Report says EDA market could be nearing 'inflection point' Dylan McGrath (12/30/2005) http://tinyurl.com/e46ya SAN FRANCISCO — EDA revenue growth will remain stagnant until new leaders emerge, and new technologies could displace the companies that currently dominate the sector, according to a report released earlier this month by Gartner Dataquest. The report on worldwide EDA market trends, compiled by Gartner Dataquest EDA analysts Gary Smith, Daya Nadamuni, Laurie Balch and Nancy Wu, contends that customers are hungry for electronic system level (ESL) tools, but that there is a lack of these tools available. This lack of ESL tool availability, the report said, is "the only thing keeping register transfer level (RTL) tool sales growing." On the bright side, the report indicates that the EDA industry finally has a set of proposed ESL methodologies that appear to work, the first crucial step toward ESL tool sales growth. "The market may be on hold as far as sales are concerned, but the new technologies are advancing rapidly," the report said. Gartner Dataquest forecasts that the market for ESL tools will experience a compound annual growth rate (CAGR) of 35.7 percent over the next five years, but firm hopes the rate will be even higher, "because this market needs explosive growth to pull the world of EDA out of its doldrums." Citing the late arrival of 65- and 45-nanometer design tools to the market, Gartner Dataquest forecasts that the EDA market declined roughly 0.6 percent in 2005, coming in at an estimated $3.96 billion. The market research company forecasts EDA revenue will rise to 4.27 billion in 2006, 4.65 billion in 2007, 5.15 billion in 2008 and 5.69 billion in 2009. Citing the lack of ESL tools, Gartner Dataquest forecasts that the RTL tool market will grow more than 9.8 percent in 2006, reaching nearly $1.4 billion. The forecast calls for RTL growth to reach 1.52 billion in 2007, 1.64 billion in 2008 and 1.78 billion in 2009, an overall CAGR of 7 percent. "Once the move to ESL is complete, the RTL market will be a small to no-growth market," the report states. The report points to a feeling within the design community that ESL and design-for-manufacturing (DFM) challenges, which were the talk of the industry for much of 2005, will completely revamp the EDA market, displacing leaders Cadence Design Systems Inc., Synopsys Inc. and Mentor Graphics Corp. According to the report, unidentified design experts draw a parallel between the current situation and that which took place in the 1980s, when then-startups Cadence and Synopsys offered RTL tools that displaced the dominant EDA vendors of the time, such as Daisy Systems Corp. and Valid Logic Systems. "This is the inflection point we've been talking about," the report said. The report also decimates the idea that there is currently a "DFM market." Instead, the report asserts, "DFM seems to be a general term, similar to verification, which includes multiple markets." The best use of the term, the report says, is as an adjective used to describe a tool — "DFM-aware router" is presented as an example. Using data from 2004, the Gartner Dataquest report also breaks down company market share in each of the various EDA markets. The MathWorks leapt to the top of the ESL design and simulation in 2004, capturing 33 percent of the market, the report states. Synopsys, with 26 percent, and CoWare Inc., with 19 percent, were the only other companies with double digit market share in this space. Cadence, which had 28 percent market share in this space in 2003, according to Gartner Dataquest's 2004 market trends report, saw its share erode to 8 percent. In the $263-million logic synthesis market, Synopsys maintains a dominant 85 percent market share, according to the report, which forecasts that this market will slowly but steadily, reaching $291 million in 2006 and $329 million in 2009. Magma wins IC implementation the easy way According to the report, Magma Design Automation Inc. has won the IC implementation competition "the easy way," because both Cadence and Synopsys have dropped out of it. As a result, Gartner Dataquest took the "less-than-optimum" step of measuring IC implementation and ASIC layout together, a procedure that the analysts said gives Magma an advantage because it bundles its tools. Nevertheless, measured this way, Synopsys holds a 44 percent market share, the report said, with Cadence and Magma holding 29 percent and 25 percent, respectively. Cadence holds a dominant 72 percent market share in the custom place and route market, with Mentor finishing a distant second with 10 percent, according to the report. Gartner Dataquest forecasts that this market will decline from $170 million in 2004 to $160 million in 2005 and $154 million in 2006, before growing to $179 million in 2007, $217 million in 2008 and nearly $253 million in 2009. In the $167-million design-rule-check market, Mentor has grown its market share to 58 percent, according to the report, distancing itself from Cadence (25 percent) and Synopsys (15 percent). But the report notes that Mentor will be facing stiff competition from both companies, as well as Magma, who are claiming that Mentor's Calibre is not capable of handling 65-nm designs efficiently. In the resolution enhancement technology (RET) market, which the report points out often comes up in DFM conversations, Synopsys bested Mentor in 2004, 49 percent to 40 percent. Cadence finished a distant third, with 9 percent of the market. As RET becomes more critical to the industry's ability to shrink line widths, Gartner Dataquest believes this market will grow rapidly, from an estimated $119 million in 2005 to $131 million in 2006, reaching more than $195 million by 2009. In the $270-million market for printed circuit board layout tools, Mentor grabbed 39 percent of 2004 market share, according to the report, followed by Cadence at 29 percent and Japanese vendor Zuken at 18 percent. Driven by rising pc board complexity and consumer electronics demand, Gartner Dataquest believes the growth outlook for pc board design tools is rather good. The firm expects the pc board market to rise from an estimated $275 million in 2005 to $284 million in 2006, reaching more than $336 million in 2009. The firm expects overall pc board design tool revenue to grow at a 5.8 percent CAGR, rising from an estimated $478 million in 2005 to $500 million in 2006, reaching $634 million in 2009. Synplicity Inc. continued to expand its lead over Mentor in the FPGA synthesis market in 2004, according to the report. Synplicity picked up another 9 points of market share and now holds 67 percent of the market, compared to Mentor's 26 percent, the report said. Gartner Dataquest expects this market to grow slowly, from an estimated $81 million in 2005 to $91 million by 2009. http://tinyurl.com/e46ya --

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