EDA, IP Revenue Up 15%

New report shows strength in all sectors, despite trade war restrictions and a pandemic.


EDA and IP revenues blasted off in Q3 of 2020 in every geography and every sector, despite a trade war, a pandemic, and slowdowns in the automotive and avionics sectors.

Revenue grew to $2.95 billion, up 15% over the $2.57 billion in the same period in 2019, according to a just-released report from the Electronic System Design Alliance Market Statistic Services (MSS). The four-quarter moving average, which provides a broader context for the numbers, increased 8.3%.

“There have been only 3 times in the last 10 years were the growth numbers have been 15% or greater,” said Walden C. Rhines, executive sponsor of the SEMI EDA MSS. “The biggest new trend we’re seeing is that Google, Facebook, Amazon and Alibaba are now not only doing their own chips, but making a lot of them — and big ones. These are application-specific designs, and the cost of EDA tools is not a drag on them.”

What’s different for these giant system companies is the cost of developing custom chips can be economically justified with improvements in performance and power, which in turn lower the cost of powering and cooling operating giant hyper-scaler data centers. So rather than competing for an available slot on a PCB, where every fraction of a penny is important, the cost of more efficient chips and tightly integrated hardware and software can be weighed against adding more servers, powering and cooling them, and increasing the size of data centers. In this case, area is measured by the square foot or meter rather than by millimeters of silicon.

Companies like Apple have started developing their own processors, as well, based on Arm cores, where the cost of development can be absorbed by the sales volume of computers, tablets and phones. Apple also benefits from having a single operating system that works more efficiently in all of these devices, unlike in the past where it offered a separate OS for its phones, and engineered its OS to utilize Intel’s processing architecture.

For EDA companies, all of this translates into significant increases in verification tools, whether they are sold outright or leased through the cloud. China’s push to develop its own chips, many of them based on RISC-V, also has spurred demand for EDA tools.

Fig. 1: EDA, SIP and services revenue breakdown by region. Asia/Pacific region is fastest growing and closing in on Americas. Source: SEMI/ESDA MSS

“What we saw was an acceleration of the growth rate in Q3,” said Rhines. “This overcame the lost of the largest purchaser in the world of EDA tools — Huawei.”

CAE, the largest market segment, grew 10.7% in Q3 to $927.6 million, while IC physical design and verification increased 9.1% to $608.2 million. PCBs and MCMs increased 8.3% to $260.4 million. Semiconductor IP rose 25.8% to $1.05 billion.

The big surprise was services, which has been on the decline over the past four quarters. Services revenue grew 11% to $105.9 million. Along with that, the number of people employed in the industry grew 4.8% to 47,087. Both numbers point to an overall increased demand for engineering talent and domain expertise, which has been one of the big issues for chipmakers going into 2020/2021. More complex designs, more companies developing their own chips, global trade tensions and a slew of new markets and market segments have created a huge demand for both hardware and software engineers and scientists across a wide range of disciplines.

Fig. 2: Quarterly EDA, SIP and services revenue, by category. Source: SEMI/ESDA MSS

By region, Asia/Pacific grew 26.4% to $1.05 billion. The Americas grew 11.7% to $1.31 billion. Europe, the Middle East and Africa grew 4.9% to $368.3 million, and Japan grew 6% to $232.4 million. Most experts point to Japan’s recovery (4.7% four-quarter moving average) as a sign of how widespread the demand for electronics has become.

Fig. 3: Q3 revenue by segment and geography in $millions. Source: SEMI/ESDA MSS


Daniel Payne says:

You mentioned Apple having a single OS, but I see that they offer: macOS, tvOS, iOS, iPadOS, watchOS.

Ed Sperling says:

You’re certainly correct on one level. But the macOS and iOS do use the same kernel and some of the same components. It’s the user interfaces above that low-level SW are different. No idea on the tvOS.

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