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May 24, 2010
The Economy, Semiconductors, EDA, & Intellectual Property
Please note that contributed articles, blog entries, and comments posted on EDACafe.com are the views and opinion of the author and do not necessarily represent the views and opinions of the management and staff of Internet Business Systems and its subsidiary web-sites.
Russ Henke - Contributing Editor


by Russ Henke - Contributing Editor
Posted anew every four weeks or so, the EDA WEEKLY delivers to its readers information concerning the latest happenings in the EDA industry, covering vendors, products, finances and new developments. Frequently, feature articles on selected public or private EDA companies are presented. Brought to you by EDACafe.com. If we miss a story or subject that you feel deserves to be included, or you just want to suggest a future topic, please contact us! Questions? Feedback? Click here. Thank you!

Introduction:

Not far from this writer's office in Albany, CA, one can gaze southwest across the Bay (along a line of sight from right to left as shown here):



On a clear day one can glimpse in the distance a hint of the familiar skyline of the City of San Francisco between the Golden Gate and Oakland Bay Bridges:



It is indeed a clear, mild sunny April Sunday morning, and I have walked over to Albany Hill Park. Since I have arbitrarily chosen today to start the rough draft of the next EDA WEEKLY article, I reluctantly begin the 30-minute trek back to my office.

En route, I realize that today is not just any Sunday; rather, it is Sunday April 18, 2010, the 104th anniversary of the Great San Francisco Earthquake and Fire:





The 1906 Quake and resulting Fire were unmitigated disasters, leaving 3000 people dead and 225,000 homeless. There were no bridges back then that might have allowed more people to escape, assuming any bridges in existence then would have survived the 7.8 temblor.

After all, a section of the Oakland Bay Bridge did fail in the less-severe 6.9 Loma Prieta “World Series” Quake of October 17, 1989, resulting in several injuries and one fatality on the bridge itself. (Overall, 3700 injuries and 63 deaths occurred across the region due to the 1989 Quake and Fire).



While seismic retrofitting of all local bridges is still underway, we SF Bay Area residents are still waiting for a replacement Oakland Bay Bridge after 21 years, keeping in mind that both the GGB and OBB were built from scratch in just a few years during the Great Depression in the 30's.

The new eastern span will be exquisite when (and if) completed, as depicted here:



The old truss design of the obsolete eastern span will eventually fade into history:



Perhaps another sign of how much has changed in 75 years, the recent construction of the a new Oakland Bay Bridge eastern span has been a 21-year nightmare of fouled up plans, bids, politics, foreign steel and concrete shortages and repeated delays. The current cost estimate has ballooned to over $6 billion and the alleged completion date extended to 2013. No one expects either to hold. Indeed, this fiasco could be the basis of its own WEEKLY article, though probably not EDA WEEKLY.

But I digress. As I continue my Sunday walk back to my office, I wonder if City officials succeeded this morning, exactly 104 years later, in again finding a few 1906 quake survivors to participate in the annual observance ceremonies at Lottie's Fountain.

Back to work on April 18:

It's time to focus on starting the next EDA WEEKLY article due in mid-May. As my portable laptop computer boots up, I put aside civil engineering musings and start thinking about electronics again, and about the incredible ubiquity of digital computers in modern life, and the symbiotic role that the EDA Industry has played in their creation and inexorable progress (and in their occasional missteps - see Footnotes [1], [2] and [3] at the end of this EDA WEEKLY regarding stock market trading woes in early May 2010).

It dawns on me that virtually all of the progress with digital computers and related software has occurred just in the years of my own lifetime (e.g. the first general-purpose electronic digital computer, the ENIAC, wasn't running till 1943-45):



I begin to wonder what life was like before digital computers, before email, before the Internet, before websites, before texting, cell phones, 3D CGI movies, video games, even before television or before radio. I gradually realize that one would have to be as old as a Great SF Earthquake survivor, to have experienced life without any electronics.

I quickly conclude what I already knew - while life today is heavily electronic, hectic and complex, it's far more desirable than life back then.

[1] Footnotes refer to numbered paragraphs at end of this issue of EDA WEEKLY.


The laptop computer signals that it's ready.

In the six months since the writer began this series of EDA WEEKLY articles, the overall economic climates in the world at large and in the United States in particular have been showing signs of considerable improvement, with a few spots still less prosperous than they need to become.

In turn, the general economic recovery has positively affected worldwide semiconductor sales, which in turn has begun boosting the fortunes of the overall EDA Industry.

In particular, the niche of EDA having to do with electronics intellectual property (IP) bears special attention.

So this May 24, 2010 edition of EDA WEEKLY will be devoted to examining the progress of six selected Electronics IP Providers as a path to assessing the health of this niche, as the overall economy has improved in recent quarters.

What follows is divided into four parts:
  1. The Economy
  2. The Semiconductor Industry
  3. The Overall EDA Industry
  4. The Electronics Intellectual Property Niche

I. The Economy over the last six months:


Back in Q4 2009 this writer published an EDA WEEKLY article on EDAcafe.com entitled, “The Role of Business Planning”. This archived article is still just a mouse click away.

The introduction to that article listed some Q3 2009 signs that the US economy was beginning to recover from the “great recession” that began in December 2007. Such



signs included the fact that US GDP had finally turned positive in Q3 2009 after four consecutive quarters of contracting economic activity.

Also cited was the fact that stocks in general had then surged about 50% since their March 2009 lows. Venture capital investments in the San Francisco Bay Area in Q3 2009 had also ticked up for a second straight quarter, per an October 20, 2009 report from the National Venture Capital Association.

At the same time, in early Q4 2009 the country was still far from being out of the economic woods. While venture investment was up slightly in the SF Bay Area, across the USA venture capitalists had invested only $5.1 billion into 616 deals during Q3 2009, down 6% from the previous quarter, according to Dow Jones.

Moreover, during most of the summer and fall of 2009, the US was still losing jobs every month. Despite the fact that President Obama's $787 billion stimulus plan had saved or created more than 1 million jobs, unemployment was continuing to rise, with the US economy having lost 7.2 million jobs through September 2009 in the 22 months since December 01, 2007.

But as 2010 began, improvement continued. On February 26, 2010 the US Bureau of Economic Analysis said that the real Gross Domestic Product (GDP) -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 5.9% in Q4 2009, according to the "second" estimate released by the Bureau. The first (preliminary) estimate that appeared on January 29, 2010 of Q4 GDP was +5.7%. The Q4 2009 US GDP was the fastest growth pace in more than six years. In the third quarter of 2009, real US GDP had increased, but only by 2.2%.

On March 5, 2010 the US Labor Department reported that US employers cut a smaller-than-expected 36,000 jobs in February 2010, leaving the overall US unemployment rate steady at 9.7%. Moreover, job losses for December and January combined were revised to show 35,000 fewer jobs lost than previously reported. The labor market was gradually improving and the pace of layoffs had slowed markedly from early 2009 when the US economy was losing 750,000 jobs on average a month.

Manufacturing actually added 1,000 jobs in February 2010. Also, temporary hiring added 48,000, a sign that more permanent hiring would lie ahead.

On April 2, 2010 the US Labor Department said employers added (you read it right! added!) 162,000 jobs in March 2010, the most since the “great recession” began in December 2007. The March 2010 total included 48,000 temporary workers hired for the US Census. The department also revised January's job total to show a gain of 14,000, up 40,000 from a previously reported loss of 26,000. February's job numbers were also revised higher by 22,000 to show a loss of only 14,000. The economy had then added jobs in three separate months since the recession began. Private US employers alone added 123,000 jobs in March 2010, the most since May 2007.

