Sparks fly at Cooley's 'Bigwig' panel

SAN JOSE, Calif. — Sparks flew at Deepchip.com moderator John Cooley's annual "Bigwigs" panel at the Design & Verification Conference (DVCon) here Thursday (Feb. 23), with representatives from smaller companies suggesting that pricing strategies by the larger companies were hurting the EDA market.

Kathryn Kranen, CEO of Jasper Design Automation, accused Synopsys Inc. and Cadence Design Systems Inc. of giving away software to undercut startups and expand their presence in customers' tool flows.

Mike Gianfagna, CEO of Aprio Technologies expressed concern that EDA vendors would "crater the market" for design-for-manufacturing (DFM) tools by giving away technology. With chip makers spending in the neighborhood of $4 billion on new fabs, Gianfagna argued, DFM technology providers could see some budgets that "may have an extra zero or two" compared to what EDA companies typically see.

"We've been burning the grass for too long," said Gianfagna, who added that, as a former Cadence employee, he has seen some ridiculously low average selling prices of tools. He argued that the EDA industry needs to "stop pricing to budget and start pricing to value," suggesting that companies have set a goal to command as much of customers' tool budgets as possible without determining what is a fair price for the value provided.

Though acknowledging that his company sometimes takes the lead of its larger competitors and cuts the price of its tools to make a sale, Rajeev Madhavan, CEO of Magma Design Automation Inc. said he has more often told salespeople to walk away from deals when he felt they would jeopardize EDA pricing integrity. He pointed out that a smaller percentage of semiconductor industry revenue is being spent on EDA tools than it was a few years ago.

"We shoot ourselves in the foot a little bit," Madhavan said. "We've got to stop doing that eventually." He argued that part of the problem is that EDA has failed to provide customers with the level of automation the semiconductor industry needs.

According to Gary Smith, chief EDA analyst at Gartner Dataquest, because physical implementation tools from Cadence, Synopsys and Magma have all been proven on 65-nm designs which have taped out, customers have been "having a ball playing these guys off each other" in order to lower tool prices. A lot of customers, Smith said, did not use their entire CAD budgets in 2005 because EDA vendors were giving them such great deals.

Smith said, as of the time of the Design Automation Conference last June, Synopsys and Cadence were showing the most willingness to cut prices, with Magma "holding the line well."

Antun Domic, Synopsys' general manager of implementation, said it is a myth that big EDA companies give away tools for free.

"Anyone who has been in EDA sales will tell you, if you offer a customer a tool for free, they will say, 'I don't want that, so give me the other stuff for less,'" Domic said.