The weakest link of China's chips: How to break the IP dilemma?

After the ZTE incident, the domestic semiconductor industry has set off a wave of reflection. Whether it is industry witnesses, senior experts or even emotional bloggers, they have all made eloquent comments on the current situation of "China's chip shortage". Gu Wu said that the article was right or wrong. This situation of "everyone talking about chips" made many people in the industry shout that the era of China's semiconductors is finally coming.

However, according to the observation of the semiconductor industry (ID: ICBANK), the hot topics discussed by everyone are basically centered around chips, equipment, manufacturing, packaging and testing, etc., but not much attention is paid to the IP industry, which is very important in the upstream of chips. But in fact, this aspect is the part that needs the most attention in China. Because without IP, there is basically no chip. But the accumulation in this aspect in China is very weak.

The so-called IP (Intellectual Property) refers to those reusable design modules with independent intellectual property rights in semiconductor integrated circuit design. With the advancement of chip integration technology and changes in market demand characteristics, the importance of IP in integrated circuit design has become increasingly prominent, and more and more integrated circuit designs are carried out based on semiconductor design IP.

According to IPnest's definition, the world's design IP can be divided into 11 categories, among which processor IP has a market share of 42.3%, far ahead of the second-ranked wired interface IP. These IPs are the key to modern chips.

Design IP categories

From the perspective of product characteristics, the main application products of design IP are divided into three categories: processor IP ((CPU + DSP + GPU & ISP) all belong to processor IP), wired interface IP, physical IP (Physical IP) and other digital IP. Processor IP is mainly used for microprocessors; wired interface IP, as the name suggests, is IP similar to SATA/Ethernet; physical IP is mainly used for analog and mixed signals, physical interfaces, storage units and other digital IPs. According to data from IP-Nest, processor IP is the world's largest IP group, with a market share of 56.4%. Although it has decreased from last year's 58.3%, it does not affect its dominant position; followed by wired interface IP, with a market share of 20.5% and a total value of US$725 million, a 20% increase from last year; as for physical IP, the market share is also 16.3%.

Market share of different types of IP

In the past few years, thanks to the development of the IC industry, the sales of design IPs have also risen. According to data from IP Nest, the global IP industry contributed $3.596 billion in revenue in 2017, up 12.4% from 2016. In comparison, the IP sales 10 years ago were about $1.9 billion. Although this figure is a bit shabby compared to the total chip sales of $400 billion, most of the current chips cannot run without these IPs.

For example, Arm, which we are familiar with, is an IP supplier. The Coterx series and Mali series IPs they provide are the key components of MCU and mobile processors. They can be regarded as the skeleton of chip operation. It can be said that without these IP suppliers, there would be no current chip industry.

Like many semiconductor industries, design IP is also a highly monopolized market. According to data from IP nest, Arm has been the world's largest design IP supplier for many years, and IP supply is gradually converging towards the top ten. Gartner data shows that in 2007, the total market share of the top ten IP suppliers in the world was only 70%, and Arm's share was only 33%.

Top 10 Design IP Suppliers in the World in 2007

But by 2017, Arm's market share had reached 46.2%, and the second-ranked Synopsy had a share of 14.7%. In addition, many previously existing companies have gradually fallen off the list (either acquired or simply disappeared). The top ten global IP suppliers account for as much as 84.6% of the market share, and the market is highly monopolized.

2017 Global Design IP Supplier Ranking

Among these manufacturers, Arm is a supplier of CPU, GPU, VPU and DPU products, especially its CPU and GPU, which have a strong influence in the mobile and embedded markets; Synopsy, ranked second, is an EDA manufacturer and a major supplier of wired interface IP. According to IPnest data, their market share is as high as 45%, and they also have a 35% share in physical IP.

Broadcom, ranked third, also acquired a lot of IP through the mergers and acquisitions of LSI and Avago, and surpassed Imagination in this year's ranking to become the world's third largest IP supplier; Imagination, needless to say, established a huge influence in GPU and CPU product lines after acquiring MIPS a few years ago. But last year, they chose to split the GPU and CPU businesses, and this split is bound to affect the design IP supplier landscape next year.

Cadence and Synopsy, ranked fifth on the list, are also EDA suppliers. In terms of products, in addition to DSP IP Tensilica, they also provide analog physical IP, interface IP, and verification IP. Ceva is a professional DSP supplier. In addition, there are a series of products such as 5G NR IP and NB-IoT IP, and now even AI processor IP NeuPro is provided, further enhancing their market influence.

