Global Semiconductor Intellectual Property Market to Witness Growth due to Increasing Demand for IoT and Automotive Applications
The Global Semiconductor Intellectual Property Market is estimated to be valued at US$ 7.3 Bn in 2024 and exhibit a CAGR of 10.3% over the forecast period 2024-2031. The market is witnessing high growth owing to the increasing adoption of IoT and automation across industries as well as growing demand for connected devices. Furthermore, the rising focus on technological advancements and ongoing product innovation in the semiconductor industry are fueling the growth of the market.
Market Dynamics:
The growth of the global semiconductor intellectual property market is driven by growing demand for connected devices and IoT applications. The rising adoption of IoT across industries is increasing the need for semiconductors and intellectual property (IP) cores in various IoT applications and devices. IP cores help reduce cost, power consumption and risk of IoT devices and accelerate the design process.
Another key driver is the increasing automotive electronics content in modern vehicles. The growing electrification of vehicles and rising demand for advanced driver assistance systems (ADAS) and infotainment systems have increased the semiconductor content in automobiles. Semiconductor IPs play a vital role in speeding up the design of automotive electronic control units and chips with improved functional safety features. They help lower development cost and time for automotive semiconductor designs.
Advancement in Technology is driving the Global Semiconductor Intellectual Property Market
Rapid advancements in semiconductor technology have increased the complexity of chip designs significantly. Developing cutting-edge technology requires huge investments in research and development. Semiconductor companies are increasingly outsourcing non-core functionalities like chip design to third-party IP vendors to reduce costs and development timelines. Advanced technologies like 5G, artificial intelligence, Internet of Things, and autonomous vehicles are pushing the boundaries of semiconductor design and driving demand for specialized IP cores. As technology nodes shrink to 5nm and below, chip designs become more complex requiring sophisticated semiconductor intellectual property. This makes technology advancement a key driver of growth for the global semiconductor IP market.
Increasing Outsourcing of Chip Design is fueling Semiconductor IP Adoption
Chip design and development consume massive resources and it requires specialized Electronic Design Automation (EDA) tools, design expertise, fabrication facilities and years of experience to build leading-edge chip designs internally. Given such high entry barriers, most fabless semiconductor companies outsource non-core aspects like IP development to third-party IP vendors. The rising trend of outsourcing chip design is a major demand driver for the semiconductor IP market. According to reports, over 80% of a modern system-on-chip design comprises of third-party IP blocks. Outsourcing chip design allows semiconductor companies to focus on their core competencies and accelerate time-to-market while reducing costs substantially. This is propelling the adoption of semiconductor IPs globally.
High Cost of In-House Chip Design is Restraining Market Growth
While outsourcing IP development offers significant advantages, building chip design capabilities internally allows semiconductor companies to customize IP as per their exact requirements and own the underlying technology completely. However, setting up an in-house chip design team requires massive upfront investment in EDA licenses, design tools, hiring expert talent and silicon fabrication infrastructure - costs running into billions of dollars. Such high fixed costs of in-house design pose a challenge for small and medium chip companies. This cost factor is somewhat restraining the semiconductor IP market growth, as some companies still rely on internal resources for key IP blocks.
IP Licensing Models Demand Hefty Royalties
Semiconductor IP vendors need to recover their huge R&D expenditures and make reasonable profits. Thus, they typically license IPs using perpetual or subscription-based models that demand ongoing royalty payments even after the initial fixed fee. These hefty and recurring royalty terms make IP licensing expensive for semiconductor companies, especially for low-volume niche markets. High IP licensing costs can adversely impact chip margin and competitiveness. Complex multi-party IP licensing arrangements also involve legal complications and high transaction costs. Such factors associated with IP monetization models are restraining broader adoption of third-party IPs to some extent.
5G Rollout Opening New Avenues for Specialized IPs
Massive 5G infrastructure build-out across the globe is unleashing opportunities for specialized semiconductor IPs catering to 5G applications. Areas like mmWave technology, advanced routing IPs, high-speed serial I/Os, high-performance computing, adaptive antenna technology, network function virtualization require niche IP expertise. This massive 5G rollout globally is spurring demand for innovative radio frequency, analog, and digital IP blocks optimized for 5G smartphones, base stations, routers and other IoT devices. 5Gadoption will open up a new market landscape that leverages specialized semiconductor IPs in areas like 5G New Radio, network slicing, AI/ML edge processing etc.
Focus on AI/ML Driving Opportunities for Computing IPs
Artificial intelligence and machine learning have immense possibilities across every industry vertical. However, realizing the full potential of AI requires specialized computing architectures and semiconductor IPs. Most current CPUs and GPUs cannot meet AI's stringent low-power, real-time processing needs. This has opened up opportunities for novel computing IPs optimized for AI workloads like neuromorphic chips, in-memory and near-memory computing, large matrix processing, and diverse accelerator architectures. It is spurring IP innovation in domains like AI training, edge inference, computer vision, natural language processing etc. The explosion of AI startups and big tech's focus on AI creates sustained demand for specialized semiconductor IPs for AI/ML applications across edge-cloud continuum.
Key Developments
- In March 2023, eMemory Technology Inc. (Taiwan) and United Microelectronics Corporation (Taiwan), one of the leading global semiconductor foundries, announced that the Resistive Random Access Memory (RRAM) Ips offered by eMemory Technology Inc. has been qualified MC’s 22nm ultra-low-power process, adding to UMC’s comprehensive embedded memory offering for IoT and mobile applications. The two companies are also jointly developing new RRAM solutions for the automotive sector.
- In May 2023 ABB is an industrial automation and robotics company that recently unveiled an exclusive announcement of its latest collaborative robot, referred to as the ABB SafeMove2, meant to significantly increase the efficiency of industrial operations while ensuring safety. For instance, this robot detects and prevents collision with a guarantee of safety to the human population either when near them or working close proximity with the robots.
Key Players
Arm Holdings, Synopsys, Inc., Cadence Design Systems, Inc., Imagination Technologies Limited, Lattice Semiconductor Corporation, CEVA, Inc., Rambus Incorporated, Silvaco Inc., Intel Corporation, eMemory Technology Inc., Dream Chip Technologies GmbH (Goodix Technology Co. Ltd.), VeriSilicon Microelectronics (Shanghai) Co., Ltd.
