Semiconductor IP: Changes in market direction

USA: The third party semiconductor intellectual property (SIP) market was not immune to the market forces unleashed in 2008 but managed to achieve a 4.9 percent growth.

While this growth rate was much lower than historical trends, it is Semico’s view that the IP market will continue to outperform other semiconductor markets, and remain in positive territory with 2.9 percent growth in 2009.

The positive growth is due to the trend for more and more IP to be incorporated into SoCs and other device types that use IP. The SIP market will return to stronger growth in 2010 and continue to gather momentum from 2011–2013, even though the growth rates will still be somewhat below historical norms.

These market trends are analyzed in Semico’s report: “Semiconductor Intellectual Property: Changes in Market Direction.”

“The forecast for the IP market is still optimistic and we do not see any negative growth for the IP market during the entire forecast period,” states Rich Wawrzyniak, Semico Senior Analyst.

“Historically, the industry innovates its way out of a downturn. Semico’s assumption is that successful companies will roll out new products to stimulate the market. That means new designs and more use of IP.”

Semico’s report examines how the SIP market is undergoing a round of consolidation with the number of companies shrinking approximately 50 percent by 2008 compared to 2000.

Wawrzyniak verifies: “This is not a sign of a weakening market but rather a sign of the market sorting itself out with strong contenders consolidating their positions.”

Semico projects this market to continue to grow, surpassing $4 billion by 2013, with a CAGR exceeding 10 percent.

Semico’s report tracks the SIP market by the commonly accepted labels such as ‘Star’ and ‘Commodity’ SIP. These categories are further segmented by more descriptive labels such as ‘Critical IP’, ‘Purpose-Built IP’ and ‘Chip Enhancement IP’.

The report also tracks the SIP market by function such as Memory, CPU, DSP, Analog, Logic, Interface, Interconnect and Chip Enhancement IP.