On Friday, April 5, DSP Group and Parthus announced the merger of DSP Group's IP licensing business with Parthus, forming a new company, ParthusCeva, Inc. According to the companies, ParthusCeva will be "the leading independent provider of DSP-based IP solutions." Many observers view the deal as another step in the inevitable consolidation of the silicon IP business, as a large number of competitors face a skittish market and seek ways to strengthen their positions.
DSP Group has been the most successful licensor of DSP cores, entering the business in 1992 and generating licensing revenue of about $21 million in 2001. Nevertheless, DSP Group's licensing revenue comprises only about 20% of the company's total revenue, with the bulk coming from its fabless IC business, which specializes in application-specific standard products for telecom applications such as cordless phones. DSP Group has been facing increasing challenges in its attempts to grow its IP licensing business; for example, some prominent former DSP Group licensees, such as LSI Logic and Infineon, have turned elsewhere for their next-generation cores. At the same time, DSP Group's long-standing plans to spin off its licensing business via a public offering were undermined by the queasy condition of the stock markets.
While DSP Group's licensing business has focused on cores, Parthus has focused on "platform" IP; that is, on providing bundles of software and hardware IP targeting specific applications, such as Bluetooth and GPS. Parthus had a successful IPO in mid-2000, but is facing increasingly vigorous competition--including new platform offerings from IP giant ARM. Parthus lost $35 million on revenues of $42 million in 2001, of which $30 million came from IP licensing.
Parthus had previously developed its own DSP cores, compatible with Motorola's DSP56xxx architectures. It appears likely that these cores will now be set aside in favor of DSP Group's Teak, TeakLite, and Palm cores.
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