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Gartner: chip design houses will boom

Gartner: chip design houses will boom

Lurking in the shadows of the semiconductor scene are an important group of vendors that don't actually make any silicon of their own, but instead supply the chip designs that help keep the industry abreast of evolving technologies. Gartner Group released a study Monday detailing the substantial room for growth that these semiconductor intellectual property (IP) players may enjoy in the near future.

While companies in the semiconductor IP space often fail to grab the public's attention, the chip designs developed by these companies help run a myriad of electronics products. While the vendors in this space rarely make anything tangible, they make money from licensing their chip designs and selling development tools and consulting services.

Many of the chip design companies design silicon for Net appliances, mobile phones and handhelds computers, so it should come as no surprise that Gartner expects these companies to enjoy robust growth. In many instances, these chipless design houses help manufacturers stay on top by providing them with designs that are in line with the most recent advances in chip technology.

"IP is a key enabler of design reuse and the only effective way of closing the 'design gap'," Jim Tully, chief analyst for Gartner's worldwide semiconductor group, said in a statement. "Without this technology, semiconductor vendors and OEMs will not be able to take advantage of today's semiconductor manufacturing advances."

The semiconductor IP market generated $US442 million in revenue in 1999, according to Gartner's estimates. As opportunities for IP designs grow and players enhance their reputations, Gartner expects that figure to surge to $620 million in 2000, and then catapult to a staggering $2.94 billion by 2004.

"Today, most IP vendors are very small and are perceived by large potential customers as vulnerable," Tully said in the statement. "Customers are reluctant to purchase strategically important IP from these companies until they are a little bigger and more stable. We believe the industry will pass through this stage within two years to emerge ready for stronger growth beyond 2004."


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