3rd Party Semiconductor Intellectual Property Market Update

The 3^rd Party Semiconductor Intellectual Property (IP) market has seen great innovation in the products it offers to System-on-a-Chip (SoC) designers over the last ten years. If any market segment in the semiconductor industry typifies the intense evolutionary pressures that the entire electronics market has undergone, it is the 3rd Party IP market.

Most of these evolutionary forces are driven by the need to integrate more functionality in fewer devices at the system level. The primary method to accomplish this is using 3^rd Party IP. The IP market has evolved to supply the solutions SoC designers require to craft their silicon products in response to ever-changing market requirements.

Rather than looking at the 3^rd Party IP market as a monolithic segment, tracking revenues by year, Semico Research Corp. has analyzed the IP market by functional category and then sub-divides these categories into revenues by quarter. This analysis of the data and some additional data on design starts, IP costs and SoC unit shipments. Semico has arranged the IP market by the following IP types:

IP Market on an IP Category Basis

• The CPU market is the largest IP category, and it will remain so for the foreseeable future, accounting for 34.4% of total market revenues by 2025.
  • A new CPU architecture has been introduced by ARM that is focused on processing data around safety standards and implementing those protocols in a system. This continues the theme of developing CPU architectures that are not general purpose but are specific in nature such as processors for vision, signal processing, graphics processing and video processing.
  • With the rise of Artificial Intelligence (AI) applications through the deployment of Convolutional Neural Networks (CNNs), the market is seeing the creation of CPU IP architectures created specifically with AI functions in mind.
  • The introduction of ‘free’ Instruction Set Architectures (ISAs) such as RISC-V and open-source versions of the MIPS architecture is expected to continue invigoration of the discovery and exploration phase the market is now enjoying driven by AI applications and other silicon solutions.
• Memory IP was the 2^nd largest category in 2020 driven by the need for increased resources on SoCs to handle the large number of CPU cores in silicon solutions. By 2025, the Memory IP market will account for 11.4% of total market revenues.
  • New embeddable memory architectures as licensable IP entered the market two years ago. MRAM is being supported by TSMC, GLOBALFOUNDRIES, SMIC and UMC. Other non-volatile memory types such as STTRAM, ReRAM, CBRAM and FeRAM are entering the market. In addition, a new memory type based around carbon nanotubes (CNTs) is also starting to gain some traction.
  • Presumably, Intel’s reentry into the silicon foundry market will include support for MRAM and many other new memory architectures.
• Interface was the 3^rd largest IP category in 2020, with an 11.0% share of the market driven by the need for faster interfaces to move the enormous amount of data created through AI. However, by 2025, the Interface category’s share of the market will fall to 9.6%, having been overtaken by GPU IP.
• Graphics was the 4^th largest IP category in 2020 driven by the increasing need for SoCs to incorporate embedded vision functions for AI and to process data locally. The Graphics market will account for 10.5% of total IP revenues by 2025, overtaking the Interface category.
• A licensable programmable logic fabric has entered the market from several different companies and could generate significant revenues in the SoC market as adoption increases and the technology matures.
  • While starting from a small base, eFPGA will have the highest growth rate with a CAGR of 68.4% through 2025.
• The market for Security is mid-sized today but will grow in importance and necessity as portable wireless devices permeate our society and require increased protection from viruses and denial-of-service attacks. This will be especially true to secure data in the IoT market. This category has one of the highest growth rates after eFPGA.
  • The industry discussion as to the need for Security IP has ended in the affirmative. Now the discussion has shifted to how much Security IP in the silicon is enough.
• From 2020 to 2025, Licensing revenues will increase at a faster rate than will Royalty revenues due to the new wave of architectural refreshes and exploration initiated by designers looking to incorporate of AI functionality in their silicon solutions. This signals continued market growth over the forecast period of 2021 – 2025.
  • This is a change from the recent past when royalty revenue growth outstripped that of licensing revenues.
  • Once SoCs using these new architectures start shipping in volume, Semico anticipates that royalties will once again be somewhat larger than licensing revenues.

By all measures, the IP market today is not a mature market, nor is it nearing maturity. This is evident simply by looking at its dynamic nature and the level of innovation IP users are asking for and the IP vendors are delivering. In a mature market this would not be possible since lower growth levels would not allow for adequate resources to achieve the innovation this market is delivering. Semico believes as the end markets that IP serves evolve, so too will the IP market evolve.

Taken from the report, Figure 175 shows the total IP market by product category by quarter. Semico forecasts that the IP market will exceed $2.0B in revenue per quarter by 2Q22 and continue to reach $2.7B by 4Q25, a CAGR of 8.9% by the end of the forecast period.

Figure 175: Total IP Market Revenues Actual and Forecast by Quarter, 1Q06 – 4Q25

*Forecast  Source: Semico Research Corp.

The lid has been removed from the innovation box and we all will benefit with better, more integrated and higher-performance products!

Semico has recently written a report covering this topic:  Licensing, Royalty and Service Revenues for 3rd Party IP: 2021 Market Analysis and Forecast (SC105-21) April 2021

Here is a link to the Table of Contents on our website:

https://semico.com/content/licensing-royalty-and-service-revenues-3rd-party-ip-2021-market-analysis-and-forecast