Silicon suppliers stockpiling IP to prepare for next upswing

Silicon suppliers stockpiling IP to prepare for next upswing
By Darrell Dunn, EBN
April 13, 2001 (2:42 p.m. EST)
URL: http://www.eetimes.com/story/OEG20010413S0035

In a sign that even semiconductor giants are unable to go it alone in today's lean, fast-paced environment, the number and scope of the intellectual property licenses unveiled here at last week's Embedded Systems Conference have reached new heights.

The dozen or so agreements, which included heavyweight licensees such as Intel, LSI Logic, and STMicroelectronics, show that companies are stockpiling multiple architectures as they search for the perfect IP core to power their next embedded market foray. Some industry observers said silicon suppliers are loading up their IP coffers in response to pressure from OEM customers and a slumping economy, both of which demand that chip makers have an array of processor cores at the ready in time for the next upswing.

LSI Logic Corp., Milpitas, Calif., for example, which has been busy over the past year licensing its own ZSP DSP technology, last week received a license to Bluetooth core technology from NewLo gic Technologies AG, Lustenau, Austria. The Bluetooth core will be added to LSI Logic's CoreWare library, which also includes ARM- and MIPS-based devices.

"One size does not fit all," said Will Strauss, an analyst at Forward Concepts Co., Tempe, Ariz. "By licensing someone's core, you can reduce your R&D cost, just as you do when you acquire another company."

Also last week, Lexington, Mass.-based STMicroelectronics Inc. extended its relationship with ARM Holdings Ltd. by licensing the ARM7, ARM9, and ARM10 microprocessor cores. The move came a week after ST announced plans with Hitachi Ltd. to create a new company called SuperH Inc. that will develop and market microprocessors based on the competitive SH architecture.

Though some expressed doubt that every licensed core will find its way into end products, companies are on the hunt for the right mix of IP, whether to meet specific applications or merely fill temporary holes. Others, such as Motorola Inc.'s Semiconductor Products Sector, are bowi ng to customer demands, as witnessed earlier this year when the company agreed to license the ARM core specifically to keep its socket in Palm Inc.'s popular PDA.

Loading up on DSP

Further stocking its DSP technology storehouse, Intel Corp., Santa Clara, Calif., last week obtained rights to the IP of 3DSP Corp., Irvine, Calif. In exchange for the license, Intel agreed to invest a "significant share" of the $24 million in total third-round financing that 3DSP has received, said company president and chief executive Tom Beaver.

Intel's stated objective in the communications market is to provide the "building blocks for the Internet economy," and to get there the company is pairing its more traditional processors with DSPs in applications such as wireless phones, handheld personal appliances, broadband access, and voice over Internet Protocol.

Analysts speculate that the 3DSP core could feature in Intel's joint 3G cellular handset baseband development program. A cooper ative effort with Mitsubishi Electric Corp., the baseband chipset will use Intel's ARM-based XScale architecture and an unnamed DSP. Industry watchers said the 3DSP core is a candidate for the job, given that the new Frio DSP Intel developed last year with Analog Devices Inc. is not market tested.

"Frio is not ready for prime time yet," Strauss said. "The timing of the Mitsubishi development is such that it initially will not use Frio. And overall, Intel plans to come out with different versions of their Personal Internet Client Architecture with various DSPs. All they really care about is XScale, and the DSP is exchangeable and optimized for specific markets."

Giving it away

With a host of relatively new companies marketing RISC and DSP-based architectures, the competition is likely leading to some cut-rate licensing deals, observers said, although IP houses interviewed last week claim they are not slashing fees.

"My guess is a lot of these upstart companies are go ing at it very aggressively, and they are motivated to show some initial traction," said Jeff Bier, an analyst at Berkeley Design Technology Inc., Berkeley, Calif. "If they have some big- name licensees, they [can get] their foot in the door with other companies. The agreements may essentially be risk free, with no upfront payment."

Charlie Cheng, president and chief executive of Lexra Inc., a San Jose-based supplier of MIPS-style processor IP, said he would not be surprised if some companies have become willing to make sweetheart deals. Because Lexra has chosen to rely little on venture or capital investment, however, Cheng added that it's impossible for his company to license without significant upfront fees.

"In trying to secure some large companies [as licensees], there may be some horse-trading going on," he said. "There may be some deferred pay-ments, and there is a certain amount of posturing in the industry."

Indeed, license negotiations can be a fluid process, Strauss said.

"I've see n the same company sell the same IP for the same application for $300,000 to $1 million depending on whom they are talking to, the time of day, and what the traffic will bear," he said. "No two licensees are the same."

Overpopulation?

Observers also believe that within two to three years there is likely to be a shakeout of IP licensing companies, which is causing new entrants to strive for strong relationships to ensure their survival. A licensing agreement, however, is far from an assurance that a new architecture will ever find itself shipping in significant volumes.

"If you look at DSP Group, which has been very successful, they have over 40 licensees, but only 12 are performing licensees," Strauss said. "A lot of companies will license a particular DSP or RISC core with the idea that they will put it in a particular project, but it doesn't happen."

While "everyone wants to be ARM or MIPS," those well-established companies spent years building a foundation to all ow them to withstand assaults from new-and in some cases higher- performing-processor architectures, Berkeley Design's Bier said.

"It takes a long time for actual silicon to show up in volume," he said. "Getting a licensee signed on is a necessary step, but it's not a sufficient step."