Commentary: Electronics IP Industry – An August 2010 Update


Relative to Q2 last year, ARM and MOSYS' stock prices in Q2 this year each enjoyed over triple-digit percentage rises, with MOSYS leading the percentage parade at +168%. MIPS exceeded 70% in stock price appreciation over the year. While all five IP players improved prices over the year, neither CEVA nor Rambus kept pace with the NASDAQ's percentage rise of +50%.

Sequentially (Q2 2010 vs. Q1 2010), all vendors but Rambus improved modestly, but any positive improvement was sufficient to be superior to the 3 month decline in the NASDAQ. And Rambus deteriorated further percentage-wise than did the entire NASDAQ during Q2.


Recent Market Caps:

Table 4: A look at the closing Market Caps of four of the G5 Electronics IP Vendors on August 6, 2010, compared to May 5, 2010.

In the three months between May and August, three of the G4 (CEVA, MIPS, & MOSYS) combined picked up a total $95.31 million in Market Capitalization, only to have Rambus endure a loss of Market Capitalization of $550 million on its own, overwhelming the relatively paltry gain of the other three, and driving the G4 total loss OF MARKET VALUATION down nearly $455 million. Once again, it showed that Rambus' Mkt Cap at the end of Q1 2010 was an anomaly.



On July 13, 2010 the EDA Consortium (EDAC) Market Statistics Service (MSS) announced that the Electronic Design Automation (EDA) industry revenue for Q1 2010 was $1247 million, a 4.6% increase compared to $1192.1 million in Q1 2009. Sequential EDA revenue declined 1.2%, while over the last four quarters it declined 5.9%.

“Led by increases in the CAE and Semiconductor IP categories, the EDAC revenue numbers show an increase over Q1 2009,” said Wally Rhines, EDAC chair and chairman and CEO of Mentor Graphics. “Geographically, the Asia/Pacific region showed growth both year to year and quarter over quarter.”

Companies that were tracked employed 26,099 professionals in Q1 2010, up 0.4% compared to Q4 2009, but down 1.7% from the 26,561employed in Q1 2009.

The complete MSS report, containing detailed revenue information broken out by both categories and geographic regions, is available via subscription from the EDA Consortium.

Revenue by Product Category

Computer Aided Engineering (CAE), EDA's largest category, generated revenue of $458.5 million in Q1 2010. This represents a 7.2% increase over the same period in 2009. Over the last four quarters, CAE declined 3.5%.

IC Physical Design & Verification revenue decreased to $274.4 million in Q1 2010, a 9.2% decrease compared to Q1 2009. Over the last four quarters, IC Physical Design & Verification declined 8.3%.

Printed Circuit Board and Multi-Chip Module (PCB & MCM) revenue decreased 8.8% compared to Q1 2009, to $109.4 million. Over the last four quarters, PCB & MCM decreased 8.9%.

Semiconductor Intellectual Property (SIP) revenue totaled $320.9 million in Q1 2010, a 35.8% increase compared to Q1 2009. Over the last four quarters, SIP decreased 0.1%.

Semiconductor Intellectual Property (SIP) revenue totaled $320.9 million in Q1 2010, a 35.8% increase compared to Q1 2009. Over the last four quarters, SIP decreased 0.1%.

Services revenue was $83.7 million in Q1 2010, a decrease of 20.7% compared to Q1 2009. Over the last four quarters, services decreased 21.7%.

The Americas, EDA's largest region, purchased $492.9 million of EDA products and services in Q1 2010, representing a decrease of 0.2% compared to Q1 2009. Over the last four quarters, the Americas were down 5.5%.

Revenue in Europe, the Middle East, and Africa (EMEA) was up 0.5% in Q1 2010 compared to Q1 2009 on revenues of $224.2 million. Over the last four quarters, EMEA was down 13.1%.
First quarter 2010 revenue from Japan decreased 5.5% to $250.8 million compared to Q1 2009. Over the last four quarters, Japan decreased 10%.

The Asia/Pacific (APAC) region increased to $279.0 million in Q1 2010, a 33.2% increase compared to the same quarter in 2009. Over the last four quarters, APAC increased 7.0%.

###
The information supplied by the EDA Consortium is believed to be accurate and reliable, but the EDA Consortium assumes no responsibility for any errors that may appear in this document. All trademarks and registered trademarks are the property of their respective owners

####

Acknowledgments:

The writer would like to acknowledge the sources of data and information for this Electronics IP Commentary for August 2010: Vendor News Releases; Hoover's; Yahoo! Finance; Google Finance; The SIA; and The EDA Consortium. Ongoing support by the team at IBSystems, Inc., including but not limited to Sanjay Gangal, Adam Heller, David Heller, Jon Heller, Nitai Fraenkel, and Sumit Singhal, is also appreciated.

####

About the Author of this August 2010 Electronics IP Commentary:

Since 1996, Dr. Russ Henke has been president of HENKE ASSOCIATES, a San Francisco Bay Area high-tech business & management consulting firm. The number of client companies for Henke Associates now numbers more than forty. During his corporate career, Henke operated sequentially on "both sides" of MCAE/MCAD and EDA, as a user and as a vendor. He's a veteran corporate executive from Cincinnati Milacron, SDRC, Schlumberger Applicon, Gould Electronics, ATP, and Mentor Graphics. Henke is a Fellow of the Society of Manufacturing Engineers (SME) and served on the SME International Board of Directors. Henke was also a board member of SDRC, PDA, ATP, and the MacNeal Schwendler Corporation. He is also a member of the IEEE and a Life Fellow of ASME International. In April 2006, Dr. Henke received the 2006 Lifetime Achievement Award from the CAD Society, presented by CAD Society president Jeff Rowe at COFES2006 in Scottsdale, AZ. In February 2007, Henke became affiliated with Cyon Research's select group of experts on business and technology issues as a Senior Analyst. This Cyon Research connection aids and supplements Henke's ongoing, independent consulting practice (HENKE ASSOCIATES). Dr. Henke is also a contributing editor of the EDACafé EDA WEEKLY, and he has published ELEVEN (11) EDA WEEKLY articles since November 2009; URL's available.

To obtain details of the brand new
"2010 Business Planning Tool Kit Promotion"
from HENKE ASSOCIATES,
please click on the URL below and scroll to the last entry on that page:

http://www.henkeassociates.net

Since May 2003 HENKE ASSOCIATES has now published a total of ninety-one (91) independent COMMENTARY articles on MCAD, PLM, EDA and Electronics IP on IBSystems' MCADCafé and EDACafé. Further information on HENKE ASSOCIATES, and URL's for past Commentaries, are available at http://www.henkeassociates.net. March 31, 2010 marked the 14th Anniversary of the founding of HENKE ASSOCIATES.



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