NEW YORK--Correct us if we’re wrong, but many readers may be writing off MIPS Technologies way too soon.
The fate of MIPS is shaping up as one of the industry’s biggest stories in 2012. The company’s potential sale would have a significant impact on its storied processor IP line, MIPS customers, potential suitors who would either gain access to the processor IP or lose access and, of course, the current MIPS work force.
MIPS has not commented on speculation about a possible sale, and we’ve been unable to confirm that it has retained an investment banker to represent it (the rumor mill says it’s Goldman Sachs). Nevertheless, the question of who might buy MIPS is unavoidable and should be debated considering the broader implications of such a deal.
For one thing, there are enough chip companies -- including Broadcom, Sigma Design, Cavium Networks and others -- whose SoC roadmaps are dependent on MIPS cores. The outlook for MIPS licensees is as muddled as the future of MIPS. Switching to new cores is tricky since it requires an extensive rework of the internal software infrastructure. As one EE Times reader noted: “Current-day SoCs need a fast turnaround time, and the time needed to rework the software / debug with a new processor IP is just not there.”
But some argue that the transition might not be all that traumatic. Gary Mobley, senior research analyst at The Benchmark Co., wrote in his recent research note that “there is evidence that many of MIPS’ long-time licensees such as Sigma Designs and MStar have started to migrate toward ARM cores.”
To close a deal, seller and buyer must first agree on the sale price. MIPS, which has reportedly been shopped around for the last decade, the question of price is a moving target. In assessing the value of MIPS, Mobley wrote that “the wild card is MIPS patents.” He believes MIPS’ patents, “at a minimum,” could be “worth $100 million.” Mobley estimates the liquidation value for MIPS at about $5 per share “based on our best estimate for the present value of the company’s royalty stream, plus cash and certain assets, minus balance sheet and off-balance sheet liabilities.
MIPS understands how to play this game.
J. Scott Gardner, a senior analyst at The Linley Group, said MIPS has had its patent portfolio evaluated and is now included in the Ocean Tomo 300 Patent Index for 2011-2012. Ocean Tomo, an IP merchant bank, developed an “IPQ score” to rate patent assets based on a proprietary statistical methodology. The IPQ score has a median of 100. Patent assets with higher IPQ scores are statistically more likely to generate economic returns, according to the firm. The IPQ score for MIPS is 135 – one of the highest among semiconductor companies listed in the Ocean Tomo 300 list of member companies
The list “includes a lot of very large companies, and the median market cap is over $9 billion,” said Gardner. “MIPS could raise cash without selling the entire company.”
Gardner added that there are “a few scenarios that would really shake up the industry,” including Apple and Google. “Apple has proven the value of complete vertical integration and ecosystem control,” he said.
Others find promise in the emergence of a tighter Google-MIPS relationship. Google has recently decided to include the MIPS architecture as part of its SDK for the next generation of Android, noted Mobley. "This means eventually all future Android applications will run native on MIPS.
In the following pages, EE Times editors weigh in on the debate, sharing their thoughts in the categories of: a few unlikely candidates, best bets and a potential wild card.
My current thought is the best deal for MIPS is to sell its patent portfolio while retaining rights to it as IPWireless did in a deal with Nvidia and IV this week.
That gives MIPS a solid cash injection and the freedom to develop next-gen products.
Hi, Moronda. ARM may have won the war, as you say, but I wouldn't discount MIPS patents so quickly.
I wouldn't discount Sandeep so quickly either. Much of the difficulties MIPS had gone through are due to what happened even before Sandeep arrived at MIPS.
Lastly, I wouldn't want any company to go down the toilet. Every company, and every engineer on the team, deserves to do its/his best and eventually succeed.
I'm curious as to why you wouldn't discount the patent portfolio. It does seem very reasonable to ask ... if MIPS is not successfully asserting patents rights against ARM/Intel/AMD now, why would someone be able to in the future or how would the patents otherwise be useful?
The converse question to "Who might buy MIPS?" is "Why should MIPS want to sell?" I think the answer is probably obvious. Size matters, and MIPS feels it needs to be part of a bigger, better heeled company to survive and compete long-term in the CPU/GPU market.
And it isn't clear that ARM has won the war. The current war I see is all about power efficiency, and ARM is poised to make inroads into the server market because ARM cores use less power than Intel. It's even more vital in the mobile device market, where the scarce resource is battery charge, and you win by being able to work longer without needing to recharge.
I think a lot will hinge on just how good the newly announced MIPS designs are. If they are as power efficient as claimed, they'll get a lot of interest.
And while I don't expect it would happen, I know a company that might find MIPS a worthwhile acquisition: Intel. Intel has little penetration in the mobile device market, and the Atom processor hasn't really been able to compete with ARM. Intel might find it worthwhile to add MIPS both for the patent portfolio and the opportunity to better compete with ARM in the mobile market. They can certainly afford the price.
Intel used to license ARM IP, and had its own line of StrongARM processors, before selling it to Freescale in a reorganization. If they bought MIPS, they wouldn't be licensing someone else's technology. It would be theirs, because they bought it. And Intel has the fabs and the process technology to manufacture MIPS based chips in any form desired.
