EDA industry benefits from new markets

The essential nature of EDA has become more apparent, he said, as semiconductor companies are becoming increasingly like systems companies and systems companies are becoming increasingly like semiconductor companies, he said.

Software development and silicon development have been separate “arms races” which have now “become intertwined” due in part to the introduction of AI/ML and engineering software convergence across the industry.

He defines AI as conversational language input and ML as pattern recognition and optimisation. It is this ML/optimisation which is expected to be a driving force in the EDA industry.

In addition to design automation software, IP and hardware have contributed to this growth which has been sustained – and is sustainable – across multiple product categories, he continued. Another factor to growth is new addressable markets, such automotive; in the last five years EDA companies have begun to work with systems customers in the automotive industry.

Industry revenues, dominated by “the big four” (Cadence Design, Synopsys, Siemens EDA and Ansys) exceeded $13bn in 2023, following growth every year for more than 10 years, recovering from 2009’s decline. Revenue for 2024 is estimated to be over $14.4bn for 2024, said Vleeschhouwer.

EDA companies are likely to continue the propulsion with 35% of revenues going to R&D. This is an area which distinguishes it from other software sectors, which typically spent 20%-25%, said Vleeschhouwer.