SANTA CLARA, Calif. A rousing defense of the "free library" business model was presented by Jim Ballingall, vice president of worldwide marketing at the UMC Group (Sunnyvale, Calif.), in a keynote address at the IP99 Conference. Ballingall said the business model, under which foundries pay royalties to third-party library vendors, is beneficial for library providers, foundries and end users.
"Frankly, I think it's the best deal going in the semiconductor industry we've ever seen," Ballingall said. He also asserted that third-party library vendors who have experienced some turmoil over their business models of late will be able to garner royalties totaling some $225 million by 2002.
Ballingall contrasted three available library models. In the "free" model, the foundry pays royalties, and possibly non-recurring engineering (NRE) charges, to the library vendor, while t he customer gets the library at no charge. Ballingall credited Artisan Components Inc. (Sunnyvale, Calif.), with which UMC works closely, as the pioneer of this model.
Other approaches, he said, include a "royalty-lite" model in which a customer buys a library at a discount, and a "merchant" model in which a customer pays an up-front fee for the library.
The free library approach is good for foundries, he said, because volume usage will improve libraries, and because it makes it easier for the foundry to do business with startups. It's good for library vendors, he said, because it allows them to "mainstream" their products quickly and gain market share.
One complication, he acknowledged, is cash flow for library vendors, given that royalty income might not develop for one to two years after the original engagement. He noted that UMC pays Artisan NRE to support customers directly, providing some short-term cash flow.
But another issue that has yet to be resolved is royalty tracking, which is n ow done manually. Ballingall noted that the Virtual Socket Interface (VSI) alliance is spearheading a project for intellectual property (IP) identification and tracking, and that Artisan has a tool called Artiscan that it will submit to VSI for consideration as a potential standard. Artiscan can read and write "watermarks" in GDSII files.
Will free mega-cells be next? Pointing to Synopsys Inc.'s move to add a PCI core to its DesignWare library, Ballingall said that "IP depreciation" will continue. "Star IP is not immune to the 'free' epidemic," he said, referring to cores that command per-use fees. "The Sun PicoJava core was announced as free. I would look for others to break rank with some variation of the Sun model."