Unlocking the Potential of Semiconductor IP: Market Analysis and Opportunities for 2034

The global semiconductor IP (SIP) market, valued at US$ 7.1 billion in 2023, is poised for significant growth, driven by technological advancements and increasing adoption across various industries. Projected to grow at a CAGR of 5.9% from 2024 to 2034, the market is estimated to reach US$ 13.5 billion by the end of the forecast period.

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Analyst Insights: Key Growth Drivers

Increasing Demand for AI-Based Applications

The rapid growth of artificial intelligence (AI) is a major factor boosting the semiconductor IP market. AI applications, particularly those relying on deep learning (DL) and machine learning (ML), are increasingly integrated into automotive, consumer electronics, and IoT devices. These applications demand advanced IP cores to support compute-intensive methodologies and robust chip designs.

• Neural Network Processing (NNP): R&D in neural network algorithms has driven the need for AI System-on-Chips (SoCs) with enhanced processing, memory, and connectivity capabilities. These architectures integrate on-chip neural networks, opening up new avenues for investment in semiconductor technologies.
• Customized IP Solutions: Companies are designing tailored IP cores to meet the unique demands of AI-based applications, further propelling market expansion.

Government Initiatives in Defense Modernization

Governments worldwide are investing in the modernization of defense technologies, creating a surge in demand for reliable semiconductor IP solutions. Semiconductors play a critical role in advanced defense systems, and security concerns necessitate robust IP designs.

• Hardware Root of Trust (HRoT): HRoT ensures secure operations by embedding key cryptographic operations and secure boot processes within SoCs. Technologies such as Physical Unclonable Functions (PUF) are increasingly being adopted for enhanced security.
• Encryption and Decryption: Semiconductor IPs now support data security through cryptographic algorithms like AES, RSA, and ECC, making them indispensable for sensitive defense and communication systems.

Commercialization of Captive IP

Key players in the semiconductor IP market are adopting innovative business models to commercialize captive IP previously developed by large semiconductor and systems firms. This trend is helping monetize IP assets that were traditionally underutilized, driving further growth in the market.

Regional Dynamics

North America: Leading the Charge

In 2023, North America emerged as the dominant region in the semiconductor IP market, driven by significant investments in semiconductor manufacturing and heightened concerns over IP theft. The CHIPS and Science Act passed in the U.S. in 2022 is expected to catalyze further growth in this region by boosting domestic semiconductor production.

Asia Pacific: Rising Powerhouse

Asia Pacific, with its two-thirds share of global semiconductor sales, is a key market for semiconductor IP. China, the largest manufacturer and user of semiconductors, continues to play a pivotal role. Increased production and demand in the region are driving market dynamics, alongside the spread of fabrication activities in countries like Taiwan, South Korea, and Japan.

Competitive Landscape

The semiconductor IP market is characterized by intense competition, with major players focusing on ASIC and FPGA IP licensing, patent portfolios, and innovative product developments. Notable companies include:

• Arm Limited
• Rambus
• Synopsys, Inc.
• Cadence Design Systems, Inc.
• Taiwan Semiconductor Manufacturing Company Limited

These firms are leveraging their expertise to meet the evolving demands of industries ranging from automotive to consumer electronics and defense.

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