BY DANIEL SKILKEN President and Chief Executive Officer, C Level Design Inc., Campbell, Calif.

Forecast visibility for EDA vendors has dropped to near zero. Customers are so unsure about their own business that they don't want to commit to purchases. They cannot afford to buy the tools they need, and they cannot afford to defer their projects and not buy the tools. So, they wait until the last minute to commit to orders to any vendor. Electronics companies are delaying any projects that have significant development risks. These tend to be designs that require a large team and a long development time. Instead, they are respinning existing products that can be turned faster and with less risk. Adding features and updating existing products, with a heavy emphasis on design reuse, will be the trend for the next 12 months.

The hardest-hit segment in the EDA business appears to be large capital equipment purchases and consulting services. Companies are looking for effective alternatives to hardware emulators and simulation accelerators to speed up their functional verifications. Many electronics companies have experienced layoffs and cannot afford consultants when they are struggling to hold on to the staff they have left.

One exception is any consulting service that provides valuable intellectual property that enables a company to complete a design in a fraction of the time. EDA tools that save tool budget, dramatically improve productivity and reduce design risk are also still in demand.

In the final analysis, the important thing to remember in this discouraging economic climate is that tool purchases are not being canceled, only delayed. The result of all this rescheduling of projects is a buildup in demand for EDA tools. Designers need to produce more in a recession than they otherwise would; with fewer workers to fall back on, improving design productivity is critical. All of this bodes well for a fast turnaround for the EDA industry, and it will rebound faster and sooner than the rest of the electronics industry.