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The growing demand for reusable semiconductor intellectual property (SIP) has generated a merchant market that totals $500 million today, and is expected to grow at a rate of more than 100 percent per year.

Hoping to follow the success of companies like MIPS, ARM and Rambus, hundreds of SIP start-ups have entered the market.

However, the move by some SIP suppliers to begin manufacturing and selling ICs to supplement revenue and a number of recent acquisitions of SIP companies by IC manufacturers have prompted skeptics to argue that a business based solely on the sale of SIP can't succeed. While barriers do exist, it is possible for SIP providers to generate sufficient revenue if they can provide very clear benefits to system-on-a-chip (SOC) designers and are committed to the business model.

Because SOC design requires intimate knowledge of every feature and function within the system and extensive time and dedicated resources, it is unreasonable for vendors to take on this task independently. Experienced developers estimate it would take approximately 500 years and $75 million for an engineer designing 100 gates per day to deliver a chip with 10 million gates. By acquiring commercial SIP, SOC designers should be able to reduce time-to-market significantly.

As with any emerging market, the evolving infrastructure and lack of standards have created barriers to SIP integration and manufacturing, and have made many companies wary of bringing in SIP from an outside source. Still, SOC designers will purchase SIP if it enables them to cost-effectively break through a high barrier of entry to a market. SIP must therefore be highly differentiated and backed by extensive support. In addition, it must be designed for use in a variety of high-volume applications. SIP vendors who deliver on all of these requirements will be able to build a financially lucrative business based on the sale of SIP.

# posted by Medical Information : 5:25 AM