EDA Recovery Starts Up, Slowly But Surely
Rita Glover, EDA Today, L.C.
December 2003
The second quarter of 2003 heralded the first signs that the
Electronic Design Automation (EDA) industry is coming back to positive
growth for the first time since late 2001. Worldwide revenues reported
by the EDA Consortium show that EDA revenue, including both products and
services, totaled $946 million in the second quarter of 2003. This is
8 percent more than the $876 of EDA revenues earned in the same quarter a
year ago.
The effects of globalization are becoming apparent, as
almost all of the EDA growth came from Japan and the "Rest of World," which
includes which includes Asia/Pacific as well as the Middle East. But
design jobs are migrating to Asia, so many U.S. and European engineers are
hardly noticing the upturn. All four regions are described here for
comparative purposes.
Japan led all regions for revenue growth in Q2 2003, surging
ahead 61 percent over the previous year's Q2 to reach $183 million.
Revenue from Japan was 19 percent of the worldwide total in this quarter.
The Rest of World continued its steady revenue growth,
largely from the expansion of EDA into China, Taiwan, South Korea,
Singapore, and India. This geographical region increased 27 percent to
reach a record $93 million in the recent quarter. Revenue from this
region now constitutes 10 percent of global EDA consumption, and is growing
rapidly due to outsourcing of work from Western countries.
Western Europe had EDA revenue of $169 million in Q2 2003,
11 percent less than the $190 million reported for the same period last
year. Western Europe was the only region to show a revenue decline in
Q2 2003, and its share of global consumption decreased to 18 percent in the
quarter.
The North American region, representing the largest customer
base in EDA, purchased $501 million of EDA products and services in Q2 2003,
only slightly more than the $499 million reported last year for Q2.
Revenue from North America constituted 53 percent of the worldwide total in
Q2 2003.
Figure 1: EDA revenue trends. Source:
EDA Consortium.
Revenue growth by category is shown in Figure 1.
Semiconductor Intellectual Property (SIP) led all categories for growth in
Q2 2003. Revenue more than doubled in Q2 2003 to $57 million, compared
to $26 million during the same period in 2002. For the first half of
2003, SIP revenue totaled $95 million, 75 percent more than $54 million in
the first half of 2002, although new companies were reporting in this
category.
Revenue for Printed Circuit Board (PCB) and Multi-Chip
Module (MCM) Layout was $85 million in Q2 2003, 17 percent higher than $73
million in the same period last year, and the first quarter of
year-over-year revenue growth since Q1 2001. PCB and MCM Layout
revenue totaled $165 million for the first half of 2003, up 3 percent from
$161 million in the first half of 2002.
IC Physical Design & Verification revenue totaled $285
million in Q2 2003, up 6 percent from the $269 million in revenue from Q2
last year. IC revenue totaled $573 million for the first half of 2003,
up 2 percent from $560 million during the first half of 2002.
Computer-Aided Engineering (CAE), the largest tool category
in EDA, generated revenues totaling $457 million in Q2 2003, a 4 percent
increase over $437 million in the same period in 2002. Growth in this
front-end tool category was led by System-Level Design and Verification
Tools, which increased 52 percent over last year, and IC/ASIC
Hardware-Assisted Verification, which grew 30 percent. CAE revenue
through the first half of 2003 totaled $899 million, 1 percent less than
$911 million reported for the same period last year.
EDA Services revenue was $63 million in Q2 2003, down 11
percent from the $71 million posted a year ago in Q2 2002.
EDA revenues have taken a jagged course since 1999,
foretelling the semiconductor downturn in 2001. According to analyst
Rohit Pandey of Credit Suisse First Boston, 92% of EDA revenues are
explained by three market drivers:
- Semiconductor research and development spending (driving
87 percent of EDA revenues), although this is somewhat difficult to track
because EDA only comprises about 16 percent of these budgets;
- Design completion activity (driving 4 percent of EDA
revenues); and
- Capital expenditures by semiconductor companies (driving
1 percent of revenues for EDA-related hardware such as
emulators/accelerators).
EDA is less cyclical than the semiconductor industry,
because semiconductor companies try to innovate their way out of downturns,
resulting in bigger R&D budgets during a downturn.
The Semiconductor Industry Association (SIA) is expecting a
9.6 percent increase in semiconductor sales in the third quarter, and we may
even see a double-digit annual growth rate in 2003 for the first time since
2000. Some analysts such as Mark Edelstone of Morgan Stanley are
forecasting 10-15 percent semiconductor growth in 2003 and 15-20 percent in
2004. Our own forecast is that the semiconductor recovery will be led
by an EDA upturn of around 8 percent in 2003 and double-digit growth in
2004, since EDA is where it all begins.
Top
