Outlook for the EDA industry in 2008

The EDA industry recovered from a slump in 2006, coming in with approximately 11% growth. The results for various quarters of 2007, for publicly traded companies in EDA, are on an upward track,( expected to be 10% or more)  notwithstanding an occasional hiccup or two. Will 2008 see another double digit growth year?

The upcoming EDAC CEO forecast panel, is sure to address this burning question on the minds of EDA industry participants and watchers.  As we wait to hear the prognostications from the panel participants, here are a few thoughts to consider.

·         The semiconductor industry as a whole is expected to grow at a compound annual growth rate of 5% per annum, in the 2006-2011 period according to Gartner analysts as reported in EE Times in December 2007.

·         The cost of designing and developing a 32nm chip is projected to grow to 70mn USD or more in 2011 according to Gartner analysts.

·         The EDA industry and EDA design methodology are both at critical inflexion points right now. In 2006 and 2007, DFM was one of the big drivers of growth for EDA.

Given this information, will EDA grow at the same rate as 2007 or should we expect to see a downward trend following the semiconductor industry?

GarySmith EDA has just released their quarterly assessment of the Q1 2008 outlook for the EDA industry ( www.garysmith eda.com).  Cyclical growth patterns in the semiconductor industry are a major contributor to the EDA growth forecast. If semiconductor growth is slowing down as Gartner and other market research companies in the business forecast,  then EDA growth may not be able to keep pace with the figures seen in 2006 and 2007.

If this is the case does it mean spending on tools is drying up? The answer is not a straight yes or no. In the next post, I will look at some of factors that influence spending on design tools.