SHANGHAI, China " China has made "fantastic progress" in establishing prowess in electronic design automation to support its booming manufacturing industry, but it will take several years before designers here move up the complexity curve into the most advanced silicon designs.
That's the assessment of Synopsys Inc. chief executive officer Aart de Geus, who was in China last week touring company and industry facilities in and around Shanghai. EE Times caught up with de Geus during a lunch break at a Synopsys management-training program for its China staff at the Grand Hyatt Hotel in Shanghai's ultramodern Pudong district, on the banks of the Yangtze River.
While China's universities and engineering schools continue to turn out a bumper crop of engineers -- especially design engineers -- most design work in China today is focused on "cost reduction," de Geus said. The design-engineering effort is supported by a massive government-industry program that involves national, state and regional government funding coupled with private investment, entrepreneurial activity and professional training.
"This is the early-investment phase of the industry, and the government has decided that electronics will be important and that they can play an important role," de Geus said. "Many design incubation centers have been set up and these are surrounded by startups that try get these things going, and they are making fantastic progress."
To date, seven of these emerging chip design centers, known within the Chinese electronics sector as "semiconductor-manufacturing design bases," have sprung up. The newest and largest of them can be found here in the heart of old Shanghai. Situated in a busy commercial shopping district surrounded by retail stores and blocks of metal and tool supply job shops, the Shanghai Design Base is housed in a recently renovated six-story office building.
The ring of design bases runs around Shanghai, Shenzen, Beijing, Chengdu, Xian, Wuxi and Hang Zhou. Often located adjacent to a major electronics-manufacturing plant, many of these campuses include mini-villages of dormitory and apartment housing for workers, not all of them completed or occupied. Each design base can support up to 100 independent design centers " design shops that do layout, design and verification of low- and mid-level silicon, and cost reduction work in semiconductor geometries in the 0.35-micron to 0.25-micron range. Some develop their own intellectual property (IP).
The design centers are a fertile market for Synopsys and Cadence design tools. Synopsys has established a strong and visible presence in the China market, having set up business here in the mid-1990s. The Mountain View, Calif., company operates a major development center in Shanghai.
While Cadence Design Systems Inc. also has a presence in the Chinese chip design market, Synopsys gained the first-mover advantage by striking early deals with China's powerful Ministry of Science and Technology and the China Academy of Sciences. These deals reportedly involved agreements to donate software to university engineering programs and to heavily discount tool prices for startups. The strategy gives Synopsys huge visibility early in the design phase.
"Among the EDA companies we were far and away the earliest, having started here in 1995," said de Geus, who termed Synopsys "by far the dominant EDA player in China."
Convergence of factors
De Geus pointed to "two or three things happening simultaneously" that are directly and indirectly driving China's hot -- albeit still small -- design market today.
"First, along the the coastal regions there's a rapidly developing consumer goods market for everything from cell phones to PCs to audiovisual -- fill in the blanks," he said. "This segment has the potential to step up the socio-economic ladder. The market is characterized as low cost, and it's big."
Second, "There's a big push in manufacturing. There's a lot of capacity moving into place." Finally, "there's this entrepreneurial combination of startups and education, with the government pushing growth and development and universities producing a lot of engineers. You combine all three things and all of a sudden you have a very fertile ground," de Geus said.
But he was quick to point out that while China is, "cranking out a lot of engineers, it takes a lot of years before an engineer is productive. My guess is that it's going to be three years before you see people using the more-advanced silicon technologies. This, of course, is an average statement, as some are already pushing the state of the art." Nevertheless, de Geus foresees the industry growing "faster here than in India."
The corridor between Shanghai and Nanjing, he said, gives clear evidence of "the amount of investment in facilities. It is incredible. You see this mix of high-end manufacturing and low-end design. It's going to be interesting to see how they are all populated."
What impact will growth of the design business here have on the United States? "I think it's a very challenging development," de Geus said. "We'll see -- we're already seeing -- jobs go overseas, including design-engineering jobs. But it's a continuum, and none of the advanced stuff is here," with Silicon Valley still enjoying "its design and silicon-engineering edge. Time, distance and complexity will make it very difficult to outsource the most advanced silicon to China or anywhere else," he maintained.
"The biggest challenge from my perspective is that if we see a major push on much lower-cost products, that might also migrate to the Western world and put price pressure on the markets and the system there," said de Geus. "In the future I do believe we will see some migration of wealth to the Far East, especially China and India, because the numbers speak for a massive migration."
One fear that often crops up in discussions about China is adequate protection for intellectual property. "People are still cautions about IP," said de Geus, who believes "it will take 10 years for all of the current intellectual-property issues with the China market to be sorted out."
Indeed, de Geus predicted that this factor would keep certain technology " especially the most advanced 130- and 90-nm silicon designs " from migrating here.
"This caution extends to software products, the actual blatant copying of IP as in movies etc., and the protection of embedded IP in chips," he said. "And so people will remain cautions in terms of what they ship.
"The reality is that people in China will start protecting IP when they have some. That is the reality and that will take some time. It's the reality of a country that is moving rapidly to become more global," de Geus said.