Yesterday & Tomorrow: EDA & IP shine … today, not so much

If you’re interested in the past, the third quarter of 2015 is a good place to start: the EDA/IP industries did very well from July through September last year. EDAC’s Market Statistics Service numbers, released this week, offer some of the details. Here’s the link if you want to delve in.

Easier however, is this brief summary of my January 5th phone call with Mentor’s perpetually optimistic CEO Wally Rhines, last year’s EDAC/CEDA Kaufman Award winner and this year’s EDAC spokesman [technically, every year’s].

Although there was snow and ice on the roads around Wilsonville, Oregon, when we talked, nothing could put a damper on Rhines’ sunny outlook for the industry he leads: “The third quarter last year was another great quarter for the EDA and IP industries. With 7.1 percent growth, it was really good and even stronger than usual.

“IC physical design was up 14 percent, a core EDA technology and a big category. The IP part of the business also had growth in the double digits, although IP was the larger category in terms of dollars [$653 million].

“Logic verification – simulation and emulation – grew at 7+ percent, also a positive note for the industry.

“And the headcount in EDA grew bigger in the third quarter. It’s now above 33,000, an increase of 5.6 percent over Q3 2014. Clearly as long as revenue in the industry grows more than the headcount, companies will continue to hire.

“It’s also worth noting that the market in Japan grew 6.2 percent in the third quarter. We’ve seen [in recent years] weaker growth in Japan, but even that market is now growing.”

Citing yet more MSS numbers, Rhines concluded: “We saw growth in Asia, in North America, in Europe, and in all technology sectors except services. Overall, all sectors in the industry are looking strong.”

“Okay fine,” I said, “but enough with the past. How about the here and now? It’s only Tuesday and already the New York stock market is giving us all the willies. Is it fair to look at the stock valuations of the big publicly traded company in EDA and IP to really understand how the industry doing is today?”

“Nope,” Rhines responded. “Those [numbers] are too short-term. Tracking the public companies is not the correct way to understand [the health] of the industry.”

“Nonetheless,” I persisted, “could you give me some stock tips? I won’t tell a soul, except my broker of course.”

“Nope, again,” Rhines replied. “Can’t give you individual stock picks. But I can tell you that in the long-term design is going to be about much more than chips.

“We’re going to continue to see an expansion of demand for IP, and embedded and system design tools. All of them – IP, embedded, and systems – they’re all going to show growth.”

The end …

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… or is it?

At the time of this writing, Synopsys [SNPS] looks like it’s going to be down over 6% this week alone, as is Mentor Graphics [MENT], Cadence [CDNS], ANSYS [ANSS], and ARM [ARMH].

No wonder Dr. Rhines doesn’t think obsessing about the ups and down of the stock market is a good way to track the EDA and IP industries. [omg …]

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Tags: Ansys, ARM, Cadence, EDAC, Market Statistics Service, Mentor Graphics, Synopsys, Wally Rhines

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