Semiconductor IP Forecast 2014 – 2020

Given that the majority of my 30+ years in Silicon Valley has revolved around semiconductor IP it should be of no surprise that IP is a big part of SemiWiki and our first book “Fabless: The Transformation of the Semiconductor Industry”. That is also why one of my first round blogger draft choices was IP expert Dr. Eric Esteve. Eric has written 211 IP blogs on SemiWiki thus far garnering close to one million views. Eric had not blogged before SemiWiki but he is the author of the industry standard Interface IP Market Survey which was just updated last month.

According to Eric, Design IP is a niche market worth less than 1% of the semiconductor market but its significance in regards to design enablement is unprecedented. Eric started working in the Interface IP segment in 2005 as marketing director for PLDA. At the same time PLDA was launching the PCI Express gen-1 controller IP and within three years the company revenue multiplied by 3 (PLDA was already 10 years old). Next he worked for Snowbush, the IP division of Gennum, building a five year business plan which required deep knowledge of all protocols (PCI Express, SATA, SuperSpeed USB, HDMI and DDRn). In 2009 Eric started IPnest to better use his IP expertise which was pretty unique at that time. Eric released the first annual “Interface IP Survey and Forecast” in Q2 2009.

Why is this survey unique you may ask? Because you can find information that is not available elsewhere. For example there is an IP vendor ranking by protocol: USB2, USB3, PCIe, DDRn, HDMI, SATA, MIPI, and Ethernet. Eric also compiled a competitive analysis by protocol. For every protocol, you can find price information (for the Controller and for the PHY) and an evaluation of the design start count: the number of PCIe (or USB2, USB3, HDMI etc.) IP sales in 2013, then the total number of ASIC/ASSP design starts that include this protocol. To be able to calculate such a number requires an intimate knowledge of the IP market, absolutely.

Also read:Cliff Hou at TSMC OIP

Before working in the IP business Eric spent 20 years in the ASIC business participating in the IP buying process to support customers and then if you add another 10 years spent essentially on IP you end up with 30+ years of IP experience. During the last five years the Interface IP market segment has doubled in size from $240 million in 2008 to $480 million in 2013. It’s a fast growing market which makes the analysis in this report even more important.

One thing I can tell you is that the foundries rely on this forecast. In regards to the foundation and CPU/GPU IP, the foundries support the IP vendors that their customers work closely with which means TSMC has thousands of IP that needs to be prioritized and silicon proven for the new process nodes.

If you look at IP there is a paradox: Design IP is a niche market, weighing in at $2.5 billion in 2013 which is small if you compare it to the foundry business. But suppress Design IP and probably 70% of the chips processed by the foundries vanishes, which is why foundries take great care in supporting Design IP, and not only hard IP, RTL IP as well. It’s interesting to see that the more successful a foundry is, TSMC for example, the greater care it takes with external IP investing time, money, and resources to make sure the IP ecosystem develops properly. In return, foundry customers can reach production faster which sells more wafers.

After reading the report the only question you will probably have for Eric is this: Is the Interface IP Survey forecast up to 2020 realistic?And the answer is:

“I build a five years forecast since the very first release of the survey. This comes from my experience with Snowbush, as it was one of the key requirements. This year I have based the forecast on the number of commercial design starts (IP sales) by protocols. The first task is to evaluate the TOTAL design starts, and the evolution up to 2020, by protocol. For example, SATA and PCI Express don’t have the same growth behavior, so you need to use the protocol granularity to calculate the ASIC or ASSP design starts. Thus you have to evaluate the pervasion potential for each protocol. Then you have to insert the magic parameter: the “externalization factor”. There is an industry consensus about the fact that IDM and fabless tend to buy certain IP when they used to develop it internally. This is certainly true for Interface IP: this is a standard based IP, it’s pretty difficult for a chip maker to add differentiation. The evaluation is complex, and it’s exactly here that the 30 years’ experience add value! A couple of days ago, I read the first version of the “Interface IP Survey” written in 2009, including a forecast up to 2013. In 2009, I have evaluated the IP market to weight $440 million in 2013. And the result is… $421 million for up-front license only. A forecast with less than 5% error at five years is OK for me!

You can get the latest IP Survey HERE.