EDA Industry Update JUNE 2009 -- What did the Last Quarter Bring?

Commentary:

EDA Industry Update JUNE 2009 -- What did the Last Quarter Bring?

by Dr. Russ Henke and Dr. Jack Horgan
Henke Associates

In each of the 24 quarterly EDA Industry Commentaries published here since May 2003 by the authors, the then-current yearly and quarterly financial performances of a selected group of publicly traded Electronic Design Automation (EDA) companies were analyzed and compared. Expectations regarding the future financial performances of these same EDA entities were documented as well. The originally selected companies were Altium, Ansoft, Cadence, Magma, Mentor Graphics, Nassda, Synopsys, Synplicity and Verisity.

Note: As part of continuing EDA industry consolidation, two previously-selected EDA vendors, namely Verisity and Nassda, had been acquired by others and hence were dropped from the authors' quarterly EDA Commentaries. More recently, EDA vendor Synplicity was acquired by EDA vendor Synopsys, and EDA vendor Ansoft was acquired by MCAE vendor ANSYS. Consequently, both Synplicity and Ansoft will no longer independently appear in these EDA Industry reports.

This June 2009 report covers the performances of the remaining group of five (G5) EDA vendors for the nominal First Quarter. The timing of the publication of these quarterly commentaries is governed by the official release of quarterly results of the last vendor of the five to report for the quarter; this time it was Mentor Graphics, which reported on May 29, 2009 (Magma just beat MGC by two days). In this issue, EDA News Highlights are followed by the revenue & earnings performances of the selected group of EDA players for Q1 2009, and then EDA vendor by vendor details. EDA Vendor stock prices are discussed. Finally, individual EDA vendor forecasts for nominal Q2 2009 are provided. Enjoy!

Recent EDA Industry News Highlights:

As reported in the recently-issued Electronics IP Commentary for May 2009 by the authors, on May 07, 2009 Mentor Graphics and LogicVision announced the two companies had signed a definitive merger agreement pursuant under which Mentor Graphics will acquire LogicVision. Under the terms of the agreement, which was approved by the boards of directors of both companies, LogicVision stockholders will receive 0.2006 of a share of Mentor Graphics common stock for each share of LogicVision, for aggregate consideration of approximately $13 million dollars (as of May 07, 2009). LogicVision will operate as a wholly-owned subsidiary of Mentor Graphics. The transaction is subject to the approval of LogicVision stockholders as well as customary closing conditions (but is not subject to regulatory approvals). The transaction is expected to close during the third calendar quarter of 2009.

On June 1, 2009 Altium announced it was providing software worth nearly US$100,000 to the Rutgers University robotics club, which will use Altium’s next generation electronics design solution to design and manufacture a complete unmanned aerial system (UAS). The vehicle will feature in the UAS competition run by the Association for Unmanned Vehicle Systems International (AUVSI). The national competition requires university students to demonstrate the flight capabilities of an unmanned, electric powered, radio controlled aircraft they design and build. Entries are judged on design and ability to meet a range of mission objectives. The five-day event will be held at the Webster Field, St. Inigoes, Maryland, June 17-21, 2009. The Rutgers team will use Altium’s design solution to develop complex navigational controls, and the entire aerial sensing system and flight platform. A flight stabilization and control system, autopilot, and GPS navigation system will let the vehicle takeoff and land without human intervention, mimicking a military spy plane. It will search the arena and relay real-time video back to an operator who will identify the locations of mission targets.

On March 11, 2009 iSuppli announced its ranking of semiconductor suppliers in 2008. From that announcement, Table 1 reveals that the top ten firms were:

Note that only Qualcomm (+15%) and STMicroelectronics (+3.3%) experienced revenue growth relative to the prior year.

Total 2009 revenue from all firms surveyed by iSuppli was $258 billion, a decline of 5.2% from 2007.

On May 01, 2009 the Semiconductor Industry Association (SIA) reported that worldwide sales of semiconductors were $14.7 billion in March 2009, a slight gain of 3.3% from the prior month when sales were $14.2 billion. Sales for the entire first quarter of 2009 amounted to $44.0 billion, a disappointing 29.9% decline from the first quarter of 2008 when sales were $62.8 billion. Q1 2009 sales also declined by 15.7% from the fourth quarter of 2008 when sales were $52.2 billion.

March sales in all geographic regions except Japan showed month-to-month gains. Sales in Japan were sharply lower, reflecting a drop in the country’s economic output. However, all geographic regions reported lower first-quarter sales compared to the same period of 2008.

SIA President George Scalise said, “The modest sequential rebound in worldwide sales in March suggests that demand has stabilized somewhat, albeit at substantially lower levels than last year. While all major product sectors showed month-on-month growth, there continues to be limited visibility in end markets. There are some bright spots such as ‘smart phones’ and ‘netbook’ PCs, but there are no clear signs of early firming of demand in other major end markets such as automotive, corporate information technology, and consumer electronics.

Scalise continued, “The global chip industry continues to reflect the influence of the worldwide economic slowdown. We expect economic stimulus measures in the U.S. combined with other countries will begin to impact sales as we enter 2010.”

On June 01, 2009 Cadence announced that the Chinese Academy of Sciences Institute of Computing Technology (ICT) had adopted the Cadence® Incisive® Xtreme® III System for accelerating the development of RTL design with a verification flow for its next-generation 64 million-plus gates Loongson III advanced multi-core microprocessor. The deployment of the Incisive Xtreme III System for developing the ICT’s advanced 65- and 45-nanometer multi-core processor is said to have enabled ICT engineers to accelerate system-level verification while validating software operations.

On May 27, 2009 Magma announced the release of Talus ® 1.1, a new RTL-to-GDSII chip implementation system that is said to deliver the fastest timing closure on the largest and most complex semiconductor designs. Talus 1.1 utilizes the new Talus ® COre ™ technology, which leverages Magma's unified data model to perform timing optimization concurrently during routing. This is said to enhance designers' ability to achieve optimal results across a wide variety of designs -- while minimizing the need for user intervention. Talus 1.1 also introduces the Talus ® Flow Manager ™ with "out-of-the-box" design flows. Included with the release are out-of-the-box reference flows for RTL-to-GDSII, multi-Vdd, low-power design and high-performance design. Talus Flow Manager also introduces a new visual analysis environment, Talus ® Visual Volcano ™, that is said to integrate and present all design and analysis data via a common display.

On June 02, 2009 Synopsys announced that Semiconductor Manufacturing International Corporation (SMIC), one of the leading semiconductor foundries in the world, had adopted Synopsys' HSPICE® circuit simulator and WaveView Analyzer for design and verification of SMIC’s 65-nanometer (nm) and 45-nm IP blocks, I/O circuitry and standard cell characterization flows. Taking advantage of the features in the 2009.03 release of the Synopsys HSPICE circuit simulator, it is said that SMIC was able to cut simulation runtimes in half with improved silicon correlation over SMIC’s existing solution.