Chip designers skip the slump, post gains

The designers, which compete in what Gartner calls the semiconductor intellectual property market, saw revenue grow from $714 million in 2000 to $892 million last year, the report said. The semiconductor market as a whole, however, contracted significantly last year, falling 32 percent to $139 billion, according to the Semiconductor Industry Association.

Chip designers, including companies such as ARM Holdings, Rambus and MIPS Technologies, sell their blueprints to companies that integrate them into chips. The use of chip designs is very popular among companies that manufacture chips for the consumer electronics and personal technology markets.

Instead of creating a custom processor core, a chipmaker could license a core from, say, ARM and then focus its engineering efforts on other areas where it can gain more of an advantage, such as providing superior MPEG video playback. Texas Instruments holds licenses to several ARM processor cores, using them in chips for cellular phones, among other things.

For its part, Rambus designs memory and networking chips. Its best-known technology, RDRAM (or Rambus DRAM), is used inside PCs with Intel's Pentium 4 processor.

Processor cores, the largest segment of the semiconductor intellectual property market, accounted for $292 million in revenue in 2001. The segment is dominated by ARM, which that year had $179 million in revenue, according to Gartner.

Other technology building blocks, such as Universal Serial Bus and IEEE 1394 controllers, which chipmakers can buy and build into new chips, are also making strides, Gartner said.