Commentary: Electronics IP Industry — A May 2006 Update

Comments on the IP business of Cadence, Mentor Graphics and Synopsys:

The Top 3 EDA Vendors in overall annual revenue are also important players in the IP providers' niche. The difficulty in comparing the Top 3 EDA Vendors' IP business to one another is caused by the differences in how each company arbitrarily chooses to define the revenue components of its respective IP businesses. Further, none of the TOP 3 EDA Vendors unbundles profitability of its respective IP-related business lines, precluding IP earnings' comparisons.



EDA Consortium's Market Statistics


On April 6, 2006, the EDA Consortium's Market Statistics Service (MSS) announced that EDA industry revenue for Q4 of 2005 was $1,253 million, versus $1,191 million in the fourth quarter of 2004, an increase of only 5%.

During Q4 2005, CAE accounted for 43% of the total revenue, IC Design and Verification for 28%, PCB and MCM for 7%, Semiconductor IP for 17% and Services for 5.5%. See Table 7.

$M
4Q05
4Q04
Delta
% Total
CAE 542 521 4.0% 43.3%
IC Des & Verf 346 326 6.0% 27.6%
PCB+MCM 87 91 -4.0% 6.9%
Semi IP 209 185 13.0% 16.7%
Services 69 68 2.0% 5.5%
Total 1,253 1,191 5.2% 100.0%
Table 7 EDA Q4 2005 Revenue by Product Category


During Q4 of 2005, North America accounted for 45% of total revenue, Europe for 22%, Japan for 20% and ROW for 12.5%. See Table 8.

$M
4Q05
4Q04
Delta
North America 569 542 5.0%
Europe 272 280 -3.0%
Japan 256 229 12.0%
ROW 156 139 12.0%
Total 1,253 139 5.3%
Table 8 EDA Q4 2005 Revenue by Geography


Walden C. Rhines, chairman of the EDA Consortium and chairman and CEO of Mentor Graphics Corporation, said: "The EDA industry continued to strengthen in the fourth quarter. Revenues were up in all regions and most product lines."

For the year 2005 CAE accounted for 42% of the total EDA market, IC Design & Verification 26%, PCB + MCM 7.5%, Semiconductor IP 18% and Services 6%. Table 9 reveals a meager 3% total EDA growth year over year.

$M
2005
2004
Delta
CAE 1,925 1,925 0.0%
IC Des&Verf 1,209 1,163 4.0%
PCB+MCM 342 342 0.0%
Semi IP 816 731 11.6%
Services 282 282 0.0%
Total 4,574 4,443 3.0%
Table 9 EDA 2005 v 2004 Revenue by Product Category

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