Letter to the editor: Synopsys weighs in (John Koeter)

 
I received a plethora of e-mails regarding my recent article, entitled "Semi IP sector is a lost cause"
Then, I asked for the IP vendors themselves to respond to a set of questions. Here's one letter to the editor:

Semiconductor IP is the absolute opposite of a lost cause. It is a high-growth market that is maturing. Although exact numbers vary slightly, analysts (Dataquest, Semico, IBS) agree that IP was approximately a $1.5B market in 2006, up 15 to 20 percent from 2005. That's a far higher growth rate than the overall semiconductor industry. By 2010, we believe the Semiconductor IP market will generate approximately $2.7B in revenue. So what's driving the growth? Why is it sustainable? And why should you care? I'll begin with a quick review of the companies in the semiconductor IP market.

For starters, the top ten IP vendors represent 67 percent of the market. The top 20 account for 80 percent of IP revenue. The top 30 comprise 90 percent. After the top 30, the revenue run-rate drops to less than $10M/year. At this level, the majority of these companies are not true IP companies because they don't create a standard product and sell it multiple times to multiple customers. Instead, these vendors are typically more services-based, selling IP derived from previous services engagements and often customized to a particular customer's needs.

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