5 Reasons For Change

One of the most intriguing trends to watch these days is in the area of diversification and differentiation. As we emerge from the worst downturn in the history of semiconductor design—in fact, the only time EDA has ever shown negative numbers other than accounting changes—companies are looking for new avenues of revenue growth that are significantly different than where they drew their revenue going into the downturn.

There are five very good reasons for this:

1. The downturn has shown many companies they need to be hedged across multiple markets if they want to continue showing growth in future years. Because of the convoluted supply chain, which is spread across continents and across different design cycles, not all parts of the design chain feel the pinch at the same time. As a result, we’re seeing moves into a variety of areas such as Mentor pushing into Android devices and Synopsys moving into software prototyping.
2. Not all parts of the industry are poised for significant growth in the future. There will jam-up of competitors in some areas because there are far fewer design starts. While the design starts that do happen will be bigger and more complex, there will be fewer companies developing them because of the cost. In addition, there will be less creativity in other areas that were consistent revenue sources because rising complexity coupled with a lag in lithography technology is forcing more restrictive rules on designers. Just to get chips out the door at 32nm and beyond will require more regular shapes and layouts, which doesn’t bode well for a slew of players fighting for a shrinking place and route market.
3. The value has shifted from just hardware or software to hardware and software. Co-verification, software modeling and prototyping and even operating system and some application development is being done by chipmakers. Companies that can bridge these two worlds effectively will reap bigger rewards than those doing the same thing they were doing two years ago.
4. The pain points are getting more granular. While SoC design is moving to a higher level of abstraction, verification has more things to test. The models work great for blocks, but now those blocks have to be tested, as well. And they have to be integrated and share resources, particularly in multicore chips. Add in various power modes and power islands and complexity goes straight up and off the charts. That also has created new opportunities for startups to gain entry into the industry, and the big guys are struggling to either absorb them or compete against them.
5. There is growth in tangential markets, and far better security in reaching beyond the classic EDA world. Mentor’s push into DFM and test, mechanical analysis and wiring harnesses is a case in point. Synopsys’ push into IP and high-level synthesis are well beyond its normal flow. Even Magma has pushed into analog and mixed signal place and route.

As we emerge from this downturn—and we are still not fully emerged—these moves are likely to become even more pronounced. What is uncertain is just how the industry will look when these changes take root.

–Ed Sperling