Who’s Out, Who’s In

The trend toward consolidation will continue, but what the survivors look like is unknown.

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The EDA world is either doing better than most segments of the economy or coming apart at the seams, depending upon your perspective and your definition of exactly what an EDA company is. But at least one trend seems clear: As we push into the world of system-level design from chip design and SoCs instead of ASICs, the high-level trend is broader companies with more complete integrated packages rather than lots of little pieces.

 

While this may cause all sorts of gyrations and lots of discomfort in the interim, the industry around system-level design tools ultimately will emerge significantly stronger if not overtly different. It has no choice. Either it begins eliminating pain for engineers developing incredibly complex chips or they’ll lose market share to companies like IBM and Toshiba, which already have their own proprietary tools, and the foundries, which easily could cobble together a suite of tools on their own.

 

To no small extent, Mentor Graphics and Synopsys are well along the path of creating much more integrated flows that reach well beyond the bounds of where they used to be. Cadence clearly sees the need to change, as well, which accounts for the board’s recent actions to boot all upper management—including longtime CTO Ted Vucurevich this week. He mysteriously has disappeared from the management roster, even though the company never announced his departure.

 

Cadence’s new CEO, Lip-Bu Tan, has more experience on the finance side than anyone since former CEO Ray Bingham, but he also has one other benefit. According to company insiders, he has very strong ties inside China, which Cadence’s board clearly sees as a growth opportunity.

 

Magma, meanwhile, has gone under a cloak of secrecy in recent months to develop its new strategy. Sources say the company is working on automating parts of the analog flow, but exactly what and how successful Magma will be in that space remains to be seen.

 

What happens to a number of startups along the way is another question. Our guess is that consolidation will begin in earnest when the economy hits bottom and begins climbing back from the depths of despair. The bigger question is where do the next startups get going. Silicon Valley will still be strong, but not all the VC money will end up there.

 

What do you think will happen next?