Speculation about China’s acquisition of MIPS processor IP raises familiar questions about the value of chip development without patent enforcement.
MIPS, the once prominent IP processor company, has caught the attention of investors. According to a Bloomberg report, the company recently hired Goldman Sachs Group Inc. to help find and negotiate with potential suitors. Earlier this year, MIPS Chief Executive Officer Sandeep Vij told analysts that the company was pursuing “several paths towards monetization” of its patent portfolio.
According to Bloomberg, ThinkEquity’s De Silva said that Broadcom Corp., MIPS’s biggest customer, and Qualcomm Inc. may consider purchasing the company to gain further processor offerings. Other potential buyers include licensees such as Broadcom and Texas Instruments.
Some have even speculated that chip design tool vendor Synopsys might buy MIPS. In 2009, Synopsys acquired the analog portion of MIPS. The remaining IP processor portion of MIPS might offer customers other choices to Synopsys’s ARC processor (via Viragelogic) line of cores.
A more speculative conjecture is that that the Chinese would be interested in legitimizing their already heavy use of the MIPS architecture. Readers might recall that, in 2005, the Godson processing architecture so closely mirrored that of MIPS that even the analyst firm In-Stat wondered about serious IP and patent infringement issues.
In a country where product production trumps any concern for patent infringement, it seems strange to even speculate on the acquisition of an IP company. Further, it is doubtful that existing MIPS licensees in the US would want their contracts handled by a country with such questionable IP enforcement or support.
All this speculation does invite re-examination of the value of IP-based US technology companies designing or manufacturing complex integrated circuits in China. Years ago, I raised this issue with Chris Rowen, then CEO of Tensilica – a company that has successfully provided extensible IP processor cores to some of the same markets as MIPS. Rowen addressed the issue in a article titled: Hope and Fear: Doing Intellectual-Property Business in China
Rowen explained that the only thing worse than having your company’s IP stolen is to have people steal your competitor’s IP. The basis for this reasoning was that the more people who used a particular processor platform, the more likely it is to become a defacto standard. “….(Processor companies) are biased toward wider proliferation in rapidly emerging markets like China,” explained Rowen.
The struggles that MIPS has experienced in China suggest that a critical mass of IP must be used-stolen before it becomes a defacto standard. Further, won’t the process of becoming a defecto standard drive down the price of the legitimate IP?
But acquiring processor IP is only one part of the challenge in building ICs. The second hurtle comes in chip manufacturing. Current Chinese foundry technology seems to lag about two generations behind the developed nations. Ironically, the lack of IP enforcement is one of the reasons why few major players want to build the lowest node chip fabs in China.
Although it seems doubtful that China is interested in acquiring MIPS IP business, the potential sale does re-ignite questions about the value proportion for IP companies on the Asian continent.