EDA Revenue Hit Record High In Q3

EDA and IP revenue increased 8.8% in Q3 2024, dragged down from the double-digit growth of recent quarters by a softening in sales to China, according to the most recent report by SEMI.

For more than a decade, China’s growth propped up the entire tools industry, reporting consistent double-digit growth growth that reached as high as 40% quarter over quarter. But with ongoing trade restrictions, China has been forced to develop its own tools at the leading edge, which are not included in the SEMI numbers.

“There’s definitely a change occurring there,” said Walden Rhines, executive sponsor for SEMI’s Electronic Design Market Data Report.  “For the last four quarters, the average growth [for the total EDA, semiconductor IP and services] has been 13.7%.”

This is the third quarter in which China posted negative growth in key categories, such as PCB and physical design and verification. Sales in Korea dropped 30%, as well, according to Rhines, but it’s difficult to draw conclusions based on a single quarter. “Korea has always been a consistent performer,” he said. “The other big surprises in the Pacific Rim were India and Taiwan. India was up a whopping 64%, but they only represent about 10% of the Pacific Rim. Taiwan is a bigger percentage, and it was up 20%.”

On a global basis, the overall EDA/IP market clocked in a run rate of about $20 billion, which is a new record. It’s also a sign that the overall market dynamics have changed, because in the past EDA consistently represented about 2% of overall revenue for the chip industry. Depending upon whose estimate is used and what’s included in those numbers, the current percentage is somewhere between 3.3% and 3.75%. The overall market would need to be at $1 trillion to remain at 2%.

Fig. 1: Four-quarter moving average results. Source: SEMI Electronic Design Market Data

By segment:

• CAE sales revenue increased 16% to $1.92 billion, with a four-quarter moving average up 14.5%;
• IC physical design and verification decreased 5.5% to $854.4 million, with a four-quarter average up 4.3%;
• PCB and MCM revenue increased 5.8% to $450.8 million;
• IP revenue increased 7% to $1.686.2 million, and
• Services revenue rose 45.2% to $200.8 million.

By region, EDA and IP sales revenue to the Americas increased 17.2% to $2.33 billion, while EMEA grew 17.1% to $645.6 million. Japan, meanwhile, fell 3.5% to $298.5 million, and Asia/Pacific dropped 0.7% to $1.85 billion.

Fig. 2: Q3 revenue by segment and region. Source: SEMI EDMD Report