On Sunday night at DAC this week I sat in the front row and listened to Gary Smith give his predictions about EDA and IP as an industry. His financial forecast was a $6.8B industry in 2015, growing to $9B in 2019. An ideal company for Wall Street to invest in would have slow and steady growth. If you add semiconductor IP into the forecast then the size would be $12.147B in 2019, where they are tracking 10 categories of IP.
For new markets of growth he sees Mentor expanding into the automotive market, while Synopsys invests in the software market. The embedded SW market has a $2.7B size, so Mentor is best positioned to take advantage of this.
The mechanical design market started out larger than EDA, however EDA has now caught up to mechanical in size. Dominant mechanical companies are PTC and Siemens
Synopsys has acquired some Optical technology, to create a dominant niche strategy. Another new market for Synopsys has been in application development software (Coverity).
Potential adjacent markets for automation include chemical design and Biomedical. This started to remind me of how ANSYS has already been offering multi-physics tools as a more holistic product design approach.
Companies in big data like Google have lured EDA developers away, although ANSYS just acquired Gear in that space
Will mechanical companies try to acquire an EDA company? Does EDA have a choice?
Question: Is the IP market in 2015 and 2019, still $3B?
A: Yes, it's basically flattening. IP used to cost something with logic synthesis, now its free. The royalty model is weakening, up-front charges still happen, however it is a less profitable market segment. The growth market is for platform-based IP, they have royalties and up-front fees.
DesignWare size IP is becoming a commodity (SNPS is #3 in IP for quite a while), less revenue is expected in the future, causing flattening of IP market. So both SNPS and CDN have to go upstream, like with ARM IP.
Q: What is platform-based IP?
A: Platform-based IP mostly what ARM does (Processor plus memory, 4M gates). As DesignWare ages its value goes down.
Mentor has been able to figure out how to make SW IP for automotive standards.
SDA - System Design Automation tools, need SW ip based on standards.
Q: Is MEMS included in your EDA forecast?
A: Yes, MEMS - design tools are included in EDA market (modified PCB tools)
Q: Are there any growth areas for IP?
A: Yes, Analog and RF IP - will grow, but overall IP is flattened.