Rita Glover, EDA Today, L.C.
March 2002
Semiconductor industry forecasts say that by 2005, a full 25 percent of
all semiconductors worldwide will be fabricated in China. This makes
China is a very exciting and growing market opportunity for the electronic
design automation industry.
Any manufacturing business typically seeds industrial clusters.
Therefore, as the semiconductor industry takes root in China, it can be
expected to attract peripheral high-technology businesses and move upstream.
Just as has happened in the rest of Asia, specialty IC design work will
become available in China at a much lower cost than in other regions.
According to the World Semiconductor Trade Statistics organization
(WSTS), worldwide chip revenues will increase by only 2.6% in 2002, after
dropping 32.1 percent in 2001. The only area in the struggling
worldwide chip industry that is forecast to show growth is the Asia-Pacific
region, which is forecast to grow by 12.4 percent. All other regions
are expected to show flat to slightly lower growth rates.
Taking heed of these forecasts, EDA vendors are expanding their
operations in China. Cadence Design Systems, for example, has
announced plans to open up direct sales offices in Shanghai, Beijing,
Chengdu, and Shenzhen.
Cadence is also in the process of setting up research and development
(R&D) in China this year to tailor and customize products for the local
environment. “That’s the feedback we’ve gotten from customers,” said
Kevin Kimball, vice president of corporate marketing at Cadence. “They
are asking for local research and development support to tailor products for
their particular needs and requirements. So while the main product
might be developed in the U.S., our Chinese R&D group will translate it and
do whatever is necessary to customize it for the local marketplace.”
Historically, Cadence has been the only EDA vendor with an end-to-end
design flow, from initial logic design and simulation, through synthesis to
back-end IC placement and routing. But the coming merger of Synopsys
with Avant! Corporation (assuming it is approved by the U.S. Federal Trade
Commission) will marry the Synopsys strength in the front end market with
Avant!’s strong presence in the back-end IC design market. Since
Avant! has been investing much more aggressively in China, this may be a
significant competitive factor behind Cadence’s push into the region.
Avant! employs around 300 R&D people in Shanghai, and over 100 in Taiwan.
Since China does not have the history in electronics development and EDA
tools development that the U.S. does, EDA companies cannot find local
candidates with experience in every needed category. But there are
many things that can be done in China, such as library development, software
quality assurance, and customization of graphical user interfaces.
Most of these engineers have been trained in China, and others who were
trained and are currently working in other countries are being lured back to
the mainland.
EDA companies are leading efforts toward more engineering education in
China. Cadence, for example, is in discussions with Beijing University
about developing a software university in China to train engineering talent
there.
One challenge is that new engineers who are just getting out of school
need to have contact with more experienced engineers. “Unless an
experience base exists in a certain place, or is built up, it’s very
difficult to develop enough of a critical mass,” said Dennis Heller, head of
U.S. corporate marketing for Avant!. “That’s just now getting formed
in China, but I think it will grow over time, due to the fact that they have
a lot of very smart, highly educated engineers, and it is certainly a very
attractive business area.”
Avant! had invested in a Chinese semiconductor manufacturing company,
Semiconductor Manufacturing International Corp. (SMIC), but sold the
investment six months ago to pay off a US$195 million restitution settlement
to Cadence over their widely publicized intellectual property lawsuit.
Synopsys, on the other hand, opened up a direct office in Shanghai back
in 1995 after offering a sales and support in China for many years.
The president and chief operating officer of Synopsys, Dr. Chi Foon Chan,
was born in Taiwan, raised in Hong Kong, and has been in the United States
since 1968. He speaks Cantonese, Taiwanese, and Mandarin, and travels
frequently to the region. We spoke with him before he left on a trip
to China.
“So far, we have been cautiously growing, and building good customer
relationships and contacts within China. We had not yet been doing R&D
in that area — it had been mostly sales, support, and design services,” said
Dr. Chan. “Now we are inheriting a very large R&D group in China, and
I want to go there and spend time with them. This is a gigantic step
for us. We will now have three or four hundred people in China and
Taiwan.”
Because the yearly salary of an engineer in China is much less than in
Silicon Valley — somewhere between one-seventh and one-ninth of a Silicon
Valley engineer’s pay — companies will have a great deal of motivation to
get work done in China from a cost perspective. As a result, software
companies of all types will look to do much more work in China.
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