SANTA CLARA, Calif. Intellectual property and systems-on-a-chip (SoCs) are critical to the future of semiconductors, but integration capability is critical to the survival of so-called intellectual-property (IP) businesses, according to the keynote speaker at the IP2000 conference on Monday (March 20).
Rob Chaplinsky, general partner of Mohr Davidow Ventures (Menlo Park, Calif.), cited Intel Corp. as the only true system-on-a-chip player, with several other companies coming close to that status. But the majority of IP companies remain in the "wannabe" category, Chaplinsky said.
That's because providing IP is the easy part. Whether it comes in software form or on a test chip, IP isn't useful until it can be packaged into a functioning IC, Chaplinsky said.
"Ask yourself this: Why does a MIPS core cost 25 cents, and you go to QED [Quantum Effect Design Inc.] and th ere's a 100-fold increase in value?" Chaplinsky said the QED part is worth $25 because it is implemented in silicon.
In general, Chaplinsky said, IP becomes more valuable as it gets closer to IC form. He picked Intel as the best system-on-a-chip example because it successfully reuses designs from one microprocessor to the next, across differing process geometries.
He cited Broadcom Corp. as a close second. "They don't have any special intellectual property in my mind," he said. Rather, Broadcom's competitive advantage lies in its design methodology and integration skills, he said.
Chaplinsky named three other companies that come close to Intel's SoC level: ARM Ltd., MIPS Technologies Inc. and Rambus Inc. He also gave a plug to Pivotal Technologies Corp. (Pasadena, Calif.), the analog-IP company financed by Mohr Dav idow, as a company trying to develop integration capability and struggling with the complicated matter of IP support.
"We [at Pivotal] totally underestimated, for every IP deal we had, what it costs for support," he said.
Chaplinsky also believes that business opportunities abound for companies to become integration specialists, or for IP firms capable of tackling integration. In general, he said, the climate for startups should be good as the stock market continues to reward semiconductor companies, particularly those in the SoC-hungry communications market.
"Public markets beget everything," he said, pointing to the mass of Web startups spawned last year. "If the public market loses its appetite, everything falls."
Like many others, Chaplinsky believes the current semiconductor upswing is going to be stronger than other industry upswings, driven by the growth of Internet usage. But there's a dark spot in the picture: semiconductors represented just 0.7 percent of all venture funding in the third quarter of 1999. That should improve as high stock valuations draw venture capitalists' attention to semiconductor markets, Chaplinsky said.