EDA, IP Growth Surge

EDA and IP grew 8.9% in Q3 of 2019, according to a just-released report, indicating continued confidence in semiconductor growth.

Total revenue was up 8.9% globally compared with the same period in 2018, but that number is deceptively low. Revenue in China, for example, increased 5.7% compared to the same quarter in 2018, despite trade restrictions on sales of any IP developed in the United States to Huawei, China’s largest electronics company. China’s semiconductor industry continues to grow internally, and it has since begun developing a separate supply chain to avoid similar supply issues in the future.

In other markets, sales were well into the double digits. In the U.S., for example, physical design and verification grew 20%, according to Wally Rhines, CEO Emeritus of Mentor, a Siemens Business, and spokesperson for the ESD Alliance’s Market Statistics Service. PCB and multi-chip modules showed double-digit growth, as well.

“The design phase precedes production, so there is a lot of confidence this will continue,” said Rhines. “It’s not just automotive, either. For the past several years we saw hundreds of companies working on electric cars. In the past there were 500 companies working on electric cars and 200 companies working on autonomous vehicles. That has hit a plateau. And looked at in aggregate, the EDA is growing much faster than the electrification of cars, trains and planes. Some of this is due to AI in neural networks and pattern recognition. We’re also seeing the next phase of 5G designs. All of those things bode well for strong EDA.”

The slowdown in Moore’s Law has helped, too. Advanced packaging rose 17% in Q3 of 2019 compared to Q3 of 2018.

Fig. 1: Q3 2019 revenue by segment and region. Source: ESDA MSS/SEMI

“We’re seeing a lot of new and growing markets,” Rhines said. “We’re also seeing continued fabless semiconductor startup funding. In 2018 there was $3.5 billion in funding. It probably was less in 2019, but it’s still strong. That compares to only about $2.5 billion in 2000.”

Fig. 2: Quaterly EDA, SIP and services revenue by category, Q1 1996 to Q3 2019. Source: ESDA MSS/SEMI

Another indicator of confidence is hiring, which continues to grow. There were 44,950 professionals employed in EDA in Q3 2019, up 6.6% compared with 42,162 employed in the same period in 2018.

By category:

• CAE revenue grew 10.8% year over year to $838.3 million.
• IC physical design and verification grew 17.2% to $557.6 million.
• PCB/MCM grew 19.8% to $240.5 million.
• Semiconductor IP grew 3.7% to $835.9 million.

The only loser was services revenue, which dropped 19.9% to $95.4 million. Design services tend to grow when companies are outsourcing part or all of their design work.
By region, the Americas grew 10.4% to $1.17 billion in Q3; Europe grew 0.1% to $351.1 million; Japan dropped 9.4% to $219.3 million, and Asia/Pacific grew 5.7% to $827.5 million.

On a four-quarter moving average basis, CAE was up 7.0%, IC physical design and verication was up 6.9%, and PCB/MCM revenue was up 10.3%.

Fig. 3: Four-quarter moving average. Source: ESDA MSS/SEMI