The Electronic System Design Alliance, a SEMI Strategic Association Partner, today announced the inaugural ES Design West to be colocated with SemiCon West 2019.
Read the announcement here: http://esd-alliance.org/wp-content/uploads/PDFs/2018/ESD-Alliance_ES-Design-West-News-Release_Final.pdf
Chasing the vertical OEMs is not a new strategy in EDA.
But it is becoming that much more widespread as the major players extend their reach from automotive (long the domain of Mentor Graphics) to other sectors.
Semiconductor design companies — the linchpin to the product development and cash flow of Synopsys, Mentor and Cadence — are expected to consolidate over the near term, and the revenue outlook from that market is being tempered.
But the “new verticals” — military, aerospace, IoT, cloud — offer the chance for the EDA titans to extend their reach by not only selling IC design software but also an ever-growing array of emulation, analysis, and system design tools to a single customer. Doing so tightens the binds between EDA firm and customer, potentially making the deal more profitable as some list price devaluation that naturally occurs with bundling is offset by a lower cost of sales (including commissions).
As Cadence CEO Lip-Bu Tan said this week, “We had been emphasizing system design development. That basis is providing the entire vertical solution spec that is from IT tool and PCB and a host of system design and verification and we strongly believe that is the strategy going forward to meet the requirement of some vertical (markets).
“IoT, the cloud infrastructure and the massive cloud infrastructure fueling up; the automotive as kind of the connective devices; some of the medical field and DNA sequencing … and a few others: those can be clear application for some of our IT portfolio and some of our EDA flow and also some of our hardware PCB and system analysis requirements.”
We are starting to hear the major EDA companies discuss the PCB segment on their quarterly conference calls. This is an emerging trend; not long ago PCB was an after-thought to most analysts because the revenues were so puny compared to those of semiconductor. Now that PCB is part of a larger strategy, as opposed to simply a (profitable) business unit, that’s changing.
As this strategy ramps, it could very well shift the scope of acquisitions by the major EDA players. For decades, Synopsys has stayed far away from owning PCB design tools although some of its tools have been tied into Zuken’s. Its last foray into PCB came when it acquired Viewlogic in 1997; management quickly bought out the PCB design segment the next year. Would a shrinking semi customer base lure them back in?
Most PCB design M&A related deals these days are tied to filling gaps in technology. There’s still a disconnect between ECAD and MCAD, and there will be some shakeout as new disruptive hardware startups enter the field. So while Cadence and Mentor are pursuing true top-down strategies, not everyone is following suit.
Altium corporate director, technology partnerships and business development Dan Fernsebner told me at PCB West last month, “Incubators and hardware startups have to put products out very quickly, and they have to be right the first time.” Fernsebner says the model for these companies is shifting from enterprise engineering to relying on reference designs.
Does the change to entrepreneurship pose a challenge for the developers in terms of having to reevaluate their business models, I asked Fernsebner. “I think you’ll see explosive new companies changing the business model for those who have been in it for years,” he said, citing Telsa, Nest and Skully, companies that develop products that are field-upgradeable.
It’s rare that any single model wins out completely. But if the end-customers in key industries begin to flex their muscles, it won’t be long before the M&A activity gets really interesting.
A timely piece from the hometown paper of Mentor Graphics looks at how Carl Icahn has calmed down now that Mentor’s stock price has doubled since he started accumulating shares of the company a couple years ago.
The legendary investor is Mentor’s largest shareholder, at just under 15% of the company. Since he starting buying up shares, Icahn has been vocal about the need for the software company to shed its country club culture. He forced the issue in 2011, successfully getting three of his nominees elected to the company’s board. Last year, Mentor only nominated one of the three, which drew fire from Icahn, but with the stock price up 50% over the past 12 months, all is quiet in Wilsonville.
As the major CAD vendors hold their quarterly conference calls, one thing to watch is whether analysts are asking about PCB design tools.
For the most part, they aren’t.
So while Cadence’s PCB and IC packaging software lines saw good growth in 2012, with revenue climbing 11%, its hour-long call on Jan. 30 was devoted to fielding analyst questions on semiconductor and emulation products.
OK, we get it, we aren’t the tail that wags the dog. But given the market size and relative profitability PCB tools generate, it would be nice to get a little more notice.
Nick Martin, the founder and, until last week, CEO of Altium, is fighting back against the board that tossed him out.
But the real question isn’t whether he will regain his spot atop the CAD tool developer. It’s why the board saw fit to relieve him of his duties in the first place.
Some contend privately that at least one board member wants to sell the company but that Martin, who is the company’s largest shareholder, has been reluctant to go along. If so, pushing him out would mean removing, in part, one big barrier. For its part, the board has publicly stated that the decision to leave was Martin’s — something he vehemently contests, and which seems unlikely on its surface — and that the company has not returned the type of shareholder value the board seeks.
