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Third Party Semiconductor Intellectual Property (SIP)

Summary of Semico Outlook 2010 Presentation by
Alex Shubat, President and CEO, Virage Logic

One of the great stories of the early 21st Century in the semiconductor industry is the rise of the 3rd Party Semiconductor Intellectual Property (SIP) market and the vendors that populate it. This market has been created and driven in turn by the rise of the System-on-a-Chip (SoC) market and the need to provide higher levels of performance to meet changing market needs while at the same time allowing for increased integration of functions. All this has been against a backdrop of continuing technological evolution towards smaller process geometries and customer expectations of ever-lower silicon price points.

The over-riding reason behind all of these separate trends has been the disaggregation of the semiconductor industry starting all the way back in the 1970’s when semiconductor companies decided they could no longer build their own silicon production equipment. The trend continued with the creation of Electronic Design Automation (EDA) companies and tool sets and evolved further with the rise of independent silicon foundries and now with the rise of the 3rd Party SIP industry. At each juncture, as what had been ‘traditional’ semiconductor manufacturer functions were outsourced, the semiconductor market has itself grown in revenues, unit volumes and impact on the daily lives of people around the world.

An additional impact of the proliferation of silicon solutions has been the creation and deployment of a host of new applications and functionality available to everyday consumers around the world. There would be no need for all the new types of silicon we see today if not for the new applications that require ever more innovative and manufacturable solutions.

However, all this innovation, all this performance, all this integration of functionality and the richer feature sets they enable come with a price: higher SoC design costs and the need to address larger market volumes to recoup the development costs. Even as the different worldwide markets for semiconductors continue to grow, the growth of complex development costs is rising faster forcing SoC developers to look for ever-larger market opportunities to address.

Fortunately, the answer has so far been to employ the increased functionality offered by innovative SoC silicon solutions to enable system architects to create more ‘gotta-have’ devices and systems than ever before. The opening of new markets in the developing world for communications, connectivity and processing power has aided in this effort. But what happens when, figuratively speaking, every ‘Kalahari Bushman’ has a cell phone, or a GPS device, or a netbook? The answer, of course, is to offer new applications to run on those cell phones, GPS receivers and netbooks: Applications that will keep consumers engaged, keep consumers looking to upgrade their devices to capture even more interesting and useful applications to run on those devices.

The 3rd Party SIP industry has played and will continue to play a pivotal role in facilitating the creation of these powerful and innovative silicon solutions. By continuing to deliver pieces of expertise “frozen in time” to SoC designers, the SoC industry itself is empowered and energized. While the 3rd Party SIP industry does not create the applications itself, it does allow designers to offer ever more powerful and highly integrated solutions that can be used in the creation of the new solutions the electronics industry needs to continue on the growth path we have enjoyed for the last 30 years and more.

Rich Wawrzyniak

Senior Analist ASIC/SOC

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