TOKYO Mitsubishi Corp., Nikkei Business Publications Inc. and Toshiba Corp. have joined forces to set up an Internet-based intellectual property trading center in an effort to ignite the core and system-chip business in Japan. The trio will announce on Monday (May 29) the formation of the IPTC Planning Corp., which hopes to open in April 2001 an IP trading center geared for Japan's designers.
The effort comes at a time when the fledgling market for intellectual property (IP) is still dominated by a handful of core providers. And some sources here said they are concerned the new effort will not focus enough on the needs of small design companies.
The goal of the IPTC is to address the specific requirements of the Japanese market.
"IPTC aims to activate IP trading in Japan," said Shojiro Mori, group manager of Toshiba's corporate development center, who will serve as president of IPTC Planning. "A regional [Japanese] center can satisfy the requirements [from regional customers]."
Capitalized with about $1.1 million and owned evenly by the three founders, the IPTC will invite supporters to join its effort to define its business plan. By October, the company will drop the word "Planning" from its name as it morphs into a full-fledged business and begins test trading.
Next April, the company will begin regular IP trading. By that time, IPTC intends to increase its investors to about 11, including the original three, Mori said. By involving a greater number of investors and supporters, the original trio hopes to make the center a public trading platform in Japan.
IPTC will provide four services: a standard trading environment; a prepurchase IP performance check; protection from patent infringement lawsuits; and an IP catalog. The group expects to trade such standard parts as bus and Ethernet interface cores and imaging and audio codecs. Most of those cores will be provided by overseas IP vendors . Sources in the United States said the IPTC could help U.S. IP users navigate the unique requirements of Japanese law.
Mitsubishi, a major trading company, will provide trading, financial and electronic-commerce know-how, while Nikkei, a leading high-tech magazine publisher in Japan, will provide expertise in information distribution. Toshiba, a major semiconductor manufacturer, will provide its understanding of system-on-chip design technology, patents and contracts.
IPTC intends to collaborate broadly with existing IP-related organizations such as the U.S.-based Virtual Socket Interface Alliance (VSIA), the Virtual Component Exchange (Livingston, Scotland) and the IP Highway Consortium (Tokyo). "IPTC won't conflict with these existing organizations," said Mori. Specifically, it aims to ensure the IP traded at the center complies with VSIA standards.
The group is also considering using the TransactionWare software of the Virtual Component Exchange. "We are c urrently in negotiations with the IPTC and they are very interested in the software we have developed," a VCX spokesman said. "We don't see IPTC as a threat. What they are trying to do is create a regional exchange, where we are creating an international IP exchange."
IP Highway, a separate coalition developing IP trading tools, will also provide technology for IPTC. Fujitsu, Matsushita, Mentor Graphics Japan, Sony and Toshiba formed IP Highway in 1998 with financial support from a Ministry of International Trade and Industry (MITI) affiliate to develop common specifications for IP to be traded over the Internet. The consortium has completed system development and is now in the midst of the verification test phase. Upon issuing a report in August, IP Highway will end its mission. "The consortium has no intention of going into IP trading," said a spokeswoman for Fujitsu.
IPTC is also looking to the Semiconductor Industry Research Institute Japan and the Semiconductor Technology Academic Research Cente r for technology development.
Just how the IPTC will meld all this input remains unclear. And whether the results will meet the needs of both large and small Japanese design companies is another challenge, according to an executive of one design house in Japan who asked to remain anonymous.
"The trade center attempt will be led by major semiconductor manufacturers, so it will be subject to satisfy their needs," said the executive. "The requirements for a trade center differ between majors and small-scale design houses." In his opinion, the trade center is "better than nothing, but it won't benefit us."
Perhaps an even greater challenge lies in whether the group can spark a still-nascent move toward trading IP cores. Dataquest Inc. values the semiconductor IP market at just $417 million last year, up 36 percent from 1998. And 51 percent of that relatively small business went to three companies: ARM, MIPS and Rambus.
Meanwhile, s ources at MITI are working on other parts of the IP trading puzzle. "Current IP trading is like just exchanging ideas," said a MITI spokesman who was briefed on the IPTC effort. "To implement IP trading in LSI cores, all the rules have to be rewritten."
To solve that problem, MITI will launch a five-year "virtual core" project that aims to integrate the various design rules used by the different chip makers. For the first year MITI plans to provide $7 million in financial support.
Michael Santarini contributed to this report.