Many people forget that the US economy needs to add more than 100,000 jobs a month just to absorb new entrants into the US labor market, let alone provide a livelihood for the 15 million people already looking for work. Without constant, robust economic growth, such as during 1993-2000, the unemployment percentage rate won't budge. Many people also forget that in past recessions, it took years before employment numbers returned to pre-recession levels.

In March 2010, US manufacturers added 17,000 jobs, the third straight month of gains. The average work week increased to 34 hours from 33.9, a positive sign. The overall unemployment rate remained at 9.7% for the third straight month.

Indeed, the GDP has continued to increase, with the first estimate of GDP rise for Q1 2010 standing at 3.2% at this writing.

Then Dave Rosenberg of CNET reported that on April 11, 2010, the private company research firm CB Insights released new venture investment data for the first quarter of 2010. Overall, the news was very positive with strong growth in the number of venture deals from 687 in the fourth quarter of 2009 to 731 in the first quarter of 2010.

The first quarter of 2010 saw $5.9 billion invested across those 731 deals, a marked increase over the year-ago quarter when only $3.9 billion was invested across a paltry 483 deals. And while CB Insights notes that $5.9 billion remains far below quarterly VC investment levels seen before the '08-'09 “great recession,” there is some belief that "the VC asset class has perhaps reset at a lower but ultimately more sustainable and healthier level."



The fact that VCs are opening their collective wallets, even for smaller deals, is good news for the EDA Industry and for the US economy as a whole.

More proof that a US recovery is underway:   The May 7th Labor Department Jobs Report for April 2010: 290,000 Added!

As a final coda for this Section I of the EDA WEEKLY, we present added evidence that the US economy is truly rolling now. We do this by citing the report on April 2010 jobs from the US Labor Department, released Friday May 7, 2010:

US nonfarm payrolls improved at the fastest pace in four years in April 2010 as US employers added 290,000 jobs overall! Moreover, the Labor Department also said that its revised figures for February & March show that 121,000 more jobs were added in those two months than previously reported. In the biggest gain since March 2006, private sector employment alone increased 231,000 in April 2010, after rising 174,000 a month earlier. Manufacturing payrolls increased 44,000 in April 2010 after rising 19,000 in March. Construction gained 14,000 more employees in April, rising for a second month in a row. Service sector jobs leapt 166,000; temporary hiring increased 26,200. Government hiring rose 59,000, adding to the prior month's 56,000 increase.


II. The Semiconductor Industry:


On April 5, 2010, the Semiconductor Industry Association (SIA) reported that worldwide semiconductor sales in February 2010 were $22.0 billion, actually a slight decrease of 1.3% from January 2010 when sales were $22.3 billion. However, February 2010 sales were a whopping 56.2% higher than in February 2009 when sales were only $14.1 billion. (Note: All SIA monthly sales numbers represent a three-month moving average).

“The February (2010) sales numbers reflect (the) continued recovery of sales of semiconductors, with demand principally driven by growth in sales of electronic products in emerging economies,” said SIA President George Scalise. “Unit sales of the two leading demand drivers for semiconductors - personal computers and cell phones - are now projected to grow (percentage-wise) in the low- to mid-teens in 2010. While the 56% year-on-year growth reflected in the February (2010) sales number is encouraging, it is important to note that January and February of 2009 marked the low point for the semiconductor industry during the worldwide economic downturn,” said Scalise.

“There are encouraging signs that the global economic recovery will continue, and we remain cautiously optimistic that there is upside potential for growth beyond our November (2009) forecast for 2010,” Scalise concluded. (Note: The November 2009 SIA forecast for 2010 semiconductor sales was $242.1 billion).

SAI'S chip news for March 2010 was even better!

On May 3, 2010 the SIA reported that worldwide semiconductor sales in March 2010 were $23.1 billion, an increase of 4.6% from February when sales were $22.0 billion. Sales increased by 58.3% from March 2009 when sales were $14.6 billion. The first quarter of 2009 marked the low point in semiconductor sales during the global economic recession. Sales for the first quarter of 2010 were $69.2 billion compared to $43.7 billion for the first quarter of 2009. All monthly sales numbers represent a three-month moving average.

“Global sales of semiconductors set a new high for the month of March and were second only to the record sales reported in November 2007,” said SIA President George Scalise. “Healthy demand from major end markets coupled with restocking to normal inventory levels contributed to strong first-quarter growth. While we expect that 2010 sales will continue to be strong, the year-on-year growth rate will moderate going forward, reflecting the industry recovery that began in the second half of 2009.

“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.



Relative to Earnings, Table 2 reveals that three of the six vendors (CEVA, MIPS, and MoSys) delivered slightly less profit in Q1 2010 than in Q4 2009, sequential behavior that is classic between the change of years. But ARM, Virage Logic, and of course Rambus' improved Q1 2010 profits easily overwhelmed the others' modest sequential reductions, such that the profitability of the G6 overall improved slightly more [$175,313,000] in Q1 10 vs. Q4 09 than the improvement generated by Rambus alone [$174,192,000].

Indeed, four of the six covered vendors were in black ink in Q1 2010, vs. three in Q4 2009 and only two in Q1 2009. But Rambus' Samsung deal allowed it to deliver nearly 80% of the year-over-year $212,173,000 improvement in G6 profits Q1 2010 vs Q1 2009.




Q1 2010 Results of Individual G6 Electronics IP Providers:




On April 27, 2010 ARM Holdings plc announced its unaudited financial results for the quarter ending March 31, 2010, and said Q1 2010 demonstrated continuing ARM progress against its strategy with its highest ever unit shipments leading to record royalty revenues, profits and net cash generation.

Q1 2010 total revenues were $143.3 million, up 2.4% sequentially over Q4 2009 revenue of $140.0 million, and year-over-year up 18.5% over Q1 2009 revenue of $120.9 million.

Total license revenues in Q1 2010 increased by 6% year-on-year to $43.0 million, representing 30% of group revenues. License revenues comprised $34.2 million from PD and $8.8 million from PIPD. Total royalty revenues in Q1 2010 increased by 33% to $77.5 million, representing 54% of group revenues. Royalty revenues comprised $66.7 million from PD and $10.8 million from PIPD.

During Q1 2010, ARM partners reported shipping 1.4 billion chips, an increase of about 70% on last year.

Profit for Q1 2010 was 19,572,000 pounds, or $30,337,000. Profit for Q1 2009 was “only” 9,785,000 pounds, or $14,779,000.

Progress against strategy in Q1 2010:   At March 31, 2010, ARM had 1,729 full-time employees, a net increase of 19 since the start of the new year. At the end of March 2010, the group had 692 employees based in the UK, 493 in the US, 189 in Continental Europe, 271 in India and 84 in the Asia Pacific region. ARM is continuing to invest in its R&D programs and operations, and expects to continue to recruit throughout 2010.

Warren East, Chief Executive Officer, said, “ARM has continued to focus on execution and has seen positive progress against each of our growth drivers in the first quarter. Leading semiconductor and OEM companies are increasingly adopting ARM technology, creating healthy demand for our latest products. This continuing demand validates ARM's commitment to R&D investment as we develop the technology that meets our customers' needs for smarter, lower-power chips in a broadening range of end markets. Shipments of ARM-based chips reported in Q1 (2010) increased more than 50% compared with a year ago, driven by strong growth from smarter mobile devices, digital TVs, disk drives and microcontrollers, and leading to record royalty revenues. Combined with on-going financial discipline, this has given rise to year-on-year earnings growth of 49% and record levels of net cash generation.”

