EDA Revenue Up 11% YoY In Q4 ’24

The EDA industry reported substantial revenue growth in Q4 2024, up 11% to $4.9 billion from $4.44 billion reported in the same quarter of 2023, according to the ESD Alliance, a SEMI Technology Community, announced Monday in its latest Electronic Design Market Data (EDMD) report. The four-quarter moving average, which compares the most recent four quarters to the prior four, rose 12.8%.

Walden C. Rhines, executive sponsor of the SEMI Electronic Design Market Data report noted, “One of the surprises to me was the fact that overall, Asia Pacific grew at 10% despite the fact that China was down. 10% is an interesting observation, but overall, [the industry showed] pretty broad strength, 3% growth in employment, double digit growth in the Americas, Japan and Asia PAC, growth in all product categories, except IP, and strong in Asia except China.”

As to the reason why the IP category dipped, “[IP] is a little more volatile. We categorize IP into reporting and non-reporting companies, and the ones that were down were the reporting companies. Non-reporting includes companies like Arm and that suggests that the overall broader IP industry, was fairly strong, 21% and yet the reporting companies that sell IP – and most EDA companies sell some IP—was weaker,” Rhines said.

Digging more deeply in the numbers, one of the ones that stands out is printed circuit board design, which was a very strong 16% growth. “Within that, two areas were particularly so,” Rhines said. “One was very strong. 70% growth in IC package design, which I think intuitively, you would think that makes some sense. The problem with package design is that not everyone lists their purchases in the IC package design segment, even though they may be buying a routing tool for package design. I know at least one major company reports their numbers in physical design instead of package design, even though they have a lot of copies in use for package design. So, it’s a little bit anomalous in the reporting but it’s not a trivial area. It’s $84 million a year of revenue, and so to grow 70% is big.”

Resolution enhancement is another strong product sector. “One wonders what the Chinese producers are doing, because they’re obviously doing quadruple patterning, where the rest of the world is using EUV. Where are they getting their software? Because certainly some of the companies like SMIC are embargoed but I don’t know the details there.”

Further, services revenue was strong, which is typically modulated by employees versus outsourcing. “The service revenue this time was 11% growth, a reasonably healthy number, and that means that people still have more design ambitions than they have people to cover them,” Rhines noted. “That’s usually a positive indicator, and usually services is what becomes weak as you’re heading into a recession, because people pull their design work in house.”

So, for companies concerned in general about economic factors, Rhines said, “Keep the faith relative to design, as that’s what we see even in the worst financial crises: R&D for design continues. The reason, I believe, is because everyone knows that sooner or later things will change, hopefully get better, and you’ve got to have new designs coming to market all the time, or you fall behind.”

Also, it’s really hard to downsize a design team and then resize it up later. “Designers are hard to find, and you can’t just modulate the people. It’s a fixed cost expense. During a recession, EDA has been a great investment, because even if the semiconductor industry swings plus or minus 30% or more, the EDA industry has a fairly small effect, because the R&D continues. I saw this when I worked at Texas Instruments. We would have major cutbacks and reductions in personnel, and we hardly ever touched a designer. That was the place we needed stability,” he added.

According to ESDA, the companies tracked in the EDMD report employed 61,827 people globally in Q4 2024, a 2.9% increase over the Q4 2023 headcount of 60,106, but down 0.9% compared to Q3 2024.

The quarterly EDMD report contains detailed revenue information within the following category and geographic breakdowns.

Revenue by Product and Application Category – Q4 2024 Year-Over-Year Change

 Computer-Aided Engineering (CAE) revenue rose 10.9% to $1,696.9 million in Q4 2024. The four-quarter CAE moving average increased 12.3%.

• Integrated Circuit (IC) Physical Design and Verification revenue increased 15.4% to $797.9 million. The four-quarter moving average for the category increased 8.1%.
• Printed Circuit Board (PCB) and Multi-Chip Module (MCM) revenue jumped 15.9% to $476.2 million. The four-quarter moving average for PCB and MCM rose 8.3%.
• Semiconductor Intellectual Property (SIP) revenue increased 7.9% to $1,760.7 million. The four-quarter SIP moving average rose 15.7%.
• Services revenue rose 11% to $195.6 million. The four-quarter Services moving average rose 26.2%.

Revenue by Region – Q4 2024 Year-Over-Year Change

• The Americas, the largest reporting region by revenue, procured $2,171.8 million of electronic system design products and services in Q4 2024, a 12.9% increase. The four-quarter moving average for the Americas rose 17.1%.
• Europe, Middle East, and Africa (EMEA) procured $622.3 million of electronic system design products and services, a 2.3% increase. The four-quarter moving average for EMEA grew 10.6%.
• Japan’s procurement of electronic system design products and services increased 21.7% to $318.4 million. The four-quarter moving average for Japan increased 10.8%.
• Asia Pacific (APAC) procured $1,814.8 million of electronic system design products and services, a 10.2% increase. The four-quarter moving average for APAC grew 9.3%.