EDA Industry Update September 2009 -- What did the Last Quarter Bring?


EDA Industry Update September 2009 -- What did the Last Quarter Bring?

by Dr. Russ Henke and Dr. Jack Horgan
Henke Associates

In each of the 25 quarterly EDA Industry Commentaries published here since May 2003 by the authors, 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 Verisity.

Note: 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 authors' 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 will no longer independently appear in these EDA Industry reports.

This September 2009 Commentary covers the performances of the remaining group of five (G5) EDA vendors for the nominal Second Quarter. The timing of the publication of these quarterly commentaries is governed by the official financial news release of the last G5 vendor reporting; this time it was Magma, which reported on August 27, 2009. In this issue, EDA News Highlights are followed by the revenue & earnings performances of the selected group of EDA players for Q2 2009, and then EDA vendor by vendor details. EDA Vendor stock prices are discussed. Then, individual EDA vendor forecasts for nominal Q3 2009 are provided. Finally, some EDA Consortium stats are included for Q1 2009. Enjoy!

Recent EDA Industry News Highlights:

On August 18, 2009 Mentor Graphics Corporation and LogicVision, Inc. announced that LogicVision stockholders have voted to approve, and the parties have closed, the previously-announced (May 07, 2009) merger. Former LogicVision stockholders will receive 0.2006 share of Mentor Graphics common stock in exchange for each share of LogicVision common stock. This is approximately $13 million. Under the terms of the merger agreement, the transaction is expected to be tax-free to the stockholders of LogicVision for U.S. federal income tax purposes. The transaction has been structured as a stock-for-stock reverse triangular merger whereby a wholly owned subsidiary of Mentor Graphics will merge with and into LogicVision, with LogicVision surviving the merger as a wholly owned subsidiary of Mentor Graphics. In calendar 2008 LogicVision had revenue of $12.1 million and a net loss of $3.5 million. In 2007 the firm had revenue of $11.6 million with a net loss of $3.7 million. (In December of last year Virage Logic made an unsuccessful bid to acquire LogicVision for about $10 million).

On July 30, 2009 Mentor Graphics unveiled its Android and Linux strategy, including the acquisition of Embedded Alley Solutions, Inc. (San Jose, CA), a vendor of Android and Linux development systems. By combining Embedded Alley’s Android and Linux products and services with the Mentor Graphics Nucleus real-time operating system (RTOS), tools and middleware, Mentor says it can now provide device manufacturers with all the software they need to build their products, and work with them throughout their product lifecycle to supply tools and services.

On July 29, 2009 Cadence announced first-silicon results on 32 nm Common Platform high-k metal-gate (HKMG) technology, manufactured at IBM. Cadence and the Common Platform alliance, comprised of IBM, Chartered Semiconductor Manufacturing and Samsung Electronics, collaborated to tackle systematic and random variability in advanced node designs. Cadence says that these silicon results represent a significant milestone for designers with stringent design-for-manufacturing (DFM) requirements, and can enable Encounter Digital Implementation (EDI) System to provide significant power savings, yield enhancement and time-to-market advantages.

On August 31, 2009 Cadence and GLOBALFOUNDRIES Inc. announced that the two companies had entered into a multi-year software and services agreement for advanced semiconductor design. As part of the agreement, GLOBALFOUNDRIES has adopted a suite of Cadence® technologies to aid in the design, verification and manufacturing of complex semiconductor devices targeting process technologies of 45 nanometers and below. GLOBALFOUNDRIES Inc. is an independent semiconductor foundry with HQ in Sunnyvale, California, created by the divestiture of the foundry business of AMD in March 2009. GlobalFoundries manufactures integrated circuits in high volume mostly for semiconductor companies such as AMD and STMicroelectronics.

On August 14, 2009 Synopsys announced the availability of silicon-proven High-Definition Multimedia Interface™ (HDMI™) transmitter and receiver digital controllers and PHY IP solutions as part of Synopsys' DesignWare IP portfolio.

On August 25, 2009 Synopsys announced that Renesas Technology, a large supplier of microcontrollers and semiconductor system solutions, had adopted Synopsys Proteus OPC for 45-nanometer (nm) production. With the introduction of 45-nm and below technologies, the demand for optical proximity correction (OPC) is said to become greater due to design complexity and layer volume, making time to market and cost of ownership critical factors in OPC.

On August 25, 2009 Altium announced that its Altium Designer software had been chosen as the electronics design solution for the WorldSkills Competition’s electronics category. The WorldSkills Competition is an event held every two years that brings together more than 900 of the best young professionals from around the world. The electronics design category is one of 45 in which competitors compete for gold at this prestigious event. The competition takes place September 01-07, 2009 in Calgary, Canada. For more information, visit www.worldskills2009.com

On August 24, 2009 Magma announced that its customers have passed the 50-tapeout mark for chips designed at 45 nanometer (nm) or smaller geometries using Magma's Talus(r) netlist-to-GDSII design implementation system. Magma says this is more than with any other EDA supplier's implementation system.

On August 17, 2009 the Design Automation Conference (DAC), www.dac.com, announced final attendance numbers for the conference held July 26 – 31, 2009 at the Moscone Center in San Francisco. The 46th DAC attracted 5,299 conference and exhibit attendees, comprising designers, researchers, developers, academics and executives from across the electronic design and design automation industries, and the entire electronic design supply chain. Including exhibitor booth staff, a total of 7,996 individuals participated in DAC this year. “DAC attendance and community interest exceeded expectations in this challenging year,” said Andrew B. Kahng, general chair of the 46th DAC executive committee. “In 2010 and beyond, we look forward to continued growth of the User Track, to further co-location of other events with DAC, and to even more of the electronic design ‘life cycle’ represented in DAC’s conference and exhibit.”

The 47th DAC will be held June 13 – 18, 2010 in Anaheim, CA.

On August 03, 2009 the Semiconductor Industry Association (SIA) reported that worldwide sales of semiconductors were $51.7 billion in the second quarter of 2009, a welcome 17% increase from the first quarter when sales were $44.2 billion. However, second-quarter sales in 2009 were down by 20% from the $64.7 billion recorded in the like period of 2008. Six months year-to-date 2009 sales of $95.9 billion were 25% below the first six months of 2008, when sales were $127.5 billion.

SIA President George Scalise said, “The fourth-consecutive monthly increase in sales is one indicator the industry is returning to normal seasonal growth patterns.”

He noted that industry analysts have recently become more optimistic in their forecasts for key demand drivers. “Consensus estimates for unit sales of PCs are now in the range of minus 5% to flat compared to 2008, whereas earlier forecasts were projecting year-on-year unit declines of 9 to 12%. In cell phone handsets, analysts now believe the unit decline will be in the range of 7 to 9% compared to earlier forecasts of a decline of around 15%. PCs and cell phones account for nearly 60% of worldwide semiconductor consumption,” said Scalise.

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