Not long ago, Xiaomi officially released its first 3nm SoC Xuanjie O1, which uses IPs such as CPU and GPU provided by semiconductor IP company Arm as architectural support, and conducts back-end and system-level design on this basis.
This is also the research and development model adopted by most chips at present. If designing a chip is likened to building a house, semiconductor IP companies provide bricks and basic frameworks. Based on these basic materials, design manufacturers will carry out pipeline and line design, soft decoration definition and other work in combination with product needs.
Under this round of AI wave, the semiconductor IP industry is ushering in new variables. According to a survey by professional organization IPnest, the market concentration of the world's top four semiconductor IP manufacturers will increase from 72% in the previous year to 75% in 2024, but their growth rates are different. Among them, Arm, which ranks first, has an overall performance growth rate of 124% in the past nine years, and Synopsys and Cadence, which rank second and third, have growth rates of more than 300%.
This is because, in the current era of accelerated computing, AI's demand for high-speed IP interfaces has increased exponentially, and the number is far higher than the order of magnitude of core computing components such as CPUs.
In addition, the semiconductor IP industry is moving towards a new stage of competition as it continues to expand into different downstream markets and seeks new technological discourse power amid the slowdown of Moore's Law.
For example, according to the information officially released by Arm, it provides Armv9.2 Cortex CPU cluster IP, Arm Immortalis GPU IP and CoreLink interconnection system IP for Xuanjie O1.
Xiaomi also issued a response saying that Xuanjie O1 is a 3nm flagship SoC independently developed and designed by the Xiaomi Xuanjie team over four years. It is based on Arm's latest CPU and GPU standard IP licenses, but the multi-core and memory access system-level design and back-end physical implementation are completely independently designed by the Xuanjie team, and it is not the complete solution provided by Arm as rumored online.
Arm has previously stated publicly that its CSS solution is essentially to provide computing subsystems for partners in different market segments, helping them to effectively improve performance, reduce costs, and accelerate product launch cycles. However, CSS is a standardized product, not a customized business, and Arm's main business is still to provide standardized platform solutions.
This shows that the industry will not have a very high overall scale, but it still maintains a relatively high growth rate.
According to IPnest statistics, the total size of the semiconductor design IP market in 2024 will be US$8.5 billion, with a year-on-year growth rate of 20%, the highest in history. Over the past year, the overall performance growth of the top four companies has been around 25%, which has further promoted the concentration of their industry.
Of course, different industry distributions lead to different growth rates among companies. IPnest pointed out that in the past nine years, the overall semiconductor IP market has grown by 145%, but Arm, which ranks first, has grown by 124%, while Synopsys and Cadence Design Systems, which rank second and third, have grown by 326% and 321% respectively.
If calculated from the license perspective, Synopsys' market share in 2024 (32%) will be slightly higher than Arm's (30%); from the royalty perspective, Arm's 66.7% share is far higher than the manufacturers ranked behind it.
IPnest CEO Eric Esteve told the 21st Century Business Herald reporter that in 2024, Synopsys will surpass Arm in terms of licensing revenue, and the reasons behind this can be analyzed from two aspects.
On the one hand, there are structural reasons. "It reflects the quality of Synopsys' IP portfolio built following the 'one-stop service' concept. Although Synopsys seems to have weaknesses in the processor field, it is a leader in almost all other fields, such as physical, wired interfaces and digital fields." He further pointed out.
For example, if we delve deeper into the wired interface space and look at it by protocol, Synopsys has a leading market share in USB (77% share, the same below), PCIe (67%), DDR memory controllers (58%), SerDes (42%), UCIe (44%) or MIPI (74%).
On the other hand, there are speculative reasons. Eric Esteve further pointed out to reporters that since 2020, the wired interface field has become the fastest growing segment in the semiconductor IP industry, with a compound annual growth rate of more than 20%, and this trend is expected to continue in the next five years.
"This is closely related to the widespread application of artificial intelligence," he analyzed, because high-performance computing (HPC) applications require the use of high-end interconnects at advanced technology nodes. If we observe the compound annual growth rates of Arm, Synopsys and Cadence over the past nine years, which are 10.6%, 19.9% and 19.7% respectively, it fully confirms that the positioning of the latter two has greatly contributed to their high growth results.
