Significant changes in end markets mean EDA, IP no longer a fixed percentage of chip market.

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EDA tools and IP continued their double-digit growth trajectory this year, despite a downturn in consumer electronics and a continued shortage of key components that took a large bite out of the semiconductor market as a whole.

A just-released report from the ESD Alliance showed a 12% increase in revenue for Q1, increasing to $3.95 billion compared with $3.53 billion in the same period in 2022. The four-quarter moving average also showed 12.7% growth.

Several things have changed, however. In the past, EDA and IP typically dipped ahead of the market slowdown, and recovered faster than the market. That didn’t happen this time. EDA numbers have shown strength throughout the pandemic and beyond. In addition, unlike in previous years, many companies are no longer buying point tools, and the biggest customers of EDA no longer are developing their own tools, as IBM and Intel used to do.

“Now, with companies like Google, Meta, and Alibaba, they’re buying the whole enchilada,” said Wally Rhines, executive sponsor of the SEMI Electronic Design Market Data Report. “The system companies are now a bigger percentage of the market. They account for 23% of the wafer purchases, and one-quarter of the customer base for EDA, and they’re doing their own IC designs.”

Rhines also noted that EDA historically has represented a constant percentage of semiconductor revenue. “This year, semiconductor revenue fell off, although there was some strength in AI, but you would expect EDA revenue to fall off, as well. That didn’t happen.”

By category, computer-aided design grew 15.1% to $1.43 billion, while IC physical design and verification increased 24.6% to $675.8 million. PCM revenue also increased 25.6% to $368.4 million, and IP (not including Arm) grew 5.7% to $1.33 billion. Service revenues also grew 17.2% to $142.2 million.

Fig. 1: Q1 revenue by segment and geographic region. Source: ESD Alliance

By region, the Americas grew 12.7% to $1.7 billion, while Europe, the Middle East and Africa grew 21.6% to $530 million. Asia/Pacific, which includes China, grew 9.6% to $1.45 billion, and sales in Japan grew 4.3% to $272.7 million.

Fig. 2: Four-quarter moving average of EDA/IP revenue. Source: ESD Alliance

Ed Sperling

Ed Sperling

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Ed Sperling is the editor in chief of Semiconductor Engineering.

Source: https://semiengineering.com/eda-ip-fundamentals-shift-as-market-soars/