Since this writer began the current series of EDA WEEKLY articles back in November 2009, the exploits of publicly-held EDA companies have received the most attention. While the general citizenry may not relate to the existence of most EDA companies, whether large or small, public or private, their names and logos are familiar to most electronics aficionados around the world, especially in locations where the largest EDA suppliers are headquartered.
The west coast of the United States sports the homes of the Big 3 EDA vendors, with Synopsys and Cadence in the San Francisco Bay Area, and Mentor Graphics Corporation in nearby Oregon. Agilent EEsof EDA, likely the fourth largest enterprise in terms of EDA revenue, is in Santa Rosa, CA. Apache, recently acquired by Pittsburgh’s multi-physics MCAE vendor ANSYS, is here in the Bay Area. So too is Autodesk, on the mechanical CAD side, whose HQ is in San Rafael, CA. Hundreds of other design automation firms also flourish here.
While there may be a valid chicken-egg argument to make, the support of world-class universities and a thriving venture capital industry have made Silicon Valley an especially attractive hub of EDA activity, with its highly-agreeable weather year round; spectacular coastal scenery, mountains, National Parks and winter sports only hours away; and need I mention, its liberal political climate.
Sure, it’s expensive to live here and it’s getting more and more crowded, with a morning and evening commute of epic proportions, but there are expanding Bay Area Rapid Transit, light rail, and Caltrain systems and other public transportation available; three major airports; and who doesn’t treasure an occasional automobile trip across the Oakland Bay Bridge or incomparable Golden Gate Bridge to the headlands, redwoods or Napa and Sonoma Valleys?
Yes, living space remains dear (my SF Bay Area house is a fifth the size of our previous dwellings in Oregon or in the Midwest). Our yards are miniscule and neighbors are close. But what neighbors they are! On our little street alone: university professors; television personalities; symphony musicians; a house full of undergraduate students, Master’s and PhD candidates; post-docs; physicians; apartment dwellers; a family of two daddies, one mommy and a beautiful baby; Nobel Laureates; and professional people from everywhere in the world!
Let’s not forget the even larger population of private EDA enterprises, many of which are formed here by ex-employees of the largest public EDA vendors. Many private EDA companies are started in Silicon Valley from scratch by people who arrive just for that reason. And frequently, private companies begun elsewhere eventually move their headquarters here.
To move the needle back toward a balance between private and public EDA vendors covered in the EDA WEEKLY by this writer, for February 2012, we choose two private companies from the categories mentioned above: Silicon Frontline Technology, Inc. and Breker Verification Systems, Inc.
The headquarters of Silicon Frontline are located at 595 Millich Drive, Suite 206, Campbell, CA 95008, about 7 miles southwest of the city center of San Jose, CA.
There is also a Silicon Frontline Branch Office in Belarus. Offshore sales representatives are based in Taiwan, Japan, South Korea, and Europe.
While Silicon Frontline is a young company, its founders and electronic verification experts already had years of Silicon Valley experience under their belts, having worked at Epic Technology and then founding Nassda Corporation in 1998.
Before being acquired by Synopsys in 2005, Nassda had become a provider of full-chip circuit verification software for complex nanometer semiconductors. Cofounder Yuri Feinberg was in charge of post-layout simulation at Nassda and cofounder Andrei Tcherniaev was in Nassda’s Simulation Core Technology Group. They were the original developers of HSIM, the EDA industry’s first hierarchical circuit simulator.
EDACafe.com Coverage of Nassda
As it happens, Nassda had been one of the initial nine publicly-held companies included in the EDA Commentaries posted quarterly in EDACafe.com by the writer and his associates since 2003.
Indeed, the December 2004 EDA Commentary reported that Synopsys and Nassda had announced a proposed merger on December 1, 2004. Measured by annual revenue, Synopsys today is the largest EDA vendor in the world. The two companies entered into a merger agreement in late 2004 providing for the acquisition of Nassda by Synopsys in an all-cash transaction at $7.00 per share, subject to the closing of the acquisition, settling all outstanding litigation by Synopsys against Nassda and certain Nassda officers, directors and employees.
On January 10, 2005 Nassda said that the Federal Trade Commission had requested additional information and documentary material in connection with its review of the proposed merger, to which both Nassda and Synopsys quickly complied.
Meanwhile, on January 12, 2005, Nassda announced the financial results for its first quarter of fiscal 2005, ending December 31, 2004. Total Nassda Revenue for the quarter was $11.3 million, an increase of 16% from $9.7 million in the same quarter the previous year and highest quarterly revenue in Nassda’s history.
Dr. Sang Wang, then Nassda’s Chief Executive Officer, said at the time, "First fiscal quarters are always seasonally challenging. We are pleased to have achieved satisfactory financial results, exceeding both the revenue and earnings expectations for the first quarter of our fiscal 2005, and maintaining our total cash, cash equivalents and short-term investments balances at $101.0 million." Nassda CEO Wang continued, "Even though the semiconductor industry completed 2004 with good growth, we expect that the customers will continue to be very cautious with their spending. Nevertheless, as design starts steadily move to smaller and smaller geometries, we expect the need for nanometer verification software will become even more prominent."
By the time Synopsys finally completed its acquisition of Nassda in May 2005, Nassda had announced the financial results for its second quarter of fiscal 2005. Total Nassda revenue for its second quarter was $12.3 million, another increase from the record revenue of $11.3 million for the just-previous first quarter. Net income for the second quarter was $1.9 million. This time, Sang Wang said, "We are very proud to have achieved another quarter of sequential revenue growth and (we) returned to profitability despite the substantial costs incurred related to the pending acquisition. Our total cash, cash equivalents and short-term investment balances have also increased to $107.9 million at March 31, 2005."
The financial and legal issues associated with the eventual May, 2005 acquisition of Nassda by Synopsys were unusually complicated. This excerpt was taken from the Synopsys 10K filed on December 21, 2007:
Purchase Price. The Company acquired all the outstanding shares of Nassda for total cash consideration of $200.2 million, or $7.00 per share. In addition, as required by the merger agreement, certain Nassda officers, directors and employees who were defendants in certain preexisting litigation between Synopsys and Nassda made settlement payments to Synopsys in the aggregate amount of $61.6 million.
Net of the settlement payments described above, the Company paid $138.6 million in cash to the former shareholders of Nassda. However, in accordance with EITF 04-01, Accounting for Preexisting Relationships between the Parties to a Business Combination, the Company was required to separately value the settlement of the previously existing Nassda litigation and the business combination. The Company determined the fair value of the settlement to be $33.0 million and recorded this amount as other non-operating income. The Company valued the net assets acquired from Nassda in the business combination at $196.9 million. The total purchase price included $13.2 million in acquisition-related costs and $12.1 million in vested stock options assumed.