The intellectual property business is an oasis of growth, expanding at up to 19 percent a year, according to Semico Research. By contrast the semiconductor market has been relatively flat.
Executives at top fabless chip makers suggest they will not move so quickly into new process nodes given their rising complexity and costs. That means EDA companies such as Cadence need to get a bigger slice of a potentially shrinking pie if they are to remain viable.
In that light, the core business is a great space for Cadence, said Rich Wawrzyniak, a senior market analyst for Semico Research Corp. (Phoenix).
Some believe Cadence offered a premium for Tensilica, given the finances around its earlier acquisition of Denali Software and the market cap for DSP core provider Ceva Inc., another processor IP company. Wawrzyniak disagrees, noting Tensilica’s configurable products let them address multiple DSP, RISC and other markets while Ceva is more tied to DSPs.
Cadence did evaluate Ceva, said one source close to the deal. But the idea of using Tensilica’s configurabilty to address more markets and tie into Cadence’s tools made it more compelling. Tensilica’s financials were marginally better, too, the source suggested.
Martin Lund joined Cadence from Broadcom last year to spearhead the IP drive.
Indeed the Tensilica cores could be a strategic weapon in the hands of an EDA company such as Cadence. “If you can get the right flexibility in the right spot of the SoC you can save a ton of time and money,” said Martin Lund, senior vice president of the SoC realization group at Cadence, which owns the charter for the company’s new core business.
Lund joined Cadence a year ago from Broadcom, where he managed the Ethernet switch business from a startup to a billion-dollar unit. Tan said he wanted someone running his IP business who understood the fabless designer’s perspective.
Cadence started preparing the way for its drive into cores a few quarters ago. It announced it shifted some staff into Lund’s group from a separate design-services team that was developing custom silicon blocks for customers. Such custom work doesn’t scale well into a larger business, said Lund, adding the group is now working on standard in-house cores.
Lund notes the core business has plenty of headroom as electronics spreads into more and more uses. “The application space is enormous,” he said.