Gartner's Dataquest Says Emerging Semiconductor IP Industry Grew 36 Percent In 1999.

Driven by the trend toward system-on-chip (system level integration), the worldwide semiconductor intellectual property (IP) market totaled $417 million in 1999, up 36 percent from 1998 revenue results, according to Dataquest Inc., a unit of Gartner Group Inc. (NYSE: IT and ITB). In 1998, worldwide semiconductor IP revenue reached $306 million.

Dataquest defines a semiconductor IP block as a predesigned function to be implemented in a semiconductor device such as an ASIC, ASSP or PLD. The top three vendors, ARM, MIPS Technology and Rambus, represented 51 percent of the worldwide semiconductor IP market in 1999 (see Table 1 below).

"The relative newness of the semiconductor IP market has led to much experimentation in business models by the various players," says Jim Tully, chief analyst for Dataquest's Semiconductor Worldwide group. "The uncertainty of success in this market is itself a big impediment to market growth, as customers are concerned over support from vendors in mission-critical applications."

Led by ARM and MIPS Technology, microprocessor blocks dominated worldwide IP revenue, reaching $190 million in 1999. Bus interface blocks such as PCI, USB and IEEE 1394 have proven to be popular functi9ons for third-party IP providers because of the ease of verifying a standard function. Bus interface revenue totaled $76 million.

"Most of these companies in this marketplace are operating in a commodity or near commodity market and are therefore operating in a make-versus-buy environment with standards-based IP," Tully said. "Prices start to fall rapidly as soon as products are introduced, and this can kill companies that do not move fast enough. Vendors must add more value or develop a plan that includes the criteria for dropping a particular IP product and making a strategic switch to an alternative."

The full survey details are available in the Dataquest Market Statistics report titled "Worldwide Semiconductor Intellectual Property Market Share Rankings, 1999." The report forms part of Dataquest's Intellectual Property Advisor Service that provides market analysis and advice to vendors and users of semiconductor IP.

Table 1

Top 10 Worldwide Semiconductor Vendors by Revenue Estimates
(Millions of US Dollars)

              1998       1998 Market   1999       1999 Market    1998-1999
Company       Revenue    Share (%)     Revenue    Share (%)      Growth (%)

ARM             59.1       19.3         88.5         21.2          49.7
MIPS
  Technology    54.0       17.6         77.2         18.5          43.0
Rambus          39.3       12.8         45.3         10.9          15.3
Mentor
  Graphics      33.1       10.8         31.7          7.6          -4.2
Synopsys        24.2        7.9         24.5          5.9           1.2
InSilicon       11.8        3.9         19.3          4.6          63.6
DSP Group       14.6        4.8         19.0          4.6          30.1
Artisan         15.6        5.1         17.3          4.1          10.9
Sican            4.2        1.4          6.9          1.7          64.3
SSL              4.6        1.5          5.7          1.4          23.9
Others          45.5       14.9         81.6         19.6          79.3
Total Market   306.0      100.0        417.0        100.0          36.3

Source:  Dataquest (May 2000)