“ARM has made an encouraging start to 2010 in improving trading conditions, although there remains a lack of certainty as to the impact of the broader macroeconomic environment on end-consumer demand later in the year. In this context, and as ARM continues to execute its strategy, we expect group dollar revenues for the full-year 2010 to be in line with current market expectations,” East concluded.

News Item:

On February 22, 2010, Ashlee Vance (bio below) of the New York Times published the following article, “For Chip Makers, the Next Battle Is in Smartphones”. It affects ARM and many others.

The semiconductor industry has long been a game for titans.

The going rate for a state-of-the-art chip factory is about $3 billion. The plants typically take years to build. And the microscopic size of chip circuitry requires engineering that practically defies the laws of physics.

Over the decades, legions of companies have found themselves reeling, even wiped out financially, from trying to produce some of the most complex objects made by humans for the lowest possible price.

Now, the chip wars are about to become even more bloody. In this next phase, the manufacturers will be fighting to supply the silicon for one of the fastest-growing segments of computing: smartphones, tiny laptops and tablet-style devices.

The fight pits several big chip companies - each trying to put its own stamp on the same basic design for mobile chips - against Intel, the dominant maker of PC chips, which is using an entirely different design to enter a market segment in which it has a minuscule presence.

Consumers are likely to benefit from the battle, which should increase competition and innovation, according to industry players. But it will be costly to the chip manufacturers involved.

“I worry about that,” said Ian Drew, an executive vice president at ARM Holdings, which owns the rights to the core chip design used in most smartphones and licenses that technology to manufacturers. “But ultimately, these chip makers are all pushing each other, and if one falls over, there are still two or three left.”

Intel, based in Santa Clara, CA, has long been held up as the gold standard when it comes to ultra-efficient, advanced chip manufacturing plants. The company is the last mainstream chip maker to both design and build its own products, which go into the vast majority of the PCs and servers sold each year.

Most other chips, for items as diverse as cars and printers, are built by a group of contract manufacturers, based primarily in Asia, to meet the specifications of other companies that design and market them. Traditionally, these companies (contract manufacturers), known as foundries, have trailed Intel in terms of manufacturing technology and have handled chips with simpler designs.

But with mobile technology, an expensive race is on to build smaller chips that consume less power, run faster and cost less than products made at older factories.

For example, GlobalFoundries plans to start making chips this year in Dresden, Germany, at what is arguably the most advanced chip factory ever built. The initial chips coming out of the plant will make their way into smartphones and tabletlike devices rather than mainstream computers.

“The first one out there with these types of products is really the one that wins in the marketplace,” said Jim Ballingall, vice president for marketing at GlobalFoundries. “This is a game changer.”

The company, a new player in the contract chip-making business, was formed last year when Advanced Micro Devices, Intel's main rival in the PC chip market, spun off its manufacturing operations. GlobalFoundries, based in Sunnyvale, CA, has been helped by close to $10 billion in current and promised investments from the government of Abu Dhabi.

The vast resources at GlobalFoundries' disposal have put pressure on companies like Taiwan Semiconductor Manufacturing, United Microelectronics and Samsung Electronics, which also make smartphone chips. The message from GlobalFoundries is clear: as the newcomer in the market, it will spend what it takes to pull business away from these rivals.

At the same time, Apple, Nvidia and Qualcomm are designing their own takes on ARM-based mobile chips that will be made by the contract foundries. Even without the direct investment of a factory, it can cost these companies about $1 billion to create a smartphone chip from scratch.

Recently, these types of chips have made their way from smartphones like the iPhone to other types of devices because of their low power consumption and cost.

For example, Apple's coming iPad tablet computer will run on an ARM chip. So, too, will new tiny laptops from Hewlett-Packard and Lenovo. A couple of start-ups have even started to explore the idea of using ARM chips in computer servers.

“Apple was the first company to make a really aspirational device that wasn't based on Intel chips and Microsoft's Windows,” said Fred Weber, a chip industry veteran. “The iPhone broke some psychological barriers people had about trying new products and helped drive this consumer electronics push.”

Companies like Nvidia and Qualcomm want to get their chips into as many types of consumer electronics as possible, including entertainment systems in cars, and home phones with screens and Web access.

At the Mobile World Congress in Barcelona, Spain, last week, manufacturers displayed a wide range of slick devices based on ARM chips, including a host of tablets and laptops. In addition, HTC released its Desire smartphone, built on a Qualcomm ARM chip called Snapdragon, which impressed show-goers with its big touch-screen display.

Meanwhile, Intel is about to enter the phone fray, both to expand its market and defend itself against the ARM chip makers. Its Atom line of chips, used in most netbooks and now coming to smartphones, can cost two to three times as much as the ARM chips, according to analysts. In addition, the Atom chips consume too much power for many smaller gadgets.

Intel executives argue that consumers will demand more robust mobile computing experiences, requiring chips with more oomph and PC-friendly software, both traditional Intel strengths.

“As these things look more like computers, they will value some of the capabilities we have and want increasing levels of performance,” said Robert B. Crooke, the Intel vice president in charge of the Atom chip. “We're seeing that from our customers in a number of spaces, including digital TVs and hand-held devices.”

Intel also has deep pockets. As of December, the company had more than $9 billion in cash and short-term investments.

Mr. Crooke said that Intel's manufacturing expertise would allow it to produce a new crop of chips every 18 months or so that would be cheaper and use less power. As rivals shift to more cutting-edge chip-making techniques, he said, they are likely to run into problems that Intel solved years ago.

At the same time, competition from other chip makers will pressure them to lower their prices.

“I don't know whether it will make it harder for these guys to invest in the future, but you certainly would think so,” Mr. Crooke said.

Ashlee Vance works out of the New York Times San Francisco bureau, covering the ways in which businesses and workers use technology. His stories focus on the major hardware and software makers, along with exploring the new companies and personalities shaping business computing. Ashlee joined The NYT in 2008 after working for five years as editor of The Register - an irreverent British technology web site. He has also written freelance stories on technology for The Economist. In 2000, Ashlee graduated from Pomona College with a degree in philosophy, the obvious major for any technology reporter.

About ARM Holdings plc:

The Group's principal activity is licensing, marketing, research and development of RISC-based microprocessor and systems. It operates in three divisions: Processor division, Physical Internal Processor division and Systems Designs division. Its Processor encompasses those resources that are centered on microprocessor cores including specific functions such as graphics IP, fabric IP, embedded software and configurable digital signal processing IP. Physical IP concerned with the building blocks necessary for translation of a circuit design into actual silicon. Systems Design is focused on the tools and models used to create and debug software and system-on-chip designs. The Group has six offices in the United States of America and other offices China, Japan, South Korea, Taiwan, Israel, France, Germany and India. Design offices are based in the United Kingdom, France, Belgium, Germany, the United States of America and India.



On April 29, 2010 CEVA, Inc. (NASDAQ: CEVA) announced its financial results for the first quarter, the period ending March 31, 2010.

Total revenue for the first quarter of 2010 was a record $10.60 million, an increase of 11% year-over-year compared to $9.51 million reported for the first quarter of 2009. Q1 2010 revenue was also above the sequential Q4 2009 level of $10.18 million by 4.1%, an unusual feat.