So while it’s true the move to Shanghai coincided with an improved bottom line and a higher share price, it’s also true the stock hasn’t topped $1 in years (chart — the top line = $1; the current price is about 80 cents). No one is getting rich owning Altium right now. If the board is getting antsy, it’s understandable. Whether that merits replacing Altium’s answer to Steve Jobs — a design visionary who, according to many we’ve spoken with, has always put the technology first — is for the historians to determine.
The herd is riding on the EDA vendors, almost all of which are at or near 52-week high share prices.
In the past week, Cadence, Mentor and Synopsys hit or were trading just pennies off their yearlong highs. National Instruments and Ansys both traded much closer to their highs than their lows. Even Altium closed in on a high, but that’s a bit deceiving because it’s a penny stock and lightly traded on the Australian exchange.
So, is it the investor herd driving up an industry? Or is it a sign that the EDA market, which topped $5 billion for the first time in 2011, is geared up for a sustained run?
I had the great pleasure of attending Zuken’s ZDAC users group meeting earlier this month in San Antonio at the invitation of Steve Chidester, head of product marketing, and Amy Clements, marketing/sales manager.
Steve and Amy had asked me to present on electronics data transfer, a subject many readers know has long held my interest.
There were about 100 people who attended the event this year, slightly up over last year. All the usual Zuken folks were there: Gerhard Lipski, GM of Zuken Europe; Dave Gullickson, GM of Zuken USA; apps engineer Griff Derryberry; Humair Mandavia; Sandy Jones; and so on. I also was fortunate to meet with Zuken COO Jinya Katsube and CTO Kazuhiro Kariya.
As we’ve reported over at PCDanfF.com, just before ZDAC, Zuken rolled out two new tools: DesignForce, which accelerates prototyping by enabling chip-package-interconnect substrate optimization in a single, native 3D format. The CAD company also released CR-8000, its primary CAD flow. (DesignForce is embedded in CR-8000.) They spent a considerable amount of time discussing those two new tools and their ongoing product roadmap, including CR-5000 Lighting v. 14 next March, which will include a netless router. Zuken says it sees a need to move more information to upstream design, such as system and architecture. The main takeaway was that design makes up 4% of the cost of the process, but it determines 60% of the product cost.
I had about 45 people in my session. There was great interest in the topic, in part because some of the people there have been pushing their companies (RIM, Rockwell Collins, Northrop Grumman, to name but a few) to standardize on IPC-2581. All in all, it was well worth the time.
Also, Zuken is doing a lot in wiring harness design. This is a big market for many EMS companies (especially for military and aerospace work), and there are probably 12 to 15 companies that supply design software for wiring harness. (Some big ones are Mentor, Zuken, Eplan, Autodesk, and IGE-XAO). I didn’t attend the wiring harness design sessions, but it seems the audience was fairly split between the two.
Next year’s event will be held in Newport, CA, around the same time frame (early November).
In laying out his EDA360 vision, Bruggeman asserted software must help profitability as much as productivity, and that future designs will be app-driven, in which users would start with the applications and then overlay the optimized hardware/software.
In doing so, Bruggeman echoed hardware design industry guru Lee Ritchey, who famously said at a Printed Circuit Design-sponsored tech session that users buy the hardware to run the software.
Bruggeman’s departure has raised the question about Cadence’s executive succession plan, and whether he lost a battle to run the company in the future. Again, some analysts feel CEO Lip-Bu Tan plans to step down sooner rather than later, and that Bruggeman’s resignation paves the way for senior vice president of worldwide field operations Charlie Huang to ultimately ascend the throne.
Stay tuned.
The early sense is Carl Icahn will win two seats on Mentor’s board. Given there are eight seats total, and that Icahn and Casablanca Capital — another disgruntled shareholder that is supporting Icahn’s slate — between them own slightly more than 20% of the EDA company’s stock, that seems pretty fair.
Whether it will benefit the company in the long term remains to be seen, of course.
The board shop, which over the past few years has developed and honed its free CAD/DfM tool known as PCB123, today rolled out a conversion tool that features native file upload functionality.
In short, customers no longer need to export data in Gerber; instead, they can use one of a series of native data formats, including Altium, Eagle, OrCad, NI, and others (including, of course, PCB123).
It’s the second big development by the PCB maker in the past year, having already rolled out a parts library addition to PCB123 that supports some 500,000 components.
PCB123 won’t replace the big ticket CAD suites, of course, but for the types of prototype boards most designers need, it keeps getting better and better. And with its CAD conversion capability, Sunstone further extends its “ease” factor to those who don’t use the company’s own software.