The processor IP market for semiconductor IP is expected to hold the largest share during the forecast period
The processor IP market is expected to hold the largest market share during the forecast period. Processor IPs have several use cases in consumer electronics and automotive verticals, which also cost high. These are used in advanced driver assistance systems (ADAS) and infotainment systems in the automobile sector. High deployment of processors in consumer electronics products is one of the vital factors for the market growth of processor IPs. These processors are mainly classified into 3 major processing units: microprocessor unit (MPU), microcontroller unit (MCU), and digital signal processor (DSP).
The market for royalty sourcing is expected to continue to hold the largest share by 2024
The semiconductor IP market for royalty sourcing is expected to hold the largest share during the forecast period. In royalty IP sourcing, a chip manufacturer will have to pay for every single chip it manufactures. The market for royalty is flourishing due to fluctuations in the market for technology, as royalty can help manufacturers produce as much products as they wish and pay royalty for that products only. Moreover, majority of the giants source their semiconductor IPs through royalty model instead of licensing. This is one of the core reasons owing to which the market for royalty-based semiconductor IP is high.
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The market for automotive vertical is expected to witness highest growth from 2018 to 2024
The semiconductor IP market for automotive is expected to grow at the highest CAGR during the forecast period. The growth of semiconductor IP in the automotive sector is due to increasing application of microprocessor units (MPUs), microcontroller units (MCUs), sensors, analog integrated circuits (ICs), interfaces, and memory in autonomous and premium cars. The automotive industry is witnessing a digital transformation. The industry is moving toward digitization; dozens of embedded processors connected via multiple digital networks are controlling and optimizing operations of almost every system in automotive operations. The automobile industry is likely to witness the advanced versions of processors in future, with the advancements of enhanced signal processing algorithms project in safety, driver interfaces, emission control, and in-cabin entertainment and information. Approximately 100 processors are used in a high-end automobile, which makes it a flourishing application segment in the market.
Asia Pacific holds the largest share in the semiconductor IP market in 2018
APAC is expected to continue to lead the semiconductor IP market and also expected to be the fastest growing region. This growth is mainly attributed to the increasing investment of players in Semiconductor IP in the region. Asia has more number of manufacturing firms with over 150 small IP vendor firms and IP firms. Semiconductor wafer manufacturing has been dominated by the firms based in China, India, Taiwan, and Singapore. Many major IDMs are outsourcing wafer production to Asia. APAC is also the highest consumer of electronics products that makes it a growing market potential region for semiconductor IP players. China, Japan, South Korea, and India offer some of the prolific electronics manufacturers in APAC. Therefore, there is a continuous demand for semiconductor IP in APAC. The availability of an enormous pool of cheap and underemployed labors was the most important determinant of the growth of the market in East Asia in the 1960s and 1970s. The US firms made their way to the market in East Asia through Hong Kong. Several factors that made East Asia a particularly attractive location include political stability, open financial system with no limits on repatriation of profits, and excellent telecommunications and transport facilities in this region. Taiwan, South Korea, and Singapore share the same benefits. Additionally, Hong Kong has the added advantage because of flourishing industrial economy based on textiles, garments, plastics, and other labor-intensive industries. Hong Kong had well-developed international trading networks and logistic capabilities.
Driver: Advancement in multicore technology for consumer electronics sector
Consumer electronics are becoming smarter and more intelligent due to increasing research and development activities. This is due to advanced components and chips made with the help of complex IPs designed for every application. The consumer electronics sector offers tremendous growth opportunities for the semiconductor industry and the semiconductor IP market players. The semiconductor industry is highly dependent on consumer electronics such as smartphones, tablets, and memory products. ICs and SoCs are extensively used in these consumer electronics applications, and an increase in demand for these products is reinforcing the semiconductor market and the market.
Presently, the consumer electronics sector holds a major share of the global semiconductor IP market. With the success of multicore technology in the embedded computing sector of large form factor, mostly in computing devices such as desktops, laptops, netbooks, and notebooks, the industry is expected to have a successful transformation in small form factor devices such as smartphones, tablet PCs, and other portable electronic gadgets such as wearable electronics.
The market for multicore processors is growing rapidly owing to the advancement of personal computing for consumer electronics globally and emerging technological advancements such as octa-core processors for smartphones. These multicore processors would present opportunities for the growth of the global semiconductor IP market in the future. Today, most portable consumer electronics run on multicore (dual-core or quad-core) processors. These processors are helping companies to be competitive in the market for consumer electronics by exhibiting fast, efficient, and error-free performance
Restraint: Constant changes in technology
Technology is an ever-changing concept, especially in the semiconductor industry. In each leap, new technology would enter the market and break the equilibrium. Same applies to the IC industry where process nodes play a vital role. Change in nodes of a semiconductor chip changes design complexity, chip form factor, and IP core design architecture. Restraint in advanced SoC design is the effective implementation of these chips in advanced technologies, such as 20 nm planar and FinFET processes.
Migration to an advanced technology node increases design cost for IP vendors, while payments for licensing the IP suitable as per the new technology node may not match up to the rise in expenditure. The overall cost of SoC designs, including silicon IP and software IP, is increased by ~40%, with a shift in the node size from 32 nm to 28 nm and are expected to increase by 30% again with a shift of 22 nm. The overall cost of SoC silicon IP design is approximately increased by 36% with the node of 28 nm.
As an impact of the abovementioned changes in process nodes of chip manufacturing on the IP industry and IP cores, rapidly changing process nodes turn out to be a restraint for the global semiconductor IP market.
Opportunity: Embedded DSP IP and programmable DSP IP segments to have tremendous growth potential in the coming future
Rapid developments in the embedded DSP IP and programmable DSP IP segments is one of the latest trends garnering focus in the semiconductor IP industry and its subsegment. The preference for the advanced embedded DSPs, sophisticated programmable DSPs, and the rising demand for them have gained a lot of attention from the major players of the DSP industry and its parent industry—the global semiconductor industry—over the past 5 years.
Embedded processing comprises embedding IP cores in a system (SoC) or on an IC board. Until now, chip size limitations kept the number of cores per DSP chip confined to 1, 2, or 4 at maximum; however, this trend has changed recently, wherein new semiconductor processes have facilitated reduction in size, thereby allowing single-chip DSPs to become multicore, with considerable input/output (I/O) and on-chip memory, while still maintaining the required die size for good yield.
Factors such as power consumption and the need for large on-chip memory have further triggered the embedded DSP market; driving the development of such multicore DSPs into SoCs. The DSP-based SoCs are flourishing with rapid demand for several end-use applications such as smartphones and tablet PCs. Overall, the embedded DSP segment is growing at a very fast pace with increasing demand for DSP SoCs, thereby rapidly boosting the demand for embedded DSP IP cores.
The current sophisticated DSP-based applications and products are expected to exhibit advanced performance and flexibility with less time-consuming development cycles, economical cost, and power consumption.
Challenge: Impact of IP thefts, counterfeits, and conflicts on the semiconductor IP market
Major problems faced by the semiconductor IP industry are IP thefts, counterfeits, and conflicts; the impact of these problems has increased over the past few years. The semiconductor IP market in APAC is a large segment of the global semiconductor IP market based on geography, with its percent revenue share growing every year. Several IP players focus on APAC for the semiconductor IP industry, and its value chain follows the same trend as its parent industry—the semiconductor industry.
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