NEW YORK -- After two years of proselytizing, the Virtual Component Exchange (VCX) launched its Web-based service today with a mission to streamline business and legal issues for companies looking to trade semiconductor intellectual property (SIP) online.
The b2b service is aiming to remove obstacles to the electronicsindustry's trend toward licensed and reusable IP, which is making up a growing percentage of system-on-chip (SoC) designs. The volume of SIP transactions is expected to nearly triple in the next four years at which point the SoC market will be worth $2.94 billion, according to Dataquest Inc. of San Jose.
"We're seeing the emergence of a new set of buyers [that] use the Internet to extend their reach to where they couldn't have before," said VCX chief executive Andy Travers. "VCX is creating the code of conduct for companies-the agreed way of doing business."
Operating from its base in Livingston, Scotland, VCX is combating bottlenecks-namely cumbersome contractual and legal issues-by formulating a set of business standards to ease IP trade.
"The negotiation time for IP blocks was starting to exceed the
time-to-market window," Travers said. "But this is not just about delivering a transaction cost reduction, this is about delivering extra bandwidth" to the transaction process.
Jauher Zaidi, chief executive of IP provider PalmChip, said it can cost a company $1 million or more in legal fees to license
technology blocks, and that's on top of the cost of actually
evaluating, qualifying, and acquiring the IP. Zaidi said tools such as those offered by VCX can cut a 15-month development cycle to seven months by trimming five months off evaluation and chopping logistical and physical design times in half.
Another of VCX's goals is to alleviate engineers from having to
design the more mundane and redundant elements of their products.
"When you walk around many of these companies, you'll see
engineers screaming. You look at what they're doing, and they're
designing PCI interfaces and other things that they shouldn't be
doing," said Dataquest analyst Jim Tully.
With more than 40 members, VCX is composed of a growing number of IP developers, semiconductor suppliers, and EDA firms. Its OEM representation has increased to about 30% of the group. The company today also announced seven new members: Conexant Systems, NEC, Nortel Networks, Sun Microsystems, IP provider Dolphin Integration, and Scottish electronics companies 4i2i and Nallatech.
VCX will offer a variety of tools to enable companies to trade IP more efficiently and open an avenue for buyers to acquire needed technology.
The list of services includes the VCX Listing, which allows users to search for and compare so-called "virtual components" online; the DAAControl system, which allows companies to draft standard data-access agreements; and the ProcessBuilder, which enables members to tailor their tool access to the IP sales and
procurement procedures of a given customer. A fourth service, the DealRoom, includes standard terms sheets and licensing
contracts, and "model clauses" consisting of a common legal
language to speed transactions.
According to VCX, which was founded with $8 million in grants and another $250,000 in member fees, online users will be charged a fee to join the group, and additionally for access to the tool suite. Other charges will be assessed for listings and for each transaction conducted over the exchange.
Travers said a small company would typically incur about $11,000
in annual fees for the use of VCX, while a company in the $1 billion revenue range might expect to pay about $40,000.