March 01, 2004
Predicting EDA's future growth -- and, is Moore's Law dead, or has the paradigm shifted?
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Peggy Aycinena - Contributing Editor

by Peggy Aycinena - Contributing Editor
Posted anew every four weeks or so, the EDA WEEKLY delivers to its readers information concerning the latest happenings in the EDA industry, covering vendors, products, finances and new developments. Frequently, feature articles on selected public or private EDA companies are presented. Brought to you by If we miss a story or subject that you feel deserves to be included, or you just want to suggest a future topic, please contact us! Questions? Feedback? Click here. Thank you!

Publisher's Note: There's a New Editor Coming to EDAWeekly Soon!

Beginning next week Dr. Jack Horgan takes over the reins as Managing Editor of EDAWeekly. Jack is best known to you for his exemplary work on our Quarterly EDA financial report. You can read a sample in this issue. Dr. Horgan is a CAD expert with years of academic and industry experience and we are honored to have him onboard. I'm sure you'll enjoy the depth of coverage and industry insight he brings. Welcome Dr. Jack!

Predicting EDA's future growth -- and, is Moore's Law dead, or has the paradigm shifted?

By David Heller

In this week's EDAWeekly we'll take a detailed look back at the performance of the EDA industry over the past quarter, and also look into our crystal ball to see if we can divine the future.

Before we look at the past, let's put the cart before the horse, put on our swami's hat and peer into the future. The crystal ball was a bit clouded at yesterday's EDA Consortium CEO Forecast and Industry Vision panel meeting, held at Virage Logic's facility in Fremont, California.

The meeting was moderated by Bill Freichs, an industry analyst from the D.A. Davidson Company who admonished the six distinguished CEOs and panelist to, “Be sure you forecast a forecast!” After a chuckle, Cadence's CEO Ray Bingham took the floor to say that, "After coming out of a two to three year downturn this is now a defining time. The economy has begun recovering, the stock market is up -- but we have huge technological problems to be solved. The challenge is to continue the Moore's Law dictum of smaller and faster, but now we've got to facilitate making chips more affordable - cheaper. This problem and challenge offer the EDA industry a definite opportunity." Ray said
that revenue for
logic IC's is growing from $50B in 2001 to a projected $86B in 2006. He also said that the FPGA market, although small, is growing at an extremely fast rate. He pointed out that the growth rate for ASICs is slowing and that the ASSP market (Signal Processing) is huge but is also showing little growth. SoC is “the sweet spot for real growth,” and Ray predicts a 7% to 10% growth in the EDA industry this year based on growing silicon R&D expenditures, a high renewable license base, and an improving economy.

Adam Kablanian, CEO of Virage Logic took the podium next and proclaimed loudly, “Moore's Law is broken!” Adam's contention was that Moore's Law is not a law of physics but an economic law based on supply and demand. He said that the cost of designing one project at 90 nanometers, for example, costs in excess of $30 Million, and that there are very few applications, especially consumer based-applications that can justify this cost. He said that the majority of designs will continue to be done in past-generation technologies, which are “just fine for the majority of applications.” Adam said that the EDA industry's challenge is to reduce design time by reducing the
number of engineering hours it
takes to produce a design. His solution, which he believes rightly since he's president of a major SIP company, is SIP. He said that more will be spent on SIP moving forward than on EDA tools. Adam was optimistic about the future saying that the SoC market is up, a major recovery is on the way, and the semiconductor industry is healthy. So, 'up' was Adam's projection.

Next up was Aart de Geus of Synopsys who began by saying that a team of high-level market analysts put together his marketing projection, and that they even guaranteed it! “They said that if the projection didn't come to fruition, they'd write another one for free.” Aart agrees with the other panelists that cost has been added to the Moore's Law equation, but stated firmly that, “Moore's Law will happen, and on time!” Aart also believes that there's a lot of growth potential in the SIP marketplace --- backed up by the recent announcement that Synopsys is to acquire
Monolithic System Technolgy and Accelerant Networks, designed to expand their IP portfolio. Aart also said that there's lots of interest in DFM
(Design for Manufacturing), yet another way to achieve lower costs. You'll have to forgive this reporter. I didn't scribble down Aart's projection, but I know it was up beat!

Entrepreneur Kathryn Kranen, CEO of start-up Jasper Design Automation said that design verification takes up as much as 70% of the design cycle, and reducing this time would greatly lower the cost of the final product. She said that the consumer market is hot, and that price is king. Reducing the cost of goods to the end-user is the main challenge. Kathryn also put in her vote for “Moore's Law is broken,” and emphasized that cost is part of the equation now. As far as predicting the future, well, Kathryn deferred to “Gary Smith's numbers.” Gary is EDA analyst for Gartner, Inc. I haven't seen this report, so I can't comment. If you've looked at it please drop
me a line and we'll publish
the numbers in our next EDAWeekly issue.

A jovial Wally Rhines, CEO of Mentor Graphics was up next stating that the semiconductor industry is in a long and sustained recovery, and that the EDA industry traditionally lags. He then went on to tell us of his quest for that magic 'leading indicator,' the one Holy Grail that accurately predicts the timing of EDA's future growth. He dismissed semiconductor R&D as not correlating with EDA, and also dismissed capital equipment expenditures as being too volatile. Wally said that EDA is based on design starts, not industry revenue, and thinks he's found the indicator in the haystack: Photomasks! He presented a chart that shifts the photomask industry's revenues four Quarters to the
right, and viola! -- an almost perfect correlation to EDA revenues. If the photomask model works Wally predicts a very “robust recovery” beginning in the third quarter of this year. If not, well, 5% looks good to him.

Last up to bat was Rajeev Madhavan, CEO of Magma. Rajeev pulled out two cell phones, both with different high-tech features, and said that the goal is to combine all the bells and whistles into one small device. And to do this he said, "We're going to need to push to smaller geometries, like 90 nanometer design. Our goal is to make our customers more profitable," he continued, “and to do this we've just got to make Moore's Law economically feasible. We've got to reduce the cost of silicon.” Rajeev's forecast for EDA industry growth this year is "in the 7% range," and he feels it will track along with semiconductor industry performance.

So, what's the Moore's Law consensus? It's not dead, but the paradigm has shifted to include a third component, cost. And, what's the real forecast for this year? According to the panelists it's in the 5% to 8% range. But, I for one am going to be keeping a very sharp eye on the photomask industry!

The entire panel discussion, including some very interesting Q&A, was filmed and will be available on the EDA Consortium web site ( in a week or so. We'll point you over there when it's up so you can see this event for yourself.


EDA Industry Update February 2004 --

What did the Last Quarter/Year Bring?

By Dr. Russ Henke and Dr. Jack Horgan

December 2003 EDA Commentaries by the authors (published on EDACafé.com), 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. This February 2004 report covers their performances for the fourth quarter of 2003 as well as for the full year 2003.

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-- Peggy Aycinena, Contributing Editor.

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