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Virage Logic Turns Over a High Card

By John Donovan

November 17, 2009óVirage Logic announced today that it had completed its acquisition of NXPís horizontal advanced CMOS semiconductor IP (SIP) technology. As part of the acquisition, approximately 150 former NXP employees and the assets associated with selected NXP advanced CMOS libraries, IP blocks and SoC infrastructure along with other classes of semiconductor IP, including approximately 25 associated patent families, are now part of Virage Logic. Virage and NXP also inked a $60 million strategic alliance that will give Virage cash flow and customers for many years.

That’s part of the story, but Virage’s strategy going forward is the interesting part.

One-Stop Shop

virage slide

Virage has been steadily building up its IP offerings for the past several years. It got started in 1995 providing SRAM cores and embedded memory IP products. Since then it’s expanded its offerings through a series of acquisitions: In-Chip Systems in 2002 (standard cell logic), Ingot Systems in 2007 (DDR memory controllers, PHYs, DLLs), Impinj in 2008 (their NVM technology) and this past August ARC International (configurable processors). Virage’s IP offerings now include processors, memory and a variety of interface solutions. But the key piece they’ve lacked has been an analog/mixed-signal capability. They just got that from NXP.

Virage long ago set out to be “the industry’s trusted semiconductor IP partner,” and it finally has all the pieces in place to be able to stake a claim. There are literally thousands of IP providers, but as any SoC designer knows, stitching together IP from a variety of vendors is a non-trivial task, escalating to the painful when it comes time for debug and verification.

Being able to offer a wide range of IP blocks that are pre-tested and certified to work together is a big selling point for any vendor. It’s one of ARM’s major advantages, having long ago acquired Virage’s competitor Artisan; in addition ARM certifies cores and software offerings from its huge network of ecosystem partners, making it easy to design an “ARM system.”

Virage has no intention of going after ARM or Intel, according to Dr. Alex Shubat, president, CEO and co-founder of Virage Logic. Despite the ARC acquisition, “We’re positioning it away from ARM, we’re not competing to be the number one processor on a chip. We let ARM and Intel have that market. We’ll be competing more with application processors, media processors, utility processors or subsystems. We feel very comfortable that we can actually dominate those markets.”

Considering that Virage’s customers include some of the biggest application processor vendors—TI, Broadcom, Marvell, Freescale, STMicro—there’s bound to be some competition with them for sockets. But the more integrated IP you can bring to an SoC design, the better your chances of capturing new design starts. I think Virage’s main competitor will be Synopsys, who offers a wide range of IP in addition to their tools. However there’s plenty of headroom for both companies, especially if Shubat is right about a new inflection point for IP growth.

New Driver for IP Growth

As Dr. Shubat explained in an interview, “The NXP deal also plays into another strategic initiative. As we expand our customer base, we believe that a market that is still untapped—and a big inflection point for Virage—is really the disaggregation that is going on with the semiconductor IDMs. As they outsource their manufacturing to foundries; as they outsource their EDA to the Cadences and Synopsyses of the world; the next band is really the IP. So this [NXP deal] is a stepping stone that will enable us to acquire a lot of these relationships.”

For the last several years the semiconductor IP industry has grown faster than the semiconductor industry as a whole. This first round of growth was powered by the rise of fabless semiconductor companies and the resulting growth of fabs; according to Shubat, “A lot of single-use fabless companies are built around IP.” After you outsource manufacturing, you’re left with design and marketing. Engineers always want to work on interesting designs (aka the “value add”) and are happy to contract out the ‘boring bits’, which is where IP vendors come in.

Shubat sees the next wave of IP growth coming from IDMs, who represent “a huge untapped market for companies like Virage.” Large IDMs previously developed their own IP internally. As more and more of them are going ‘fab lite’ or fabless, a lot of them are questioning why they should continue to develop their own IP when they can avoid the NRE and license it instead. “You don’t differentiate yourself in the market based on technology or foundation IP.”

With the recent dominance of consumer electronics, ‘cool features’ and ‘time to market’ argue strongly for outsourcing IP and focusing on what makes your product unique. There’s every reason to believe that the semiconductor IP market will continue to outpace the semiconductor market for the foreseeable future. This is a wave that Shubat is ready to surf.

Virage Logic Corporation
Fremont, CA
(510) 360-8000

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