Semi IP Growth & Commoditization

The market for semiconductor intellectual property (IP) is set to grow to more than $2.04 billion in 2009 from $1.2 billion in 2004, according to market research company iSuppli Corp. Royalties are becoming the largest source of revenue in the IP market, and offering a steady CAGR of 10%+.

Where is this growth likely to be coming from, though?

One hypothesis from Gartner attributes the growth to Analog and mixed-signal circuit blocks becoming licensable.

I don’t think this is going to be the main source of growth. The growth, in my opinion, will come from lots of erstwhile commodity, low-tech and non-tech products upgrading into a high-tech status. Example: Toys. These nouveau techs are still fairly unsophisticated and don’t exactly need rocket speed processors or humongous memory cores, neither do they need DSPs. Nonetheless, they drive volumes, and the royalties will continue to add up, quite likely, for the old generation products from MIPS and Virage.

Welcome to the age of electronics commoditization!