First quarter of 2010 licensing revenue was $4.7 million, an increase of 4% over $4.5 million reported for the first quarter of 2009. Royalty revenue for the first quarter of 2010 was a record $5 million, an increase of 32% over $3.8 million reported for the first quarter of 2009. Revenue from services for the first quarter of 2010 was $0.9 million, a 26% decrease compared to $1.2 million reported for the first quarter of 2009.

US GAAP net income for the first quarter of 2010 was $2.1 million, an increase of 51% over $1.4 million reported for the same period in 2009. However, Q1 2010 net income sequentially was (as expected) below Q4 2009, when net income was $2.91 million for the traditionally strong fourth quarter.

US GAAP diluted earnings per share for the first quarter of 2010 were $0.09, an increase of 29% compared to $0.07 for the first quarter of 2009, but of course no match for the $0.14 of Q4 2009.

By the by, as guidance last quarter CEVA expected revenue in the next quarter (January - March 2010) to be in the range of $9.9 million and $10.9 million, and GAAP EPS was forecast to be between $0.07 and $0.09.

During the quarter, the Company concluded five new license agreements. Four of the agreements were for CEVA DSP cores, platforms and software, and one was for CEVA Serial ATA (SATA) technology. Target applications for customer deployment are 2G and 3G handsets and data cards, set-top boxes, digital TVs and SSD drives. Geographically, two of the agreements signed were in Europe and three were in Asia.

Gideon Wertheizer, Chief Executive Officer of CEVA, stated, "We are very pleased with our record first quarter revenue, which reflects the continued adoption of our DSP technologies by key players in the cellular and consumer electronics markets, as well as consistent growth in our royalty revenue. During the quarter, we announced new licenses for our DSPs with two leading players in the WiMAX market who are expanding into the LTE space. Also, we announced that Samsung is now deploying LTE datacard modems and dongles based on our DSP technology. We are encouraged by the pipeline build up, and believe we are on track with our revenue and profitability growth plans for the Company."

Yaniv Arieli, Chief Financial Officer of CEVA, stated, "We have demonstrated good progress during the first quarter of 2010, reporting revenues above the mid range of our guidance and setting a new record for royalty revenue. In addition, we achieved a record high GAAP gross margin of 93%. We believe our solid pipeline of licensing deals and continued royalty growth will reinforce our strong financial foundation and positions the Company for long-term profitability. We also continued to generate significant positive cash flow during the first quarter in the amount of $6.1 million, which further strengthens our balance sheet and improves our financial flexibility. As of March 31, 2010, CEVA's cash balances, marketable securities and long term bank deposits were $106.7 million."

News Item:

On April 7, 2010 CEVA announced the availability of the CEVA-SATA3.0 Device Controller IP. Building on extensive experience with SSD customers, CEVA has upgraded its SATA Device Controller IP to provide 6Gbps line rate for faster data transfers, doubling the throughput from the previous generation. The IP has already been licensed to a leading FLASH memory semiconductor manufacturer for use in their future SSD designs.

The CEVA-SATA3.0 IP incorporates the latest Native Command Queuing (NCQ) specifications for isochronous data transfers and queue management which in turn enables prioritized transfers of streaming audio and video data. In addition, CEVA has further developed the unique CPU off-loading features of the Controller IP, resulting in significantly improved overall system performance.

"Solid State Drives, with their rapid evolution in terms of capacity, reliability and performance, are becoming the lead adopter for 6Gbps SATA," said Aviv Malinovitch, vice president, Operations at CEVA. "Our CEVA-SATA3.0 unleashes the full performance potential of next-generation SSD products while also offering the added benefit of offloading the CPU by assisting in the processing of the 6Gbps transactions."

About CEVA, Inc.

CEVA is the leading licensor of silicon intellectual property (SIP) DSP Cores and platform solutions for the mobile handset, portable and consumer electronics markets. CEVA's IP portfolio includes comprehensive technologies for cellular baseband (2G / 3G / 4G), HD video and audio, voice over packet (VoP), Bluetooth, Serial Attached SCSI (SAS) and Serial ATA (SATA). In 2009, CEVA's IP was shipped in over 330 million devices, including handsets from all top five handset OEMs - LG, Motorola, Nokia, Samsung and Sony Ericsson. Today, more than one in every four handsets shipped worldwide is powered by a CEVA DSP core. For more information, visit www.ceva-dsp.com .



On April 27, 2010 MIPS Technologies, Inc. (NASDAQ: MIPS), reported consolidated financial results for its third fiscal quarter 2010, ending March 31, 2010. All financial results stated herein compare current results with historical results recast to reflect the disposition of MIPS Technologies' Analog Business Group (except where indicated).

Summary of Q3 Fiscal 2010 (Q1 2010 Calendar) Financial Highlights:   Fiscal Q3 2010 (Q1 2010 Calendar) Details:

Revenue for calendar Q1 2010 was $17.5 million, an increase of 15% over the prior quarter revenue of $15.2 million, but a decrease of 1% from the $17.7 million reported in calendar Q1 2009 (the $17.7 million in Q1 2009 revenue does not include the discontinued Analog Business Group). As guidance last quarter, MIPS expected revenue in the quarter (January - March 2010) to be in the range of $16.8 million to $18.3 million.

Revenue from royalties was $12.1 million, an increase of 6% from the prior quarter and an increase of 13% from the corresponding quarter a year ago. License revenue was $5.4 million, a sequential increase of 42% from the prior quarter, but a decrease of 23% from the $7.0 million reported in the year-over-year quarter of 2009.

The Company's calendar Q1 2010 GAAP net income from continuing operations was $3.061 million, or $0.07 per share, the latter of which was virtually equal to the earnings per share to the prior quarter. As guidance last quarter, GAAP EPS for calendar Q1 2010 was forecast to be between $0.05 and $0.07.

The Company also reported that it paid off its remaining debt of $8.4 million on April 7, 2010.

"I'm very encouraged with our results for this (calendar Q1 2010) quarter, including signing our largest mobile handset customer to-date coupled with record royalty units achieved during the quarter," said Sandeep Vij, MIPS Technologies chief executive officer since January 25, 2010. "As MIPS Technologies' solutions continue to proliferate around the globe, we are focused on extending our lead in the home entertainment and networking markets, and making continued inroads into new markets such as storage and mobile handsets."

News Item:

On April 26, 2010 MIPS Technologies, Inc. announced that MIPS and Imagination Technologies Ltd., a multimedia and communications chip technologies company, had formed a strategic alliance to ensure the optimum system solution and support for customers combining IP from both companies. Together the companies are working to help SoC developers get to market quickly with optimized solutions combining processor IP from MIPS and graphics, video and other IP from Imagination. Reflecting this strategic alliance, MIPS Technologies has joined Imagination's POWERVR Insider graphics developer ecosystem as a technology partner.

About Imagination Technologies:

Imagination Technologies Group plc (LSE:IMG) creates and licenses processor cores for graphics, video, multi-threaded embedded processing/DSP and multi-standard communications applications. These silicon intellectual property (IP) solutions for systems-on-chip (SoC) are complemented by software tools and drivers as well as developer and middleware ecosystems. Target markets include mobile phone, handheld multimedia, home consumer entertainment, mobile and low-power computing, and in-car electronics. Its licensees include semiconductor and consumer electronics companies. Imagination has corporate headquarters in the United Kingdom, with sales and R&D offices worldwide. See: www.imgtec.com.

