ARM continued to lead the market in total IP revenues because it vastly outperforms its competitors with royalties on the billions of ARM IP cores shipped each year. However, in a now familiar pattern, ARM’s total IP revenue declined slightly in 2019 in a market that grew. This is similar to what happened in both 2018 and 2017.

The reason for ARM’s decline was not the arrival of RISC-V alternatives but rather the growing significance of non-processor forms of IP, according to IPnest principal Eric Esteve, who has produced a substantial annual report on the state of the semiconductor IP market in 2019.

Companies ranked by semiconductor design IP revenue in 2019 (millions of dollars). Source: IPnest (March 2020).

It is notable that Imagination Technologies, now owned by Chinese interests through private equity firm Canyon Bridge Capital Partners LLC (Palo, Alto, Calif.), saw its IP revenue fall 18.9 percent and Wave Computing, owner of MIPS processor IP licensing business, fell out of the top ten ranking in 2019.

ARM once controlled 50 percent of the IP market and still leads the market but was down to 40.8 percent market share in 2019 from 44.7 percent in 2018, according to IPnest’s figures. Second-ranked Synopsys increased its revenues by 13.8 percent to claim 18.2 percent of the market. The IP revenue of third-placed Cadence jumped 22.9 percent giving the company 5.9 percent of the market.

Next: Overall

Overall the semiconductor IP market in 2019 was worth about $3.94 billion, up 5.2 percent from a 2018 value of $3.74 billion, a figure that IPnest had upgraded since last year. When it is considered that the IC market fell by about 15 percent in 2019 and that IP royalties are usually tied to chip selling prices this is good result for IP vendors, suggesting increased penetration of the market.

In 2018 the IP market was up by about 10 percent from 2017.

“Synopsys’ growth was steady in a declining semiconductor market. After we take out memory and just consider logic, analog and SoC, the market declined about 6 percent. So my conclusion is that overall the IP business is really healthy,” Esteve told eeNews Europe in a telephone interview. Esteve also pointed out that in terms of up-front licensing for IP cores Synopsys beat ARM into second place.

Market share for semiconductor IP licensing in 2019 but excluding royalties. Source: IPnest.

Cadence managed to lift its total IP revenues year-on-year by 22.9 percent, albeit from a lower base. Esteve said that is partly because the company has four or five IP product lines and partly because of success for its Tensilica processor/DSP line. It also acquired NuSemi Inc at the end of 2017 and at the end of 2018 was able to demonstrate a high-speed SerDes interface running at 112Gbps in 7nm silicon.

Esteve said interface IP is growing in significance in the market while general-purpose processor IP is becoming more of commodity.

“For most of the last decade IP business growth was mostly based on smartphone business and the likes of ARM, Imagination and Ceva did very well. However, as is well known the smartphone sector has more recently put downward pressure of component suppliers and reduced margins to wafer thin amounts. This in turn is pushing back on established IP suppliers.

“For the next few years the source for growth [in IP revenues] will be high-performance computing and data centers, wired and wireless networking. IoT will impact the market as well but not as much,” said Esteve.

Next: No RISC-V

There is no representation of the RISC-V open-source instruction set architecture (ISA) in the IPnest’s ranking. Although the ISA is free to use several companies are starting to make both component and IP offerings around this.

Esteve, said that many suppliers were offering microcontroller components based on RISC-V but that these were not part of the IP market. Nonetheless there are IP offerings around RISC-V. “It is not easy for them to find a good business model although the ISA has extremely good potential.”

The evolution over time of semiconductor IP categories shows that interface IP, such as SerDes, is growing in significance as processor IP is diminishing. Source: IPnest.

RISC-V also has a mountain to climb, said Esteve. “The 100-plus design wins for Si-Five cannot compare to the billions of ARM-based chips that ship each year.” ARM has claimed that In 2017 it had more than 1,600 licensees going up by more than 100 per year and that more than 21 billion chips shipped with ARM IP inside.

Esteve said that RISC-V will become an issue for ARM over the years to come. “Customers are fed up with paying very high licensing for ARM,” he said.

Esteve said his analysis shows that ARM’s royalty revenue declined by 6 to 7 percent in 2019 on an annual basis. This is roughly in line with the fall in the logic, analog and SoC part of the chip market. But the company was more or less flat because the technology licening part of its business – including physical IP – was up 13 percent.

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News articles:

ARM, MIPS, Imagination lose IP market share

ARM loses IP market share to fast-growing followers

Synopsys buys Invecas analog IP assets

Former ARM executives at helm of analog IP startup

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