EDA Business Climate: A Retrospective

Written by Sean Murphy. Posted in EDA, skmurphy

“The farther backward you can look, the farther forward you are likely to see.”
Winston Churchill

I think we are in the midst of a significant change in the structure of the EDA industry. I think we are going to see a change in the industry that will be as significant as the shifts from turnkey systems or engineering workstation centric solutions. First I would look back over some markers from the last seven years to provide a context for an assessment of the EDA business climate and prospects for the future.

  • 2001 7 EDA IPO’s
  • 2002 “Wall Street Evaluates EDA” is Session 1 at DAC
  • 2004  “EDA: This is Serious Business” is Session 1 at DAC
    • Will there ever be another “next great EDA company” or has the industry settled into a stable triopoloy?
  • 2007 “EDA Exit Strategies, What’s Next?”
    • Should startups stay private and grow organically? What are the other choices for exit strategies?
  • 2008 “EDA: A View from Sand Hill Road”
    • Summary: EDA Industry is Flat, opportunities are in open source, Nano/MEMS for cleantech, SaaS, and tools for electronic design that broaden market

Here are the details and references.
2002 39th DAC SESSION 1
PANEL: Wall Street Evaluates EDA
Chair: Aart de Geus – Synopsys, Inc., Mountain View, CA
Organizers: Sharon Turnoy, Deirdre Hanford

The EDA sector is capturing unprecedented attention on Wall Street. With seven IPOs in 2001 alone and strong performance by the EDA “blue chips,” the industry has gained new prominence with the capital markets. In this panel, Aart de Geus will moderate a discussion between representatives of the various constituencies who play a role in shaping Wall Street’s opinion of EDA: financial analysts, portfolio managers, venture capitalists, CEOs, and the press. Questions discussed will include: How do investors and analysts currently view EDA? What contributes to that perception? What factors drive EDA’s current favor with Wall Street, and why is the sector “hot” compared to two to three years ago? How do we sustain that favor? Given the highly complex nature of our industry, how do investors decipher the strength of a particular EDA firm? Is EDA tied to the semiconductor industry’s performance? What role does the press play in shaping the view?

Wall Street Evaluates EDA Speaker(s):

  • Moshe Gavrielov – Verisity Design, Inc., Mountain View, CA
  • Richard Goering – EE Times, Felton, CA
  • Lucio Lanza – Lanza Tech. Ventures, Palo Alto, CA
  • Jay Vleeschhouwer – Merrill Lynch Tech. Research, New York, NY
  • Vishal Saluja – J. & W. Seligman & Co. Inc., Palo Alto, CA

2004 41st DAC SESSION 1
Panel: CEO PANEL: EDA: This is Serious Business
Chair: A. Richard Newton – Univ. of California, Berkeley, CA
Organizers: Bob Dahlberg, Kurt Keutzer

Over the last 20 years, electronic design has grown to annual revenues of $3B per year and dominates the Technical and Systems Sector of the Software Industry. Cadence and Synopsys are among the top 15 independent software vendors when ranked by market capitalization. In short, the EDA industry has come of age, but the future of the industry is far from certain. Where will the future growth of the industry come from? Are EDA revenues forever tied to the cyclical semiconductor industry? Will there ever be another “next great EDA company” or has the industry settled into a stable triopoloy?

EDA: This is Serious Business Speaker(s):

  • CEO PANEL:
    • Michael J. Fister – Cadence Design Systems, Inc., San Jose, CA
    • Aart De Geus – Synopsys, Inc., Mountain View, CA
    • Walden C. Rhines – Mentor Graphics Corp., Wilsonville, OR
  • Questioners:
    • Gary Banta – Stretch, Inc., Mountain View, CA
    • Richard Goering – EE Times, Santa Cruz, CA
    • Jennifer Jordan – Wells Fargo Bank, Portland, OR
    • Mark Papermaster – IBM Corp., Austin, TX
    • Sunil Shenoy – Intel Corp., Inc.,Hillsboro, OR
    • Gary Smith – Gartner Dataquest, San Jose, CA – ,

2004 Electronic News: Riding High on Change By Ed Sperling — Electronic News, 6/18/2004

Wally Rhines, chairman and CEO of Mentor Graphics, sat down with Electronic News to talk about the future of chip development, discontinuities in the EDA market and where opportunities will unfold in the future. What follows are excerpts of that conversation.

Electronic News: At DAC, there were three acquisitions in the first day. What does that say for the EDA industry?

Rhines: In the downturn, there were quite a few acquisitions and a lot of the intermediate-sized companies disappeared. There really hasn’t been that many since then. There were 88 startups funded by venture capitalists this year. That’s a big number. The pool is replenishing. There are good companies growing.

2007 DAC 44: June 4, 2007, 10:45 AM – 11:45 AM PAVILION PANEL
EDA Exit Strategies: What’s Next?

Organizer(s): Michelle Clancy – Cayenne Communications

The environment today is dominated by a drought in IPO’s. At the large companies M&A activity has slowed. Leveraged buyouts are the chosen path in the semi industry, and the Sarbanes-Oxley Act is making being a public company an undesirable place to be. How does all this impact EDA startups today? Should startups stay private and grow organically? What are the other choices for exit strategies?

  • Moderator: Kathryn Kranen – Jasper Design Automation, Inc.; Vice Chair, EDA Consortium, Mountain View, CA
  • Speaker(s):
    • Rajeev Madhavan – Magma Design Automation, Inc., Santa Clara, CA
    • Andrew Yang – Apache Design Solutions, Inc., Mountain View, CA
    • Jay Vleeschhouwer – Merrill Lynch & Co., Inc., New York, NY

2008 DAC 45 PAVILION PANEL: EDA: A View From Sand Hill Road
Chair: Lucio Lanza – Lanza Tech.Ventures, Palo Alto, CA
Organizer: Dave Kelf – Sigmatix, Inc., Boston, MA

Today, locating investment for even the most exciting of EDA startups is challenging. What are investors looking for in EDA companies, what are the interesting trends and opportunities and what investments are being made? Why is investment in EDA critical to the entire electronics industry?

Speakers:

  • Kent Shimasaki – Nollenburger Partners, San Francisco, CA
  • Juan-Antonio Carballo – IBM Corp. and Argon VP, Redwood City, CA
  • Erach Desai – Integrated Corporate Relations, Inc, Boston, MA

More to come. My focus will continue to be on opportunities for startups in an industry that–ever since they passed Moore’s Law–has been marked by ongoing disruptive innovation.

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