Semiconductor IP Market Trends

Growth Drivers

• Rollout of 5G networks: The swiftly expanding demand for wireless communication technologies including 5G networks are creating high growth prospects for semiconductor intellectual property market players. 5G networks are based on specialized, high-performance chip designs for network infrastructure edge devices including smartphones and 5G base stations. Increasing at a significant CAGR of 24.4%, the global 5G base station market is anticipated to reach 731.04 billion by 2037. The European Union has around 346,000 5G base stations installed across the region followed by the U.S. approx. 100,000. Furthermore, as per the analysis by the 5G Americas, the global 5G connections are set to increase from 1.9 billion in 2023 to 6.8 billion by 2029. The 5G penetration in North America holds around 36.0% of the population and is foreseen to reach 601 million by 2027.
• Increasing demand for AI & ML devices: The surging demand for artificial intelligence (AI) and machine learning (ML) applications and devices is set to uplift the revenues of semiconductor IP producers. The AI workloads, deep learning, and machine visions are optimized by custom IP cores and are dependent on advanced memory chips to store data. For instance, in January 2024, the IBM Corporation revealed that as per the study around 42% of enterprise-scale companies worldwide have adopted AI applications to carry out their business operations. Organizations in China, India, and the UAE are prime adopters of AI applications with 85.0%, 74.0%, and 72.0% of deployment rates, respectively. Furthermore, in September 2024, the World Economic Forum revealed that over a third of European businesses have deployed AI in their organizations and the number is set to increase in the coming years.

Challenges

• Complex licensing models: The complexity issue associated with the licensing models especially for bunded IP solutions can act as a barrier for some companies. Also, disputes over licensing terms, royalty payments, and intellectual property (IP) ownership often hamper professional relationships between semiconductor IP providers. Thus, complex licensing models are expected to hinder the overall semiconductor intellectual property market growth to some extent in the foreseeable years.
• IP theft and security concerns: The IP theft concern and the rapid emergence of counterfeit products are some major factors affecting the semiconductor intellectual property market growth. SIP companies need to invest heavily in securing their designs from unauthorized use and also from the development of similar copies, which increases their overall operational costs. Also, security vulnerabilities in semiconductor IP often led to catastrophic consequences for end users, especially in sensitive sectors such as automotive, government, and healthcare, hampering the sales and goodwill of key players.