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In what is sure to be a highlight from this year’s Design Automation Conference, CEOs of the three largest EDA companies gathered Monday, July 27 to talk about the present and future of the EDA industry. Lip-Bu Tan (Cadence), Wally Rhines (Mentor Graphics), and Aart de Geus (Synopsys) were realistic about present economic challenges, but optimistic about a future in which EDA may play a broader role among a growing customer base.
Wally Rhines, Lip-Bu Tan, and Aart de Geus
I’m sure everyone in the packed auditorium hall would have their own list of takeaways, but here are some of mine.
1. The global economic slowdown has strongly impacted EDA, but EDA technology will help customers get out of it.
Wally: This is the “first significant year of negative growth” for EDA. But forward-looking companies will keep developing products and will increase R&D.
Lip-Bu: Customers feel design costs are too high and are looking for ways to reduce design costs.
Aart: We’re in a global recession. Efficiency and productivity are key, and “if anything screams efficiency, it’s EDA.”
2. Customers are looking for EDA providers to fulfill a broader role than they have in the past.
Aart: The overall cost of design is many times what is paid to EDA companies.
Lip-Bu: Customers want to focus on their core competence and build an ecosystem of partners. Productivity, time to market, and design costs are pivotal.
Wally: Semiconductor companies are now systems companies. They want help with the whole problem – including embedded software.
3. Less venture capital is flowing to fabless companies, but startups still provide new opportunities.
Lip-Bu: Investment in semiconductor companies has decreased “substantially.” There’s a strong requirement for capital efficiency, and EDA vendors can help.
Aart: There are still startups, and they start with a much cleaner design methodology.
Wally: VC-funded fabless startups are still not inconsequential, but more are in analog/RF as opposed to digital. Large IDMs are going fabless or fab-lite, where the differentiation is in the design.
4. EDA startups have a tough ride, but shouldn’t give up hope.
Lip-Bu: Find a tough problem, solve it, listen to the customer carefully. There are a lot of opportunities.
Wally: Don’t run out of money! And look at opportunities big companies aren’t looking at.
Aart: Don’t focus on an exit strategy. It’s contrary to the goal of being an entrepreneur.
5. EDA can take a larger share of semiconductor industry revenues…but will have to provide more value.
Aart: Semiconductor revenues are down 38% in the first quarter of 2009. “We can absolutely improve that picture. There has to be a big emphasis on productivity.”
Wally: We have to provide a bigger share of value. Best way is to help grow semiconductor revenue, and grow alongside it.
Lip-Bu: There are tremendous opportunities in verification, system-level design, mixed-signal, and low power. “When I talk to companies, power is the number one problem they have to solve.”
6. Design services and silicon IP are hot.
Lip-Bu: Customers are focusing on core competence and looking to outsource in other areas. Design services is an area of “tremendous growth.”
Wally: People outsource what they can’t differentiate. Outsourcing physical layout will grow.
Aart: IP is part of the design methodology going forward. Startups want to buy complete subsystems and add value at the next level up.
7. EDA has opportunities beyond semiconductors.
Wally: There are great opportunities in embedded software and systems design, and adjacent industries like automotive and military/aerospace.
Lip-Bu: Medical could be “interesting.”
Aart: The world faces one mega-issue, which is power. Electronics could help cut power consumption by 20-30%.
8. EDA CEOs are taking steps to get through the recession.
Wally: “I’m flying coach.”
Lip-Bu: “I look at Cadence as a startup so I can run it efficiently.”
Aart: We’re cutting costs, but the most important thing is to help our customers stay in business. We do everything we can to make sure chips come out right.
9. There is no one “silver bullet” that will substantially reduce design costs.
Aart: No silver bullet -- we have to make the entire design flow work together.
Wally: We need “lots of improvement in all phases of design,” but high-level design is where we can have the largest impact.
Lip-Bu: Verification is big part of design costs. First-pass design success is critical. System-level design can help customers be very targeted.
10. In conclusion – things are looking up.
Aart: The world is at a critical point with respect to energy, aging, and health care. Technology can address these problems, and we sit at the “heart” of high technology. “Therein lies a big opportunity.”
Wally: The electronics industry is unique in its ability to adapt to economic disruption. We’ll be reporting a growth quarter for EDA at this time next year.
Lip-Bu: Recovery is on the horizon, and there are a lot of exciting and “fun” applications EDA technology can help with. “This is the time to invest. We’ll come out the other side of the tunnel smiling all the way.”
And using Sean's point as a take-off, the next six firms could also help to give a more complete picture (on top of the Big Three) of the economic impacts upon the EDA industry due to this great recession that we are suffering.
You wonder if the CEO's of the next six largest firms (e.g. Magma, Denali, Springsoft, Atrenta, ...) would have been more willing to talk about disruptive technologies and emerging trends. As John F. Parker observed "All reform comes from below. No man with four aces howls for a new deal."