EDA has been underpaid for so long that the necessary levels of investment have not been made. Now the tools that designers need just haven’t been thought about.
The Pied Piper of Hamelin is a German fable about a rat catcher who used his magic pipe to lure away rats. When he was not paid by the town, he used his pipe to lure away all of the town’s children. I am not suggesting that exactly the same is true for the semiconductor industry and having not paid EDA, but I do not think they have paid enough and they will now have to pay a hefty price.
Don’t get me wrong, this is not the fault of the semiconductor industry. The EDA industry did most of this to themselves. EDA companies were so interested in growth at any cost, by stealing accounts from each other, that they discounted way below the fair value of the tools. They trained the semiconductor companies to want and expect bargain basement pricing.
But this had unexpected knock-on effects. First, it made the environment for EDA startups less attractive. Startups face an uphill battle as it is, but having to compete on lowball pricing made things worse. Most ran out of money and got bought by the larger EDA companies for way less than they were really worth.
That led to less investment in EDA and fewer and fewer startups. In the long run, that means fewer new tools or innovative ways of solving the problems of the industry. The large EDA companies, in general, are far too busy maintaining and doing linear development on the tools they have. With each new problem that comes up with the smaller nodes, additional tools become necessary and that gets added to the increasingly large roster of tools in their portfolios. Recent examples are Emulation, verification IP, Double Patterning and power-aware design.
They are also investing huge sums of money on the newest nodes, and the jury is out if they will ever get the return on investment from that with so few semiconductor companies likely to want to buy them. These investments, like the ones made by the fabs to develop the process, are made years ahead of the first customer tapeouts. Of course, EDA companies cannot stop that development. Otherwise they would lose customers, and with it all of the dollars, because semiconductor companies also have been trained to expect all-you-can-eat deals. If they fail on the newer nodes, they would lose for all of the nodes.
EDA revenue has remained a relatively fixed percentage of semiconductor revenues, but to stay at that percentage it has taken a lot of investment, including performing most of the block-level design for the systems in the form of IP. The size and complexity of those IP blocks has also been increasing. EDA has also gone way outside it core space in search of new revenue streams, looking at embedded software, security, system design and others. If you were to look at core EDA revenue, it has probably declined as a percentage of the industry it supports.
But the knock-on effects go even deeper. There is almost nobody doing research in the area of EDA, which means that even the groundwork has not been done on some of the things that the industry is now asking for. Universities are not interested in the area, and there are much more exciting things for research students to be working on. If the startup market had been healthy, that may not have been the case because it would have provided a way for them to monetize their research.
One such example came up while writing my DFT article. It is the lack of tools for analog test and the more fundamental work that is necessary to develop the fault models. A couple of EDA companies are looking into the creation of analog fault simulation, but without the research to guide them, the fault models will not have been proven or standardized. Thus, there is likely to be no compatibility between the tools in terms of the quality of results.
We have seen companies like Verific and Invionics Inc. start selling to design companies in increasing numbers as designers are being forced to create more of their own tools. At least those companies will be reminded how expensive it is to create and maintain those tools.
The price that semiconductor companies will pay is not having the tools they want when they want them. EDA will find a way to create those tools if enough customers ask for them, but EDA is less likely to be speculative these days. That was the role of the startups.