EDA Industry Update December 2009 -- What did the Last Quarter Bring?
by Dr. Russ Henke
In each of the 26 quarterly EDA Industry Commentaries published in EDAcafe.com since May 2003 by Henke Associates, 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
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 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 no longer independently appear in these EDA Industry reports.
This December 2009 EDA Industry Commentary covers (for the nominal Third Quarter of 2009) the performances of the remaining group of five (G5) EDA vendors: Altium, Cadence, Magma, Mentor Graphics, and Synopsys. The timing of the publication of these quarterly commentaries is usually governed by the official financial news release of the last G5 vendor reporting; this time the delay in publication was due to other circumstances.
EDA News Highlights are followed by the revenue & earnings performances of the selected group of EDA players for nominal Q3 2009, and then EDA vendor by vendor details. These details include individual EDA vendor forecasts for nominal Q4 2009. EDA Vendor stock prices are discussed. Finally, some EDA Consortium stats are included for Q2 2009. Enjoy, and best wishes for a healthful and prosperous 2010.
Recent EDA Industry News Highlights:
On November 30, 2009 the Semiconductor Industry Association (SIA) reported that worldwide sales of semiconductors rose to $21.7 billion in October, a 5.1% increase from September when sales were $20.6 billion. Sales were 3.5% below October 2008 when sales were $22.5 billion. Sales for the first 10 months of 2009 were $180.0 billion, a decline of 16.6% from the like period of 2008 when sales were $215.8 billion. All monthly sales numbers represent a three-month moving average of global semiconductor sales. “October is historically a strong month for the semiconductor industry as electronic equipment manufacturers ramp production for the holiday season. Inventory management throughout the supply chain has been very tight, and this may extend the fourth-quarter build season by a few weeks,” Scalise continued. “As Semiconductor sales are increasingly driven by the performance of the overall global economy our sales are reflecting the improved economic conditions in our world markets. Sales increased sequentially in all geographic regions,” Scalise concluded.
On December 10, 2009 Altium Limited (ASX:ALU) announced that it is one of 11 sponsors of the 2010 National Computer Science School (NCSS) Summer School, a 10-day summer program that brings together Australia’s brightest high school students to learn programming skills at the University of Sydney. Students from grades 10-12 from all around Australia descend on the University to learn the basics in computer science and apply those skills to embed intelligence into a complete embedded control system for an iRobot Create® platform. The resulting robots, essentially iRobot’s Roomba® robot vacuum cleaners with the innards removed, compete in a battle of embedded programming over physical obstacles.
On December 14, 2009, Cadence Design Systems, Inc. (NASDAQ: CDNS) announced that Fairchild Semiconductor, a global provider of energy-efficient semiconductor technology, named Cadence as its primary EDA partner following the signing of a multi-year agreement for Cadence® mixed-signal technology. A key technology for Fairchild is the Virtuoso Accelerated Parallel Simulator combined with Virtuoso AMS Designer, both part of the Cadence® Virtuoso Multi-Mode Simulation suite. These technologies are said to accelerate full-chip verification, leading to higher quality products and faster time to market.
On December 14, 2009 Magma(R) Design Automation (Nasdaq:LAVA) announced SiliconSmart(R) ACE, a next-generation intellectual property characterization and modeling tool and the latest addition to its SiliconSmart product line. The SiliconSmart ACE flow is said to deliver more accurate models and faster turnaround time than other tools for designs targeted at 28-nanometer (nm) and smaller process nodes.
On December 14, 2009 Mentor Graphics Corporation (NASDAQ: MENT) announced that Kontron AG (Eching, Germany), had expanded its Expedition™ Enterprise PCB installation from Mentor Graphics, with worldwide usage of the HyperLynx® solution for signal and power integrity. Kontron is said to have selected the HyperLynx signal and power integrity product for its accurate analysis and simulation capabilities, ease-of-use, and quick setup time. Combined with the Expedition Enterprise platform and the DMS (Data Management System), the HyperLynx product is aimed at formulating a solution for high-performance electronic product design that reduces design cycle times, prototypes, manufacturing re-spins and development costs, while increasing product performance.
On December 07, 2009 Synopsys, Inc. (NASDAQ: SNPS) announced that Hisilicon Technologies Co., Ltd., a provider of ASICs and solutions for communication network and digital media, and a subsidiary of Huawei Technologies, had established Synopsys as its primary EDA partner across its implementation and verification design flows. Hisilicon signed a business agreement to extend its use of Synopsys' IC Compiler place-and-route technology and DesignWare® IP as well as other tools from Synopsys' Galaxy™ Implementation and Discovery™ Verification Platforms. "Since its founding, Hisilicon has carefully selected the key strategic partnerships that help us deliver high quality ICs and services to our customers," said Teresa He, vice president of Hisilicon Technologies Co., Ltd. "We chose to partner with Synopsys because of their technology and proven ability to help make us successful."
How did the G5 EDA Vendors fair during the Third Quarter of 2009?
As shown in Table 1, the combined total revenue performance of the five covered EDA firms for the nominal third quarter of 2009 was $784.64 million, a negligible increase of less than 1% from the $781.69 million just a quarter earlier. However, the $784.64 million in Q3 2009 was in fact a drop of -4.2% from the $819.25 million total achieved a year ago in Q3 2008.
Sequentially, both Altium and Synopsys endured revenue decreases in Q3 2009. But Cadence, Magma and Mentor delivered small sequential revenue increases over Q2 2009.
Year-over-year, both Altium and Magma suffered double-digit percentage losses in revenue. Cadence and even behemoth Synopsys lost year-over-year revenue in single-digits percentage-wise, whereas Mentor Graphics squeezed out a tiny year-over-year percentage revenue increase of 2.4%.
Turning to earnings performances in Q3 2009, the picture is mixed. Table 2 shows that the EDA group of 4 (that reported quarterly income) still totaled a combined net loss of over $17 million in Q3 2009, but that particular G4 loss was actually a very impressive positive swing of some $212 million compared to Q3 2008’s miserable negative total.
All the vendors covered contributed in Q3 2009 to the year-over-year earnings improvement over the Q3 2008 debacle, except Synopsys, whose $19.53 million in Q3 2009 earnings was nevertheless still in the black. Magma crept back to black ink in Q3 2009, but while showing improvement in year-over-year earnings, both Cadence and Mentor Graphics were still in the red in Q3 2009, just less so.
On a sequential basis, Synopsys again was the only firm to experience a worse earnings picture in Q3 2009 than in Q2 2009, but again Synopsys’ sequential swing still left it in the black in Q3 2009, thanks to its steady record of profitability in general.
Company by Company Q3 2009 details:
On October 12, 2009 Altium Limited reported limited financial results for the quarter ending September 30, 2009. Sales were US$9.42 million, a decrease of 23% over the previous corresponding period. Revenue was US$11.38 million , a decrease of 10% over the previous corresponding period.