About MIPS Technologies:

MIPS Technologies, Inc is a provider of industry-standard processor architectures and cores that power some of the world's most popular products for the home entertainment, communications, networking and portable multimedia markets. These include broadband devices from Linksys, DTVs and digital consumer devices from Sony, DVD recordable devices from Pioneer, digital set-top boxes from Motorola, network routers from Cisco, 32-bit microcontrollers from Microchip Technology and laser printers from Hewlett-Packard. Founded in 1998, MIPS Technologies is headquartered in Sunnyvale, California, with offices worldwide. For more information, visit www.mips.com.



On April 28, 2010 MoSys, Inc. (NASDAQ: MOSY) reported financial results for the first quarter ending March 31, 2010.

Q1 2010 Highlights:   First Quarter Results:

Total net revenue for Q1 2010 was $3.6 million, compared with $3.5 million reported for Q4 2009 and $2.6 million in Q1 2009.

Q1 2010 total revenue included licensing revenue of $1.5 million, compared with $1.3 million for the previous quarter and $0.5 million for Q1 2009. The increase in Q1 2010 license revenue was primarily due to ongoing serial interface IP projects, early stage revenue from two new license agreements signed in the previous quarter and increased revenue from the 1T-SRAM technology agreement with ROHM. Q1 2010 royalty revenue was $2.0 million, compared with $2.2 million for the previous quarter and $2.0 million for Q1 2009. The sequential decrease in royalty revenue was due to decreased royalties from consumer products containing 1T-SRAM embedded memory.

Gross margin for Q1 2010 was 78%, compared with 80% for Q4 2009 and 87% for Q1 2009.

GAAP net loss for Q1 2010 was $5.7 million, or ($0.18) per share, compared with a net loss of $4.9 million, or ($0.16) per share, for the previous quarter and a net loss of $4.2 million or ($0.13) per share for Q1 2009.

Cash and investments totaled $33.9 million as of March 31, 2010, compared with approximately $40.4 million as of December 31, 2009. The sequential decrease in cash and investments included cash used in operations, as well as $2.3 million in cash payments related to the acquisition of MagnaLynx.

“During the first quarter, we announced the expansion of our business model to include plans for the Bandwidth Engine family of ICs,” commented Len Perham, President and Chief Executive Officer of MoSys. “In addition to being a world-class IP provider, MoSys is developing high-performance ICs that combine our patented 1T-SRAM® high-density embedded memory and ultra high-speed 10 Gigabit per second SerDes with computational capability. We believe the Bandwidth Engine represents a breakthrough solution for developers of next-generation networking systems and high-performance computing applications. At the end of the quarter, we also announced the acquisition of MagnaLynx, which expands our engineering expertise in high-performance, low-power serial chip-to-chip communications and complements our Bandwidth Engine and next-generation IP product roadmap.”

Mr. Perham continued, “Also, during the quarter, we announced a major technology agreement with ROHM for use of our 1T-SRAM in its next-generation IC designs. Revenue from the ROHM project along with our ongoing serial interface and memory IP projects drove license revenue to the highest level since the second quarter of 2007. With several projects in the early stages of development, we expect license revenue to ramp throughout 2010 as additional delivery milestones are achieved.”

“Overall, we made significant progress on our strategic initiatives in the first quarter of 2010 and remain focused on positioning the Company for future growth by expanding our business model, market opportunities and product roadmap. In the coming quarters, we expect to further the development of our Bandwidth Engine family of ICs, while capitalizing on our serial interface and embedded memory IP in the networking, consumer and high performance computing markets,” concluded Mr. Perham.

By the way, spokespeople for MoSys said 3 months ago that the company as a matter of policy does not provide future guidance, yet these same people encouraged the writer to listen to the Q4 MoSys' webcast earnings call. Unfortunately, that recording was unavailable by the time this writer tried to access the Q4 webcast. The same was true this quarter.

News Item:

On March 26, 2010 MoSys, Inc. announced that it had acquired MagnaLynx Inc. a developer of high-speed, low-power serial chip-to-chip communications technology.

The acquisition is expected by MoSys to result in the following benefits to MoSys: Founded in Ames, Iowa in 2003, MagnaLynx specializes in high-performance, low-power SerDes design services and IP cores for network communications and high performance computing applications.

The total purchase price is expected to be approximately $5.0 million.

About MoSys, Inc.

MoSys, Inc. develops serial chip-to-chip communications solutions that deliver unparalleled bandwidth performance for next generation networking systems and advanced system-on-chip (SoC) designs. MoSys' IP portfolio includes DDR3 PHYs and SerDes IP that support data rates from 1 - 11 Gigabits per second (Gbps) across a variety of standards. In addition, MoSys offers its flagship, patented 1T-SRAM® and 1T-Flash® memory cores, which offer a combination of high-density, low power consumption, high-speed and low cost advantages for high-performance networking, computing, storage and consumer/graphics applications. MoSys' IP is production-proven in more than 225 million devices. MoSys is headquartered in Sunnyvale, California. More information is available at www.mosys.com.



On April 22, 2010 Rambus Inc. (NASDAQ: RMBS), reported financial results for the first quarter of 2010, the period ending March 31, 2010.

Revenue for the first quarter of 2010 was an incredible $161.9 million, up 425% sequentially from the fourth quarter of 2009 and up 492% from the quarter a year ago, primarily due to the agreements signed with Samsung during the first quarter of 2010. (Revenue without the Samsung deal would have been $24.8 million for Q1 2010).

“The Samsung agreement was a transformational event driving record revenues this quarter,” said Harold Hughes, president and chief executive officer at Rambus, in what may become the most remarkable executive understatement of the new year. “This agreement, along with the AMD license renewal, reflects a recognition of the ongoing value of our portfolio of patented innovations and demonstrates the momentum of our licensing efforts.”

Samsung is expected to make payments to Rambus totaling approximately $900.0 million over a five-year period in connection with the settlement agreements, which include the purchase of 9.6 million shares of Rambus common stock for $200.0 million. In the first quarter of 2010, the Company received cash consideration of $425.0 million from Samsung, recognized as follows:   The remaining $475.0 million is expected to be paid in successive quarterly payments of approximately $25.0 million (subject to adjustments per the terms of the license agreement), concluding in the last quarter of 2014.

Revenue and cash receipts resulting from the Samsung agreement for the first quarter of 2010 and future periods are expected to be recognized as follows (in millions):



Writer's Note: The overall impact of the settlement with Samsung makes Q1 2010 an accounting anomaly when it comes to perceiving numerical trends, and arguably may require a graduate degree in finance for readers to untangle. Nevertheless, the numbers are all presented here as reported by Rambus, comparing Q1 2010 to both Q4 2009 and Q1 2009.

After the giant impact of the Samsung deal is taken into account, Rambus reported net income for the first quarter of 2010 of $150.9 million as compared to a net loss of $23.3 million for Q4 2009 and a net loss of $17.4 million year-over-year for Q1 2009.

Diluted net income per share for Q1 2010 was $1.28 as compared to a net loss per share of $0.22 in Q4 2009 and a net loss per share of $0.17 for Q1 2009.

Comment from last Quarter on Rambus' Guidance for Q1 2010:

The following comment by this writer published last quarter turned out to be quite prescient:

Rambus executives gave guidance during the Rambus' Q4 2009 earnings conference call, that Rambus' revenues for the January - March 2010 quarter would be between $47 million and $51 million. Perhaps half of this would be from royalties recently won in Rambus' legal battles waged now for years to protect its Intellectual Property rights. Judging from the questions posed by investment analysts in on the earnings call, it would appear that most investors are focused on how much money Rambus can win in court battles, vs. winning in the technical market place. After all, Rambus has spent over $50 million in legal expenses in each of the last two years pursuing litigation to defend its intellectual property rights. And to Rambus' credit, the two attorneys present for Rambus during the earnings call appeared extremely competent, careful and confident, on a par with the two top management Rambus executives who participated.”

