EDA Sales Down Slightly

Q4 showed first drop in six years; IP and services show solid growth.


EDA sales dropped 1.9% in Q4 of 2015, following a spectacular run of 23 consecutive quarters of solid growth. For the year, the EDA and IP industry posted 5% growth.

It’s hard to read too much into a single quarter, especially when growth for the full year was up 5%, according to numbers released by the EDA Consortium’s Market Statistics Service. Computer-aided engineering (CAE), the largest category, was down 7.8% in Q4 to $645.3 million, compared with $699.5 million for the same period in 2014. IC physical design and verification was down 8.1% to $444.6 million, compared with $483.7 million.

At the same time, IP revenue grew 9.2% to $702.2 million, up from $642.8 million in Q4 of 2014. It was the first time ever that IP surpassed CAE revenue. Services revenue also grew 5.4% year over year to 107.1 million.

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Source: EDAC MSS

“When you compare this to the semiconductor industry, which hardly grew at all in 2015, this is good,” said Wally Rhines, board sponsor for the EDAC MSS, and chairman and CEO of Mentor Graphics. “EDA is a highly attenuated version of the semiconductor industry.”

Rhines pointed out that all of the declines were in the single digits.

“We also saw good strength in IP and services,” he said. “And China is still showing strong growth. They continue to invest. The government has committed $20 billion to stimulate self-sufficiency in semiconductors. That investment is going to private equity, which will throw in $100 billion of their own. About half of that will be for manufacturing, but about a third will be for fabless semiconductors.”

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Q4 Revenue by segment and region, in millions of dollars. Source: EDAC MSS

The bigger question is how 2016 will look. A single quarter is too short a period of time to draw conclusions about the industry’s health.

On a regional basis, the Americas posted a 3.1% drop in revenue to $906.5 million. Asia/Pacific grew 2%, while Japan dropped 8.4%.