A story in EW in 2002 started: ‘The chipless business model – companies which develop and sell semiconductor IP – may have run out of steam, according to a report from analysts Future Horizons.
“Supplying a core is not big news anymore. At the system-on-chip level, we are now having to aggregate applications on a chip rather than just component functions. The future ARM will have to build their business model on providing, for example, a general purpose ‘GSM core’, and so on,” said Malcolm Penn, chairman and CEO of Future Horizons.
‘The 2002 chipless industry was worth $1bn, a mere 0.7 per cent of the total semiconductor market, with market leader ARM responsible for $235m of those revenues.’
‘Yet ARM, like other chipless firms, is experiencing lower revenue per employee, lower licence fee revenue and lower unit royalties. These are trends which are set to continue, said the report.
)Revenues per employee are lower in chipless companies than they are at fabless semiconductor companies or IC design houses, which means financial backers may require reductions in manpower.’
‘Lower licence fees have resulted from competition and delayed payments, as customers wait to see whether a piece of IP actually works on-chip before paying for it.’
‘Lower unit royalties are the result of a trend towards higher volume consumer applications which put downwards pressure on a per unit royalty fee.’
“Arm has admitted poor up front licence revenue for Q4 2002, and the first half of 2003, and have conceded that they see no significant recovery this year,” said the report.
‘Adding to Arm’s woes are near saturation of the new licensees market, and an unwillingness of customers to migrate to newer cores, said the report.’
