Introduction:
The big event at the beginning of the year was undoubtedly Synopsys, which acquired Ansys for $35 billion on January 16 and then completed the acquisition of Intrinsic ID on March 20. This series of events undoubtedly marks the active activity of the EDA (Electronic Design Automation) industry in market operations, investment and financing, and mergers and acquisitions.
Although the competition of international giants is still fierce, domestic EDA has also experienced several years of rapid growth and market involution, and today's domestic EDA achievements and controversies coexist. Now standing at a special node at the bottom of the semiconductor industry cycle, can the industry have a clearer understanding of the development path of domestic EDA? What is the way forward? We'll explore this set of questions next.
1. Overview of EDA industry:
· Definition of EDA
What is EDA? In today's high-tech environment, can a chip be born without the help of EDA?
Chip production is a process that involves multiple complex steps, including design, manufacturing, packaging, and testing. EDA plays a crucial role in this series of steps, as it is an industrial software designed to assist in the entire process of integrated circuit chip design and production.
As the core link of the integrated circuit industry chain, the function of EDA is indispensable, whether it is the software used for design by chip design companies or the software used by wafer fabs for manufacturing. It is not only a core tool for designers to realize chip design, but also helps foundries improve the yield of products, thereby supporting the huge integrated circuit market and a wide range of electronic information and digital economy markets.
As technology continues to advance, chip designs become more and more complex, and modern integrated circuits can include up to billions of semiconductor devices. Without the help of EDA software, designing such a complex chip becomes an almost impossible task. Therefore, EDA is not only increasingly integrated with the industrial chain, but also has become a key force to promote design efficiency and technological innovation.
· Classification of EDA tools
In the field of integrated circuit design and manufacturing, electronic design automation (EDA) tools show their diversity and specialization depending on the type of chip. Integrated circuit chips (ICs) are mainly divided into two categories: digital ICs and analog ICs. Digital ICs deal with discontinuous digital signals, such as 0s and 1s; Analog ICs are responsible for processing continuous signals such as light, sound, and temperature. Currently, many ICs are a hybrid of digital and analog circuits, which combine the characteristics of analog and digital circuits, often with the digital part as the core, and execute complex algorithms. For these different circuit types, EDA tools are also subdivided into three categories: digital chip design EDA, analog and mixed circuit design EDA, and integrated circuit manufacturing EDA. Among them, the full-process tools of digital circuit design can be divided into two parts: front-end and back-end according to the design process, and the front-end and back-end have different design tools and verification tools; Analog and hybrid circuit design tools focus on circuit design, simulation verification and physical implementation. EDA tools for integrated circuit manufacturing are used to develop manufacturing process platforms and wafer fabrication.
Compiled from public information
In addition to the main EDA tools mentioned above, there are a number of secondary EDA tools designed for specific popular applications, such as functional safety and fault injection for automotive applications. Each type of EDA tool is a combination of several EDA point tools, through which chip designers can effectively deal with the complexity of integrated circuit design, ensuring accurate implementation and efficient production of the design. By understanding these different EDA tools and their applications, we can gain a deeper understanding of how EDA technology can nuanced the design and manufacturing of integrated circuits, which in turn drives the technological progress and market development of the entire semiconductor industry.
2. Global EDA market competition pattern:
The rise of domestic EDA and the monopoly of overseas giants
In the global EDA market, the high degree of monopoly of overseas giants is significant. Synopsys, Cadence, and Siemens EDA (formerly Mentor Graphics, acquired by Siemens in 2016) collectively accounted for about 70% of the global EDA market revenue in 2020, and this trend continues to this day. These three companies are companies that can provide full-flow EDA tool solutions for design, and their technology and market position are almost unmatched.
However, unlike the concentration of international markets, China's EDA market, although smaller, is growing faster than the global average. According to the China Semiconductor Industry Association, China's EDA market will reach 18.49 billion yuan (about 2.5 billion U.S. dollars) by 2025, accounting for 18.1% of the global EDA market. Between 2021 and 2025, it is expected to grow at a CAGR of 15.64%. This rapid growth is partly due to continued domestic investment in advanced process technologies and broad support from the government to the corporate level.
In addition, digital ICs, as a major component of the EDA market, are also showing strong growth momentum globally. According to WSTS data, the size of the digital chip market has reached 305.568 billion US dollars in 2020, accounting for 84.59% of the overall integrated circuit market. The wide range of applications of digital chips, from smartphones to data centers, is further driving the demand growth for EDA tools.
What are the leading enterprises in China?