According to IPnest statistics, in 2024, the design IP segment of wired interfaces will grow at an annual rate of 23.5%, while the processor category will grow by 22.4%.
Eric Balossier, chief semiconductor market analyst at TechInsights, analyzed the company's development history to the 21st Century Business Herald reporter. He pointed out that Synopsys has been carrying out acquisitions in recent years, and many acquisitions have driven its growth. This kind of external expansion will bring more significant growth than organic growth.
"Since 2016, Synopsys has completed 74 acquisitions, an average of two acquisitions per year over the past three years. This strategy has brought the company a wide range of IP, including interface IP, which is growing faster than all other IP categories, including CPU IP." He analyzed, and Arm's penetration rate in the CPU IP market is very high, which to a certain extent limits its overall growth performance in the terminal market.
However, Eric Balossier added that Arm is advancing with new opportunities in the PC and data center markets, and is also increasing value by raising prices for new licenses or offering complete solutions (CSS).
A reporter from 21st Century Business Herald found that at a previous performance exchange meeting, Arm executives mentioned that the total patent royalty combination of the new generation v9 architecture will be higher than that of the v8 architecture, and its CSS computing subsystem solution will also drive the growth of royalty business revenue.
Typical examples include Synopsys and Cadence Design Systems, which are not only IP vendors but also EDA leaders, and are typical EDA+IP combined business models. Although Arm is mainly based on a pure IP model, in recent years it has also been seeking to provide standardized solutions such as CSS to help chip design companies speed up their product launches and expand their growth potential.
Leveraging external expansion is also a perspective that cannot be ignored. Under the wave of AI, this trend may continue. Recently, market news pointed out that both Arm and Qualcomm are willing to acquire SerDes giant Alphawave, which happens to be the fourth largest company in the semiconductor IP industry.
Although the acquisition has not been publicly confirmed by the company, it can be used as a starting point to observe the future expansion path of IP manufacturers.
Eric Esteve analyzed to reporters that Arm's business model is not just centered around CPU IP and GPU IP. "Since the acquisition of Artisan in 1999, Arm's business model has been composed of memory compilers and I/O libraries, system IP, and security IP, which are called basic IP. In 2025, Arm sold these basic IPs to Cadence, which shows that Arm does not want to imitate Synopsys's 'one-stop service' model."
As for the possible support that Alphawave may bring to Arm, Eric Esteve continued that since SerDes (serializer/deserializer) is critical to building top-level interconnect capabilities based on protocols such as Ethernet, PCIe, CXL or UCIe, companies like Alphawave are leading in the field of high-end interface IP, which can meet the needs of building high-performance computing applications (such as AI systems).
From this, we can see two completely different scenarios. He analyzed that the first one is that Arm enters the artificial intelligence market by providing Alphawave's IP and chiplets solutions, which can now increase its annual revenue by at least US$300 million, and this figure will increase to US$1 billion by 2028.
The second option is that Arm hopes to develop AI systems by improving its own technical capabilities and compete with AMD and Nvidia. "This will be a complete business model change, but the company has recently communicated about such changes, which could increase Arm's revenue from billions of dollars to tens of billions of dollars by providing integrated circuit (IC) solutions based on IP," Eric Esteve further pointed out.
Eric Balossier also told the 21st Century Business Herald reporter that having leading SerDes IP will help Arm use its products to penetrate the customer market in the fields of high-performance communications and data center system-on-chip (SoC) design (whether through IP subsystems or by advancing its business model to serve customized chip design); in addition, this will provide a broader IP portfolio for high-performance communications and other cutting-edge markets.
From the perspective of industry trends, he pointed out that the IP field is both integrated and highly fragmented. For high-demand IP fields related to computing and advanced packaging, industry integration may continue; mature computer companies such as Intel may exit some non-core businesses, and their strategies may also promote broader acquisitions of IP portfolios; of course, they may also face competition from other companies, such as Nvidia's recent announcement that it will license its NVLink interconnect IP to third parties.