I don't expect it to occur for corporate ego reasons - it would be an implicit admission Intel has been unable to compete with X86 based designs in the mobile space, and had to acquire different technology they didn't create to do so. But it might make sense for them to do so.
My bet in this speculative discussion is on Intel too. They desperately need an out into the mobile market; and with ARM infringing on the server market it makes sednse for Intel to use its cash to do with MIPS as they see fit. The question is, is there a tight fit between MIPS and Intel strategies? For a company that capitalized on a radically different RISC architecture developed by current Stanford U. president J. Hennessy MIPS might be just what Intel needs to counter the ARM-based mobile juggernaut.
The Chinese want MIPS bad but the U.S. government won't allow it. My money is on Qualcomm, Synopsis, or Rambus. All of them are IP companies so it would make sense for them to acquire MIPS since it fits with business models. Qualcomm already uses MIPS and Synopsis would rather use MIPS than ARC because of the MIPS software ecosystem. The worst buyer would be Broadcom, that's the company which helped run MIPS into the ground.
Why can't the Chinese get MIPS? The DLX/MIPS-I architecture is essentially in the public domain. There is nothing special about the MIPS architecture. Any group can take it and create a chip, like the x86 competitors did a few years ago (TI, ST, IDT, etc). If you want to sell, the ecosystem is important, for in-house use, it does not matter. Power is determined by technology and the number of transistors, not the ISA.
But really, who wants MIPS? What has MIPS done for us or themselves lately (the past 5+ years)? And like all these suffering companies, what makes the next guy better at making it work than the last string of CEO's or owners? If you don't have real synergy, it's just going to keep withering. And how many other companies will MIPS take down with it when the architecture stalls (further)?
I'm guessing MIPS is way over-pricing themselves thinking they've got great value, when really they've just got a lot of companies by the short hairs. But they're 10 years over the hill. If nobody blinks, MIPS will be on Craigs List in another couple years.
I wouldn't put much stock in some super-secret computer-generated patent-rating algorithm (does it run on a MIPS processor?). I'd rather have two critical patents than 2000 frivolous ones.
I'm not seeing any big wins here, but potential for some big losses, with a domino effect to other IP companies. Tensilica, Ceva et al. maybe but MIPS may be too much woman for those boys to handle. Maybe ARM - or even Intel - buys MIPS just to milk them while snuffing them out.
Someone, please surprise me!
Intel+Marvell would be even better. Marvell is an ARM licensee and has several cores so Intel could quickly compete in the ARM market. IIRC, a chunk of Marvell used to be an Intel division, so that's another synergy. OTOH, it's possible that the ARM license wouldn't transfer to Intel, or that ARMH would make Intel pay dearly for it. Intel would have to use 25-33% of its cash to buy MRVL, however, so it probably won't happen.
Buying MIPS would just be pocket change for Intel, however. They have $15B in cash&investments, mostly short term, and MIPS market cap is only $0.353B. Even with a 40% takeover premium, the cost to Intel would be about 0.10 per share, less than half the quarterly dividend. Intel already has one of its best engineering teams in Israel, so there is synergy there as well. If Intel has any plans to acquire an ARM license, owning the MIPS IP could prevent ARMH from trying to extract too much from Intel. And Intel certainly has enough lawyers to monetize MIPS' patents and just reassign their engineers if they can't make a go of applying the MIPS architecture to mobile devices. But I very much expect that Intel could utilize the MIPS architecture for that as easy as they could do so with ARM. Especially with the latest Google developments.
People use other architectures so that they do not have to deal with Intel for non-desktop devices. Intel is smart enough not to have to buy anyone when their margins are so good. If you are not buying MIPS now, why would you buy MIPS from Intel? x86 CISC overtook RISC long ago due to pricing from DEC, Sun, Silicon Graphics and other misdirected (now historical) companies. Intel courted the Asian board manufacturers, the others ate their young.
Good and interesting calls on Microchip and Intel, which we did not include in our runners and riders list.
Perhaps we should have.
BUT I still feel they would fall foul of the "don't compete with your customers" rule.
How could Microchip license microAptiv for use in microcontrollers successfully when it is sells so many microcontrollers?
How could Intel license high-end and mobile MIPS cores when it is trying to sell Atom and Ivy Bridge into the same sectors?
'BUT I still feel they would fall foul of the "don't compete with your customers" rule.'
I don't see how Intel buying MIPS and offering MIPS cores falls under this rule. Intel's customers are OEMs using chips. Was Intel competing with their customers when they licensed ARM IP and sold ARM CPUs through their former StrongARM division? Why should acquiring MIPS and offering their cores instead be any different?
"How could Intel license high-end and mobile MIPS cores when it is trying to sell Atom and Ivy Bridge into the same sectors?"
That would be a matter of competing with themselves. For the customer, it's an advantage: is what they are trying to do better served by Atom and Ivy Bridge, or by MIPS designs? And it's an advantage for Intel, too, as it broadens their product offerings and gives them more options in competing.
