May 24, 2010
The Economy, Semiconductors, EDA, & Intellectual Property
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Russ Henke - Contributing Editor

by Russ Henke - Contributing Editor
Posted anew every four weeks or so, the EDA WEEKLY delivers to its readers information concerning the latest happenings in the EDA industry, covering vendors, products, finances and new developments. Frequently, feature articles on selected public or private EDA companies are presented. Brought to you by If we miss a story or subject that you feel deserves to be included, or you just want to suggest a future topic, please contact us! Questions? Feedback? Click here. Thank you!

On March 5, 2010 the US Labor Department reported that US employers cut a smaller-than-expected 36,000 jobs in February 2010, leaving the overall US unemployment rate steady at 9.7%. Moreover, job losses for December and January combined were revised to show
35,000 fewer jobs lost than previously reported. The labor market was gradually improving and the pace of layoffs had slowed markedly from early 2009 when the US economy was losing 750,000 jobs on average a month.

Manufacturing actually added 1,000 jobs in February 2010. Also, temporary hiring added 48,000, a sign that more permanent hiring would lie ahead.

On April 2, 2010 the US Labor Department said employers added (you read it right! added!) 162,000 jobs in March 2010, the most since the “great recession” began in December 2007. The March 2010 total included 48,000 temporary workers hired for the US Census. The department also revised January's job total to show a gain of 14,000, up 40,000 from a previously reported loss of 26,000. February's job numbers were also revised higher by 22,000 to show a loss of only 14,000. The economy had then added jobs in three separate months since the recession began.
Private US employers alone added 123,000 jobs in March 2010, the most since May 2007.

Many people forget that the US economy needs to add more than 100,000 jobs a month just to absorb new entrants into the US labor market, let alone provide a livelihood for the 15 million people already looking for work. Without constant, robust economic growth, such as during 1993-2000, the unemployment percentage rate won't budge. Many people also forget that in past recessions, it took
years before employment numbers returned to pre-recession levels.

In March 2010, US manufacturers added 17,000 jobs, the third straight month of gains. The average work week increased to 34 hours from 33.9, a positive sign. The overall unemployment rate remained at 9.7% for the third straight month.

Indeed, the GDP has continued to increase, with the first estimate of GDP rise for Q1 2010 standing at 3.2% at this writing.

Then Dave Rosenberg of CNET reported that on April 11, 2010, the private company research firm CB Insights released new venture investment data for the first quarter of 2010. Overall, the news was very positive with strong growth in the number of venture deals from
687 in the fourth quarter of 2009 to
731 in the first quarter of 2010.

The first quarter of 2010 saw $5.9 billion invested across those 731 deals, a marked increase over the year-ago quarter when only $3.9 billion was invested across a paltry 483 deals. And while CB Insights notes that $5.9 billion remains far below quarterly VC investment levels seen before the '08-'09 “great recession,” there is some belief that "the VC asset class has perhaps reset at a lower but ultimately more sustainable and healthier level."

The fact that VCs are opening their collective wallets, even for smaller deals, is good news for the EDA Industry and for the US economy as a whole.

More proof that a US recovery is underway:
  • A May 4, 2010 a US Commerce Department report showed the number of buyers who signed contracts to purchase homes surged more than expected in March 2010, another sign that President Obama's government incentives are helping. Also, the National Association of Realtors said its seasonally adjusted index of sales agreements for previously-occupied homes rose 5.3% from a month earlier to a reading of 102.9. It was the highest level since October 2009 and a 21% increase from the same month a year earlier.
  • The US Commerce Department also said in a separate report on May 4, 2010, that despite a drop in orders for commercial aircraft, total US factory orders still rose 1.3% in March 2010, much better than the 0.1% decline some analysts had predicted. Excluding transportation, US factory orders were up 3.1%, the largest gain since August 2005.
  • Of particular interest to the topic of this issue of EDA WEEKLY: Orders in March 2010 for computers and other electronics products increased 22.7%! 
  • The Institute for Supply Management reported May 3, 2010 that its gauge of manufacturing activity rose to 60.4 in April, up from 59.6 in March This was the strongest reading in nearly six years and represented the ninth straight month that the index has signaled growth in manufacturing. (A reading above 50 indicates manufacturing is expanding; readings below 50 signal that the factory sector is contracting). "Manufacturing is leading the way for the US economy, and I expect that will continue for quite some time," said Mark Zandi of Moody's Analytics. "I am looking for manufacturers to experience strong growth for the next several years."
  • The May 7th Labor Department Jobs Report for April 2010: 290,000 Added!

    As a final coda for this Section I of the EDA WEEKLY, we present added evidence that the US economy is truly rolling now. We do this by citing the report on April 2010 jobs from the US Labor Department, released Friday May 7, 2010:

    US nonfarm payrolls improved at the fastest pace in four years in April 2010 as US employers
    added 290,000 jobs overall! Moreover, the Labor Department also said that its revised figures for February & March show that 121,000 more jobs were added in those two months than previously reported. In the biggest gain since March 2006, private sector employment alone increased 231,000 in April 2010, after rising 174,000 a month earlier. Manufacturing payrolls increased 44,000 in April 2010 after rising 19,000 in March. Construction gained 14,000 more employees in April, rising for a second month in a row. Service sector jobs leapt 166,000; temporary hiring increased 26,200. Government hiring rose 59,000, adding to the prior month's 56,000 increase.

    II. The Semiconductor Industry:

    On April 5, 2010, the Semiconductor Industry Association (SIA) reported that worldwide semiconductor sales in
    February 2010 were $22.0 billion, actually a slight decrease of 1.3% from January 2010 when sales were $22.3 billion.
    However, February 2010 sales were a whopping 56.2% higher than in February 2009 when sales were only $14.1 billion. (Note: All SIA monthly sales numbers represent a three-month moving average).

    “The February (2010) sales numbers reflect (the) continued recovery of sales of semiconductors, with demand principally driven by growth in sales of electronic products in emerging economies,” said SIA President George Scalise. “Unit sales of the two leading demand drivers for semiconductors - personal computers and cell phones - are now projected to grow (percentage-wise) in the low- to mid-teens in 2010. While the 56% year-on-year growth reflected in the February (2010) sales number is encouraging, it is important to note that January and February of 2009 marked the low point for the semiconductor industry during the worldwide economic downturn,” said

    “There are encouraging signs that the global economic recovery will continue, and we remain cautiously optimistic that there is upside potential for growth beyond our November (2009) forecast for 2010,” Scalise concluded. (Note: The November 2009 SIA forecast for 2010 semiconductor sales was $242.1 billion).

    SAI'S chip news for March 2010 was even better!

    On May 3, 2010 the SIA reported that worldwide semiconductor sales in
    March 2010 were $23.1 billion, an increase of 4.6% from February when sales were $22.0 billion. Sales increased by 58.3% from March 2009 when sales were $14.6 billion. The first quarter of 2009 marked the low point in semiconductor sales during the global economic recession. Sales for the first quarter of 2010 were $69.2 billion compared to $43.7 billion for the first quarter of 2009. All monthly sales numbers represent a three-month moving average.

    “Global sales of semiconductors set a new high for the month of March and were second only to the record sales reported in November 2007,”
    said SIA President George Scalise. “Healthy demand from major end markets coupled with restocking to normal inventory levels contributed to strong first-quarter growth. While we expect that 2010 sales will continue to be strong, the year-on-year growth rate will moderate going forward, reflecting the industry recovery that began in the second half of 2009.

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    To read more news, click here.

    -- Russ Henke, Contributing Editor.


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