Consolidation Conundrum

As I write this Comment, there are rumours that Apple will buy ARM. ARM Chief Executive Warren East has denied any takeover, and Apple expectedly has refused to comment. I shall examine a possible Apple-ARM merger from the perspective of a current IP trend—consolidation.

Important acquisitions
Consolidation has helped in streamlining IP delivery process and improving design reliability. ARM acquisition of Artisan, and MIPS of Chip Idea are among the most important ones. Synopsys has been on an acquisition spree, having taken over a number of companies in the last four-five years, including InSilicon and Accelerant Networks. InSilicon put PCI and USB in the Synopsys portfolio, while Accelerant gave Synopsys high speed, mixed signal CERTES capabilities. Mosaid and Cascade are among other important acquisitions of Synopsys. Virage Logic acquired Impinj for its multiple time programmable memory and Ingot Design Systems for its DDR technology.

Consolidation helps the designer. With individual blocks of IP in some designs growing to as high as 1 million gates, how does the designer ensure that each block functions reliably and interfaces predictably with the rest of the system? These IPs are generally not design differentiators, yet the need for getting the design right preferably in the first attempt itself at a competitive speed is so great that even IDMs are going for outside IPs rather than in-house ones that enable differentiation. The consolidation has enabled designers get IPs for various applications from the same source, thereby greatly improving the probability of the IPs working together efficiently.

The consolidation has also helped designers get services from IP providers on a global basis. Design centres typically work across many geographical regions even if they procure IPs from one place. Small IP companies do not have a wide presence to serve customers globally.

The consolidation has reduced the complexity in buying IPs. There are long technical processes to evaluate any IP. Buying multiple IPs from multiple sources involves longer processes than buying them from the same source. IP being a volume-based business, prices are favourable when more numbers are bought from the same source. Besides, negotiating business terms and warranty indemnification also become easier and less time consuming when sourcing IPs from a single vendor.

Thus, closer partnerships, better pricing, and greater reliability are the advantages that consolidation is opening up, which is a win-win situation not only for IP providers and users, but also for designers and customers.

Technological shift
Beneath the shift of consolidation there is also a technological shift in the IP industry. Increasing integration is pushing the requirement for system-level expertise further up the supply chain, thereby necessitating IP vendors to assume responsibility for complete functional subsystem. SoC vendors are now becoming system vendors. For instance, application-independent IP blocks such as DRAM interfaces are increasingly being sold as complete functioning subsystems, rather than as sets of parts from an IP catalog. The two major configurable processor core vendors, Tensilica and ARC, have changed from selling CPU core kits to providing complete hardware/software/verification packages for specific applications. Android handset is likely to become a single piece of IP for its entire range of applications. This means that unless the IP vendor is supplying a full subsystem or an analog/mixed signal function unique in the market, he will hardly be able to sell to SoC designers. His only customers will be other IP vendors, who hardly offer any margin.

How will Apple-ARM consolidation impact industry? This could well be a conundrum. I believe that unlike other consolidations, this one might not be an unmixed blessing for the industry and consumer. ARM is the leader in mobile phone chips. Apple is ARM’s biggest customer. ARM provides processors not only to Apple but to almost all mobile phone players, including Nokia, Sony-Ericsson, and Samsung. After consolidation could Apple stop ARM technology from reaching its rivals’ products? Designers used to ARM-designed microprocessors will need a lot more time and money for redesigning, adversely affecting the industry and the consumer.