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EDA sees positive sequential revenue trend

Posted: 14 Apr 2010 ?? ?Print Version ?Bookmark and Share

Keywords:EDA? IC design? software?

EDA revenue improved on a sequential basis in Q4 09 for the second consecutive quarter, according to the EDA Consortium (EDAC) trade group.

EDA revenue totaled $1.26 billion in Q4 09, up 8.1 percent on a sequential basis and down 4.2 percent year-over-year. The four-quarter moving average also declined by 9.5 percent, according to a report by EDAC's market statistics service.

"Despite the year-to-year decrease, the EDAC revenue numbers continue to show a sequential increase over the previous quarter," stated Walden Rhines, EDAC chair and chairman and CEO of Mentor Graphics Corp.

In a discussion with EE Times, Rhines highlighted the sequential improvement and said that, while EDAC does not provide forecasts, "we certainly see that the sequential trend is positive."

EDA revenues indeed improved sequentially in the third and the fourth quarters, ending a long string of successive declines from the first quarter of 2008 through Q2 09.

Asked whether it is possible to get back to where we were early 2008, Rhines explained that the EDA industry has been on a long-term growth trend throughout its history. He declared: "The amount of software required to solve design problems, the number of designers, the complexity of design and the number of new design applications all continue to increase over the long term. While there may be periods of slow, or even negative, growth, EDA is a long term growth industry."

In Q4 09, Rhines indicated that the most notable sequential increases were in the categories of CAE, IC physical design and semiconductor IP.

Questioned about the probability that these categories will continue to improve in the first quarter of 2010, Rhines outlined that these sequential increases are notable because two of them are among the largest segments of the EDA industry, namely CAE and IC physical design. "That suggests that the sequential improvement is broad based rather than focused upon specialty design areas."

The top five largest categories remain the same but, he noted, there are some smaller categories that showed strong sequential and annual growth. These included design for test, ESL design, PCB analysis, yield enhancement, physical libraries and verification IP. "In general, these are newer area of EDA design and therefore would be expected to be growing faster than the larger, more traditional categories," Rhines commented.

Growth in Asia
According to EDAC's report, revenue declined y-on-y in every consuming region, with the exception of the Asia Pacific region, which improved by 6.3 percent to $210 million.

Although Asia Pacific region ranks fourth, after the Americas, the EMEA region and Japan, it is the only region to show a year-to-year growth. A question is being raised here: Can we expect the gap to continue to shrink between EMEA, Japan and APAC?

Emphasizing that he was speculating, Rhines answered that "it is clear from recent data that the APAC region has been increasing as a percent of the total EDA market. Given the growth of design personnel in Asia, this does not seem surprising."

EDA companies that were tracked employed 25,995 professionals in Q4 09, down 4.8 percent y-on-y but up 0.2 percent from the 25,942 employed in Q4 09, EDAC said.

Rhines commented: "The year to year decline in total employment in the EDA industry is now being offset by slight sequential growth. As electronics R&D spending increases, one would expect EDA employment to increase as well."

To illustrate his view, he cited the quarterly numbers for 2009: 26,561 professionals in Q1 versus 26,298 in Q2, 25,942 in Q3 and 25,995 in Q4.

"Based upon the data for the fourth quarter of 2009, the EDA companies have indeed started to resume hiring," Rhines concluded.

- Anne-Francoise Pele
EE Times

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