According to IPnest statistics, IMG ranked sixth in the world in 2024 with a market share of 1.6%, but its annual revenue growth rate actually fell by 10%.
Eric Esteve analyzed that ten years ago, IMG ranked first in the field of GPU IP and competed with Arm, which ranked first in the field of CPU, in the mobile phone market. At the same time, IMG made several attempts in CPU IP but all failed. It first cooperated with MIPS and later tried RISC-V. Arm successfully developed end-side GPU IP and became the market leader. IMG's cooperation experience with important customer Apple was quite tortuous. The latter once tried to get rid of it as a supplier, but ultimately failed.
"Today, IMG has a booming opportunity: the market needs the GPU IP solutions provided by IMG to compete with AMD and Nvidia. But considering that these two competitors have been deeply involved in the GPU field for many years, this is not an easy task." He continued that competition in the IP market is extremely fierce, and in order to succeed, breakthrough technological solutions must be introduced.
Eric Balossier also pointed out to reporters that IMG faces fierce competition from established competitors such as Nvidia, AMD and Arm. However, IMG's newly released E series products are very eye-catching.
"It is worth noting that all major IP suppliers are providing neural network processors (NPU) IPs that can be integrated into microcontrollers (MCUs) or system-on-chips (SoCs) for edge artificial intelligence, including Arm, Synopsys, Cadence Design Systems, Ceva and several startups. This has resulted in too many NPU IP suppliers and insufficient customers in the edge market, which has hindered IMG in expanding AI market opportunities," he further analyzed.
Regarding the future integration trend of the IP industry, Eric Esteve said that the next step may be to seek changes in the business model, allowing IP suppliers to design IC products, or just design small chips such as chiplets. "The overall size of the semiconductor IP market is slightly less than $10 billion, $8.4 billion in 2024, and selling chiplets or ICs may be the only way to break the $10 billion ceiling."
This is also the research and development model adopted by most chips at present. If designing a chip is likened to building a house, semiconductor IP companies provide bricks and basic frameworks. Based on these basic materials, design manufacturers will carry out pipeline and line design, soft decoration definition and other work in combination with product needs.
Under this round of AI wave, the semiconductor IP industry is ushering in new variables. According to a survey by professional organization IPnest, the market concentration of the world's top four semiconductor IP manufacturers will increase from 72% in the previous year to 75% in 2024, but their growth rates are different. Among them, Arm, which ranks first, has an overall performance growth rate of 124% in the past nine years, and Synopsys and Cadence, which rank second and third, have growth rates of more than 300%.
This is because, in the current era of accelerated computing, AI's demand for high-speed IP interfaces has increased exponentially, and the number is far higher than the order of magnitude of core computing components such as CPUs.
In addition, the semiconductor IP industry is moving towards a new stage of competition as it continues to expand into different downstream markets and seeks new technological discourse power amid the slowdown of Moore's Law.
Growth rate differentiation
As the upstream of the semiconductor industry, although the overall scale of the semiconductor IP industry is not large, it is the key to leveraging the hundreds of billions of dollars in chip market.For example, according to the information officially released by Arm, it provides Armv9.2 Cortex CPU cluster IP, Arm Immortalis GPU IP and CoreLink interconnection system IP for Xuanjie O1.
Xiaomi also issued a response saying that Xuanjie O1 is a 3nm flagship SoC independently developed and designed by the Xiaomi Xuanjie team over four years. It is based on Arm's latest CPU and GPU standard IP licenses, but the multi-core and memory access system-level design and back-end physical implementation are completely independently designed by the Xuanjie team, and it is not the complete solution provided by Arm as rumored online.
Arm has previously stated publicly that its CSS solution is essentially to provide computing subsystems for partners in different market segments, helping them to effectively improve performance, reduce costs, and accelerate product launch cycles. However, CSS is a standardized product, not a customized business, and Arm's main business is still to provide standardized platform solutions.
This shows that the industry will not have a very high overall scale, but it still maintains a relatively high growth rate.
