01
What exactly is IP in the chip industry?
In the chip industry, IP refers to IP cores, which are like fully functional “small components” within a chip. These “small components” are mature circuit modules that have already been designed—such as those responsible for computation or data processing. They can be reused in other chip designs, similar to building with LEGO bricks where ready-made pieces are incorporated into new creations. This reduces a lot of design work, shortens the design cycle, and increases the chances of successful chip development. Since these circuit modules embody the designer’s effort, creativity, and intellectual property, they are called IP cores and can be seen as “semi-finished components” in the chip design process.
Typically, a complex chip is composed of two parts: one part is the circuit designed by the chip designers themselves, and the other consists of multiple IP cores purchased externally. Imagine designing a chip—design companies can purchase the needed IP cores, like sourcing different colored and shaped LEGO bricks, and only design the parts where they have unique ideas, then assemble everything together.
Chip design is somewhat like developing a system circuit board. Both use mature, ready-made IP cores (or chips) and are assembled like a puzzle. However, the key difference is that when developing a system board, developers rarely make their own chips—they use off-the-shelf ones. In chip design, besides using purchased IP cores, designers must also create some circuits themselves, connect all the parts, and rigorously verify the chip’s functionality and performance before it can be manufactured.
If this is still unclear, think of chip design as assembling a puzzle. The purchased IP cores with various functions are like puzzle pieces of different shapes and colors, and the circuits designed by the company are green puzzle pieces. Designing a complex chip is like putting these pieces together into a complete picture. But unlike an ordinary puzzle, assembling a chip requires consideration of parameters and specifications of the IP cores to ensure correct connections—only then can the chip function properly.
When other chip design companies use a particular IP core, it’s called IP reuse in the industry. Creating these reusable circuit function modules is called IP development. Companies that specialize in IP development are IP vendors or IP providers. They sell IPs to chip design companies, which is referred to as IP licensing or IP transactions.
02
Where does IP come from, and what is its value?
To understand the origin of IP, we need to go back to the early days of chip design. At that time, chips could only integrate limited functions and were relatively simple, so all circuits were designed manually by the engineers. Small chip companies could only manage simple chip designs, while large and powerful companies designed the large and complex ones. Regardless of chip size, companies had to design everything from scratch, and high-end chips were mostly dominated by a few large international corporations.
Later, as chip demands increased, chips became larger and more complex. It became nearly impossible for small companies to design a complex chip independently. Especially in the late 1980s, with the emergence of the foundry model, many small chip design companies appeared. Everyone was looking for ways to overcome the challenge of small companies being unable to design large chips.
There are many similar approaches in real life for reference—for example, building complex structures with ready-made building blocks, assembling a puzzle from different pieces, constructing large machines using standardized components, writing large software using subroutines, or building large electronic systems using multiple chips. The core of all these ideas is the same: using ready-made and mature components to build more complex products. This approach simplifies development, reduces redundancy, saves time, and increases success rates.
The IP core development and reuse in the chip industry emerged from this way of thinking. IP cores act like these pre-made components. With them, designing complex chips becomes easier, faster, and more likely to succeed.
The value of IP is significant in four main ways:
- It simplifies complex chip design, shortens the design cycle, and improves success rates.
- It enables small companies to design large chips.
- It allows system companies to design their own chips, boosting innovation and intellectual property ownership.
- It helps the chip design sector break away from the traditional model and evolve into an independent industry, accelerating its development.
Today, many small and medium chip design companies, though limited in capacity, purchase large quantities of IP cores to speed up development and quickly bring products to market. More companies specialize in IP development and are becoming increasingly professional. Various IP cores are emerging, IP transactions are becoming more frequent, and the financial stakes involved are growing.
03
What is IP merge
As a foundry, a manufacturer needs to help clients accelerate product development and production in order to secure more orders. Therefore, they must strengthen the development and application of IP. This involves helping clients integrate IP while maintaining IP confidentiality and security, enabling them to complete their product development and move into production. This task falls to the foundry.
When a client incorporates a successful IP module into their design and sends the data to the foundry, the foundry must perform an additional step—integrating the module into the client’s data to ensure completeness before tape-out. This step is called module integration or IP merge at the foundry, and the entire process is referred to as the IP merge service.
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