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IP business will overtake EDA business
Ravi Thummarukudy
Monday, November 17, 2008
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.

While these were the first-wave, several new standards in RTL-based BUS interface IPs such as PCI Express, HyperTransport, Ethernet, wireless standards like Bluetooth and WIMAX are becoming standardized and popular. There’s also slew of algorithmic standards like MP3, MPEG1/2/4, H.264, verification IPs in Verilog, VERA or E-language for verifying these standard components and physical or hard macro-level IP blocks like Ethernet XAUI, PCIe/USB Phys. to name few.

Reverting back, quality and miniaturization are hallmarks of Japanese products worldwide. They achieve quality through well defined, systematic and fully automated processes for design and manufacturing; engineers worship quality for products’ success. Quality is not enforced from outside but set up internally, this being the only way to increase revenue and profits. A blend of Silicon Valley creativity, Indian entrepreneurship and Japanese approach on processing appears the mantra for developing better quality IPs.

Nobody need lecture us on quality in IP-business or in Electronic Design Services. IP as an industry-movement suffered a setback with IP building blocks built in garages, failing to perform well. Understandably, the industry was embryonic with poor enforcement of design process. Today, there’s great stress on quality and validation. Adherence to industry standards is now the norm, thanks to a mega movement.

Now, things are in favor of using third-party IP. Every chipmaker wants a plug-and-play–plug an IP core and it works! and focus their resources on their secret sauce to integrate a complete solution. Parallels between IP and EDA tools are unmistakable and IP trend is clearly following EDA. While EDA market got adopted sooner, IP adoption and business is growing faster purely because these functions are embedded in chips taking a percentage of the semiconductor chip business, something that EDA business has been dreaming for long.

Numbers speak for themselves. The industry is estimated at $3-billion and is growing. There’s more trust for IP-vendors today and increasing demand for third-party IP building blocks. We can’t just predict IP adoption to overtake EDA and sit idle for it to happen. The IP industry needs to take several initiatives to excel. First is the quality of IP. Designs must be built using highest quality and tools because of their critical role.

Second, IP companies actively involve themselves in standards-creation and compliance along with system and chip companies. HyperTransport and PCI-SIG are good examples of how the IP companies collaborated with their big brothers in the industry to develop plug-and-play products.

A third important aspect of the IP-business relates to “Intellectual Property” involved in the product itself. While much of the interconnect IP blocks are industry standards, still every quality provider needs to make sure of copyright, patents and other trademarks. Any violation of these will slow the adoption of IP - an area where IP business needs to be more careful than EDA, as IPs are embedded in the design, while EDA tools are mostly external in nature and thus less vulnerable.

Another key to promoting IP is for IP providers to collaborate among themselves. Like EDA companies’ collaboration forums EDAC and shows like DAC, IP vendors should collaborate and define standards like VSIA for improving plug-and-play. I’m aware of several initiatives in various countries where companies have joined to standardize and share IP blocks available through IP exchange initiatives. Websites like design and re-use provide information regarding IPs available worldwide. Similar IP exchange forum has been proposed in India wherein companies with IP can buy it off one-another and avoid re-inventing the wheel to deliver finished solutions faster. Working with such forums primarily will reduce time to develop and market large SoCs by using or re-using IPs that are tested and ready to integrate.

A potential ecosystem is building up in India. The semiconductor industry started its roots when Texas Instruments set up shop in 1984. Today, the industry has become $3-billion big with over 120 chip-design companies. According to a Frost and Sullivan study, India accounted for less than one-percent share in global semiconductor revenues in 2003. In 2005 it increased to 1.2 percent. It’s predicted to hit two-percent in 2007 and five-percent by 2015. Direct revenue generation of $43.07 billion by 2015 is expected, employing 781,780 engineers and indirect employment of 2.96 million opening $1 billion market opportunity for EDA players, 36.30 billion TM and 15.52 billion TAM for semiconductor suppliers. The fact that IP providers are opening both design and support centers will contribute significantly to India’s forecast.

Overall, adoption of standard IP by industry is increasing and enabling chip companies to focus on value, leaving standard part of the chip to other third parties. This trend will soon be the key driving force in developing bigger, faster, complex chips in record time. Opportunities for India in this domain is wide open.

The author is VP and GM of the IC Solutions Division of GDA Technologies, has over 20 years of experience in the semiconductor/EDA industry. He can be reached at ravi@gdatech.com
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