Chip IP market sees a boom

'System on a chip' shift fuels 40 percent growth in intellectual property business, but success remains difficult
Written by Matthew Broersma, Contributor

Semiconductor intellectual property companies are raking it in, according to new figures from research firm Gartner Dataquest.

Chip makers are moving toward integrating many functions on a single die -- the so called "system on a chip" -- and are finding it more convenient to buy functions from vendors such as ARM Holdings, MIPS and Rambus. This shift has meant that worldwide revenues in the semiconductor intellectual-property (IP) industry jumped to $689m (about £468m) in 2000, up 40 percent from the 1999 level of $492m.

Semiconductor IP companies do not manufacture processors themselves, but sell designs to manufacturers who adapt them to their own products.

Nevertheless, analysts see the market facing troubles because of its competitive nature. "This is a difficult business in which to make money, particularly for block-based vendors," said Jim Tully, chief analyst for Gartner Dataquest's Semiconductor Industry Worldwide group, in a statement. "The uncertainty of success in this market is a big hindrance to market growth, as customers are concerned that a supplier of critical technology could go out of business."

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