Global Sources
EE Times-Asia
Stay in touch with EE Times Asia
?
EE Times-Asia > EDA/IP
?
?
EDA/IP??

Cadence-Mentor merger a 'bad idea', analyst says

Posted: 20 Jun 2008 ?? ?Print Version ?Bookmark and Share

Keywords:electronic design automation? mixed signals? web-based designs?

"Cadence Design Systems is under pressure and may lose its top spot in the electronic design automation sector, and its proposed $1.6 billion merger with Mentor Graphics is 'a really bad idea,'" said a veteran EDA analyst.

"You would be sticking together two companies that have little synergy, a number of overlap and enough combined debt with the deal to make it hard to keep the pace in R&D," said Gary Smith, principal of Gary Smith EDA. "This deal would be like tying a boat anchor to the two companies and potentially sinking them both," he added.

"The two companies have significant product overlap in several keys areas including IC routing and DFM tools, where Mentor's products are superior," he said. They also have similar products in chip verification, an area that has become as critical as chip design itself given the rising complexity of semiconductors.

Contemplating on sliding growth
Michael Fister, Cadence CEO, is under heavy business pressure to maintain the company's lead in the sector that has seen growth slump. The company said its sales may fall four percent this year, but Wall Street analysts have projected the digits downturn could be doubled.

Cadence's two biggest customerschipmakers Freescale Semiconductor and NXP Semiconductorare struggling with their own problems. In addition, Cadence is facing new competition from Magma Design Automation and Synopsys Inc. in the analog and mixed-signal design area. "Cadence is in trouble, it will have a negative year and may lose its number one spot in EDA," said Smith. "Fister needs to do something to fix the company, but this will not fix it," he added.

Forecast for Mentor
"If Walden Rhines, chief executive, Mentor, can resist the $16 per share deal, it could create a shake-up that potentially puts it in the driver's seat for software to design chips and boards," said the analyst. Mentor's board rejected the merger after Cadence proposed it at the recent Mentor board meeting.

"Mentor has really become the leader in technology and strategy and it has been for the last couple of years," Smith said. "It was the first to figure out RTL chip design was going to go flat and it had to go above it to ESL and below it to DSM," he added.

Smith noted that Mentor could be one of the few EDA companies other than Magma to have a robust 32nm IC router offering, a key product for next-generation chips.

"Wally is shooting to be number 1, and I would not be surprised if he makes it," stressed Smith. "I think Wally's board members are pretty good now and they understand that the only reason to do this deal would be to take the money and run," he said.

- Rick Merritt
EE Times





Article Comments - Cadence-Mentor merger a 'bad idea', ...
Comments:??
*? You can enter [0] more charecters.
*Verify code:
?
?
Webinars

Seminars

Visit Asia Webinars to learn about the latest in technology and get practical design tips.

?
?
Back to Top