January 2009 and the EDAC Forecast Panel

January is just around the corner and with it comes a new EDAC forecast panel with prognostications for 2009. Looking back over the past three years, EDA recovered from a slump in 2005 achieving 10% growth in both 2006 and 2007. 2008 has turned out to be a challenge.

The original expectation was that the growth trend would continue and EDA would see a double digit growth year for a third year in a row. The primary drivers of growth would be semiconductor and systems companies retooling for the next node. Forecasts issued in early 2008, by research companies for semiconductor industry growth, were bullish. Growth forecasts for consumers of semiconductor products such as PCs, consumer electronics, telecommunications and networking and other industries were all bullish. The magic $300 billion revenue number for the semiconductor industry appeared within reach.

However all that changed very quickly. Once it was clear that the global macro economy was going into a tailspin, forecasts were quickly revised downwards. Looking forward, Gartner now expects semiconductor revenue in 2008 to be down 4.4% and to be down 16.3% in 2009 for a total of $219 billion according to their latest news release. iSuppli appears to be a little more bullish and expects a downturn of 9.4% in 2009. They believe revenues for the industry will be $241.5 billion in 2009. The Semiconductor Industry Association (SIA) is predicting a 5.6% downturn for the industry in 2009 and a dollar value of $246.7 billion. While the actual dollar values and percentages may vary, the consensus seems clear. The semiconductor industry is headed for a downturn in 2009. The good news is all the forecasts turn positive for 2010 and 2011 and revenues will be in the range of $251 billion to $264 billion depending on the source of the forecast.

None the less, a few things do not change. The semiconductor industry continues on its march towards smaller geometries. The cost of designing a 32nm chip is projected to be in the $70 million range (with a large percent of costs attributed to software development), according to various sources. Semiconductor companies will have to upgrade their tools at some point to be able to design at 32nm and below. EDA will benefit from these tooling upgrades. The question is how soon?