According to IPnest statistics, the total size of the semiconductor design IP market in 2024 will be US$8.5 billion, with a year-on-year growth rate of 20%, the highest in history. Over the past year, the overall performance growth of the top four companies has been around 25%, which has further promoted the concentration of their industry.
Of course, different industry distributions lead to different growth rates among companies. IPnest pointed out that in the past nine years, the overall semiconductor IP market has grown by 145%, but Arm, which ranks first, has grown by 124%, while Synopsys and Cadence Design Systems, which rank second and third, have grown by 326% and 321% respectively.
If calculated from the license perspective, Synopsys' market share in 2024 (32%) will be slightly higher than Arm's (30%); from the royalty perspective, Arm's 66.7% share is far higher than the manufacturers ranked behind it.
IPnest CEO Eric Esteve told the 21st Century Business Herald reporter that in 2024, Synopsys will surpass Arm in terms of licensing revenue, and the reasons behind this can be analyzed from two aspects.
On the one hand, there are structural reasons. "It reflects the quality of Synopsys' IP portfolio built following the 'one-stop service' concept. Although Synopsys seems to have weaknesses in the processor field, it is a leader in almost all other fields, such as physical, wired interfaces and digital fields." He further pointed out.
For example, if we delve deeper into the wired interface space and look at it by protocol, Synopsys has a leading market share in USB (77% share, the same below), PCIe (67%), DDR memory controllers (58%), SerDes (42%), UCIe (44%) or MIPI (74%).
On the other hand, there are speculative reasons. Eric Esteve further pointed out to reporters that since 2020, the wired interface field has become the fastest growing segment in the semiconductor IP industry, with a compound annual growth rate of more than 20%, and this trend is expected to continue in the next five years.
"This is closely related to the widespread application of artificial intelligence," he analyzed, because high-performance computing (HPC) applications require the use of high-end interconnects at advanced technology nodes. If we observe the compound annual growth rates of Arm, Synopsys and Cadence over the past nine years, which are 10.6%, 19.9% and 19.7% respectively, it fully confirms that the positioning of the latter two has greatly contributed to their high growth results.
According to IPnest statistics, in 2024, the design IP segment of wired interfaces will grow at an annual rate of 23.5%, while the processor category will grow by 22.4%.
Eric Balossier, chief semiconductor market analyst at TechInsights, analyzed the company's development history to the 21st Century Business Herald reporter. He pointed out that Synopsys has been carrying out acquisitions in recent years, and many acquisitions have driven its growth. This kind of external expansion will bring more significant growth than organic growth.
"Since 2016, Synopsys has completed 74 acquisitions, an average of two acquisitions per year over the past three years. This strategy has brought the company a wide range of IP, including interface IP, which is growing faster than all other IP categories, including CPU IP." He analyzed, and Arm's penetration rate in the CPU IP market is very high, which to a certain extent limits its overall growth performance in the terminal market.
However, Eric Balossier added that Arm is advancing with new opportunities in the PC and data center markets, and is also increasing value by raising prices for new licenses or offering complete solutions (CSS).
A reporter from 21st Century Business Herald found that at a previous performance exchange meeting, Arm executives mentioned that the total patent royalty combination of the new generation v9 architecture will be higher than that of the v8 architecture, and its CSS computing subsystem solution will also drive the growth of royalty business revenue.
AI-driven expansion
It is precisely because the overall scale of the IP industry is relatively small that companies in the industry are seeking differentiated business models to gain greater growth space.Typical examples include Synopsys and Cadence Design Systems, which are not only IP vendors but also EDA leaders, and are typical EDA+IP combined business models. Although Arm is mainly based on a pure IP model, in recent years it has also been seeking to provide standardized solutions such as CSS to help chip design companies speed up their product launches and expand their growth potential.
Leveraging external expansion is also a perspective that cannot be ignored. Under the wave of AI, this trend may continue. Recently, market news pointed out that both Arm and Qualcomm are willing to acquire SerDes giant Alphawave, which happens to be the fourth largest company in the semiconductor IP industry.
Although the acquisition has not been publicly confirmed by the company, it can be used as a starting point to observe the future expansion path of IP manufacturers.
