SAN JOSE, Calif.--EDA tool revenues declined in every major category during the third quarter compared to the same period a year ago. Still, the EDA industry managed to eek out 1 percent sequential growth thanks largely to the inclusion of new intellectual property companies in the report, according to the latest data from the EDA Consortium's Market Statistics Services (MSS).
According to the MSS report, the EDA industry posted third quarter revenues of $950 million, a 1 percent sequential increase over last quarter and the third consecutive quarter of growth for the industry. Third quarter revenues totaling $950 million were 1 percent lower than revenues during the same period in 2002.
EDA kept its growth streak alive thanks largely to the addition of new semiconductor IP companies that did not report revenues to MSS in Q3, 2002. With the addition of two companies " Virage Logic and inSilicon " MSS reported Q3 of 2003 SIP revenues were $53 million, a 68 percent increase over last year's Q3. EDA overall numbers in Q3 were also helped by the first uptick in many quarters in design services, which grew to $63 million, a 3.8 percent increase over Q3, 2002.
However, the bad news is that EDA revenue derived solely from tool sales and maintenance was $834 million during the third quarter, a decline of 4.4 percent from revenues of $871.8 million in Q3 2002.
While sales and maintence declined in every category, the "good news" according to Wally Rhines, EDAC chairman and Mentor Graphics CEO and chairman, is that tool sales and maintenance revenues "didn't decline that much."
"The quarter in total was modestly negative but the 'year to date' was moderately positive," said Rhines. "You could categorize it as a continuation of flat year to year with sequential improvement. But we still clearly aren't in the recovery yet."
Rhines noted that the North American region, EDA's largest customer base, usually leads recoveries. But sales in North America, according to MSS, declined.
The group said the North America region purchased $506 million worth of EDA products and services in the third quarter, 53 percent of the worldwide total, but 9 percent less than the same period last year.
Japan, according to MSS, led all regions for EDA quarterly revenue growth of 11 percent over 3Q 2002 to reach $173 million.
Revenue for the "rest-of-world (ROW) catregory also increased 7 percent to $92 million in the third quarter, representing 10 percent of the worldwide total.
Revenue in Western Europe was $180 million during the period, accounting for 19 percent of the worldwide total, and a 7 percent increase over Q3 2002.
Rhines said that the increase in the Japan and ROW markets was due largely to a recovery in the wireless market.
He also noted that EDA recovery has traditionally lagged semiconductor recovery by 12 to 18 months, and that the semiconductor industry recovery is currently in its ninth month.
Still, said Rhines, overall tool sales were decent.
MSS reported that EDA's largest tool category, computer-aided engineering (CAE), generated revenues totaling $454 million during the third quarter, 2 percent less than the same period in 2002.
IC physical design and verification revenue totaled $298 million, an 8 percent decrease from third quarter 2002.
Rhines said there were some bright spots in smaller tool segments during the quarter. For example, he said simulation tool sales grew 8.6 percent, resolution enhancement tools grew 25 percent, IC/ASIC design planning and floorplanning grew 60 percent, analysis tools in general grew 10 percent and DFT grew by 11 percent over the same period in 2002.
MSS also reported that EDA industry employment increased from the previous quarter and was also higher than this time last year.
According to MSS, the EDA industry employed 19,300 enginneers during the third quarter, up 4 percent from 18,600. The rise in the number of employees is likely influenced by the addition of new companies, including SIP vendor Virage Logic, in the latest report.