SAN FRANCISCO Silvaco said Monday (Jan. 9) it has completed the spin off of Simucad Design Automation Inc., the modeling and simulation EDA tool provider it acquired in 2003, in preparation for an initial public offering (IPO) targeted for the fourth quarter.
Simucad will emerge with a product line forged from assets of Silvaco and Simucad, including circuit simulation, layout, parasitic modeling and digital computer-aided design (CAD) tools. Silvaco, meanwhile, will remain a private company focused on technology CAD (TCAD) with process and device simulation products derived from the original TCAD technology pioneered at Stanford University in the 1970s and 1980s.
Ivan Pesic, CEO of both Silvaco and Simucad, characterized the Simucad spin off as unique in EDA history because the company is not backed by venture capitalists and plans to devote 100 percent of the proceeds from the IPO to R&D and augmenting customer support.
"It's a unique event in the EDA industry to see a company that has been self-financed for 21 years spin out to go IPO," Pesic said. "This is good news for customers. We are putting money where our mouth is."
The mechanism for spinning Simucad out for IPO has been in place more than a year. According to Simucad's Web site, the company was incorporated in the state of Delaware in June 2004 as a spin-off from Silvaco.
Pesic said Silvaco/Simucad has been preparing to take this step for years. The timing is right in 2006, he said, because after four down years, the economy is in better position to grow. He pointed out that IPOs by EDA companies have become almost unheard of, and Simucad wanted to be the first out of the gate in 2006.
Pesic said he has already received the blessing of major customers, and that many had actively encouraged the move. Silvaco has been told by CAD purchasing managers that they are not able to make large-scale EDA purchases from private companies because big purchases require access to a vendor's financial statements.
Gary Smith, chief EDA analyst at Gartner Dataquest, said he suspects that Pesic is positioning Simucad to become a major player in analog EDA, which will require a large infusion of cash.
"One of the big opportunities right now, and one place where there is a possibility of a major company forming in EDA is in analog EDA," Smith said. "But it's going to take some money to do that."
TCAD, Smith said, has been a great market for Silvaco, but its size and growth potential are limited. In its 2005 EDA Market Trends report, released last month, Gartner Dataquest forecasts that the TCAD market will grow from an estimated $53.1 million in 2005 to $55.7 million in 2006 and $69.7 million in 2009. According to that report, Silvaco held a 15 percent market share in TCAD as of 2004, trailing Synopsys' 75 percent.
According to Smith, the opportunity exists in analog EDA because there is no established high-level flow. Analog designers, he said, are still thinking in terms of transistors. The opportunity, he said, is to move analog EDA to the register-transfer level, so that the tools can be used by normal logic designers as opposed to analog experts.
"There is a whole flow that has to be designed and populated in order for analog EDA to take off," Smith said.