TOKYO Mentor Graphics Corp. is in discussions to purchase a portion of Zuken-Redac, Japan's leading supplier of pc-board CAD software, in a bid to fill out gaps in its pc-board design tool offering, a senior manager from Zuken confirmed Friday (Oct. 8).
The negotiations have been going on for more than a month, but there is no assurance that the deal will go through because Zuken considers routing such an important piece of its pc-board design business. Mentor, meanwhile, may be courting several other vendors.
"Place and route accounts for more than 80 percent of the key technology for PCB design," said Jinya Katsube, senior managing director of Zuken Inc. (Yokohama, Japan) "Mentor will become one of our competitors either under an OEM agreement or if we jointly develop technology. If we sell, we may have other competitors unless we properly arrange the distribution channel."
Other sources said Mentor will make Zuken the exclusive distributor of the layout tools in Japan as part of the acquisition, though Katsube said distribution issues have yet to be worked out. Zuken already has an existing agreement to resell Mentor's ICX analysis tools, as well as those from Cadence Design Systems Inc.
In Cadence's footsteps
Mentor has had a keen interest in developing or acquiring routing technology since competitor Cadence bought Cooper and Chyan Technology (CCT), developer of the Specctra autorouter, in 1997, Katsube said. Mentor and Zuken used to resell CCT routing tools under an OEM contract, but the agreement ended after the buyout.
"It's publicly known that Mentor needed routing technology after CCT was acquired," Katsube said. "Mentor is probably looking for either developing it internally or acquiring the routing technology from third-party vendors."
He said there may be as many as five other acquisition targets for Mentor to consider. Mentor Japan officials were unavailable for comment by press time, and Mentor headquarters in Wilsonville, Ore. declined comment
Zuken-Redac was created in 1994 when Zuken K.K. of Japan purchased U.K.-based Racal-Redac. Although its U.S. user base is small, Zuken-Redac has a strong market presence in Europe and Japan and is one of the leading pc-board CAD vendors worldwide.
Products from the Redac side of Zuken-Redac include the high-end Visula layout system, the Route Editor autorouter, and the Windows-based Cadstar layout system. Zuken developed the CR-5000 layout system, which is sold mostly in Japan and is known for its strength in analog design. Recently, Zuken-Redac has been moving aggressively into the advanced packaging area and has been targeting the U.S. market for this initiative.
Zuken K.K. and Zuken-Redac claim annual revenues over $130 million and employ over 750 workers. Zuken-Redac's U.S. office is in Santa Clara, Calif. Zuken K.K. is listed on the Tokyo stock exchange.