Future looks bright for China's IP market
Dedicated to rapid SoC prototyping, third-party silicon IP, SoC design, prototype and production services, S2C Inc. partnered with IP vendors CAST, eASIC, IPextreme, Tensilica and TranSwitch for a one-day SoCIP2008 Seminar and Exhibition in Shanghai and Beijing last October. EE Times-China took this chance to speak with Mon-Ren Chene, S2C chairman and chief technology officer, about his views on China's and the world's semiconductor IP markets.
How do you view the current situation of China's semiconductor IP market? What about its future? Personally, I am very optimistic about the future of China's IP market. Judging from the current situation, the IC design companies in China have realized that developing IP is a time-consuming task and have come to accept the concept of purchasing IP.
Many companies hope to develop IP by themselves so they can earn more revenue. If not, they can at least save some cost. However, things don't turn out the way they want. The reason is that besides pre-development, the post-support, verification, bug fix etc. are also involved, using up a lot of time. Obviously, it should be emphasized that the premise of purchasing IP is that the mature and proven IP should exist in the market. If not, it is another matter.
Here is a very good example that can illustrate the development of the IP market in China. Several years ago, the percentage of our IP business turnover is almost zero, while it now makes up 20 percent of our total business. Furthermore, this trend is continuing. In China, many IC design companies exist, but most of them are small firms. It is obvious that they are not able to do everything on their own, unlike large companies. So to obtain market share, they must speed up the release of their products. Therefore, only by purchasing IP to integrate designs can they promote the prosperity of the IP market.
As to the relatively new semiconductor IP industry in China, I am also optimistic. Although IP agency platforms were set up in Beijing and Shanghai, they don't really bring the companies much profit. Nevertheless, we recently noticed that some local IP technical companies producing high-quality products have hardly made any progress in business. The reason is that they lack good channels of marketing and promotion. With this, a neutral role connecting the whole industry is needed, and S2C is dedicated to fulfill this role.
On the whole, there is much room for China's IP industry to develop. Now, our advantage lies in that we are capable of developing the products that satisfy needs. Once we settle down in the competitive and fierce China market, we will be able to sell these products back to the European and American markets in the future to obtain more space for development.
What are the objectives of the SoCIP2008 Seminar and Exhibition, which S2C organized along with some IP suppliers? The main purpose is to provide an excellent face-to-face communication opportunity for clients and vendors. Most of the products developed by IC companies in China, especially the clients of S2C, belong to ASSP. In the course of R&D, these companies are in need of plenty of mature IP.
To let them get a better idea of these products, we held this seminar where IPs were displayed, and where clients and vendors get a chance to communicate face to face, thus promoting better understanding. This way, the vendors can know what their clients are concerned about. What is more important is that the clients get to know the products better and when they really need these products, they will know with whom they should communicate. In addition, unlike other grand IC exhibitions, our audience was classified more carefully—all are involved in the IP industry, making communication more efficient and smooth.
Today, IC design companies are facing a lot of pressure. Will this situation affect the business of IP suppliers? That is true. But I think it is a good opportunity for IP suppliers. Although many companies want to reduce costs, IC design companies can't stop their work. For once business rises again, you are likely to lose this opportunity. Therefore, a more feasible alternative is to keep your core design staff and make up for the HR losses due to staff reduction by purchasing IP.
It is really true that under the pressure of the current economy, many companies have reduced the expectation of the performance of the next quarter. But they had to use current IP market to avoid these issues. If an engineer is hired, he may do whatever he is told to, even something insignificant. Meanwhile, if IP is purchased, it will be used with a specific purpose.
Besides, it is a matter of regions. This sub-prime mortgage loan crisis mainly has stricken American consumption, but it has hardly affected China. Therefore, now it is a good opportunity to develop the IP industry in China. Accordingly, that's why the overseas IP companies took active part in this seminar.
You mentioned in your talk that the cost could be reduced through IP. But IP is not very cheap. Everyone thinks IP is very expensive. But please don't forget what it can do for us. I have mentioned that developing IP also involves a lot of painstaking work such as testing, filing, debugging etc. in addition to writing some programs. Who can do that? Maybe you can spend only six months writing the programs. Moreover, if it goes smooth, the programs can be applied soon. But if it doesn't, it might take you another six months to conduct another work. You do save some money by doing this in one year, but you actually have missed the marketing opportunity. On the contrary, purchasing IP will make things totally different. These IPs are already verified and also being applied in others' production. Thus, even if you feel that the price is too high, the total cost has, in fact, decreased a lot.
In addition, there are many different ways of purchasing IP. RTL is relatively expensive, while Netlist is cheaper. The flexibility of S2C lies in that we can offer different terms of IP to satisfy the needs of all kinds of clients.
What do you think are the opportunities that the IP market faces this year and will face next year? [There is opportunity in] HDMI, as more and more families are purchasing flat-panel TV, hoping to watch directly on the large screen from digicams and video cameras. Hence, many companies have been rushing into this market. What's more, some processors—such as the audio-video processor of Tensilica and the simplest 8051—are still being widely applied to all kinds of products. Many multicore products are also adopting 8051. Thus, I think it will be very popular in a short time.
But in the aspect of HDMI, the competition between HDMI and DisplayPort is always there. Furthermore, whichever wins, the flat-panel TV is still very valuable. Hence, consumers are unlikely to change their TV. Accordingly, there should be a market for the chip supporting two standard interfaces. TranSwitch has taken the initiative and released such an IP. I am convinced that it will have a great and bright prospect, and also create a good opportunity for the IC design companies in China.
- EE Times China