In the domestic market, after more than 30 years of hard development, domestic EDA has been recognized for the strategic importance of the semiconductor industry and actively supported by government policies. Some of the earliest EDA companies, such as Silxin and Guangli Micro, have been deeply engaged in their own fields for more than 20 years and have become the first batch of domestic EDA companies. In 2008, under the influence of the special policy of "nuclear high-base", such as Empyrean, Primarius, Xinhe Semiconductor, etc., were established one after another. These old enterprises have now become the backbone of domestic EDA. The "ZTE incident" in 2018 further stimulated the rise of domestic EDA companies, and many emerging companies sprung up, including Hongxin Micro-Nano, Xinhuazhang, Hejian Gongsoft, etc. At present, the number of domestic EDA companies has exceeded 120, and they have made significant progress in their respective fields.
It comes from the official website and public information collation
The three listed companies, Empyrean, Primarius and Guangli Micro, have their own strengths. Empyrean inherits the mission of "Panda System", and its analog circuit design EDA process is one of the world's leading solutions in this field. Primarius has some of the world's leading core technologies in the field of memory, analog and mixed-signal circuit design. Guangli Micro has achieved a major breakthrough in localization substitution, breaking the long-term monopoly of foreign products in the field of integrated circuit yield improvement.
In the EDA market dominated by digital ICs, Silchip represents the rapid development of domestic EDA in this field. After 20 years of intensive development, it has now developed from the initial prototype verification to the whole process covering architecture design, software simulation, hardware simulation, prototype verification and digital debugging, realizing the full migration of EDA to the cloud and forming a complete digital front-end EDA solution.
In addition, some domestic EDA companies have also achieved global breakthroughs in key technology nodes. Xinhe Semiconductor adopts simulation-driven design, provides a whole industry chain EDA solution covering IC, packaging to system with completely independent intellectual property rights, supports advanced technology and advanced packaging, and fully supports 2.5D/3DIC chiplet design.
At the same time, Hongxin Micro-Nano announced in April that its newly developed static timing signoff tool CHIMETIME is expected to successfully complete the certification of Samsung's 5nm EUV process in early 2024. Prior to this, Hongxin's self-developed place-and-route tool AGUDA and logic synthesis tool ROCSYN have successfully completed the certification of Samsung's 5nm EUV process in 2022 and 2023 respectively.
Although these domestic EDA companies have filled the gap in the domestic market and shown the potential to compete with international giants, from the past experience of overseas, it seems that the history of EDA development is a history of mergers and acquisitions of established enterprises and emerging enterprises. Will the future of domestic EDA also follow such a trajectory?
It comes from the official website and public information collation
3. M&A, investment and financing trends in the global and domestic EDA industry:
Recently, overseas giants have frequently acquired mergers and acquisitions
Globally, the recent M&A activity in the EDA market is high, indicating a trend of strategic restructuring and technology consolidation within the industry. At the start of the new year 2024, for example, the major event in the chip design space was Synopsys' $35 billion acquisition of Ansys, an engineering simulation software company. The merger, which aims to create a global leader from chip to system design, demonstrates a typical strategy for expanding product portfolio and market share through acquisitions, while also reflecting strong technology and market complementarities between the two companies.
Then, on February 15, the day after Valentine's Day, Japanese chipmaker Renesas Electronics announced the acquisition of Altium Limited, the world's leading supplier of electronic design systems, for $9.1 billion. This move not only strengthens Renesas' competitiveness in the PCB board level EDA tool market, but also marks the deepening of the software and hardware convergence strategy, which is expected to break through the revenue model that relies on a single license. Cadence then kicked off the year with the acquisition of BETA CAE on March 5, marking its official foray into structural analysis. These M&A cases not only accelerate technology integration, but also expand the market boundaries and business scope of the participating companies. On March 20, Synopsys announced the completion of another round of acquisitions for Intrinsic ID, a leading provider of physically unclonable functional (PUF) IP for system-on-chip (SoC) designs.
Rational convergence of domestic enterprise investment and financing & mergers and acquisitions
The investment, financing and M&A activities of the domestic EDA industry show a different trend from the active M&A in the international market. Although the number of domestic EDA enterprises and financing cases have increased rapidly in recent years, with the maturity of the industry, investment and financing activities have gradually shown a trend of rational convergence.
According to incomplete statistics, from 2022 to March 2024, there will be more than 20 investment, financing and mergers and acquisitions in the domestic EDA industry, involving more than 16 companies, highlighting the heat of the industry and the attention of capital. For example:
In September 2022, Xinhuazhang announced the acquisition of Instantyo Electronics, and integrated its core technology into its ultra-large-scale software simulation technology into Xinhuazhang's intelligent V verification platform, enriching its system-level verification product portfolio. In October of the same year, Empyrean acquired 100% of the shares of Xinda Technology, which is engaged in the development of memory/IP characterization extraction tools, for $10 million in cash. Immediately after December 26, Silchip acquired Microcrystalline and integrated its hardware simulation into the whole process layout of digital EDA.