News Item:

In separate news, on February 04, 2010, Rambus announced that Kevin Donnelly, senior vice president of IP Strategy, would serve as the IP Summit Chair for the DesignCon 2011 conference. The announcement was made during the Keynote Luncheon at DesignCon 2010. "Rambus is a respected leading vendor of semiconductor IP and a long-time supporter of DesignCon in all aspects of the event," commented Barry Sullivan, content director, International Engineering Consortium. "I'm personally pleased to recognize Kevin's expertise and have his guidance in the development of the IP Summit and DesignCon 2011 event overall." Donnelly leads the development of Rambus' IP business strategies. Prior to this position, he served as senior VP of Engineering, where he led future technology development for Rambus' memory and logic interface products. He holds a bachelor's degree in electrical engineering and computer sciences from the University of California, Berkeley and a master's degree in electrical engineering from San Jose State University. Donnelly also holds numerous patents in high-speed clocking and I/O circuits.

About Rambus Inc.

Rambus is one of the world's premier technology licensing companies. Founded in 1990, the Company specializes in the invention and design of architectures focused on enhancing the end-user experience of computing, communications and consumer electronics applications. Additional information is available at www.rambus.com.



On May 5, 2010 Virage Logic Corporation (NASDAQ:VIRL) reported its financial results for its second fiscal quarter, or first calendar quarter of 2010, the period ending March 31, 2010.

Total revenue for calendar Q1 2010 was $25.245 million, compared with $11.025 million for calendar Q1 2009 and $21.66 million for the sequential calendar Q4 2010.

License and maintenance revenue for Q1 2010 was $19.2 million compared with $9.1 million for the same period a year ago and $16.9 million for the just-prior quarter. Royalty revenue for Q1 2010 was $6.0 million, compared with $1.9 million and $4.7 million for Q1 2009 and Q4 2009, respectively.

As reported under US generally accepted accounting principles (GAAP), net loss was $1.098 million, or ($0.04) per share, for Q1 2010 compared to a net loss for year-over-year Q1 2009 of $26.347 million, or ($1.15) per share, and net loss of $2.181 million, or ($0.09) per share for sequential Q4 2009.

Virage Logic President and CEO, Dr. Alex Shubat said, "During the past several years, we've focused on all those corporate efforts necessary for building out our IP product portfolio through new product development as well as selective acquisitions. The positive results of these efforts were made apparent in our first quarter of fiscal 2010 (calendar Q4 2009), when we achieved a record $21.7 million in revenue. Now, for the second quarter of fiscal 2010 (calendar Q41 2010/, we are posting another record revenue of $25.2 million. This revenue number represents a 17% quarter over quarter growth, and a 129% year over year increase. License and maintenance revenues increased 14% to $19.2 million during the quarter, while royalty revenue climbed 26% to $6.0 million. This robust increase in royalty revenue was a result of both increased sales of advanced technology semiconductor wafers from our foundry partners, and royalty income from semiconductor manufacturers for our ARC(R) processor product portfolio.

"License bookings during the quarter were strong and greater than our license revenue. In fact, our license book-to-bill ratio has been above unity for each of the last four quarters. We now enjoy a record license backlog. This backlog growth, coupled with the increase we see in new opportunities, gives us both comfort and confidence.

"We continue to believe that the recent growth in demand for our products is a result of both our increased product offering and a seminal change occurring in the semiconductor industry towards the use of third-party wafer foundries by almost every SoC integrated circuit manufacturer, including most major IDMs. This change is, we believe, partly responsible for further disaggregation in the semiconductor space, resulting in the increased use of standard third-party IP.

"During the quarter, we continued to expand our IP building block portfolio. We announced the availability of our SiPro(TM) Mobile Industry Processor Interface (MIPI) PHY and controller IP on the 40nm LP process node to target the mobile market. These products are created using the production proven IP that we licensed from AMD in early 2009.

"In the area of physical IP on advanced process nodes, we believe we have not only maintained but extended our early leadership position at 40nm. Today, more than 40 customers are actively designing SoCs at this node using our IP. We also continue our early leadership at 28nm and today count five customers, three of which are end customers, on this advanced node. We believe our SiWare(TM) Memory, SiWare(TM) Logic and High Speed Interface products offer the industry's broadest portfolio of silicon proven IP."

Dr. Shubat concluded, "For the third quarter fiscal 2010 (calendar Q2 2010), we are projecting revenues of $26.0 million to $27.0 million and non-GAAP EPS results of $0.10 to $0.13 per share. Included in this forecast is an estimate of $0.01 from our Strategic Outsourcing business, acquired from NXP in mid-first quarter fiscal 2010. We had previously forecasted that this Strategic Outsourcing business would not contribute positively to our corporate EPS until fourth quarter fiscal 2010 (calendar Q3 2010).

"We have now finalized our NXP IP business and productization plans and are scaling the operation accordingly; therefore, in the third quarter fiscal 2010 (calendar Q2 2010), we will take a one-time restructuring charge of approximately $5.7 million to $6.0 million. The company expects to realize, before tax, a total of approximately $10.0 million to $10.5 million in non-GAAP adjustments in the third quarter calendar Q2 2010), comprised primarily of the NXP IP business transition and restructuring costs, FAS123R stock-compensation, amortization and other acquisition-related expenses."

Writer's note: Many of the strategic changes mentioned by Dr. Shubat above, were described in the December 22, 2009 EDA WEEKLY article, “ Virage Logic -- On The Move!”.

News Item:

On April 21, 2010 Virage Logic Corporation announced that its AEON(R) MTP (Multiple Time Programmable) NVM (non-volatile memory) EEPROM IP has been qualified for a million cycles at an elevated temperature of 105o C in a standard 250-nanometer (nm), 5V CMOS process. Dedicated EEPROMs typically guarantee one million cycle performance only at room temperature. AEON MTP NVM not only exceeds that performance, but comes with additional major advantages: the ability to be integrated into standard CMOS as well as high-voltage, analog processes. Thus, Virage Logic becomes the first IP company to develop and qualify MTP EEPROM IP at 90nm and 65nm, and now the first ever MTP NVM EEPROM IP with a million cycles endurance.

NVMs, supporting bit counts from 8 bits up to 16k bits, are ubiquitous in every analog System-on-Chip (SoC) design shipped. These memories are used for data collection, parameter storage, and other computing functions that require data be preserved when the power is turned off. Virage Logic's NVM products are found in seven of the top ten analog semiconductor companies shown in the 2010 Databeans listing.

"Virage Logic's AEON MTP NVM EEPROM IP is ideally suited for use in such end applications as digital power management and battery fuel gage applications," said Dr. Yankin Tanurhan, vice president and general manager of Virage Logic's Processor and NVM Solutions business units. "Furthermore, having million-cycle MTP NVM EEPROM IP that can be implemented on a standard CMOS process opens up entirely new applications. A million cycles means an AEOM MTP EEPROM written every 5 minutes can last 10 years for real-time data logging applications. For example, over this time embedded battery power management software can monitor the aging profile and environmental conditions of a battery and modify its operation to maintain consistent performance over the life of the battery."