You might get the sort of fun I observed decades back, when IBM salesmen for the AS400 and RS6000 lines danced around each other, as there was overlap in what those products could be used for, and two IBM divisions might be competing head to head for the same customer.
Perhaps explain myself well. My meaning was that Intel licensing a MIPS core for use in an SoC by Ingenic would then be competing with Ingenic when it tries to sell an Atom-based SoC.
Of course, if Intel buys MIPS and stops all licensing operations and offers Atom- or MIPS-based SoCs there is no competition. But terminating those licensing agreements is not necessarily easily done.
I still don't see the issue. Ingenic is a Chinese SoC manufacturer making products based on the MIPS architecture. Intel might like to sell them Atom based SoCs, but that might require changes to Ingenic's strategic plan and business model. One question is whether Ingenic has its own fab and makes its own chips. What would they buy from Intel if they do? Do they close their own foundry and buy parts from Intel, do they license Intel IP to make in their own foundry, or do they keep their own foundry making MIPS chips and buy Atom chips from Intel?
And part of the confusion may lie in what constitutes the product. ARM and MIPS are fabless semi-conductor firms. They license designs that other vendors will actually make chips using. For ARM and MIPS, a design win is a license by a manufacturer to use their IP, with a royalty stream based on production.
Intel is a fabbed semi-conductor manufacturer. They both make designs and manufacture chips using those designs. So for Intel, a design win might be either a license of IP with royalties based on production, or an order for X thousands of physical chips to build into someone else's device. Which Intel might prefer to get will probably depend upon estimated volume.
But if Intel buys MIPS, I *don't* see them canceling existing licensing agreements. Not only would it be difficult to do: they'd be buying MIPS in part to *get* those customers. Canceling existing agreements would require OEMs to renegotiate to continue production, and they might just switch to ARM. It would probably also make OEMs who *hadn't* previously licensed MIPS IP reluctant to do so, as the question would be "Can we trust Intel not to screw us?", and the answer might be "On evidence, no."
If I'm Intel and I buy MIPS to get a piece of the mobile market, I keep existing licenses in place, and what I sell depends on the market. I'm not going to convert one of my fabs to MIPS production unless I have a really big design win to pay for it.
["But terminating those licensing agreements is not necessarily easily done."]
Who needs to terminate ? You simply let them run their course.
The real issue here is Road maps - the same long-term decision Apple made, in jumping to Intel.
The actual Core matters less and less; what matters more, is engineering reference examples in the latest FAB process.
FABs need choose only one Core to benchmark their latest shrinks, and the natural 'first cab of the rank' is the larger-user-base one.
["Good and interesting calls on Microchip and Intel, which we did not include in our runners and riders list.
Perhaps we should have."]
Amazing it never occurred to you ?
If I was Intel, I could buy MIPS, merely to annoy ARM. Intel is already acting as a Fab, so a good question is have they already fabbed the latest MIPS Aptiv cores ? What did the numbers say ?
If I was Microchip, I would buy MIPS to 'secure the road map' and get a design team. They already made the call, to avoid ARM royalties, and the Aptiv cores do fit well.
With China's recent commitment to a national silicon standard (ISA), a Chinese firm (newly created, established, or government) makes perfect sense as a purchaser. I suspect that any regulatory and security concerns can be negotiated.
Perhaps a new Chinese company is created to buy MIPS. It converts the architecture into open source and becomes a design services company. China rallies behind MIPS and the ecosystem is strengthened because like Linux its free. Big picture, China wins since it spends less on foreign ARM/Intel IP.
Yes china could leverage the IP the most most likely. But what of the defense products that use MIPs? Is this a security muddled issue also?
Can anybody desribe what is alcking in the MIPs archetechture compared to ARM?
I do not yet understand why they did not improve and what is deficient for their products compared to ARM. How much is hurd mentality and how much is a performance/cost issue?
["Switching to new cores is tricky since it requires an extensive rework of the internal software infrastructure."]
Yes and no.
As a stunning example, note what Apple/Intel did, when they decided Freescale's Road Map, was simply not up to Intel's.
Also note the comment about Google including MIPS, which shows that adding a new core is not as hard as many imagine.
I'll add an observation that a many changes to a License Core, can actually penalize the licensees.
Much of the Cortex M3 business, merely cannibalized ARM7 Microcontrollers - so those ARM7s reached EOL sooner than they would have.
Even the Cortex M3V2 release, devalues those first out the gate, with first Gen M3's - and the Cortex M0+ is another re-spin...
Ms. Yoshida - I read through all your articles and it reminds me of "fool me once shame on you, fool me twice shame on me" proverb. MIPS was a good company when founded by the pioneers of computer architecture. It improved the versatility of Intel microprocessors by giving it stiff competition. But now it is in the hands of one of the most incapable management team. But your characterization, "I wouldn't discount Sandeep so quickly either. Much of the difficulties MIPS had gone through are due to what happened even before Sandeep arrived at MIPS. " is terrible. CEO is a total and utter failure. I have seen it first hand. He is off on several vacations and even when around discussion his vacations. Under his leadership, MIPS stock and MIPS is a disaster.