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Where Have All the IP Vendors Gone? Part 3: Market Consolidation

We have answered the first two questions on Market Growth and Market Maturation. The third question relates to Market Consolidation and its impact on the long term health of the 3rd Party IP market.

Does the fact that we have recently seen several ‘large’ IP companies acquired by other ‘larger’ IP companies mean the long anticipated consolidation in the industry has gotten underway.

In order to answer this question it might be a good idea to consider what conditions contribute to, or force, a market consolidation in the first place:

Where Have All the IP Vendors Gone? Part 2: Market Maturation

Well, we have answered the first question about market growth, now how about market maturation?

Market maturation can be viewed in two ways:

The Internet of Things: The Next Wave

Predicting the next innovative product that will be a consumer ‘must have’ is not an easy task.  There is always the possibility of someone inventing one really cool device that would rival the success of tablets and smart phones, but Semico doesn't see that on the horizon, yet. We do see enormous opportunities in the markets that are commonly referred to as "The Internet of Things". There are several factors that we believe will drive the Internet of Things. These include but are not limited to:

  • Controlling electric usage to minimize energy consumption
  • Remotely monitoring home and appliances
  • Security concerns for home, office and industrial environments
  • Inventory control in business, retail and at home in your pantry or refrigerator
  • Constant monitoring of home appliances and industrial equipment to prevent costly breakdowns
  • Access to entertainment from home, auto or other remote locations

These are just a few of the advantages of having everything networked and connected to the Internet.   One of the key drivers that Semico believes will influence the implementation of the Internet of Things is the increasing cost of electricity and the desire to monitor and control consumption.

Looking Inside Google Glass

Google Glass is gaining more interest.  The product will not be officially available to consumers until early 2014.  However, devices have been delivered to developers. 

CNET got its hands on one for a teardown.  Except the teardown didn’t go much further than a few pieces that could be easily removed. To get to the processor or memory would require destroying the plastic housing.  At a retail price of about $1,500 that is not likely to happen.  What has been figured out comes from Google’s specs, software developers and debugging tools.

According to Google, Glass has a high resolution display.  The camera is 5 megapixel and the video is 720p.  Connectivity is 802.11 b/g Wi-Fi and Bluetooth.  Total Flash memory is 16 GB of which 12 GB is available to the user.  It has a micro USB cable and charger. 

What has been determined is that the main processor is the Texas Instruments OMAP 4430 with 1 GB of RAM.  TI first targeted OMAP for the smartphone market.  It has lost market share to other chip vendors, notably Qualcomm.  However, TI has refocused OMAP on a broader market, including consumer. Amazon uses the TI OMAP 4430 in the Kindle Fire. 

Android developers note that there are 16 sensors which are part of the Google Android Sensor Manager system.  These sensors are used by apps developers.  They are listed:

Where Have All the IP Vendors Gone? Part 1

Well, the title is a little facetious, but given all the recent acquisitions in the 3rd Party IP market, it may certainly feel like that to some people. You can relax, there are still plenty of IP vendors left in the market and that won’t change anytime soon.

So what is going on?

  • Does this foretell a slowing in the market growth so the smart people are getting out now?
  • Is this the start of the long prophesied market maturation?
  • Are we finally seeing the so-called market consolidation down to 4 IP vendors?

I can’t tell you how many times I have heard these questions over the last 10 years. It seems like anyone with an opinion on these issues usually speaks up when certain activities occur – like one IP vendor being acquired by another IP vendor. Or people see the acquisitions as a sign that the IP market can’t keep growing at the same rate as the last 3-4 years, which by the way was really quite good. In fact much better than the overall semiconductor market.

Let’s start by looking at the 3rd Party IP market growth over the last several years.

3rd Party IP Market Growth Rates: 

Ring of Fire Poses Risk to Semiconductor Manufacturing

There are hundreds of semiconductor fabs, spread all over the world. The trend over the past several years has been one of consolidation into several main manufacturing centers in the Asia/Pacific region, the United States, and Europe. Unfortunately for the industry, many of these fabs are located in areas prone to earthquakes. Some locations are also at an added risk of damage from tsunamis generated by earthquakes.

The northeast coast of Japan is a prime example; in March 2011, the region suffered a massive 9.0 magnitude earthquake and tsunami that killed 15,883 people, injured over 6,000, and left almost 2,700 still missing. The disaster also caused seven meltdowns at the Fukushima Daiichi nuclear power plant. The plant is still running on makeshift equipment and recently suffered a power outage that left four fuel storage pools without cooling water. In terms of damage to buildings, almost 130,000 buildings were completely leveled, and over a million others sustained some sort of damage. The amount of devastation was astounding, but the Japanese have done an amazing job of clearing away debris and recovering in the two years since, as illustrated by these photos posted at the Atlantic.

MEMS: Room For Improvement

Last week while traveling in the Bay Area, I forgot my GPS so I used my iPhone 4s to guide me around. My rental car came with a Microsoft SYNC USB connection, so I thought I’d have no problems using my phone with the car system. I plugged in my phone, input my next destination and was on my way. Not quite.

MapQuest audio was not working. I had to unplug the phone from the car to hear the turn by turn navigation. The iPhone 4s uses an A-GPS or assisted GPS and has an integrated digital compass, providing additional directional information. But for some reason, the mapping application was continually re-calculating. I was on the route, but the navigation system thought I was somewhere else!

I drove to the ISQED SensorsCon Conference and Becky Oh, President and CEO of PNI Sensors provided some great insight on sensors and the real world. Nine-axis sensing is common today. The combination of a gyroscope, accelerometer and magnetic sensors provide the tracking data to determine up and down, side to side, and back and forth movements. Sensors can register how fast we’re moving, which direction we’re facing, and turning radius.

Stand Back, BigDog Gots This

So have you seen what DARPA is up to lately?  They appear to be giving robots cinder blocks to throw around willynilly.

Take a look at how BigDog has evolved over time.  It can take some abuse.

Is the BigDog too much for you? How about the LittleDog. Cute, and isn't throwing large boulders at us. I like it.

Intel Is On A Roll!

On February 25th, 2012, Altera and Intel announced an agreement to build next-generation, high performance FPGAs on Intel’s 14nm Tri-Gate technology.   This is significant because Altera has used TSMC as their sole foundry for years.   Altera has never before been swayed by price or lured away by the promise of technology.  But, as the saying goes, “never say never”.  As of today Altera has two foundry relationships.

This announcement comes less than a week after Achronix announced the successful rollout of their Speedster 22i which is being built using Intel’s 22nm Tri-Gate technology.  Achronix used TSMC for their 65nm and 40nm product development.  It was somewhat of a risk, but Achronix left the TSMC technology track at 40nm, skipped 32/28nm and went straight to Intel for their 22nm Tri-Gate technology.   Was Altera watching in envy?

During TSMC’s Q4 2012 financial conference call, Morris Chang, TSMC’s CEO, was asked at what technology node and for which end markets does TSMC view Intel as becoming a more fierce competitor?   Morris Chang is not new to this business.   He stated that he already viewed Intel as a fierce competitor.

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