The EDA CEO Forecast, an annual panel event hosted by the EDA Consortium, recently took place in Sunnyvale, CA. By and large, the panelists saw the future of the EDA industry as bright, following a performance in 2001 that was far better than that exhibited by the semiconductor industry.

Participants in the panel were Vinod Agrawal (LogicVision), Bernie Aronson (Simplicity), Ray Bingham (Cadence), Aart de Geus (Synopsys), Moshe Gavrielov (Verisity), Wally Rhines (Mentor Graphics), and Mike Tsai (Axis Systems). Each panelist gave their view of the industry, followed by questions from the panel moderator and then from the audience.

Most of the panelists agreed that, despite the economic woes of the electronics industry in 2001, EDA companies more than held their own. This view was summarized by Synopsys' de Geus, who said that the EDA industry was up 9% in 2001. In comparison, during last year the semiconductor industry had its worse drop, down 32% from 2000. Sharp downturns also occurred in the semiconductor equipment, electronic systems, and communications segments of the electronics industry.

The EDA sector was the best performing sector of the entire electronics industry. In addition, five companies had successful IPOs and one, Verisity, was the top performing IPO in any industry in 2001. The panelists also agreed that in 2001, Wall Street finally took notice of the EDA community, recognizing EDA as a critical enabler for electronics growth and success.

Mentor's Rhines discussed a number of reasons for a bright outlook for EDA in 2002. Among his positive factors are:

• The existence of leading-edge fabrication facilities, particularly in the silicon foundry arena, to support growth and innovation in semiconductor and system design. Rhines feels that current silicon-processing development will support leading edge design for the next 3-4 years.
• Disintegration of the communications market driving electronic system and component innovation.
• The EDA industry is much more stable than the IC industry with respect to growth rate. Rhines expects a 12% growth for EDA in 2002 and around a 15% growth in 2003.
• The price-to-earnings ratio (P/E) for EDA companies, in general, makes the industry attractive for investors.

Axis' Tsai echoed Rhines' optimism. For 2002, Tsai sees good revenue growth, along with operating and net incomes, for the EDA industry and also sees the semiconductor industry cycle turning positive in 2002, good news for EDA companies and the electronics industry in general. He, like Rhines, feels that a strong EDA structure will lead to continued attention from Wall Street, which will help improve EDA's stability and longevity.

An addition, de Geus brought up a continuing opportunity for EDA companies—contributing to the decrease of the "Design Gap", the constantly expanding difference between the complexity of chips that processing houses can make and the complexity of what designers' can successfully design as manufacturable chips. Several panelists also agreed that one of the biggest problems EDA companies can help overcome is decreasing the amount of time designers spend verifying chips during and after chip design. This "Verification Gap" makes the future bright for companies that produce verification and/or test software—virtually all those represented by this panel.

Finally, Verisity's Gavrielov mentioned that he felt the biggest driving factor for EDA growth was increasing chip complexity. Gavrielov added the chip vendors do not want to develop EDA tools, they would rather concentrate on chip development. The other panelists concurred with these assessments, since complexity increase drives the semiconductor and EDA industries in tandem. Higher complexity leads to shrinking process technologies, improved chip packaging, higher system integration and, of course, the need for better chip and system design, verification, and test EDA tools.