The EDA & Electronics IP Almanac: Q1 2011

The above is only a portion if the non-GAAP discussion by Synopsys, Readers interested in the complete non-GAAP discussion are welcome to check out the Synopsys web site. You won’t find more on the Synopsys non-GAAP discussion in the EDA WEEKLY.

Revenue Information by Synopsys’ Product Groups

For management reporting purposes, Synopsys organizes its products and services into 4 groups: 1 Core EDA (Electronic Design Automation), which includes the Galaxy™ Design Platform, the Discovery™ Verification Platform and the FPGA (Field Programmable Gate Array) design products ; 2 Intellectual Property (IP) and System-Level Solutions; 3 Manufacturing Solutions; and 4 Professional Services and Other.  This information is actually quite useful.

1 Core EDA. Includes Galaxy Design Platform, Discovery Verification Platform and FPGA design products.

Galaxy. The Galaxy Design Platform provides its customers with a single, integrated IC design solution that includes industry leading individual products and incorporates common libraries and consistent timing, delay calculation and constraints throughout the design process. The platform helps reduce design times, decrease integration costs and minimize the risks inherent in advanced, complex IC designs. The principal products included in the Galaxy platform are the IC Compiler physical design solution, Design Compiler® logic synthesis product, Galaxy Custom Designer® physical design solution for analog/mixed-signal designs, PrimeTime®/PrimeTime SI timing analysis products, StarRC™ product for extraction, and the Hercules™ and IC Validator physical verification product family.

Discovery. The Discovery Verification Platform is a comprehensive, integrated portfolio of functional, analog/mixed-signal, & formal verification products. The platform includes its simulation and verification products and design-for-verification methodologies, and provides a consistent control environment to help significantly improve the speed, breadth and accuracy of its customers’ verification efforts. The principal products included in the Discovery platform are the VCS® comprehensive RTL verification solution, Formality® formal verification sign-off solution, NanoSim® FastSPICE circuit simulation and analysis product, HSIM® hierarchical FastSPICE circuit simulation and analysis product, HSPICE® circuit simulator, and CustomSim™ circuit simulation solution.

FPGA Design. FPGAs are complex chips that can be customized or programmed to perform a specific function after they are manufactured. The principal products included in FPGA Design are Synplify® Pro and Premier implementation and Identify® debug software tools.

2 Intellectual Property and System-Level Solutions. This broad IP portfolio provides customers with high-quality, silicon-proven digital, PHY, analog, verification and memory IP for SoC designs to reduce their design risk and time-to-market. Its IP solutions include the DesignWare® Library of infrastructure IP, VCS Verification Library of popular chip function models, and DesignWare Cores, which are pre-designed and pre-verified digital logic and mixed-signal blocks that implement important industry standards, including USB, PCI Express, DDR, SATA, HDMI, Ethernet and MIPI. Its analog IP solutions include analog-to-digital converters, digital-to-analog converters, audio codecs, video analog front ends and touch screen controllers. Its memory IP solutions include embedded memory, including SRAMs and non-volatile memory, logic libraries, embedded test and repair IP and configurable processor cores. Its System-Level solutions enable customers to, among other things, accelerate verification and embedded software development. These solutions include its virtual prototyping portfolio and Confirma™ Rapid Prototyping System, the portion of the Certify®, Identify Pro, and Synplify Premier software tools used for system verification, and Synphony High Level Synthesis. Synopsys also offer specialized System-Level solutions, such as products that focus on interactions with optical components in the system.

3 Manufacturing Solutions. The Manufacturing Solutions products and technologies address the mask-making and yield enhancement of very small-geometry ICs, as well as high-level modeling of physical effects within the ICs and include the Technology-CAD (TCAD) device modeling products, Proteus OPC optical proximity correction (OPC) products, CATS® mask data preparation product, and Yield Management solutions, including Odyssey and Recipe Manager and Editor (RME), and Yield Explorer.

4 Professional Services and Other. The Professional Services group provides a broad range of consulting and design services that address all phases of the SoC development process, including design methodology adoption, specialized systems design services, turnkey design and training, along with its Lynx Design System, a production-ready chip implementation environment that helps customers improve their productivity and optimally deploy Synopsys tools and methodologies.

The following table summarizes the revenue attributable to these groups as a percentage of total revenue for the last ten quarters and two fiscal years. Synopsys includes revenue from companies or products that Synopsys has acquired during the periods covered from the acquisition date through the end of the relevant periods.

EDA WEEKLY readers will note the steady rise in the percentage of Synopsys’ IP business, from 9% in Q2 09 to 24% in Q2 11.

