The Virtual Component Exchange(VCX), launched this week at the IP98-Europe conference
and exhibition in Frankfurt, Germany, has met with a mixed response among
semiconductor companies and providers of intellectual
The VCX Ltd., with a charter to work on business and legal
issues to support the transfer of IP cores, has 10 initial
backers: ARM, Cadence, ISS, Mentor Graphics, Motorola,
Nokia, Phoenix Technologies, Siemens, Toshiba and TSMC.
They will drive the initial development of rules and
regulations prior to VCX's first commercial transactions
in the third quarter of 1999.
While observers have praised the comprehensive nature
of the VCX's preparatory work, questions are being raised
about how useful a specially prepared IP trading
environment will be to companies with an interest in IP
Until now, the VCX has been driven by Scottish Design Ltd.
(Glasgow), a subsidiary of Scotland's national economic
development agency, Scottish Enterprise. The VCX is one
part of a plan to encourage the development of
system-on-a-chip design in Scotland under Scottish
Enterprise's Alba project, but the chip exchange is being
stressed as a global initiative that does not require
members to have a presence in Scotland.
"I have reservations," said Eric Schutz, director of
strategic business development at Alcatel
Microelectronics (Brussels, Belgium). "It looks like a
monopoly and I don't like monopoly situations. There are
things to learn about speeding up negotiations, but if at
some time there was a rule, or a de facto situation, which
said I could only use certain foundries - the ones in the
VCX - that would be unacceptable."
Wary of problems involving anti-competitive practices,
the VCX is taking steps to steer clear of them.
Discussions have already been held with the European
Commission and U.S. authorities on these issues. Interim
director Andy Travers has emphasized that the VCX will
not set prices for IP cores, and that the services and
facilities it will eventually offer will be optional - a menu
from which members can choose and adapt. These
services could include a secure network for initial
contact; predefined forms of contracts; a clearinghouse
system for auditing usage of cores and the collection of
royalties; and a dispute and arbitration service.
Schutz rejoined, "Do you think I will negotiate my next
ARM license through VCX? We already have direct contact
with ARM; we have contact with Mentor and with Phoenix.
What's in it for us?
"Sourcing IP from a random set of suppliers is not the way
to work," Schutz added. "You have an established network
of partners as you do in design services and EDA tools."
Schutz made one concession to the possible usefulness of
the VCX: "For small IP developers, it may help to be in a
protected environment and to leverage VCX services, but
for larger companies I don't see it."
In more a positive vein, Bob Payne, strategic technology
officer of VLSI Technology Inc. (San Jose, Calif.), gave VCX
cautious welcome. "We're fully involved in the VSI alliance
[working on technical standards for IP cores] and, in
general, organizations that help standardize interfaces
are good." He added, "The business aspects [of IP trading]
are more difficult than the technical aspects."
Currently, VLSI's business model is not to be a seller of IP
cores but a manufacturer of deep-submicron silicon, he
said. "But at some point we may be more involved." Payne
said 90 percent of VLSI Technology's IP is from its own
portfolio, but there is about a 10 percent slice the
company shops for. "The ASIC industry is in the middle of
this and we all believe the industry is well served by the
establishment of standards," Payne said. "We will watch
VCX and we may get involved. I wish them success."
Other industry observers were wary of the VCX founding
group, questioning whether it was simply based on
customers of the Cadence Design Systems Inc.
design-services facility in Livingston, Scotland. The
founding members of the VCX denied it. "VCX is
completely neutral in terms of EDA tools," said Travers.
"We're not doing this for Cadence's benefit, or anyone
else's benefit. It's for the industry's benefit."
Bob Terwilliger, president and chief executive of ARC
Cores Ltd., was ambivalent about the creation of the VCX.
"I think they've highlighted every one of the problems
we've already solved. Our typical negotiation time is two
weeks. I don't know where we can shorten that. By offering
a 30-day evaluation for free, we've cut about three
months out of the sales cycle." But Terwilliger was one of
the few executives prepared to commit his company to
becoming a member of the VCX immediately after the
announcement of its formation. "Sure, we'll join. We'll join
every country club there's a good reason to join,"