Namely, the amount of IP chip-design teams acquire from outside sources will be relatively small, at least for a couple of years. Consider that on average about 30 percent of a chip's circuitry is reused circuitry; 70 percent is newly developed. The reused circuitry comes from either an internally or externally created prior design. In fact, an average of 12 percent of the reused circuitry comes from outside sources like commercial IP vendors, strategic partners and so on. The remainder, 88 percent, comes from sources inside the chip-design team's company. This data comes from studying more than 200 IC and ASIC design projects in late 1997 in both the semiconductor and systems industries. Thus, on average, outside parties supply only 3.6 percent of a chip's overall circuitry (12 percent of 30 percent). This is tiny. Of course, one reason for such a low figure is the difficulty of mixing and matching IP from different sources. Proponents of VSI, Rapid and VCX would argue that this is exactly the reason for their existence.

When we project out over the next 12 months, the situation is likely to change, but not by much. These same design teams indicate that the amount of externally sourced IP they plan to use will grow from 12 to 18 percent. The amount of reused circuitry on-chip will grow from 30 to 46 percent of the chip's overall circuitry. Thus, on average, the amount of externally sourced IP on a chip will grow to 8.3 percent of the entire chip's circuitry (18 percent of 46 percent). Relatively speaking, 8.3 percent is still quite small. Think about it: More than 90 percent will still come from internal sources. The implications are important.

— Ronald Collett is president of Collett International Inc. (Santa Clara, Calif.), a management consulting firm. He can be reached at ronc@collett.com.