Synopsys self description

Synopsys, Inc. (NASDAQ:SNPS) is a world leader in electronic design automation (EDA), supplying the global electronics market with the software, intellectual property (IP) and services used in semiconductor design, verification and manufacturing. Synopsys' comprehensive, integrated portfolio of implementation, verification, IP, manufacturing and field-programmable gate array (FPGA) solutions helps address the key challenges designers and manufacturers face today, such as power and yield management, system-to-silicon verification and time-to-results. These technology-leading solutions help give Synopsys customers a competitive edge in bringing the best products to market quickly while reducing costs and schedule risk. Synopsys is headquartered in Mountain View, California, and has approximately 70 offices located throughout North America, Europe, Japan, Asia and India. Visit Synopsys online at

We finally come to the Electronics IP portion of The EDA and Electronics IP Almanac: Q1 2011.

Recall from the Introduction, that these are the G5 IP Vendors that we planned to cover here:

The Electronics IP G5 Results for Nominal Q1 2011

We begin our review of the Q1 2011 Electronics IP G5 performances by looking at the Electronics lP Revenue Summary (Table 3) below.

As a group of five vendors (The IP G5), we are not surprised that the Sum revenue for Q1 2011 was less than its seasonally-strong sequential Q4 2010 predecessor, although both ARM’s and CEVA’s Q1 2011 revenues topped their Q4 2010 levels.  As a positive trend, the G5 Q1 2011 Sum of nearly $287 million was the second best of the last four quarters. To assert a positive trend, of course, one must ignore the anomaly of Q1 2010, when the Rambus royalties’ windfall distorted the Sum radically).

And the distinction among the five IP vendors continues with two dominant vendors and three runners up. ARM Holdings’ strength and steady growth are once more on display, with Rambus’ sinusoidal revenue still number two. While the business models of each are dramatically different, together the “odd couple” again in Q1 2011 took seven-eighths of the IP revenue Sum (just as occurred in Q4 2010), leaving the last eighth divided among the bottom three companies.

Ah, the bottom three. The revenue numbers for the last four quarters would suggest that while second smallest, CEVA is on a roll; MIPS is flat to a slight decline, and tiny MoSys is “bumping along.”

Table 4 reveals the traditional earnings decline of Q1 vs. its sequential Q4 predecessor, even for ARM... but wait, here comes little CEVA breaking the tradition. And it would seem that the stock market likes what it sees in CEVA (see the one-year stock charts that accompany the individual vendor write-ups in the sequel).

Over all, Table 4 shows lots of red; indeed, 40% of the entries in Table 4 are in red font this quarter. CEVA’s line is the only one with all black font.


Electronics IP Vendor by Vendor Details – Q1 2011

On April 27, 2011 ARM Holdings plc announced its unaudited financial results for the first quarter of 2011, ended March 31, 2011. ARM continues to see its IP technology chosen by leading companies for a broad range of end markets, helping to deliver its highest-ever revenues and profits.

ARM Progress on key growth drivers in Q1 2011

Growth in adoption of ARM® processor technology

o 39 processor licenses signed for all target end markets
o Broadcom and LG Electronics both sign subscription licenses, enabling access to a wide range of ARM’s processors for use across multiple end markets
o Several major semiconductor companies developing chips for set-top-box and digital TV applications licensed ARM technology, for the first time in this application area
o Long-term strategic agreements deliver further growth in order backlog

Growth in mobile applications

o 1.15 billion ARM-processor based chips shipped into mobile devices, including smart phones and tablets

Growth beyond mobile into consumer electronics and embedded products

o 0.7 billion ARM-processor based chips shipped into a broad range of end applications, including digital TVs, disk drives and microcontrollers

Growth in outsourcing of new technology

o Physical IP: 3 Processor Optimization Packs licenses signed for Cortex™-A family processors, further increasing the royalty opportunity from high-value chips in mobile computers and smart phones
o Graphics: 7 licenses signed for Mali™, ARM’s advanced graphics processor family

Warren East

Warren East, ARM Chief Executive Officer, said, “Influential market leaders are licensing ARM technology to gain access to a growing ecosystem of operating systems, software applications, tools and service providers. Many of these companies have been ARM licensees for many years, and are now deploying ARM technology across a multitude of applications; in mobile, consumer electronics and embedded devices. This licensing drives ARM’s long-term royalty opportunity. Shipments of ARM-processor based chips increased 33% on the same period last year driven by growth in smart phones, tablets, digital TVs and microcontrollers. ARM’s revenue growth enables us to continue to invest in innovative technology development at the same time as delivering strong increases in profits and cash flow.”


