Chip in

The semiconductor intellectual property (IP) market continued to outperform the semiconductor chip market in 2002, as world-wide semiconductor IP revenue grew 5 per cent in 2002, with revenue of $933.8 million, according to Gartner. By comparison, the world-wide semiconductor chip industry grew by 1.9 per cent in 2002.

The top two vendors, ARM and Rambus, accounted for more than 30 per cent of the total market. Some of the strongest growth rates were by Synopsys (block library), TTPCom (platform), Artisan Components (varied) and Monolithic System Technology (memory). Despite this growth, vendors are still trying to determine the best model for success.

"Business models for IP vendors are a topic of much discussion, with a large amount of experimentation taking place," said Jim Tully, vice president and research director for Gartner's emerging technologies and semiconductor group. "Even among the top ten vendors, there are narrow-focused vendors, broadline players, vendors of commodity products,differentiated product vendors, library suppliers, block vendors and platform/solution providers. Some companies focus only on IP, while others are primarily in a different business."

Royalty revenue was hit harder than license revenue because of poor semiconductor conditions. However, royalties remain the major way forward for the industry.

"Vendors must develop business models that will build royalty revenue for the benefit of vendors and users," Tully said. "But, the royalty percentage should not be allowed to grow over 50 per cent as this would expose vendors to the relative volatility of the semiconductor market."