EDA, IP Growth Surges Again

EDA tools and IP revenue increased 8.9% in Q3 of 2022 to $3.767 billion, up from $3.458 billion in 2021, according to a just-released report from the ESD Alliance at SEMI.

All regions except Japan reported growth, but the numbers were a bit more uneven in Q3 than in recent quarters. For example, total silicon IP dropped 1%, while services revenue grew 20.8%. At the same time, EDA revenue jumped 15.1% to $2.263 billion, up from $1.965 billion in Q3 of 2021.

One of the anomalies was the four-quarter moving average for IC physical design and verification in Asia/Pacific — a region where China traditionally dominates those numbers. The total growth for the year, from Q3 2021 to Q3 2022, was just 2.2%. That brought down total EDA revenue growth in Asia/Pacific to 14.4%. In contrast, the Americas posted 10.4% growth IC physical design and verification, and 16.2% total EDA revenue growth. It was the first time in recent memory that the Americas growth rate beat out growth in the Asia/Pacific region.

“There has been a real slowdown in China over the last few quarters,” said Walden C. Rhines, executive sponsor of the SEMI Electronic Design Market Data Report. “It’s still growing, but not as fast as previous quarters.”

The Americas also saw a huge spike in the PCB/MCM sector, which jumped 46.8% over the same 12-month period, versus 12.4% for Asia Pacific. On the other hand, CAE revenue in China was 25% for the same 12-month period, while the growth rate in the Americas was 12.9%.

Fig. 1: Four-quarter moving average of EDA/IP revenue. Source: SEMI/ESD Alliance/EDMD report

Total EDA revenue in Japan, meanwhile, which had recovered somewhat in recent quarters, dropped 8.3% during the same 12-month period. The big win in Japan was IP and services revenue, which grew 25.7% for reporting IP companies, and 23.5% in services.

Putting this in perspective, while total global growth for EDA and IP was still in the double digits, not everything was as strong everywhere as in previous years.

On a quarterly basis, global EDA revenue grew 15.1%, which includes 16.7% for CAE, the largest category; 15.6% for PCBs and MCMs, and 12.2% for IC physical design and verification. Total silicon IP revenue was down 1% in Q3, compared to the same period in 2021. For reporting IP companies, growth was 6.6%; for non-reporting companies, it was down 5.9%. Total services revenue grew 20.8%.

Fig. 2: Q3 2022 vs. Q3 2021. Source: SEMI/ESD Alliance/EDMD report

Demand for design professionals remained strong in Q3 at 55,369 professionals, and increase of 8.2% over the same period in 2021 and a 1.8% increase compared with Q2.

While these numbers show strength overall, they do reflect changes in the market that make it more difficult to track some segments. For example, systems companies are developing their own chips, and while it’s relatively straightforward to count the number of tool licenses, it’s much more difficult to say how much IP is being re-used because some of those chips are only used internally. And it may become even more difficult to gather data as they begin developing chiplets and using them to build chips for their own proprietary servers.

“One of the very big changes in the last 10 years is the systems companies,” said Rhines. “There is a great deal of challenge in the analysis.”