It is also worth noting that in May 2023, Primarius acquired 100% of the equity of Fuzhou Xinzhilian Technology Co., Ltd. to fill the gap in the board-level and package-level design of the company's products. In September of the same year, Guangli Micro acquired 62% of the equity of Yiruixin, whose main business is integrated circuit testability design (DFT) technical services and product development.
On March 26, 2024, Yake Hongyu completed the second round of financing, which was co-invested by Focus on Hard Technology Track, Yuntai Capital, etc., and followed by Huada Jiutian. Founded only 4 years ago, Hejian Gongsoft has also completed the investment and merger of several EDA startups in the past few years, and has acquired wholly-owned subsidiaries including: Shanghai Huasang Electronics, Yunshu Innovation Software, and Beijing Nuori Integrated Circuit.
Under this trend, although emerging companies can obtain more resources and support by accepting acquisitions or strategic investments from established companies, whether they can compete with other established companies depends on their own strength and strategy. Some emerging businesses may have unique technologies, innovative products or services, and the ability to adapt flexibly to the market, allowing them to stand out in a highly competitive market and compete with industry giants. However, for companies that are smaller or have not yet established their market position, they may face greater challenges in the face of competitive pressure from industry giants, and it is unclear whether they will inevitably be acquired.
Nonetheless, this M&A activity is expected to continue, bringing more opportunities for innovation and growth to the industry. By integrating resources, technology and talents, companies in the industry can better respond to market challenges and promote the progress and development of the industry. This integration helps to create more competitive products and services, bringing more possibilities and opportunities to the industry.
JW Insights also recently released the "Global EDA/IP Industry Market Research Report" pointed out that from a market perspective, the large-scale commercial implementation of 5G, AI, smart cars and other fields has brought about a surge in demand for advanced high-computing power chips, and the market size of EDA tools supporting chip design will grow steadily. In addition, with the gradual tightening of technology blockades and sanctions, the potential energy of China's EDA localization will also accelerate, and the scale of the domestic EDA industry is expected to accelerate its growth.
However, after entering 2023, as the semiconductor industry as a whole enters a trough period. As an upstream part of the semiconductor industry, the EDA industry has also been affected and has experienced a decline in investment and financing activity. This change reflects the market's cautious long-term view on the development of the EDA industry, emphasizing the need for sound operation and technology cultivation after rapid development. In this market environment, the industry is likely to witness more investment focused on quality over quantity, as well as more precise strategic choices in M&A.
4. Future outlook: AI innovation, cloud computing integration and IP collaboration in the EDA industry
· AI Innovation
The goal of AI intelligence is to greatly reduce the proportion of repetitive and low-creative work such as chip architecture exploration, design, and placement and routing from the existing EDA use process, and use AI algorithms to automatically explore architecture, design generation, and physical design. In the future development of the EDA industry, the integration of AI technology marks an important turning point.
For example, this year Synopsys launched the industry's first full-stack, AI-driven EDA solution Synopsys.ai, covering the design, verification, test and analog circuit design phases. The solution significantly improves the efficiency and yield of chip design by automating architecture exploration and physical design, marking a breakthrough in AI technology to drive the development of EDA tools.
Domestic companies are not far behind, showing significant progress in the application of AI in the field of EDA. In 2022, Silchip launched the first domestic enterprise-level hardware emulation system, OmniArk, which uses an AI-driven intelligent compilation engine, which greatly optimizes the compilation efficiency and cabling success rate. This intelligent tool application not only reduces the manpower requirement of the design, but also improves the automation and efficiency of the entire design process.
Cloud computing integration
With the increase in the complexity of chip design, the amount of data and computing has skyrocketed, and the use of cloud technology enables EDA software to have functions such as elastic computing, secure storage, and rapid updates, so as to meet the higher requirements of large data volume and computing volume. The introduction of cloud platforms, such as Primarius' collaboration with Alibaba Cloud, provides EDA tools with key capabilities such as elastic computing, secure storage, and fast updates to meet the needs of processing big data and complex computing. In early 2024, Silchip also partnered with Tencent Cloud to further demonstrate the potential of cloud computing to optimize EDA services, accelerating chip development and time-to-market by creating a high-performance, low-cost design and simulation platform.
Platformization and IP synergy
Another key trend is the convergence of EDA and IP. Modern EDA is not just a collection of tools, but has gradually evolved into a platform that integrates IP resources, which not only facilitates the execution of design processes, but also promotes the sharing and horizontal connection of industry resources. Although the level of intelligence is constantly improving, it still needs human support to provide services, and the construction of the service platform can provide professional consulting, design services and related customization services to meet the individual needs of customers.
