Terms of the agreement were not disclosed, but Wall Street analysts said the deal is likely worth $13 million in stock, cash and incentives.

Rajeev Madhavan, Magma CEO, said his company is buying the 23-person privately held Aplus to develop a full flow for the emerging structured ASIC market — "quasi" gate arrays with turn-around times comparable to FPGAs, but the timing advantage of ASICs. It's a market that LSI Logic, NEC, and startup Lightspeed are gearing up for.

Thus far Cadence Design Systems and Synopsys, who are fighting it out for the number one spot in the EDA industry and high end ASIC/SoC market, have shown little interest in entering the structured ASIC market. If Magma is successful with its structured ASIC play, it very likely could plant the seeds for ASIC vendors offering structured custom to start using Magma tools in high-end ASIC flows as well.

EDA vendors like Synplicity and Tera Systems have offered pieces of a structured ASIC flow. Synplicity has physical synthesis for structured custom and Tera Systems has silicon constraint-driven RTL coding.

But Aplus' FPGA and CPLD physical synthesis, added to Magma's Blast Fusion place and route system, could potentially allow Magma to offer structured ASIC vendors and their customers a more complete and easy to use flow, tied to a given structured ASIC vendor's processes.

Madhavan said that Magma needs a few more technologies to firm up its offering and be fast to market. Magma recently issued more stock to raise $150 million in cash and already had $100 million in cash in its coffers. Analysts said this is likely the beginning of shopping spree for Magma.

Aplus was founded in 1998 by EDA luminary Jason Cong, professor at the University of California at Los Angeles. The company provides Palace, which offers automated physical synthesis for Altera Stratix and Cyclone devices as well as Xilinx Virtex-II devices. APlus also offers ArchEvaluator, an architectural evaluation toolkit, and ArchIntegrator, a synthesis solution for embedded PLDs in systems-on-chip.

Cong, who serves as president of Aplus, said the acquisition will give the Aplus technologies a broader sales channel and a greater opportunity to capture the structured ASIC market. Magma said it will continue to support Aplus' current FPGA customers. Madhavan was quick to point out that Magma is not conceding the high end ASIC and SoC market to Synopsys and Cadence. He said Magma sees the structured ASICs and perhaps programmable cores on ASIC designs as new opportunities for growth.

"With this release we are sending a clear message that we are not just focused on digital standard cell design, we are focused on the entire SoC design," said Madhavan. "And part of that will be custom ASIC and embedded FPGA."

While PLD has proven not to be the most lucrative market of the EDA markets, structured or platform ASIC tools will likely draw higher price points than PLDs and potentially higher volumes than pricey high-end ASIC tools, making it a potentially untapped and fairly lucrative opportunity.

Madhavan has been on Aplus' technical advisory board since the company first announced its mission in February 2000. Meanwhile, Cong was on Magma's advisory board when Magma was founded in 1997.