The potential total available market for MTP NVM EEPROM IP in SoCs for battery power management is large and growing. The United Nations' International Telecommunications Union put the total number of mobile phone subscribers at 4.6 billion at the end of 2009. MTP NVM EEPROM IP for managing power in batteries for Smartphones, the most power hungry, could potentially reach nearly 200 million units this year if past growth is any indication. Market research firm Gartner predicted Smartphone sales of 172 million for 2009 a 24% growth over the previous year.

About Virage Logic

Virage Logic is a leading provider of semiconductor intellectual property (IP) for the design of complex integrated circuits. The company's highly differentiated product portfolio includes processor solutions, interface IP solutions, embedded SRAMs and NVMs, embedded test and yield optimization solutions, logic libraries, and memory development software. As the semiconductor industry's trusted IP partner, more than 400 foundry, IDM and fabless customers rely on Virage Logic to achieve higher performance, lower power, higher density and optimal yield, as well as shorten time-to-market and time-to-volume. For further information, visit http://www.viragelogic.com.

Cadence & Denali:

As still another sign of the high level of activity in the Electronics IP marketplace, we have this May 13, 2010 news: Cadence Design Systems, Inc. and Denali Software, Inc (portraying itself as a “provider of electronic design automation (EDA) software and intellectual property (IP)” announced that the companies had entered into a definitive merger agreement under which Cadence will acquire Denali for $315 million in cash. In alignment with its EDA360 strategy, this transaction is said (when completed) to allow Cadence's solution portfolio to deliver system component modeling and IP integration. "Denali's strengths in Memory Models, Design IP, and Verification IP accelerate the execution of Cadence's recently announced EDA360 vision, creating new opportunities for the company," said Lip-Bu Tan, president and chief executive officer of Cadence. "Bringing our two companies together provides a path for future growth, as well as expanded opportunities for our customers and employees," said Sanjay Srivastava, president and chief executive officer of Denali.


Stock Market Prices of the G6 Electronics IP Providers

Measured at the ends of Q1 2010, Q4 2009 and Q1 2009, Table 3 below shows that the combined G6 (total) stock price in Q1 2010 underperformed the NASDAQ Composite sequentially (1.38% vs. 5.68%). But the combined G6 (total) stock price in Q1 2010 outperformed NASDAQ by plenty year-over-year (107% vs 57%). (All of the G6 firms are listed on the NASDAQ).

Relative to Q1 last year, the ARM, MOSYS, RAMBUS and VIRAGE LOGIC stock prices in Q1 this year each enjoyed over triple-digit percentage rises, with ARM leading the percentage parade at +146%. On the other hand, CEVA's 60% YOY rise barely nosed out the NASDAQ's rise of 57%, while MIPS at 52% was just a tad behind the YOY NASDAQ percentage rise.

Sequentially (Q1 10 vs. Q4 09), only the stock prices of ARM at +24% and VIRAGE LOGIC at +43% did better than the NASDAQ's miserly 5.7% rise, with CEVA and RAMBUS actually enduring negative stock price performances as of March 31, 2010 compared to December 31, 2009.




Recent Market Caps:

Table 4: A look at the closing Market Caps of five of the G6 Electronics IP Vendors on May 5, 2010, compared to February 5, 2010.

In just two months, the G5 picked up $676,380,000 in Market Capitalization, or 23.5%, while the overall NASDAQ Composite index gained 12.2% during the same two months.




Footnotes:

[1] While the first draft of the current May 24, 2010 article of EDA WEEKLY (which appears above in final form) was begun on April 18, 2010, the deadline for its final submittal was mid-May 2010. As with most writers who have multiple deadlines for new articles on a regular basis, one works on several articles simultaneously, each one at a different stage of completion. And so it was on Thursday May 6 that this writer was working on the subsequent EDA WEEKLY article with a mid-June 2010 deadline, discussing by phone with personnel from the Company to be featured, the earnings call of that very morning held to present publically that Company's excellent Q1 2010 financial results for the first time. We were discussing the likely impact on the Company's subsequent stock price behavior that the very positive earnings report revealed. It was at that moment that word was received from outside that the US stock markets based in Manhattan were behaving erratically and The Dow had just endured a precipitous and inexplicable 1000 point drop, Then, just as abruptly, the Dow had turned around, and by the end of trading and the end of our phone call, the markets had closed for the day. The Dow Jones ended trading at 4:00 PM EDT on May 6, 2010 at 10,520, down 347.80 points or 3.2 % for the day.

This is what the chart of the Dow Jones index looked like for May 6:



For the day May 6, the Standard & Poor's 500-stock index dropped 37.75 points, or 3.24%, to close at 1,128.15, and the NASDAQ was down 82.65 points, or 3.44%, at 2,319.64.

This entire Footnote [1] was written in the late afternoon PDT of May 6. The most worrisome issue at this moment, is that no one knows what caused today's sudden sell-off. There were rumors it could have been set off by an ordinary trader at a large firm who mistakenly entered “billions” instead of “millions” on a transaction in futures linked to stock indexes. (This particular “fat finger” speculation was considered unlikely).

It is also known that these days, securities trading is dominated by computer programs that, via pre-stored algorithms, automatically buy and sell large baskets of stocks when certain price levels are hit. Much of this trading takes place between large institutions, away from the main markets. It is conceivable that a large mistake (or deliberate hacker interference) could have been inserted, which then had a cascading effect as the algorithms kicked in. Once the latter type of selling would commence, the human element of the markets would quickly evaporate and computerized trading programs may have wantonly sold stocks at whatever price was available, creating a feeding frenzy. Naturally, the people in charge of the Congress, White House and Treasury 2001 - 2008 would not want any regulations, even regulations that might prevent such run-away trading to be programmed in. While in the minority now, these same individuals and political parties still oppose regulation. Also, why did the frenzy suddenly stop when the Dow hit 10,000 and quickly reverse the plunge?

While this automated feeding frenzy explanation is said today to be more credible (than the “fat finger explanation”), the analysis of the whole glitch episode has not yet been done, and it may take weeks or longer to unravel.

Still others blame the general sell off all this past week on worries over the weaknesses of European country economies, such as in Greece. It's hard to imagine that the specific rapid downward spike and quick partial recovery of May 6 had its roots in the European situation, however.

Most people are worried as evening descends on May 6, about what trading tomorrow, Friday May 7, might bring.

[2] Alas, Friday dawned with continued anxiety and no official explanation of the cause of Thursday's sudden glitch. Stock market traders, analysts, officials, and most private citizens were on edge all day Friday. Early Saturday May 8, the New York Times put it this way, “Through the day (Friday) and into the evening, officials from the Securities and Exchange Commission and other federal agencies hunted for clues amid a tangle of electronic trading records from the nation's increasingly high-tech exchanges. But, maddeningly, the cause or causes of the market's wild swing remained elusive, leaving what amounts to a $1 trillion question mark hanging over the world's largest, and most celebrated, stock market. The initial focus of the investigations appeared to center on the way a growing number of high-speed trading networks interact with one another and with venerable exchanges like the New York Stock Exchange. Most investors are unaware that these competing systems have fractured the traditional marketplace and have displaced exchanges like the Big Board as the dominant force in stock trading.”

Various spokespersons and investigators seemed to adopt this perspective: “Over the last five years, the US stock market has split into a plethora of new competing hubs and trading outlets, a legacy of deregulation earlier this decade and fast-paced technological change. On Friday May 7, the rivalry between the two main exchanges erupted into view as each publicly pointed the finger at the other for being a main cause of the collapse on Thursday May 6, which sent shockwaves around the globe.”

