Moonray, LSI needs (and maybe with some partners?) to try to intercept this one. Or, maybe it's hot air like Wilf implies. No time left for me (line from old rock song) to analyze this, got to go. Actually, it's not in my tier one (if I have one) knowledge bank, anyway. Someone else? From the AMAT thread:
Consortium to Create Exchange
For Buying, Selling Chip Designs
By DEAN TAKAHASHI
Staff Reporter of THE WALL STREET JOURNAL
A consortium organized by a Scottish economic development
group plans to announce
Monday that it will create an exchange for buying and selling
semiconductor-chip designs.
Nine companies covering the spectrum of electronics are forming
the Virtual Components
Exchange, which will match companies that want to license
designs with companies that need
to buy components.
The exchange is the first step toward reaching the futuristic hope
that chips might one day be
assembled like Lego blocks, with parts plucked one by one from
an online catalogue, then
plugged into highly integrated chips building-block style.
'Most Efficient Way to Trade'
"The trends tell us that in five years, you could see billions of
dollars" trading in license
transactions on such an exchange, says one of the consortium's
sponsors, Robert Leach,
senior vice president of market development at Cadence Design
Systems Inc. in San Jose,
Calif. "If there are people who have a need, and others who have a
supply, the most efficient
way to trade is to set up some kind of market."
If it succeeds in building a kind of shopping mall for chip
intellectual property, the exchange
could help usher in the era of the "system on a chip," a Holy Grail
of chip makers who want
to lower the costs and improve the functionality of today's
consumer and industrial
electronics goods by reducing all of the functions of an electronic
system onto a single chip.
The companies include systems makers Motorola Inc. and Toshiba
Corp.; Finnish
cellular-phone maker Nokia Oy; chip-design-tool makers Cadence
and Mentor Graphics Inc.;
chip licensers Advanced Risc Machines Ltd., Phoenix
Technologies Inc. and ISS Ltd.; and
chip maker Taiwan Semiconductor Manufacturing Co.
Under a plan being drawn by the economic development agency
Scottish Enterprises,
companies wishing to trade intellectual property would abide by
the same business and
technical standards. Unlike stock markets, though, the exchange
won't have quoted prices; it
will be a matchmaking service that would allow interested parties
to work out their own
contracts and prices confidentially, says Andrew Travers, interim
director of the exchange.
The consortium hopes to iron out a plan for legal and business
processes so that trading can
begin in the next 12 months, he says.
'That's Unrealistic'
If anything, the exchange is establishing an alliance in what could
become a world war in the
chip industry, where large custom-chip makers such as LSI Logic
Inc. in Milpitas, Calif.,
would try to fend off smaller chip designers whose chip "cores"
could be so interchangeable
that they could be built in any factory. "The idea that intellectual
property will be available
at retail for modest sums, and that you can spin it into a chip that
works properly -- that's
unrealistic," says Wilf Corrigan, CEO of LSI. "We know how
much effort it takes."
The opposing side is made up of manufacturers such as Taiwan
Semiconductor, which serves
as a foundry, a kind of gun-for-hire that only makes chips designed
by other companies. To
fill its factory, TSMC wants as many design companies as possible
to succeed in licensing
technology.
Skeptics view the proposed exchange as science fiction because of
significant technical
hurdles. For instance, just as it is sometimes easier to blow up an
old building rather than
rehabilitate it, lots of engineering resources are needed to make a
chip design reusable. Most
engineers design their chips so they can be built in a specific
factory in order to take
advantage of its particular manufacturing capabilities. When
someone tries to mix one design
with another and make the chip in a different factory, the likelihood
of incompatibilities
multiplies, says Robert Payne, a senior vice president at
custom-chip maker VLSI
Technology Inc. of San Jose.
For two years, a consortium of 180 companies, dubbed the Virtual
Socket Interface Alliance,
has been trying to develop standards that make it easy to reuse chip
designs. Progress has
been slow, but the group says that chips compliant with its
standards could come out as
early as a year from now.
Only a few companies have been successful at licensing designs to
other chip makers:
Advanced Risc, based in Cambridge, England, and Rambus Inc.
and MIPS Technologies Inc.,
both in Mountain View, Calif. Phoenix licenses its chip
interconnection technologies to as
many as 50 companies a quarter.
Legal Issues
Cadence's Mr. Leach says that the technical hurdles could be
small, compared with legal
issues. He believes the exchange can help solve problems such as
one faced by Sony Corp.,
which took nine months to secure rights to three small building
blocks that it wanted to use in
a new chip.
Mr. Travers estimates it takes $300,000 in legal overhead just to
license a technology, more
money than most start-ups possess. If the exchange follows the
entertainment industry and
makes licensing easier, then start-ups would stand a better chance
at surviving on royalty
income, and big companies would get designs done on time, he
says.
The driving force behind the exchange is the fact that few
companies can design everything
they need on their own. With the newest 0.18 micron manufacturing
processes, chip makers
can put 100 million transistors on a chip, or the equivalent of
several dozen Pentium
microprocessors. But the tools that engineers use to automatically
lay out designs on a chip
aren't keeping pace. Because of the complexity, even the biggest
chip makers are on buying
sprees, described by one CEO, National Semiconductor Corp.'s
Brian Halla, as the
"intellectual property scavenger hunt."
The companies are all striving to produce what they call a "system
on a chip," or one that
incorporates building blocks from numerous other chips and
integrates them into a device that
can run an entire system, such as a cellular phone, resulting in
much cheaper and more
functional devices. For instance, in 1992, a cellular phone used
seven control chips; now it
uses three, runs longer and costs less.
As more companies adopt a system-on-a-chip strategy, Dataquest
Inc. analyst Brian Lewis
estimates that semiconductors used in such chips will grow from a
$9 billion market in 1998
to a $24 billion market in 2002. "But first, people are going to
have to put politics aside and
get standards for trading in place," he says. |
