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IP Components Are EDA Tools

Gabe Moretti, Senior Editor

It has been just about 25 years since the first IP product was licensed and yet there are still questions about the true nature of the IP industry.  A few years ago EDAC started providing figures for IP revenue, and that created a debate that to some extent continues today.  Is an IP company an EDA company?  Some say yes and some strongly object and prefer to define an IP company as a fabless semiconductor company.  Is there a correct definition of the industry that creates IP?  And which IP are we talking about?  EDAC is looking only at hardware IP, but of course there are many software IP products available.  What is IP?  The name itself is not very specific.  IP stands for Intellectual Property, but that covers anything that can be copyrighted, patented, or otherwise claimed to be property that cannot be freely copied, sold, or used without express permission from its creator.  It was not the intention of the creator of the term to cover all those items, but then marketing is a difficult if imprecise, job.

So to make things easier, let’s discuss only about the IP components representing hardware that are used by hardware designers in the design and development of hardware.  Are the producers and vendors of such products EDA companies?  To be sure some EDA companies develop and sell IP.  Cadence, Mentor, and Synopsys call themselves EDA companies and all generate revenue from licensing IP products.  ARM, the leading IP company, sells development software for its products that is just as sophisticated as tools sold by EDA companies, so is ARM an EDA company?

I would like to look at IP in a different light, a point of view I share with Lucio Lanza.  IP components are used by designers in the design and development of electronic products.  The EDA industry’s purpose is to develop and market tools used by designers to design and develop electronic products.  Ergo, IP is an EDA tool.  In fact engineers do not just integrate IP components in their designs.  They use IP in making tradeoff judgments regarding architecture, performance, development cost, and ultimately price of the product they are working on.  IP is indeed an EDA tool, so EDAC is correct in counting the revenue as an EDA industry revenue.

There is also a practical aspect to the argument.  One cannot separate IP revenue from the overall revenues of Cadence, Mentor, or Synopsys, just to take the big three into consideration, without those companies deciding to account for IP revenues as a separate profit center.  And why should they if IP is the same as EDA tools?

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