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First, the good news. The EDA industry will grow from $6.2 billion in 2015 to $9.0 billion in 2019, according to Gary Smith, chief analyst at Gary Smith EDA. Year-to-year growth rates will range from +4% to +11.2%.
But in his annual presentation on the eve of the Design Automation Conference (DAC 2015), Smith noted that Wall Street is unimpressed. “The people I talk to want long-term steady growth, no sharp up-turns, no sharp downturns,” Smith said. “To the rest of Wall Street, we’re boring.”
Smith spent the rest of his talk noting how EDA can be a lot less boring and, potentially, a whole lot bigger. For starters, what if we add semiconductor IP to EDA revenues? Now we’re looking at $12.2 billion in revenue by 2019, Smith said. (He acknowledged, however, that the IP market itself is going to take a “dip” due to the move towards platform-based IP and away from conventional piecemeal IP).
This still is not enough to get Wall Street’s attention. Another possibility is to bring embedded software development into the EDA industry. This is not a huge market – about $2.6 billion today – but it is an “easy growth market for us,” according to Smith.
Chasing the Big Bucks
But the “big bucks” are in mechanical CAD (MCAD), Smith said. In the past the MCAD market has always been bigger than EDA, but now EDA is catching up. The MCAD market is about $6.6 billion now. Synopsys and Cadence are larger than PTC and Siemens, two of the main players in MCAD.
There may be some good acquisition possibilities coming up for EDA vendors, Smith said – and if we don’t buy MCAD companies, they might buy EDA companies. Consider, for example, that Ansoft bought Apache and Dassault bought Synchronicity. (Note: Siemens PLM Software is a first-time exhibitor at DAC 2015).
What about other domains? Smith said that EDA companies could conceivably move into optical design, applications development software, biomedical design, and chemical design. The last if these is probably the most tenuous; Smith noted that EDA vendors have yet to look into chemical design.
Applications development software is the biggest market on the above list, but that means competing with Microsoft, IBM, and Oracle. “You’re in with the big boys – is that a good idea?” Smith asked.
Perhaps there’s an opening for a “big play” for an MCAD provider. Smith noted that mechanical vendors are focusing on product data management (PDM). This “is really the IT of design,” Smith said. “They have a lot of hope that the IoT [Internet of things] market is going to give them an opportunity to capture the software that goes from the ground to the cloud. Maybe we can let them have PDM and see if we can take the tool market away from them, or acquire it away from them.”
In conclusion, Smith asked, should the EDA industry accelerate its growth? “The mechanical vendors have already shown interest in acquiring EDA vendors,” he said. “We may not have a choice.”
NOTE: Catch our live blog from DAC 2015, beginning Monday morning, June 8! Click here