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My colleague, Richard Goering, and I spent time with Cadence CEO Lip-Bu
Tan to get his thoughts on the company, on the EDA industry and electronics business,
and design trends in general. In part 1 of our coverage, Tan talks about
the company's evolution, its burgeoning IP business, and its acquisition
Here, in part 2, Tan addresses larger industry issues.
Specifically, how do we energize semiconductor design to attract the next
generation of engineering students, and how do we grow the global TAM and
increase value all the way along the design chain?
Q: What do you see as some of the electronics industry's
A: If you look at the bigger picture,
the semiconductor industry has not grown for the last few years and actually
it's declining. That's troublesome for me. If the industry is not growing, it
becomes a dog-eat-dog business. The industry needs to wake up. As leaders, we
need to look both at our company's performance, and at the industry as a whole.
In my view, there are areas that are
very challenging, and I have taken it upon myself to help and contribute to
them in a small way.
One important one has to do with
attracting young engineers. The good students from MIT, Carnegie Mellon,
Stanford, Berkeley...they're going to the Googles and the Facebooks of the world.
I would like some of the best talent to come to the semiconductor industry
rather than go to the social media, Internet world. There is a lot of very
important innovation going on here in the chip world.
That's why we're reaching out to all
the best students. Recently, I met a PhD student from Carnegie Mellon. The
moment I saw him, I sent a note to all my executives and said "We should hire this
guy." And it turns out we already had. It made my day. And not only do we now have
him but we have his professor working with us. So as an industry, we have to do
what we can to attract the best talent.
Q: At this year's DAC, you spoke of doubling and tripling down on
your semiconductor investments. But you're almost a lone wolf in
that regard these days. How do we spur more investment in electronics?
A: I used to have 25 guys I could
count on to invest in semiconductors. Now, there are almost none, and that
worries me. The semiconductor and system guys are sitting on $440 billion in cash.
But it's hard to do disruptive innovation in big companies.
That's why I'm excited to see some
semiconductor companies going IPO, getting acquired, and providing liquidity. So
hopefully we'll get more VC investment. InPhi went public. Montage just filed,
and there are other companies ready to file. We are starting to see more
innovation and the capital is going to flow in. At the end of the day, the
venture guys have to invest in semiconductors. One day soon, the mutual funds
have to get back to liking the semiconductor industry to buy the stocks, so we
can grow that $300 billion semiconductor market to $500 billion.
Q: How do you see EDA companies extracting more value from
A: I talk to my
friends Wally [Rhines, Mentor Graphics CEO] and Chi-Foon [Chan, Synopsys president
and co-CEO], and say "We should not be fighting each other; we should grow the
pie." We are so critical to design and we have to continue to provide more value.
In the last three years, we all look good in terms of stock performance. But if
one of us misses the numbers, all three get dragged down. So we have to look at
the big picture: How can we help the system guys to grow? Because right now, the
system guys are becoming double-digit growth customers for Cadence.
So I say, let's grow the pie. Let's
grow the industry. Let's provide the value.
Look at the semiconductor TAM right
now: It's $300 billion. The three of us--80 percent of the [EDA] market--are
still a tiny percentage of their design spend and their value. Should we get
more of that? Absolutely. We need to deliver the best IP and tools and price
accordingly. I'm very bullish about EDA.
with Lip-Bu Tan, Part 1 - How Cadence is Positioned to Build Upon Success
CEO at DAC 2013: 'I've Doubled, Tripled Down on Semiconductor Investment'
Tan at CDNLive 2013: Opportunities and Challenges for Electronics, and How
Cadence Can Help