In 2012 Cadence hired Jim Ready, founder and former CTO of MontaVista Software. Right now Cadence is delivering IP core hardware but it is thinking about software. After all that's where the engineers are.
The other striking thing is that semiconductor IP gives Cadence the
opportunity to be paid a percentage based on the success of its customer
through a per-unit royalty. The semi-IP business grew 11.2 percent in
2012 according to Gartner Inc. while the overall semiconductor market
fell back by 2.7 percent according to the World Semiconductor Trade
"Four years ago we formed a partnership
with ARM. We listen to the customer and they are ready to outsource
their IP," said Tan. Indeed there is an argument that it is only by
steeping up to a higher level of abstraction and assembling sub-system
blocks or optimizing whole system-chip platforms, that engineering teams
can get their SoC's made on time.
The mention of partnership
indicates that Cadence would be unlikely to tread on ARM's toes by
getting into mainstream CPU or GPU cores or even fabric IP. "We are
selective in terms of what IP we pick. It has to be high-quality. Denali
IP is very strong and the operating margin is in the mid-20s [of
percent] so it is not subsidized business. Similarly, I have known the
Tensilica team for many years. We made sure it is compatible with ARM
because ARM is a very important partnership," said Tan.
reason that Cadence only wants to supply high quality IP is because that
is what it takes to command a per-unit royalty, said Tan.
aspect of the IP model also appeals to Tan; that it can be a repeat
business. For communication standards such as Ethernet, USB and MIPI and
others, the standard changes continuously and the optimization for each
process node may also change. When customers sign up with Cadence they
are often signing up a road-map deal whereby Cadence engages to bring
the most up-to-date functional implementations at each process node. "We
have a road-map and customers look at that road-map," said Tan. Some
customers could not engage with a privately-held core IP provider in
this way for fear the company would disappear or get bought by a rival.
Cadence represents a safe home for such IP road-maps, said Tan.
addition the library of IP cores can be characterized and optimized for
Cadence design flows and vice versa so that these two elements of
Cadence's business mutually support each other. This is an advantage
that chip vendors who provide IP, such as Xilinx and Altera, and
foundries, such as TSMC, do not have.
Click on image to enlarge.
Where Cadence's IP factory creates value. Source: Cadence.