According to the report, total EDA revenue for the second quarter was $993 million, a four percent year-to-year increase. But that figure includes semiconductor intellectual property, which was boosted by the addition of new companies to the report, and services, which was up 11 percent over the same quarter last year.

"We have very small growth and no broad indicators of recovery," said Wally Rhines, EDAC chairman and Mentor Graphics CEO. Meeting earlier predictions of 5 to 7 percent EDA revenue growth in 2004 "will be a real climb from here," Rhines said.

Even with design services, not all the news is good. While up compared to last year, Rhines noted, services are actually down 8 percent sequentially from the first quarter.

There were, however, bright spots, Rhines said. EDA tool categories that showed strong growth included system-level design and verification, analysis tools for power and signal-integrity, resolution enhancement technology, RTL simulation and floorplanning.

These categories were offset by declines in IC placement and routing, IC full-custom layout and verification and logic synthesis. Functional verification and PCB design tools were both down about 1 percent year-to-year.

Geographically, North American revenues increased by 4 percent to $523 million, European revenues increased by 4 percent to $180 million and Japanese revenues decreased by 5 percent to $176 million.

The "rest of world" category continued its strong growth, up 19 percent to total $115 million. The region includes Pacific Rim countries such as China, Taiwan, South Korea, Malaysia and Singapore, where wafer fabs appear to be tooling up.

But why isn't EDA overall showing more growth? Rhines expressed puzzlement, noting that the move to 90 nm is happening faster than expected and that the semiconductor industry may enjoy 25 percent growth in 2004.

"It may be company specific," Rhines said. "And it certainly can be that we need more new tools and new capabilities to see some new growth."