By John Donovan—June 10, 2010
Synopsys announced this morning that it had signed a definitive agreement to buy Virage Logic for $315M in what looks to be a mutually beneficial transaction. Synopsys needed to expand its semiconductor IP (SIP) IP offerings, and Virage Logic—having built out their portfolio and positioned themselves as a “trusted IP vendor”—needed the additional financial muscle and marketing channels that Synopsys brings to the table.
Synopsis has long been building up an IP portfolio to supplement its EDA tool offerings and now has the largest such portfolio of any EDA firm. Fifteen years ago Synopsys started out with interface IP. Last year they acquired MIPS’ Analog Business Group (ABG), adding an analog portfolio. Virage Logic, for its part, started out making SRAM instances and has expanded aggressively into other areas with their acquisitions of In-Chip Systems in 2002 (standard cell logic), Ingot Systems in 2007 (DDR memory controllers, PHYs, DLLs), Impinj in 2008 (their NVM technology) and ARC International in 2009 (configurable processors). Last November Virage added a missing analog/mixed-signal capability with their acquisition of NXP’s horizontal advanced CMOS semiconductor IP (SIP) technology.
Synopsys CEO Aart de Geus said in this morning’s conference call, “Virage products provide a perfect complement to the Synopsys Interface analog IP portfolio by adding embedded memories, standard cells and programmable cores for control and multimedia subsystems.” All that and then some.
Acquiring Virage’s IP libraries complements Synopsys’ emphasis on electronic system-level (ESL) design. Synopsys’ recent acquisition of CoWare, whose software is focused on ESL, works hand in hand with expanding their IP offerings. If you’re pushing system-level design, the more of the system you can provide the stronger your position. Synopsys, Mentor and Cadence are all taking different paths to the same place.
One possible glitch—won’t Virage’s ARC processor cores compete with those from ARM, long a close ally of Synopsys? Not according to either de Geus or John Koeter, Vice President of Marketing for Synopsys’ Solutions Group. Keoter: “The IP that we’re acquiring is really largely complementary to ARM. The ARC cores are really programmable cores, more for audio and video subsystems; they’re really ancillary processors to the ARM cores and not competitive with ARM on the CPU front.” Fair enough. ARC went toe to toe with ARM for years before retiring to those niches, albeit too late to survive.
Is IP a significant strategic growth initiative for Synopsys? According to Koeter, “Yes, it is. We view IP as a natural adjacency to the EDA market. It’s all about helping our customers get their complex chips out the door. As a corporate strategy we view IP as a growing adjacency to our core market. IP and systems represent about a $200M run rate for Synopsys, about 13% of the company. This is something that we’ve been investing in on both the IP and the systems side, and we view it as a nice growth opportunity.”
With EDA becoming a mature industry (read: flat or declining revenues off into the sunset), finding complementary revenue streams is key to survival; and doing so by acquisition during tough times is a fast track to growth. With the semiconductor IP (SIP) industry growing faster than either the semiconductor or EDA industries, this is an attractive area for expansion.
Expanding into IP from EDA makes sense for an equally basic reason: SoCs are becoming increasingly complex, requiring licensing IP from a variety of vendors. In the absence of totally uniform models—a core problem when it comes to analog IP—acquiring IP from a single vendor who can guarantee not only interoperability but compatibility throughout their tool chain is a compelling proposition. And the more IP you can offer the more attractive your tool chain becomes.
Expect to see other EDA companies snap up SIP vendors over the next several months.