SIP market mysteries explored and myths exploded

PHOENIX, USA: 2010 was a very good year for the 3rd Party SIP market, which rebounded from its first ever revenue decline in 2009. Even though the market showed good growth in 2010, it essentially moved sideways with a 21.5 percent growth compared to a 21.6 percent decline in 2009.

However, looking at only SIP market annual revenues obscures several very interesting trends in the SIP market and in the broader System-on-a-Chip (SoC) market.

For this reason, Semico Research Corp. has launched a new report: 3rd Party SIP Market Analysis and Forecast by Quarter (SC101-11), which looks at the SIP market by quarter from 1Q06 - 4Q15. This report also breaks the SIP market into ten separate IP categories, namely:

CPU Cores
Embedded Memory
Video and Graphics
Security
Chip Enhancement
DSP Cores
Analog
Logic
Interface
Interconnect

The report further breaks these categories down by Licensing revenues, Royalty revenues and Service revenues, providing actual revenues from 1Q06 through 4Q10 and a forecast for each area through the 4th quarter of 2015.

In addition, Semico has provided data and analysis of the trends prevalent for each of the above IP categories in areas such as the average Licensing revenues per SoC design, the average Royalties per SoC part and the average Service revenues per SoC design.

One of the little discussed areas of IP Licensing is the fact that most designs do not license IP a single block at a time. Instead, companies that are doing multiple SoC designs license the IP they use several blocks at a time and amortize the costs over several designs. This results in lower total licensing costs per design - counter to the prevailing wisdom that IP costs are skyrocketing out of sight.

While it is true that the number of IP blocks per design is increasing dramatically, the cost of the individual IP blocks is not increasing as much. However, the integration costs for that IP are increasing as designers must manipulate and manage many more IP blocks than in their previous silicon solutions. The result is increasing integration costs and rising design cycle times.

Another myth exploded in the report is that Analog IP is not a sustainable business model. Analog IP is expected to grow at a 2010 - 2015 CAGR of 17.1 percent with licensing revenues reaching a CAGR of 15.2 percent. Analog IP at 40nm and below is very difficult to create and maintain, which means both licensing and services fees will increase over the forecast period.