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EDA’s Transformation Will Lift It Out Of The Recession

• EDA market growth has bounced back in 2010; look for solid growth to continue in 2011
• Market hot spots include electronic system-level design, design for manufacturing, and new directions such as cable and wire-harness tools and thermal/fluid analysis

The recession just can’t seem to sufficiently loosen its grip on the global economy, leaving most markets stuck in neutral. Consumer spending is weak, corporate spending is lackluster, and there doesn’t appear to be any rising tide on the immediate horizon to lift everyone’s boat. Yet despite all of the turmoil in the big picture, the EDA industry has held its own during the past year.

Though 2008 and 2009 were both big disappointments for market-wide growth, much of this was due to the accounting quagmire in which Cadence has been involved. Market-wide revenue dropped more than 11% in 2008. Then in 2009 the other top EDA companies also suffered from poor growth numbers when cautious spending became the norm for practically all customers. The market size dropped another 6.6% in 2009.

Remarkably, EDA spending seems to have resumed “normal” cyclical patterns even though an end to the recession is still a far-off hope. EDA market growth (see the figure left) has bounced back considerably in 2010 and is expected to exceed 10%. This will continue into 2011, which is also projected to experience solid growth of nearly 10%. The five-year compound annual growth rate (CAGR) for EDA is forecast to top 8% through 2014.

Even without the gangbusters consumer and corporate spending environment of a few years ago, the need to invest in upgraded design technology is crucial for the electronics industry. Remaining on the forefront of design is the only way for electronics and semiconductor vendors to stay in the game with the short lifecycle of today’s ultra-competitive high-tech products.

Key Trends In 2011
It is interesting to look at which areas of EDA are the hotspots in the market. The move up the design flow to a higher abstraction level is indisputably underway. Adoption of electronic system-level (ESL) tools is accelerating, while register transfer-level (RTL) tools are becoming more commoditized and feeling the resultant pricing pressures.

As growth of RTL tools, which has long been the mainstay of the leading EDA vendors, is leveling off, there have been quite a few acquisitions of key ESL tool providers by EDA as well as semiconductor companies. It is widely recognized that ESL will be a strategic growth area going forward.

When the semiconductor industry was flooded with fabless chip companies and IC startups were popping up everywhere back in the booming dotcom era, tools for IC layout were in especially hot demand by a large customer base. Now that the concentration of back-end chip design is being reconsolidated in the hands of fewer companies (primarily the large integrated device manufacturers and foundries), fewer seats of IC layout tools are required.

However, the escalating complexities of the chips being designed mean that there is an intensifying need for design-for-manufacturing (DFM) tools to deal with the yield complications that arise. Resolution enhancement technology (RET) and design-for-yield (DFY) will be drivers of IC layout segment growth.

The printed-circuit board (PCB) tools segment has been fairly stagnant for some time. Maturity of the technology and vendor consolidation have been the primary hallmarks of the PCB segment. We are seeing now that PCB vendors have begun to eye non-traditional, but related, markets to pursue.

Cable and wire harness tools, analysis tools for thermal and fluid flow characteristics, and tie-ins with mechanical CAD design tools are some of the directions beyond core PCB technology to which EDA vendors are already turning. These new avenues should help to revive the vitality of the PCB segment.

Information printed from www.rayyedding.com

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