Virtual IP Group unveils strategy

Electronic News, March 9, 1998 by Peter Brown

Sunnyvale, Calif.--Daily, the need for differentiation in the exploding intellectual property (IP) market grows greater. Market research firm Dataquest forecasts that the IP industry will grow to $2.5 billion by the year 2000 and the need for reusable macros is becoming a top priority in many ASIC, FPGA and microprocessor houses around the world. IP companies are proliferating rapidly but the question of how many of these companies survive in the long run remains.

Some IP providers, such as Virtual IP Group which will make its business strategy known today for the first time, believe service and strong relationships with core customers are keys to longevity.

"There are numerous IP companies in the fold these days but if you look at a lot of them and what they have to offer, there will only be a few that survive," said Warren Kao, president of the Virtual IP Group, in an exclusive interview with Electronic News. "Since the first creation of this market there were a few core companies. In the past two years we have seen a lot of companies jump on the bandwagon trying to cash in on a new industry. This has caused a lack of expectations about service in the industry. Well, we are here to prove those expectations wrong."

Founded in 1994 by Mr. Kao and Dasaradha R. Gude, the company's CEO, Virtual IP Group was formed from members of Pacific Semiconductor, a distributor design service in North America for United Microelectronic Corp. (UMC) which started the company as a side business in 1994. After UMC acquired Pacific in 1996, Messrs. Kao and Gude started working full time on Virtual IP Group.

The company currently has a library of soft and firm IP cores for the microcontroller, PC peripheral, datacom and telecom markets targeting the ASIC and FPGA arenas. Supplying the cores is only one aspect of their business plan. What they call "design foundry services" is another big portion of the business. Design foundry services includes not only supplying the cores but providing both front-end and back-end support using industry design tools. As part of its service the company will do front-end model creation, full turnkey design from a specified RTL code to back-end place-and-route and design verification services.

Virtual IP Group also currently supplies soft synthesizable cores to ISSI, Orbit Semiconductor, Hewlett-Packard, SMOS Systems, Seiko-Epson, Micronics, Avant!'s Galaxy group, WinBond, Oki Semiconductor and UMC. In addition, the company has an exclusive agreement with programmable logic device (PLD) giant Xilinx. The alliance gives Xilinx access to the company's entire line of cores and Virtual IP Group, and in turn, receives access to Xilinx software packages.

Although Virtual IP Group is privately held and privately funded--sustaining itself on revenue generated from licensing its cores--Mr. Kao said Virtual IP Group will be looking for investment from its customers. He noted that the names of potential investors could be revealed in two weeks. The company had revenues of $620,000 in 1996 and did more than $1 million worth of business last year. "We are doubling every year and we sure would like to keep that up. Whether it is possible is another story but we are going to try," said Mr. Kao.

One of the areas in the IP market that Virtual IP Group has an interest in is improving EDA tools as they relate to intellectual property. "I have been disappointed with the EDA industry that they have not come out with a solid flow, a design foundry solution," said Mr. Kao.

The company plans to roll out a variety of new cores this year, including moving more heavily into soft bus macros--a heavily contested area in the IP market. A Universal Serial Bus (USB) core is slated for introduction this quarter, a 16-bit microcontroller in 2Q and a 1394 bus core in 3Q of this year. All of the cores will initially be soft macros with the company moving them to firm as needed.