The first time I met Charlie Cheng, he was CEO of processor IP startup Lexra. Now he’s CEO of memory IP vendor Kilopass. No surprise, Cheng thinks that IP is the future for semiconductor revenues in the US and he tells us that in an article published yesterday on EETimes.com. (see “Transforming the U.S. semiconductor business model”.)
“Here, in the Silicon Valley, the semiconductor industry is very much yesterday’s news, ignored by venture capitalists, talented employees and trade publications. That makes industry pundits wonder what’s happening to the U.S. semiconductor industry, especially the startups who aspire to become another Atheros, Marvell or NVIDIA.
In my opinion, 2011 will be the year that transforms the U.S. semiconductor business model from fabless companies designing chips and building them off-shore, to focusing on just licensing the core technologies to chip companies worldwide. This model is formally called the semiconductor intellectual property (SIP) licensing business, and after its meteoric rise in the mid-1990s and much neglected due to a lack of success, is finally making a comeback again.”
The EDA360 view is that Cheng is absolutely right about the importance of IP. This is not a revolutionary idea. Not even close. Commercial IP is already a done deal. Think ARM, MIPS, Rambus, Tensilica, etc. There are successful IP companies already. You cannot design Gigagate ASICs without commercial IP. You just can’t and there’s no use arguing about it.
What you can argue about is how many IP companies the electronics industry can support. Dozens? Hundreds? Three? There’s no pat answer, so you can argue this one ‘til the cows come home.
I’ve worked for two successful IP companies in the past decade myself: Tensilica and Denali. Both succeeded on the strength of their products and their superlative marketing. There’s not much new here, either. All companies succeed or fail based on the strength of their products and on their marketing (or lack thereof). One or the other alone isn’t sufficient in IP, or any other market for that matter.
As Cheng notes, Cadence recently acquired Denali. Cadence had already signaled its new focus on IP with the publication of the EDA360 vision in April, 2010. It put the company’s money behind that vision when it acquired Denali for $315 million, as announced in May, 2010. You don’t need to ask Cadence its opinion about IP—it’s there in the acquisition press releases for all to see.
Cheng concludes his article by saying that he’s optimistic about IP’s future. Ditto.