Verisilicon provides IPs such as video, communication and digital processing. After acquiring Vivante, it also provides GPU IP options. With their design service model, they can gain more advantages in the current chip era. Rambus, which is hated by many companies, ranks eighth. They are a professional DRAM IP design manufacturer, and their DRAM design has its unique advantages.

The ninth-ranked eMemory is the world's largest logic process non-volatile memory silicon IP manufacturer. The first-ranked Kilopass is a major provider of anti-fuse OTP NVM IP in the automotive, mobile, industrial, and IoT fields. It was acquired by Synopsy in January this year, which is another story.

It can be seen from this that the top ten manufacturers have dug a very deep IP supply moat that is difficult for ordinary companies to cross.

According to the Semiconductor Industry Observer (ID: ICBANK), the industrial influence of domestic IP is very small. People familiar with the matter told the Semiconductor Industry Observer (ID: ICBANK) reporter that there are now domestic manufacturers such as HuaDa JiuTian, ​​ChengKeWei, IP Goal and Actt. HuaDa JiuTian provides high-speed interfaces; ChengKeWei is a Serdes IP supplier; IP Goal provides mixed analog and digital IP including USB1.1/2.0/3.0/codec/and other IO; ACTT's products include low-power IP in Serdes, IoT, fingerprint and sensors.

It can be seen that in terms of traditional IP, these local manufacturers can basically only provide some interface IPs, and other IPs such as CPU and GPU are almost zero. After domestic capital acquired Imagination earlier, domestic capital has made up for the GPU IP to some extent.

But if the east is dark, the west will be bright. In the past two years, domestic manufacturers have opened up a place in the hot field of artificial intelligence. Domestic manufacturers represented by Cambrian have a good influence in NPU IP; Horizon's BPU IP has also made a name for itself. But overall, the domestic IP industry is still weak in foundation, especially in CPU, which should be broken through. According to the observation of Semiconductor Industry Observer (ID: ICBANK), RISC-V, which has been welcomed by developers at home and abroad recently, will be an opportunity for Chinese manufacturers.

Xin Weihua, director of the Institute of Microelectronics of the Chinese Academy of Sciences, said at the Tech Shanghai IC Design Forum held in March this year that open source IP brings challenges as well as opportunities to IP suppliers. Taking RISC-V as an example, more and more emerging companies and chip companies are joining the design and implementation of RISC-V, which will inevitably bring challenges to MCU IP companies that have a monopoly in the market. However, a mature IP must first be fully verified to avoid bringing huge risks to chip manufacturers; at the same time, it must have a relatively complete ecosystem to reduce the difficulty and additional costs of later development of chips and systems.

IPnest also pointed out in the report that RISC-V is posing a threat to Arm's products. As for the specific impact results, we will see some of them this year. For Chinese chip manufacturers who are highly dependent on Arm, this is really an opportunity to develop their own CPU IP. But as mentioned earlier, there are many challenges to face.

IPnest provides a very comprehensive analysis based on various protocols, including active IP vendors in this market segment, rankings of IP vendors and competitiveness analysis.

The survey found that an IP supplier can always find a niche market, and it does not have to be a leader in the market to develop its business well. This is good news for domestic IP practitioners. IPnest also analyzed the trends of various market segments to predict which new applications will adopt a specific protocol in the future, which will be a reference for IP suppliers to find future opportunities. In their view, there will be great opportunities in the automotive sector.

Ravi Thummarukudy, CEO of Mobiveil, a semiconductor IP platform and design service provider, also has his own views on how to develop IP. He said that it costs money to provide IP to the market, and this cost is the recurring expenditure to provide support for the IP once the customer obtains the license and starts to integrate it into the SoC. The challenges of putting RTL design into SoC are several times more complicated than putting packaged IC into circuit board design. Therefore, if IP suppliers cannot provide comprehensive support and design services, it will be difficult to expand the scale of their licensing business.

In addition, a typical SoC design also includes several IP functional blocks, which may be licensed from multiple suppliers. It is a big challenge to integrate and verify these functional blocks. This means that a subsystem IP platform that integrates several IP functional blocks becomes a must, which can greatly simplify SoC integration.

Hopefully, the above analysis and opinions will provide some inspiration for the development of domestic IP manufacturers.

By Li Shoupeng, Semiconductor Industry Observer

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