Chips&Media Strengthens Codec Leadership With Next-Gen AV2 Licensing Deal

Chips&Media has signed a next-generation AV2 video IP licensing agreement with a major North American Big Tech company, marking an important step in the commercialization of the next wave of video compression technology. The deal includes Chips&Media’s AV2 decoder IP along with multi-standard codec support for H.264/AVC, H.265/HEVC, and AV1, giving the customer a broad hardware video foundation for future flagship products.

Technically, the significance starts with AV2 itself. AV2, developed within the Alliance for Open Media ecosystem, is intended to succeed AV1 as a higher-efficiency open video codec. The goal is straightforward but difficult: deliver the same or better visual quality at lower bitrates. Chips&Media says AV2 can improve compression efficiency by roughly 20% to 30% compared with AV1. That matters because video traffic continues to dominate network usage, while devices are expected to support higher resolutions, higher frame rates, richer color, and lower latency.

For chip designers, however, better compression is never free. New codecs usually introduce more complex prediction, transform, filtering, entropy coding, and reference-frame management tools. Those tools improve bitrate efficiency, but they also increase computational load. Software decoding can work in some cases, but at scale it burns CPU cycles, drains battery, adds thermal pressure, and can limit performance on mobile, edge, TV, automotive, and XR platforms. That is why dedicated hardware decoder IP is critical.

Chips&Media’s role is to turn the AV2 standard into synthesizable, production-ready semiconductor IP that can be integrated into system-on-chip designs. Instead of every chip company building a decoder from scratch, a licensable IP block allows SoC vendors and major platform companies to shorten development cycles, reduce implementation risk, and support multiple codec generations in a unified media subsystem. In this case, the inclusion of H.264, HEVC, AV1, and AV2 is especially important because real-world devices must handle both legacy content and next-generation streams.

The deal also matters because video standards only become meaningful when they move into silicon. A codec can be technically impressive, but it cannot reshape the market until device makers, streaming platforms, operating systems, browsers, and semiconductor suppliers align around it. A licensing agreement with a North American Big Tech customer signals that AV2 is not just a research-track codec; it is being prepared for future commercial devices and content ecosystems.

This is especially relevant for streaming and cloud video. Services such as YouTube, Netflix, social video platforms, cloud gaming providers, video conferencing services, and live commerce platforms all face the same challenge: users want better quality, but bandwidth, storage, CDN cost, and energy consumption remain limiting factors. More efficient video compression can reduce delivery costs for platform operators while improving playback quality for users on constrained networks.

Bottom line: For end devices, AV2 hardware decoding could enable smoother 4K and 8K playback, better battery life, lower heat.

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