Friday May 7 actually turned out to be a little calmer and, next to Thursday May 6, Friday ended in a relatively modest decline. But investors were edgy all day Friday, and the stock market continued to be buffeted by bouts of volatility. The unease was reflected in the VIX - a volatility measure sometimes referred to as the “fear index.” On Friday the VIX reached its highest level since March 2009, when the stock market reached its low point. The Dow sank briefly after Friday's opening bell, but within minutes began to rally and for a moment pulled into the black before tumbling anew. It slipped into positive territory twice more before lunch time, and then ground lower through the afternoon. On Friday alone, the Dow Jones industrial average fell 139.89 points, or 1.33%, to 10,380.43, while the Standard & Poor's 500-stock index declined 17.27 points, or 1.53%, to 1,110.88. The NASDAQ composite dropped 54 points, or 2.33%, to 2,265.64:



Friday May 7, 2010 was the culmination of a full week in which the Dow lost about 5.7%, the S. & P. 500 fell 6.4%, and for the week the NASDAQ lost 7.5%, as shown here:



In such an atmosphere, the outstanding US jobs data report on May 7, that would have normally moved markets, were brushed aside, even though the 290,000 jobs added to the economy in April 2010 exceeded all expectations.

With specific reference to the Company that will be featured in the June EDA WEEKLY article by this writer, the graph below shows how the Company's stock price initially reacted very favorably to its Q1 earnings numbers announced early Thursday morning May 6, only to be overcome and dragged down by the market gyrations we have discussed in the foregoing (Company line in blue, NASDAQ in green):



[3] While both the NASDAQ and the subject Company's stock price also fell on Friday May 7, the following Monday May 10 was a different story. Stocks across all exchanges rocketed to their biggest gains in a year! The Dow Jones industrial average rose about 405 points to its largest advance since March 2009. Broader US indexes outpaced the Dow's 3.9% rise. Gains in several European markets topped 9%.

What had changed over the weekend? The answer: The European Union and the International Monetary Fund had agreed to create a nearly $1 trillion rescue fund to support European nations burdened by heavy debt. The size of Europe's response was far greater than most analysts had expected, and signaled that policymakers were ready to take significant measures to shore up the euro and keep Europe's debt woes from spreading.

Like other stock indexes, the NASDAQ opened the day on May 10 (100.33 points) higher (2365.97) than it closed Friday May 7 (2265.64). As the May 10 NASDAQ chart below shows, the index was then stable all day, and closed at 2374.67, up 109.03 points, or +4.81% above its Friday May 7 close:



The subject Company behaved similarly. It opened the day on May 10 (0.86 points) higher (43.72) than it closed Friday May 7 (42.86). As the Monday May 10 chart below shows, the Company stock price was stable all day with a slightly positive slope, and closed at 44.98, up 2.12 points from its Friday close, or +4.95% (a tad higher percentage uptick than the entire NASDAQ index closed):



Caveats voiced:

Like the giant financial bailout announced by the United States in 2008, the sweeping rescue package announced by Europe over the weekend eased fears of a market collapse on May 10, but left a lingering question: will it work long term?

Stung by criticism that it was slow and weak, the European Union surpassed expectations in arranging a nearly $1 trillion financial commitment for its ailing members over the weekend May 9 and 10 and paved the way for the European Central Bank to begin purchases of European debt on May 10. Markets rallied around the world in response to the concerted defense of the euro, a package that exceeded in size the United States bank bailout two years ago.

Major stock indexes in the United States rose about 4% on May 10, while a leading index of blue-chip stocks in the euro zone rose more than 10%. The premium that investors had been demanding to buy Greek bonds plunged. But that May 10 rally appeared to have begun sputtering out by days end. As details crystallized of the bail out package's main component - a promise by the European Union's member states to back 440 billion euros, or $560 billion, in new loans to bail out European economies - the wisdom of trying to solve a debt crisis by taking on more debt was challenged by some analysts.

Indeed, despite the rise in the stock markets on May 10, not everyone was convinced that all was cured. Only hours after European leaders devised a sweeping rescue package to defuse the debt crisis that has threatened the euro, many money managers remained confident that Europe's beleaguered currency would keep falling. Despite the nearly $1 trillion aid package assembled by the European Union, “euro doubters” on both sides of the Atlantic were preparing to make new wagers against the currency. Even as the euro briefly rallied and the stock markets soared on May 10, these investors predicted that Europe's financial markets would soon come under renewed pressure. The rescue plan, they said, does not fix Europe's deeper problems. Their skepticism was reflected in the currency markets, where, after an initial surge, the euro quickly fell back. After rising against the dollar from just under $1.28 to nearly $1.31 in the early hours after the package was announced, the currency slipped back to close not far from where it started.

The three Footnotes above will be the extent to which comments will be made by the writer between May 10 and when the EDA WEEKLY article on the subject Company is posted on June 21, 2010. In the interim, readers should follow stock market events for themselves, and of course, make sure to read the EDA WEEKLY article published May 24 above, entitled, “The Economy, Semiconductors, EDA, & Intellectual Property.”

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Acknowledgments:

The writer would like to acknowledge the sources of data and information for this issue of EDA WEEKLY: Wikipedia; Hoover's; Yahoo! Finance; Google Finance; The SIA; and The EDA Consortium. Ongoing support by the team at IBSystems, Inc., including but not limited to Sanjay Gangal, Adam Heller, David Heller, Jon Heller, Nitai Fraenkel, and Sumit Singhal, is also appreciated.

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About the Writer of this EDA Weekly:

Since 1996, Dr. Russ Henke has been president of HENKE ASSOCIATES, a San Francisco Bay Area high-tech business & management consulting firm. The number of client companies for HENKE ASSOCIATES now numbers more than forty. During his corporate career, Henke operated sequentially on "both sides" of MCAE-MCAD and EDA, as a software user and as a CAD vendor. He's a veteran corporate executive from Cincinnati Milacron, SDRC, Schlumberger Applicon, Gould Electronics, Automation Technology Products (ATP), and Mentor Graphics Corporation.


Henke is a Fellow of the Society of Manufacturing Engineers (SME) and served on the SME International Board of Directors. Henke was also a board member of SDRC, PDA, ATP, and the MacNeal Schwendler Corporation. He currently serves on the board of Stottler Henke Associates, Inc. Dr. Henke is also a member of the IEEE and a Life Fellow of ASME International.

In April 2006, Dr. Henke received the 2006 Lifetime Achievement Award from the CAD Society, presented by CAD Society president Jeff Rowe at COFES2006 in Scottsdale, AZ. In February 2007, Henke became affiliated with Cyon Research's select group of experts on business and technology issues as a Senior Analyst. This Cyon Research connection aids and supplements Henke's ongoing, independent consulting practice (HENKE ASSOCIATES).

To obtain details of the brand new "2010 Business Planning Tool Kit Promotion" from HENKE ASSOCIATES, please click on the URL below and scroll to the last entry on that page:


http://www.henkeassociates.net

Since May 2003 HENKE ASSOCIATES has published a total of eighty-eight (88) independent quarterly Commentaries on MCAD, PLM, EDA and Electronics IP on IBSystems' MCADCafé and EDACafé. Access to the latest of these Commentaries, along with all the EDA Weekly articles posted to date by the writer, may be gained by clicking on this URL:

http://henkeassociates.net/articles.html

Further information on HENKE ASSOCIATES, is available at http://www.henkeassociates.net. March 31, 2010 marked the 14th Anniversary of the founding of HENKE ASSOCIATES.



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-- Russ Henke, EDACafe.com Contributing Editor.


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