DAC Attack

Designing chips has always attracted the best and the brightest minds. The sheer complexity of creating submicron technology creates challenges in mathematics, physics and science, and if intellectual stimulation ever wanes there’s always the problems associated with the next process node.

Moore’s Law sees to it that new and interesting challenges always have to be met. But it does nothing to see that there is a constant demand for new products. In the past, downturns have bypassed the design world. While chipmakers and capital equipment makers are used to painful up and down cycles, EDA has steadfastly remained in positive turf for decades. This is the first time in its history that it has ventured into negative territory.

So what’s driving this change? For one thing, the end market for semiconductors. Much of the recent growth has come from the consumer market, and while all of that provided enormous opportunity—think 1 billion cell phones replaced every couple years vs. a couple hundred million computers replaced every four to five years—it’s also based upon consumer confidence. In a downturn, consumer confidence slumps. In contrast, most corporations continue to buy technology on a standard replacement cycle, as witnessed by Intel’s recovery.

Growth in areas like medical and industrial electronics may compensate for this eventually, but not immediately and not at the same kind of volume growth as the consumer electronics market. These chips may not even be at the most advanced process nodes, and much of the work may be analog rather than digital. While the EDA industry has been pitching analog solutions for years, they haven’t caught fire the way they have in the digital world. In fact, they may not be widely accepted until recent graduates of analog engineering programs move up into more senior roles at companies.

That leaves vendors of design automation tools and strategies in limbo. While the market will likely pick up—almost everything that is now mechanical will ultimately have an electronic component because it’s much, much cheaper—it may not happen in the same vertical sectors. And no matter how well or when the Americas and Europe recover, the really sharp spikes in growth over the next decade will come from places like India and China where there are still more than 1 billion people untouched by the current economic explosion. In those geographies, the bulk of sales are likely to be extremely cost-sensitive and less cutting-edge technology, which means reference designs may suffice rather than the need to buy the latest and greatest design technology.

Disruptive changes are…well…disruptive. Not all companies survive. Some get bought, others go out of business. Still others manage to transform into something completely different, figuring out where the opportunity is and what they have to offer in the reshaped economy. And people whose jobs hang in the balance sometimes need to change their skill sets to match the changes in the overall market.

This is the overriding theme behind this year’s DAC. Technology is still important, but economics has always been the real driving force. And this year, it is a much weaker force than in the past.

–Ed Sperling