Which IP which will give substantial return in next 3 – 5 years and where a company will invest as well as how it will differentiate itself from others, particularly the big ones, are key discussion topics for any start-up entering into semiconductor IP business.
In the last few decades we have seen a tremendous growth of interface IPs due to the standardization of chip-to-chip or system-to-system communication process. Lot of IP companies have heavily invested in developing interface IPs and get benefit of those investments by providing license of those IPs to several SoC companies.
But the market is slowly getting saturated and entry barrier is increasing to the new start-ups. One of the reason is not many new protocols are coming out. In most of the cases either it is upgrading of existing protocol (like PCI-E, USB etc) or fusion of two existing protocols (like M-PCIE). An existing IP vendor will always incur much less investment to upgrade their IP than a company who is completely new in that domain. Also customers, particularly, who has licensed the IP of old version will most likely go with the existing vendor for IP based on recent versions. Moreover these IPs are very much standardized in nature, needs less customization and hence a big company, with much larger sales network, can get more benefit by investing in those IPs. That is why we have seen two big IP vendors Synopsys and Cadence are focused on interface IP segments and have even acquired small IP companies in those domains.
The question will then come where a new IP company can invest. The old traditional IPs like data converter, power management, clocking circuit modules with a focus on application areas like automotive, medical, industrial can be potential areas for new IP companies. Let us look why
- Automotive, medical and industrial SoCs have seen 7% to 9% growth which is way above than semiconductor average growth (some reports have even predicted 10%+ growth in automotive IC area). Also these segments commands more than 40% market share in analog IC market
- All of these sectors have significant usage of analog IPs. As per several reports analog IC constitutes more than 40% share of total semiconductor devices sold in those segment
- The IPs in data converter, power management etc areas need significant customization in every SoC depending on applications environment likes power, environmental noise, operative voltage etc. A start-up can take those customization requirements more effectively than the big guys. If we look none of the big IP companies actually have significant offerings in these areas
- In significant cases customers request complete SoC design with some embedded software development with these IPs. The reason is in good amount of cases the IPs with some peripheral logic form a SoC itself. As a result a start-up, with more adoption capability, can provide a solution comprising of both IP (product) and services
- Also OEMs, sometimes, directly becomes customers for these kind of project and in those situation even post GDSII manufacturing is involved
But there are significant challenges also to develop and market IPs targeted for specific application segments
- The most important is it needs significant amount of domain specific knowledge like application environment, certification/ compliances etc
- Typically the areas like automotive, medical, industrial have more stringent requirement in terms of certification, qualification and hence the chance of success of IP in the first tape-out becomes low. Hence the time of get benefit of the investment also becomes longer
- The processes used in these areas are not always normal CMOS process. Bipolar, BiCMOS, HV-CMOS processes etc are used significantly in these areas. Hence besides design knowledge the process knowledge also becomes a critical to develop the right IP in these areas
- The SoC used in automotive, medical, industrial application has 10+ years of lifetime and hence customers expect longtime support from IP vendor. They may be reluctant to rely on a start-up for this
Barun Kumar De