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EDA CEOs see strong 2007

Posted: 28 Feb 2007 ?? ?Print Version ?Bookmark and Share

Keywords:EDA? design? design for manufacturing? ESL? intellectual property?

2007 should be another strong year for the EDA industry, according to CEOs who spoke at the EDA Consortium's (EDAC) annual forecast panel Feb. 22. For the most part, however, the CEO's didn't predict specific revenue targets.

Reticence to select a number may stem from last year's panel, where Wally Rhines, then EDAC chairman, predicted 6.5 percent growth for 2006. The actual figures were far higher, according to both EDAC and Gartner Dataquest.

According to the EDAC Market Statistics Service (MSS), worldwide EDA and intellectual property (IP) revenue in Q3 of 2006 grew 17 percent over the prior year quarter. For Q2 of 2006, the MSS reported a 15 percent EDA revenue increase compared to the same period in 2005. For Q1 of 2006, the MSS cited 10 percent growth.

Last fall, a report from Garter Dataquest predicted that an investment spurt in design for manufacturing (DFM) aware CAD tools would boost EDA growth in 2006 to 13.3 percent. Cadence Design Systems, Mentor Graphics Corp. and Synopsys all reported low double-digit revenue growth for 2006.

Panel moderator Jay Vleeschhouwer, analyst at Merrill Lynch, said that 2006 was the best year of the decade so far for EDA, with revenue growth in the 11 to 12 percent range. Compound annual growth since 2000, however, is only around 3 percent. Vleeschhouwer said that the combined non-GAAP profit of the four largest EDA vendors in 2006 was around $600 million. But Adobe Software, half the size of the EDA industry, was more profitable than that, he noted.

Aart de Geus, Synopsys CEO, said that consumer electronicsespecially videois a strong driver for the semiconductor industry. That industry has a steady-state growth around 7 to 9 percent per year, he said. De Geus said he thinks the EDA industry "will do about as well this year as last." Synopsys has given revenue guidance in the 8 to 10 percent range, he noted.

Mike Fister, Cadence CEO, noted that Cadence is forecasting an 8 percent revenue increase for 2007. He said Cadence's product revenue mix is currently 31 percent analog and custom, 26 percent verification, 25 percent digital, 10 percent board and package, and 8 DFM. The compound growth rate for DFM was only 1 percent for 2004 through 2006, he said. "I think DFM is relatively static right now."

According to Alan Naumann, CEO of CoWare Inc., the EDA industry is at an "inflection point" that will lead to "software centric design." This means not only ESL, he said, but support for embedded software development as well. By 2015, he said, there may be a million people writing embedded software, perhaps 10 times the number of people designing hardware.

Wally Rhines, Mentor CEO, went through a detailed numerical analysis of the R&D expenditures of U.S. electronic companies and its correlation to EDA revenues. His prediction for 2007 is an 8 percent growth, which is "not quite as good as 2006." With an estimate of worldwide R&D expenditures, that figure slips to 7 percent.

Rhines said that "normal" EDA growth is probably in the double digits, but he noted that "what we need are problems that require new tools and methodologies." Two key areas, he said, are DFM and ESL. Rhines noted that DFM was a strong growth driver for Mentor in 2006.

Cadence's Fister, however, noted that "there's a lot of potential hype" in DFM. "The problems are hard, and I believe the business model will change," he said.

De Geus said that ESL got off to the wrong start, "as if it would be great to sell air because there are more people on Earth." He added that "C compilers are incredibly good and incredibly free." He noted, however, that ESL has succeeded in the form of IP reuse, and that hardware platforms are increasingly needed for software development.

- Richard Goering
EE Times

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