Steady EDA industry growth leading into 2009

In an interview with ECN Asia, Dr. Aart de Geus, Chairman of the Board and Chief Executive Officer of Synopsys Inc., shares the Company’s direction after it acquired Synplicity.

Please say something about the synergies obtained through the purchase of Synplicity?

The Synplicity acquisition helps Synopsys enter the growing hardware-based rapid prototyping market segment, which allows designers to quickly build and test their designs in hardware, operating in real time, with real physical interfaces. This enables customers to focus on system-level validation and early software integration and testing. Plus, Synopsys’ channel and complementary verification and virtual prototyping solutions enable us to sell Synplicity’s rapid prototyping solutions into Synopsys’ user base.

With the acquisition, Synopsys becomes a technology leader for FPGA implementation and debug. Combining Synplicity’s FPGA expertise with Synopsys’ IC technology will help us extend the solution for increasingly complex FPGAs to include timing, power, IP and verification.

Finally, the acquisition supports Synopsys’ strategy to increase our position beyond our traditional strengths in high-end semiconductor design and expand our systems and mid-tier company footprint. With design teams expanding, more design being done globally, and less time being allocated to training, ease-of-use is becoming more critical than ever. Synplicity has ease-of-use expertise honed in the FPGA market segment, which can greatly benefit Synopsys’ IC design customers.

How do these synergies help Synopsys customer?

Synopsys and Synplicity’s joint efforts will help more designers successfully solve the increasingly complex problems associated with creating today’s chips and systems. The combined offering will form a complete verification solution that serves both the hardware and embedded software development teams. Long-term, this acquisition enables us to provide a powerful integrated tool flow and methodology that lets engineers design once then drive their designs either to FPGA or ASIC technologies.

What kind of consolidation do you foresee in the EDA industry?

Customers today are seeking out closer collaboration with EDA partners who can help them address multiple challenges by delivering excellent technology, comprehensive solutions, a predictable business model and strong field support. Synopsys is a leader in all of these areas. More and more we see customers realize that they need to collaborate closely with an EDA vendor that can address their entire design and verification challenges. The era of piecing together tools from various sources to create a design flow is coming to a close. Even if they use best-in-class tools, these “Frankenstein flows” can often deliver worst-in-class results. Instead, the tools need to be tightly integrated into solutions that can address a myriad of difficult, concurrent design challenges.

The semiconductor industry seems to be on the downswing in 2008. What is your forecast for the EDA industry in 2008?

Many companies today are understandably cautious, and many of our EDA competitors have been talking about how challenging the industry environment is today. For Synopsys, however, today there is little change in our customers’ behavior. In fact, Synopsys is executing well and we continue to grow our business run-rate.

While the overall economy in the US has been soft, bringing some uncertainty to the semiconductor industry, volume demand for electronics continues to grow. The main profitability stress areas are in the memory markets, where a number of companies battle for share based on price and capacity.

For the rest of the semiconductor industry, we see a number of merger and acquisition transactions aimed at giving companies larger share and increased competitiveness in market sub-segments. A clear example of this trend is the recently announced wireless joint venture between STMicroelectronics and NXP.

In the current environment, customers are searching for optimal EDA partners and closer collaboration. Synopsys’ leading technology, comprehensive solutions, conservative business model and strong field support make us a preferred candidate for broader and closer relationships. In this context, Synopsys sees a healthy pipeline of opportunities and steady growth leading into 2009.

What are the biggest technological challenges Synopsys is facing and how do you hope to meet these challenges?

The biggest technological challenges continue to revolve around keeping pace with Moore’s Law. Today that translates into addressing low power and verification, and tightening the links between design and manufacturing. With the next generation of technology, more physics laws will become first order issues. We will meet these challenges by collaborating closely with leading edge customers to deliver integrated technology that can help them fulfill their visions for future electronic products and systems.

A common criticism against the EDA industry is that it has failed to come out at the right time with tools for deep nanometrics? Any comments?

Synopsys works very closely with design companies who are pushing to the latest geometries. Like these companies, we define challenges before they become an issue, and we work hard to deliver solutions. Nevertheless, it can take a while to develop these solutions and get them right and the industry is not always fully satisfied with how quickly it can deliver. This is a key reason close collaborations are so critical.