“Foundries and integrated device manufacturers are ramping production to bring supply into line with expected demand levels. We do not expect to see near-term issues with either excess inventories or capacity due to strong unit demand in key end markets. Computing and communications, which together account for more than 60% of total demand for microchips, are seeing healthy unit growth. PC unit sales are projected to grow in the mid- to high-teens, and handset growth is expected to be in the high single-digit range.

“The current results reflect improved sales in a variety of market segments, including the enterprise sector where recovery has been slower than in the consumer sector. Healthy economic growth in China and growing demand for PCs and cell phones in developing economies were major contributors to growth in the first quarter. Continued growth for the semiconductor industry is closely tied to continuation of the global economic recovery. We remain cautiously optimistic that global sales will show double-digit growth in 2010,” Scalise concluded.


III. The Overall EDA Industry:

On April 1, 2010 the EDA Consortium (EDAC) Market Statistics Service (MSS) announced that the total Electronic Design Automation (EDA) industry revenue for Q4 2009 was $1262.7 million, an 8.1% sequential increase from Q3 2009.

However, on a year-over-year basis, the total Q4 2009 EDA industry revenue of $1262.7 million represented a 4.2% decline, compared to $1318.7 million in Q4 2008.

“Despite the year-to-year decrease, the EDAC revenue numbers (for Q4 2009) continue to show a sequential increase over the previous quarter,” said Dr. Wally Rhines, EDAC chair and chairman and CEO of Mentor Graphics. “Most notable sequential increases were in the categories of CAE, IC Physical Design, and semiconductor IP. In addition, the Pacific Rim region showed year-to-year growth both for Q4 and for the year as a whole.”

Year-over-Year Q4 2009 vs. Q4 2008 EDA Industry Revenue
by EDA Product Category, as reported by the EDA Consortium.
Note that in each of the 5 product categories, revenue
declined vs. the corresponding quarter in 2008.  

Computer Aided Engineering (CAE), EDA's largest category, generated revenue of $482.3 million in Q4 2009. This represents a 3.9% decrease over the same period in 2008.

In the next largest category, IC Physical Design & Verification, revenue decreased to $293.6 million in Q4 2009, a 1.0% decrease compared to Q4 2008

Printed Circuit Board and Multi-Chip Module (PCB & MCM) revenue decreased 3.4% compared to Q4 2008, to $131.4 million.

Semiconductor Intellectual Property (SIP) revenue totaled $272.7 million in Q4 2009, a 4.5% decrease compared to Q4 2008.

Services revenue was $82.7 million in Q4 2009, a decrease of 16.4% compared to Q4 2008.

EDA Cosortium
Sequential Q4 2009 vs. Previous 2009 Quarters
EDA Industry Revenue by Product Category



The above chart shows that the bottom of the EDA-Consortium-reported total EDA revenue curve occurred in Q2 2009 and that quarterly revenue has increased sequentially since then. The EDA Consortium data are not yet in for Q1 2010, but it is unusual for Q1 of a new calendar year to yield more EDA revenue sequentially than the traditionally stronger Q4 of the previous year (although in these abnormal times, not impossible).


IV. The Electronics Intellectual Property Niche:

Research and Markets, an industry intelligence company based in Dublin, Ireland, states that, “The electronic components and semiconductor manufacturing industry depends highly on demand from the computer industry and (from) makers of telecommunications products such as cell phones, which can vary sharply from year to year. Technological expertise is extremely important. The industry is capital-intensive: average annual revenue per employee is about $300,000. Companies can be successful producing standard parts at low cost or by producing highly specialized components. Small companies can compete effectively with large ones by producing specialized products or developing new applications.”

The latter “bold font” sentence describes the niche of electronics intellectual property vendors very well.

Indeed, the writer and his colleagues have been covering such a niche going on eight years now, via quarterly issues of Electronics IP Industry Commentaries posted on EDACafe.com.. Each Commentary examined the then-current and recent financial histories and future outlooks of the phenomenon of Electronics Intellectual Property (IP) providers, a niche that had emerged in its own right to claim a substantial amount of revenue in the world of EDA.

Originally, eight (8) publicly-traded IP companies were arbitrarily chosen (called the "Group-of-8" or "G8"), as representative of the then-current financial state of the Electronics IP industry. At the end of 2004, ARM completed its acquisition of Artisan Components, Inc., thereby reducing the "G8" to "G7". In August 2009 Mentor Graphics completed its acquisition of LogicVision, thereby reducing the “G7” to “G6”.

Current Group-of-6 ("G6"):



For the “G6” companies above, it is assumed that all of their revenues are Electronics IP sales and/or directly related IP services. While other companies and vendors play roles in the IP industry; the G6 has been chosen as representative. (Note: For the second half of calendar 2009, the G6 total revenues represented 80.5% of the Semiconductor IP (SIP) revenues reported by the EDA Consortium).

For the most part, the electronics IP niche is hardly two decades old, with only MIPS having been founded before 1990. (While MIPS was founded in 1984, it focused for many years on building a RISC processor within Silicon Graphics before moving toward the IP game). The current incarnation of MIPS, called “MIPS Technologies, Inc.”, was founded in 1998.

Below are listed the founding dates in chronological order of the pre-acquisition members of the original group of 8 IP vendors:



Historically, UK-based ARM has been dominant, often claiming almost two-thirds of the total G6 revenue in any given period. But even this picture is changing, as other vendors execute their own expansion strategies.


How did the Electronics IP G6 perform in the Q1 2010?

Table 1 below shows that the combined G6 total revenues ballooned to $362 million in Q1 2010, or sequentially to plus 63.6% of their total of $221 million in Q4 2009, and fully 91.6% higher than the year-over-year Q1 2009 total of $189 million. While all 6 vendors grew sequentially from Q4 2009 to Q1 2010, an unusual occurrence in itself, the 63.6% Q4 to Q1 Rambus revenue growth anomaly was primarily caused by payments from Rambus' Q1 settlement of a long-running dispute with Samsung, as explained in detail in the Rambus-only section in the sequel. The same Samsung deal allowed Rambus to overtake ARM for the most revenue in Q1 2010, a feat that will be difficult to duplicate, since normal Rambus quarters have been in the $30 million revenue class.

As it did in the previous quarter, Virage Logic claimed third place in the Q1 2010 revenue race among the G6, with its $25+ million. MIPS delivered double digit percentage sequential growth in Q1 2010, but MIPS could not match its year-over-year Q1 2009 $17.7 million performance, with both figures after the MIPS Analog Business Group business unit is subtracted. The other three vendors did manage sequential growth Q1 2010 over Q4 2009.

Only MIPS among the G6 in Q1 2010 did not exceed its Q1 2009 revenue mark; ARM, CEVA, and MoSys delivered double digit percentage growth year-over-year, and of course Rambus' Q1 2010 was way better than its Q1 2009 revenue number.



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-- Russ Henke, EDACafe.com Contributing Editor.