party EDA tools to be adopted at bigger companies who originally had CAD development teams.

Involved in several projects with companies promoting standards-based simulation and synthesis tools, a major grievance I faced then was from internal CAD teams that their tools are superior to third-party tools, better complementing their design process. While this was true in some cases, economies-of-scale third-party tool companies created overcame these initial objections. Big companies needed to solve the issue of third-parties fixing bugs and making enhancements. Fast-forwarding 15 years, today, third-party EDA tools are widely adopted. Chip and system companies have re-tooled their design methodologies to accommodate standard EDA tools.

Similar trend is emerging in third-party IP business. Standardized design-interfaces and re-useable blocks provided by quality IP suppliers are replacing standard design blocks created internally. Every company wants to apply its scarce resources for building value-added unlike building a standard block. When chip companies realized IP guys were updating themselves and spending time creating standard blocks, they started adopting IPs for their use. Today, every major chip has third-party IP built in, adopting standards-based IP blocks built outside.

Third-party IP-industry started with interfaces like PCI and USB defined by industry consortium with compliance strictly enforced through plug fests etc. Indian entrepreneurs, in fact, founded the first two companies in this space: Virtual Chip and Sand Microsystems. Their success helped level the field where more fable-companies entered from Asia and Europe with chips talking to other chips in the system through third-parties’ licensed standards.