An IP quote has two moving parts: what you pay to use the core, and what you pay per part you ship. Getting only one of them right is how programs end up with an unexpected cost at volume.
The contract terms around those numbers matter just as much. Two licences with the same headline price can behave very differently once production starts.
Upfront Licence Fees
An upfront fee buys the right to use the core and access to the deliverables — RTL or GDSII, models, documentation and support. What exactly is included varies by vendor and by licence tier, so it should be listed explicitly rather than assumed.
Upfront fees are the dominant cost at low volume and become proportionally less important as volume grows. This is why the same core can be cheap for a prototype program and expensive for a high-volume one.
Per-Die Royalties
A royalty is charged per shipped die, usually as a small amount per unit or as a percentage of die or chip price. Per-die royalties commonly fall in the range of a few cents to a couple of dollars depending on the core, the node and the negotiated tier.
Royalties are what make volume planning essential. A royalty that is trivial at ten thousand units is a line item at ten million, and it recurs for the life of the product.
- Royalty can be per die, per package, or a percentage of selling price
- Tiers usually improve with committed volume
- Some licences cap or convert royalties at a defined cumulative volume
Subscription, Site and University Licences
Some vendors offer time-limited subscriptions or site licences that cover a fixed period rather than a fixed project. These suit teams running continuous evaluation or multiple parallel programs.
Academic and research programmes are usually priced differently and come with restrictions on commercial use. If a core enters through a university programme and later moves into a commercial product, the licence terms need to be checked before tape-out, not after.
Source Escrow and Continuity
Escrow places the source with a third party that releases it under defined conditions, typically vendor insolvency or end of support. It adds cost — often quoted as a percentage uplift on the licence fee — and it is cheap insurance for cores that sit in a long-lived product.
Related clauses to read carefully: what happens on vendor discontinuation, whether bug fixes and node ports are included or chargeable, and whether the licence survives an acquisition on either side.
Match the Model to the Volume Plan
The decision rule is to model total cost across your expected volume curve, not at a single point. A higher upfront fee with a lower royalty wins at volume; a lower upfront fee wins at prototype scale.
Prototype and MPW volumes sometimes come with a royalty cap or a one-time conversion option, subject to the vendor's standard terms. If you expect to transition from MPW to production masks, ask for that path in writing before signing.
