FRANKFURT, Germany The Virtual Component Exchange (VCX), launched this week at the IP98-Europe conference and exhibition, has met with a mixed response among semiconductor companies and providers of intellectual property.
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 cores.
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," Terwilliger said.