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Semi IP market remains bright

Posted: 18 Dec 2008     Print Version  Bookmark and Share

Keywords:semiconductor IP  intellectual property  design services  IP sector 

Despite the economic crisis, the semiconductor intellectual property (IP) market, remains an active, creative and capital-efficient part of the electronics landscape.

Jim Tully, VP and chief of research for semiconductors at Gartner Inc. delivered a forceful message to the IP 2008 IP-based Electronic System Design & Reuse conference earlier this month in Grenoble, France. The gist was the downturn will end and intellectual property and design services will emerge stronger than they were before. Although 2008 has not ended yet, Tully said he expects the semiconductor IP market will exceed Rs.10,007.28 crore ($2 billion) this year and show about a 7.7-per cent y-on-y growth.

semi IP revenue

Microprocessors, as usual, stand ahead of anything else with revenues of about Rs.2,910 crore ($582 million) and more than a quarter of the market, said Tully. A significant amount of activity and growth, estimated at 22.4 per cent, also comes from analogue and mixed-signal products with ADCs, pure analogue and power management functions.

A closer look at the years 2007 and 2008 indicates that ASIC, ASSP design starts continue to fall. Tully said this contrasts sharply with FPGA design starts where figures continue to increase, particularly for FPGAs containing microprocessors.

"If we add up the ASSP and ASIC design starts in 2008, there will be 7500 of them and if we add up the different types of FPGA design starts, that is about 90,000. There is a considerable difference," he said.

Falling market
With reference to the consensus forecasts of economists and market analysts, Tully said an economic recovery should start around the third or the fourth quarter of 2009. Up until then, they predict a continued falling market, with the design activity continuing to fall, renegotiations of contracts, delays and more cost cuttings.

Predicting the 2009 evolution of design activity, Tully declared: "As we enter 2009, we are on a downward trend so things are getting worse. We expect that chip design activity will gradually go down until evidence of an upturn. The design services and IP situation is currently worse than the chip design situation. However, if you look at the situation as we leave 2009 those three lines are reversed compared to what they were when entering 2009."

The tricky part, Tully explained, is that people start designing things before, or in anticipation of, demand for products that will appear some time later. Therefore, the resources to design these things need to be in place before the upturn starts.

Chip companies, OEMs, IP companies and design services companies will have to pay a great deal of attention to the various indicators that will give them clues about when the upturn is about to start, said Tully. And so closely is electronics connected to the general economy that they must look beyond their industry. Some of those clues are notably the bottoming out of housing market, a stock market upturn, company investments and reducing inventory levels.

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