The global electronic design automation tools (EDA) market (henceforth referred to as the market studied) was valued at USD 10.40 billion in 2019, and it is expected to reach USD 15.38 billion by 2025, registering a CAGR of 10.20%, during the period of 2019-2025 (henceforth referred to as the forecast period). Electronic design automation (EDA) tools have provided the silicon industry with the ability to innovate over the past few years. EDA is responsible for developing the design tools that enable the IC design process to be achieved at a design cost that allows the ecosystem to operate at a profit.
- The market studied is entirely dependent on the semiconductor industry. The semiconductor business has been experiencing steady growth. However, growth is expected to be fazed with several challenges. According to the Semiconductor Industry Association, the global semiconductor industry sales were in 2019 amounted to USD 412.1 billion in 2019, a decrease of 12.1% compared to the 2018 total. In spite of the policy challenges that led to the slowdown in the first half, sales recovered in the last two quarters.
- The factors driving growth of the market studied include - the rising demand for miniature electronic devices and increasing adoption of SoC technology across various industries, such as automotive, IoT, and AI.
- In order to prirotize the uninterrupted operations of semiconductor industry for their domestic companies and suppliers, the governements are making strategic initiatives. For instance, semiconductor design, manufacturing, packaging and testing facilities across China were allowed to operate non-stop following certain worker safety protocols. Additionally, the Department of Homeland Security’s Cybersecurity and Infrastructure Agency (CISA) has identified semiconductor industry as one of the on their lists of businesses that may continue operations.
Key Market Trends
IC Physical Design and Verification Segment to Grow Significantly
- The major factors that are impacting the growth of the segment are - the increasing complexity of IC designs and the demand for high accuracy and precision of semiconductor devices. In addition, the end-user industries are rapidly adopting IC design and verification tools to automatically carry out the placement and routing of circuits on an integrated circuit (IC) or application-specific integrated circuit (ASIC).
- In turn, ASIC vendors are becoming more segmented by what they have to offer, including devices, such as telecommunications, digital video, networking, and audio ASICs. To meet such complex chip requirements, ASIC customers have to depend more on the design groups of ASIC vendors and third-party design houses. These tools estimate interconnected resistance, inductance, and capacitance. Shipments of Application-specific ICs, in the Automotive and Industrial sector, witnessed the significant growth in 2019, which is further expected to expand the studied segment scope.
- Cloud-based IC Physical Designing tools are also gaining traction in the studied market. Cloud computing is enabling companies to gain instant access to the CPU resources needed to achieve their physical verification. In March 2019, US-based electronic design automation company, Synopsys Inc collaborated with Samsung Foundry to provide a secure, scalable cloud-based IC design and verification environment on the Synopsys Cloud Solution for designers using Samsung Foundry's process technology.
North America is Expected to Hold a Significant Market Share
- North America is the prominent market for EDA tools owing to growing adoption in industries, such as consumer electronics, automotive, and growing developments in the semiconductor industry.
- Moreover, some of the key vendors of EDA tools are headquartered in the region, such as Xilinx Inc., Ansys Inc., Cadence Design Systems Inc., Keysight Technologies Inc, and Synopsys Inc.
- Vendors in the region are upgrading their offerings. For instance, in March 2020, Synopsys Inc. announced a major breakthrough in electronic design technology with the introduction of DSO.ai (Design Space Optimization AI), the industry's first autonomous AI application for chip design. DSO.ai is part of a multiyear, company-wide initiative and strategic investment in AI-based design technology. The company’s DSO.ai solution revolutionizes the process of searching for optimal solutions by enabling autonomous optimization of broad design spaces. Hence, such innovations are expected to aid the market’s growth over the forecast period.
- Moreover, according to the Semiconductor Industry Association (SIA), the semiconductor industry directly employs nearly a quarter of a million workers in the United States, and US semiconductor company sales totaled USD 193 billion in 2019. According to the World Semiconductor Trade Statistics, in December 2019, semiconductor sales in the Americas amounted to USD 7.49 billion.
- The recent outbreak of COVID-19 has led to factory shutdowns. China consumes around 40%-50% of global semiconductor output, for both domestic consumption and assembly bound for export.
- Hence, semiconductor firms in the United States have high revenue exposure to China. And factory shutdowns or underutilization of production facilities can lead to order cuts and, in turn, fewer or delayed sales. Semiconductor firms with high revenue exposure to Apple, Qualcomm Inc., and Broadcom Inc., may be affected over the near term.
The EDA market is highly fragmented. New opportunities in the automotive, IoT, artificial intelligence and virtual/augmented reality sectors have allowed semiconductor companies throughout all phases of the IC production cycle to prosper, with sizable revenue increases. This has occurred despite significant gains in chip performance but at relatively flat unit sales prices. Some of the key players in the industry include Mentor Graphics, Synopsis, IBM. Some of the key developments in the EDA market are as follows:
- May 2019 - Cadence Design Systems Inc expanded its Verification Suite and System Innovation offerings with the launch of the Cadence Protium X1 Enterprise Prototyping Platform. The platform is applicable to multi-billion-gate AI and 5G chips to single-FPGA IoT chips and IP blocks. It can also help customers achieving up to 80% faster bring-up, with a scalable capacity of up to 32 racks, and up to 24X more capacity than competing desktop prototyping systems.
- January 2019 - Ansys entered into a definitive agreement to acquire Helic, one of the industry-leading provider of electromagnetic crosstalk solutions for systems on chips (SoCs). The acquisition of Helic, combined with ANSYS' flagship electromagnetic and semiconductor solvers, will offer a comprehensive solution for on-chip, 3D integrated circuit, and chip-package-system electromagnetics and noise analysis.
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