Semiconductor IP News and Trends Blog

EDA Tools, Global Growth and Trade Sanctions Affect IP

Semico Research shares insights on IP vs. EDA tool markets, IP growth in China and potential effects of trade sanctions on IP.

By John Blyler, Editor, Semi-IP Systems

Recently, Semico Research issued a report on 3^rd Party semiconductor intellectual property (SIP) licensing, royalty and service revenues. This report predicted that the IP market would exceed $8 Billion by 2020. Key findings of this report included:

• The CPU IP market will account for 31.3% of total market revenues by 2020;
• A licensable programmable fabric is entering the market from several companies bringing new capabilities and functionality to SoC designers;
• The Asia Pacific IP market will have a CAGR of 13.1% through 2020;
• New embeddable memory architectures are entering the market as licensable SIP, and for the first time they are supported by major silicon foundries. MRAM, STTRAM and ReRAM are poised to debut;
• The China IP market is forecast to reach $1.4 billion by 2020.

These forecasts raised questions of my own on the growth rate of IP vs. EDA tools, global growth trends and the potential effects of trade sanctions. Industry veteran Richard Wawrzyniak, Principal Analyst for ASIC & SoC technology at Semico Research, responded below.

Blyler: Will the SIP market continue to outpace the EDA tools market?

Wawrzyniak: In the short and mid-term outlook I think the SIP market will continue to outpace the EDA market. However, EDA companies have a growing presence in the SIP market so as the proportion of EDA revenues attributable to SIP business increases, their growth rate will start to resemble that of the SIP market. In the long term I expect EDA market growth rates to be above that of the SIP market because designs at 7nm, 5nm and below are going to be very complex and require very sophisticated tools to accomplish. This trend argues that over time as more designs are done at these geometries, the EDA market growth rate will be higher than that of the SIP market.

Blyler: Is the IP market growth accelerating? Is it outpacing growth in NA and Europe?

Wawrzyniak: As the SIP market revenues increase, the growth rate is slowing. This is due more to the law of large numbers than a reduction in demand for SIP. I would say that over the long term the growth rate of SIP market revenues will still exceed that of the semiconductor market revenues. China and Asia Pacific are growing faster than NA and Europe. This is more a reflection of where the work is being done than anything else. If jobs return to NA I would say NA growth rates will start to increase. However, this may take some time to become noticeable since it takes a long time to move jobs and projects around and to see the impact of these moves in the market.

Blyler: What effect will trade sanctions have on IP development and growth?

Wawrzyniak: SIP falls into the same category as movies, books, TV shows, etc. – intellectual property. If trade sanctions are implemented then I think SIP will be treated the same as these other types of intellectual property are treated.

If we are talking a border tax implemented on imports of steel, cars, etc., then the answer could be different. Not enough is known about how such a tax would be implemented to say definitively how this would play out one way or another today.

This is a difficult question to answer based on what is known today. Since SIP is fungible, it is entirely possible that establishing a presence in NA would avoid any implications of a border tax. However, this is something that only the lawyers (and Congress) can ultimately answer as to how it would be implemented.

Learn more about this report from the Semico Research site (see above)

Here’s two reference graphics from the Semico Report:

Current Semiconductor IP Market Landscape (Fig. 4) - Source: Semico Research Corp., October, 2016

Total Worldwide SIP Market Actual and Forecast Revenues by Category (Fig. 5) - Source: Semico Research Corp., October, 2016