Semi IP Up 21% in 2004 on Competition, Consolidation, Gartner Says

Thanks to strong growth and significant consolidation, worldwide semiconductor intellectual property (IP) revenue totaled $1.27 billion in 2004, a 20.7 percent increase from 2003, according to Gartner Inc.



Semiconductor IP is defined as a pre-designed block of circuits used in semiconductor devices, which typically include application-specific integrated circuits, application-specific standard products and programmable logic devices.



“There are signs that the market is maturing,” said Christian Heidarson, analyst for Gartner’s semiconductor research group, in a statement.



“Unsuccessful players have withdrawn, there have been increasing number of mergers and acquisitions and there is greater competition among the top vendors,” he noted.



For example, Advanced RISC Machines (ARM) extended its lead in the market with its acquisition of Artisan Components. In 2004, its revenue was more than twice the size of its nearest competitor Rambus and three times that of TTPCom, the two closest competitors.



Microprocessors made up the largest part of the IP market, with ARM holding the largest share of the market, Gartner said.



Part of this segment’s growth is attributed to the move from 2.5G to 3G baseband designs, which will require higher-performance cores from ARM, the firm believes.



Demand for digital video, portable consumer electronics and voice over wireless local area network (WLAN) products helped drive new licenses for MIPS Technologies, the second-largest microprocessor core vendor.



Royalty revenue grew 39 percent in 2004, while license returns grew 17 percent. Gartner believes the trend is for royalties to continue to outperform income from licensing. Proceeds from licensing are limited by a downward trend in the number of new designs.



The IP industry has always been very dynamic and despite signs of maturing, this has not changed as evidenced by the number of emerging markets.



Article continues belowFor instance, the market for non-volatile memories has seen several new entrants, and the market for encryption core emerged in 2003 and has grown fast. After years of little or flat growth, analog and mixed signal IP began to grow again in 2004, and Gartner expects to see much more from this part of the market, the firm concluded.