ARM believes that it has made an encouraging start to 2011 with more leading companies choosing to deploy ARM technology in their products. Looking forward, ARM anticipates normal seasonality for royalty revenues in the second quarter and, notwithstanding the current uncertainty as to the economic impact of the Japanese earthquake on the semiconductor industry supply chain and end-product markets, ARM expects that group dollar revenues for the full-year 2011 will be at least in line with “current market expectations.”

Total Revenues

Total dollar revenues in Q1 2011 were $185.5 million, up 29% on Q1 2010. Q1 2010 sterling revenues were £116.0 million, up 26% year-on-year. By comparison dollar revenues for the semiconductor industry were up only 13% over the equivalent period, according to ARM.

License revenues and backlog

Total dollar license revenues in Q1 2011 increased by 49% year-on-year to $63.9 million, representing 34% of group revenues. License revenues comprised $51.3 million from PD and $12.6 million from PIPD.

During Q1 2011, several Partners entered into long-term commitments to use ARM technology where much of the revenue associated with these agreements will be recognized in future quarters. As a result, group backlog at the end of the quarter was up about 15% sequentially and more than double year-on-year, to a record high.

Royalty revenues

Royalties are recognized one quarter in arrears with royalties in Q1 2011 generated from semiconductor unit shipments in Q4 2010. Total dollar royalty revenues in Q1 2011 increased by 27% to $98.6 million, representing 53% of group revenues. Royalty revenues comprised $87.9 million from PD and $10.7 million from PIPD. Total PIPD royalties of $10.7 million included $0.6 million of catch-up royalties.

Development Systems and Service revenues

Sales of development systems in Q1 2010cwere down 10% year-on-year to $13.3 million, representing 7% of group revenues. As reported one year ago, Q1 2010 revenues for development systems of $14.8 million were higher than normal partly due to additional revenue coming from backlog from two large software tool deals signed in prior periods reaching payment milestones.

Service revenues in Q1 2011 were up 21% year-on-year to $9.7 million, representing 5% of group revenues. The increase in service revenues is consistent with the strong growth in licensing activity in recent quarters.


Total ARM Net Income for Q1 2011 was $34.569 million, up 13.95% compared to Q1 2010 net of $30.337 million. Not surprisingly, net income in Q1 2011 was down 26.39% from the net for Q4 2010, the latter being a very strong seasonal quarter.

Foreign Exchange rates used by ARM in report

Effective fx rate ($/£): 1.60 in Q1 2011; 1.55 in Q1 2010.


As of March 31, 2011, ARM had 1,922 full-time employees, a net increase of 33 since the start of the year. At the end of March, the group had 788 employees based in the UK, 511 in the US, 221 in Continental Europe, 286 in India and 116 in the Asia Pacific region. Worldwide annualized revenue per full time person based on Q1 2011 revenue, is about $386,000.

Principal risks and uncertainties

The principal risks and opportunities faced by the ARM “Group” were included within the “Risks and risk management” section of the 2010 Annual Report and Accounts filed with Companies House in the UK. Details of other risks and uncertainties faced by the Group are noted within the Annual Report on Form 20-F for the year ended December 31, 2010 which is on file with the Securities and Exchange Commission (the “SEC”) and is available on the SEC’s website at 

There have been no changes to these risks that would materially impact the Group in the foreseeable future. These include but are not limited to: ARM's quarterly results may fluctuate significantly and be unpredictable which could adversely affect the market price of ARM ordinary shares; general economic conditions may reduce ARM's revenues and harm its business; ARM may have to protect its intellectual property or defend itself against claims that we have infringed others’ proprietary rights; an infringement claim or a significant damages award would adversely impact ARM’s operating results; companies within the semiconductor industry may consolidate reducing the number of customers that ARM may sell its technology to; for ARM to enter new markets or develop new technology may require significant investment and may not result in profitable operations; and ARM competes in the intensely competitive semiconductor market.


On June 17, 2011
ARM announced that it had acquired privately-held Obsidian Software , a vendor of verification and validation tools used in the design of complex processors. Obsidian Software has offices in Austin, Texas. According to the news release, as Systems on Chips (SoCs) and processors grow in complexity, there is an increasing need to develop more sophisticated verification strategies. This acquisition is said to augment ARM’s drive to match its verification strategies with the rate of change in its high performance, complex SoC IP components. The news release stated that the Obsidian Software validation team will become part of an ARM Processor validation group based in Austin, Texas.

ARM self description

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