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Tech Industry

ARM, Rambus still atop chip licensing pile

The companies grab the No. 1 and 2 spots among chip firms that license designs and intellectual property to businesses that in turn make and/or sell chips under their own names.

ARM and Rambus retained their positions as the top two companies specializing in intellectual property for semiconductors.

So-called IP semiconductor companies--which earn their money by licensing designs and patents to chip businesses that in turn make or sell semiconductors under their own names--grew faster than the chip market as a whole in terms of revenue, according to research firm Gartner. IP companies collectively accounted for $933.8 million in revenue in 2002, up 4.7 percent from revenue of $891.5 million in 2001.

By contrast, revenue from actual chip sales grew by only 1.9 percent. Revenue from chip sales, however, is far larger and is well into the billions.

Cambridge, England's ARM remained the No. 1 licensing company. ARM's 2002 revenue came to $184.9 million, up 10.1 percent from 2001's $168 million. In all, ARM accounted for 19.8 percent of the industry. Chips based on ARM designs are found in the majority of the world's cell phones.

Rambus, meanwhile, saw revenue drop, but it still retained the No. 2 spot. The Los Altos, Calif.-based company saw revenue decline to $97.4 million from 107.3 million. It now has a market share of 10.4 percent. Rambus initially specialized in designs for high-speed memory, but it is transforming itself into a company that develops chip-to-chip connections.

Other top IP companies in the semiconductor sphere included Synopsis, TTP Com, MIPS and Mentor Graphics. Generally, these companies earn revenue through licensing fees, which let manufacturers use the companies' intellectual property in designing their own products. They also earn revenue through royalties for shipped products that incorporate the licensed intellectual property.