Eric Esteve analyzed to reporters that Arm's business model is not just centered around CPU IP and GPU IP. "Since the acquisition of Artisan in 1999, Arm's business model has been composed of memory compilers and I/O libraries, system IP, and security IP, which are called basic IP. In 2025, Arm sold these basic IPs to Cadence, which shows that Arm does not want to imitate Synopsys's 'one-stop service' model."
As for the possible support that Alphawave may bring to Arm, Eric Esteve continued that since SerDes (serializer/deserializer) is critical to building top-level interconnect capabilities based on protocols such as Ethernet, PCIe, CXL or UCIe, companies like Alphawave are leading in the field of high-end interface IP, which can meet the needs of building high-performance computing applications (such as AI systems).
From this, we can see two completely different scenarios. He analyzed that the first one is that Arm enters the artificial intelligence market by providing Alphawave's IP and chiplets solutions, which can now increase its annual revenue by at least US$300 million, and this figure will increase to US$1 billion by 2028.
The second option is that Arm hopes to develop AI systems by improving its own technical capabilities and compete with AMD and Nvidia. "This will be a complete business model change, but the company has recently communicated about such changes, which could increase Arm's revenue from billions of dollars to tens of billions of dollars by providing integrated circuit (IC) solutions based on IP," Eric Esteve further pointed out.
Eric Balossier also told the 21st Century Business Herald reporter that having leading SerDes IP will help Arm use its products to penetrate the customer market in the fields of high-performance communications and data center system-on-chip (SoC) design (whether through IP subsystems or by advancing its business model to serve customized chip design); in addition, this will provide a broader IP portfolio for high-performance communications and other cutting-edge markets.
From the perspective of industry trends, he pointed out that the IP field is both integrated and highly fragmented. For high-demand IP fields related to computing and advanced packaging, industry integration may continue; mature computer companies such as Intel may exit some non-core businesses, and their strategies may also promote broader acquisitions of IP portfolios; of course, they may also face competition from other companies, such as Nvidia's recent announcement that it will license its NVLink interconnect IP to third parties.
Pattern Competition
However, what is strange is that in this round of AI wave, Imagination Technologies (IMG), a company whose main product is GPU IP, does not seem to have been able to leverage it to gain a rapid increase in market share.According to IPnest statistics, IMG ranked sixth in the world in 2024 with a market share of 1.6%, but its annual revenue growth rate actually fell by 10%.
Eric Esteve analyzed that ten years ago, IMG ranked first in the field of GPU IP and competed with Arm, which ranked first in the field of CPU, in the mobile phone market. At the same time, IMG made several attempts in CPU IP but all failed. It first cooperated with MIPS and later tried RISC-V. Arm successfully developed end-side GPU IP and became the market leader. IMG's cooperation experience with important customer Apple was quite tortuous. The latter once tried to get rid of it as a supplier, but ultimately failed.
"Today, IMG has a booming opportunity: the market needs the GPU IP solutions provided by IMG to compete with AMD and Nvidia. But considering that these two competitors have been deeply involved in the GPU field for many years, this is not an easy task." He continued that competition in the IP market is extremely fierce, and in order to succeed, breakthrough technological solutions must be introduced.
Eric Balossier also pointed out to reporters that IMG faces fierce competition from established competitors such as Nvidia, AMD and Arm. However, IMG's newly released E series products are very eye-catching.
"It is worth noting that all major IP suppliers are providing neural network processors (NPU) IPs that can be integrated into microcontrollers (MCUs) or system-on-chips (SoCs) for edge artificial intelligence, including Arm, Synopsys, Cadence Design Systems, Ceva and several startups. This has resulted in too many NPU IP suppliers and insufficient customers in the edge market, which has hindered IMG in expanding AI market opportunities," he further analyzed.
Regarding the future integration trend of the IP industry, Eric Esteve said that the next step may be to seek changes in the business model, allowing IP suppliers to design IC products, or just design small chips such as chiplets. "The overall size of the semiconductor IP market is slightly less than $10 billion, $8.4 billion in 2024, and selling chiplets or ICs may be the only way to break the $10 billion ceiling."