There has always been much hand-wringing in the electronic design automation (EDA) business about growth. We look at the markets we serve – semiconductors and electronics – and see enticing upward-bound curves as electronics permeate more of our everyday lives. We discuss and debate how EDA should participate more fully in that trajectory, painfully aware of our single-digit growth rates. We constantly ask ourselves how EDA can participate more fully in the value chain that it enables. We search for our own version of the killer app, the iPad of EDA, that will finally ignite a dramatic take-off in sales.
It’s unlikely to happen, at least in a global and disruptive way like the iPad. Despite the never-ending need for innovation to deal with IC complexity, historically EDA has always been a replacement business serving a relatively finite market of users. When you have automation as part of your segment definition, we should expect that customers will only pay at best a small premium to what they can actually do themselves. We sell new tools that replace old tools to pretty much the same group of users. This has been predictable in the EDA classic
perspective because the tool business has been tied tightly to Moore’s Law of shrinking geometries and increasing complexity. Evergreen, but a replacement business. These factors inherently limit the industry’s growth and prevent the emergence of any kind of consumer-driven home-run product.
That’s not to say we can’t grow, and grow nicely. On a macro level over the past 30 years, EDA has seen upticks with each fundamental shift in end markets, which track in fairly close alignment to major expansions in the EDA business:
In the 1980s the PC era began (and commercial EDA was born)
In the 1990s the Internet Age dawned and true front-end CAE with RTL/synthesis-based methodologies took hold with the new application specific integrated circuit (ASIC) business model
In the 2000s portable wireless connectivity drove new growth and EDA grew with technologies that enabled lower power, small form factor designs with the new commercial foundry model
Today, we stand at the early stage of what can best be described as the Convergence Era, as all three previous macro shifts combine with some recent trends into new types of products and markets.
At a micro level within EDA, there have been potential “break out” strategies to address emerging new global markets (e.g., China, India), provide new levels of incremental (non-replacement) functionality (e.g., ESL, DFM), and even stretch the definition of EDA by getting into new peripheral businesses (e.g., semiconductor IP, software development, design services). While none of these have yet proven potent enough to radically change the scale of our business, they do represent opportunities to build on our base at a slow linear rate.
On either level, EDA’s fundamental value has always been to make design engineers more productive in the face of increasing complexity so that companies can respond better to market opportunities while lowering risk and the cost to development.