Electronic Design Automation (EDA): Failure of Capitalism?

By _One Million by One Million Blog

August 13, 2013

EDA is a funny industry. It takes enormous intellectual horsepower to build software that can help design the chips that power today’s devices. It creates tremendous value. And yet, that value doesn’t translate into wealth these days.

Failure of capitalism? Let’s examine.

According to recent news by the EE Times, total EDA revenues grew 6% last year during the third quarter of the year to $1.11 billion. Within the industry, the computer-aided engineering market saw the highest growth at 12% to $632.5 million. Integrated circuit (IC) physical design and verification revenues grew a modest 3% to $326.7 million.

By region, while the Americas remained the leaders at a $715.7 million share, growth was modest at a mere 1% over the year. Asia-Pacific markets continue to report strong growth of 22% to $392.8 million and EMEA markets grew 4% to $267.5 million. Japan was the only market to report a decline of 5% over the year to $243.9 million. The growing demand of mobile devices like smartphones and tablets has helped drive the anemic growth in the EDA industry. For a long time, I have been a big promoter of wanting the EDA industry to consolidate. Last year Synopsys took the lead when it acquired Magma. This has helped reduce the price-war significantly.

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