International giants have a deep history of EDA and IP layout. Synopsys has been in the IP space since 1992 because of customer needs. Although the business has been losing money for a long time, it has now risen to become the world's second-largest IP vendor, after Arm. In March, Synopsys further expanded its semiconductor IP product line with the acquisition of Intrinsic ID. At the beginning of this year, Sierxin cooperated with Innosilicon Technology and Strange Moore to jointly create a new win-win ecology of domestic EDA+IP.
These developments not only improve the performance and application range of EDA tools, but also bring higher development potential and market competitiveness to the entire chip design industry. In the future, with the further development of technology and the continuous change of industry needs, we can foresee that the EDA industry will continue to develop rapidly in the direction of intelligence, networking and platformization.
5. Competitiveness analysis of Chinese EDA enterprises: full process coverage and market opportunities
Toolchain coverage
In China's EDA industry, the comprehensive coverage of the tool chain is one of the key indicators to measure the competitiveness of enterprises. The full process coverage of EDA tools provides greater consistency and convenience than a single point tool, which not only improves the customer experience, but also increases the profitability of EDA vendors. Specifically, customers who use full-flow tools can significantly improve design efficiency and reduce operating costs by eliminating the hassle of frequently switching between different software in the design process, reducing work interruptions due to tool-to-tool compatibility issues. This model has high customer stickiness and has long-term strategic significance for manufacturers.
However, despite the obvious advantages of full-process tools, there is still some room for development in this area for EDA companies in China. At present, many domestic EDA companies still mainly provide point tool products, and the development of full-chain tools is relatively lagging behind. In terms of the supply capacity of full-process tools for analog IC design, Empyrean is one of the few companies with full-process tools. In the key areas of high-end digital chip design, Silchip already has the ability to complete the digital front-end EDA process, while SMIT is one of the few local EDA companies focusing on the digital back-end and manufacturing end. There are also some basic tools such as logic synthesis and layout and wiring, and companies such as Hongxin Micro-Nano are actively tackling tough problems.
In the context that the three giants of global EDA - Synopsys, Cadence, and Siemens EDA - have consolidated the market position of full-process tools, domestic enterprises will likely become new giants in the industry in the future if they can accelerate the completion of full-process tools and product expansion. This not only requires continuous investment in technology development, but also strong support from the policy and market environment to promote the overall competitiveness of the domestic EDA industry.
These development trends and challenges indicate that the future of China's EDA industry will be a double-edged sword full of opportunities and challenges. In today's increasingly fierce competition in the global semiconductor industry, how to quickly and effectively grasp market opportunities and improve the whole process coverage of the tool chain will be the key problems that domestic EDA companies need to face and solve.
Representative company and product recommendation:
Silchip:
Founded in San Jose, California in 2003 and headquartered in Shanghai in 2004, it was one of the first companies in the industry to develop prototyping tools. As early as 2020, the prototyping solution accounted for 8.88% of the global market share, ranking second in the world. Excellent market performance has consolidated the leading position in the industry. Until 2018, the focus has been on the field of validation. After strengthening the core technology and external mergers and acquisitions, it has comprehensively laid out various digital EDA tools including architecture design, software simulation, hardware simulation, prototype verification, digital debugging, and EDA cloud, and now has formed a complete digital front-end EDA solution.
At present, it has been used by more than 600 global chip design companies, with customers in China, the United States, Japan, South Korea, etc., including Intel, Samsung, Sony, Realtek, Black Sesame, Kaixin Institute and other well-known enterprises, which is a mature product that has been verified and recognized by the market for a long time. It has also participated in the formulation of mainland EDA group standards, undertaken a number of major national and local scientific research projects, and was rated as a national specialized and special new "little giant" enterprise.
Guangli Micro:
Founded in 2003, as one of the three listed companies in the domestic EDA industry, Guangli Micro is a leading supplier of integrated circuit EDA software and wafer-level electrical test equipment. The company provides EDA software, circuit IP, WAT electrical test equipment and a complete set of solutions combined with chip yield improvement technology to achieve chip performance, yield and stability improvement in the entire product cycle from integrated circuit design to mass production, and the successful cases cover multiple integrated circuit process nodes.
In March 2024, Guangli Micro launched the T4000 Max semiconductor parameter tester, equipped with 100pin, which supports multi-channel parallel testing, which can better serve customers with multiple test items and high test efficiency requirements. T4000 Max (100pin) enriches the typical test product matrix of Guangli Micro and further expands the company's high-speed and high-end testing machine categories.
BGI Nine Days:
Founded in 2009, as a leader in the domestic EDA industry, Empyrean currently has a product array of dozens of EDA tools, including analog circuit design full-process EDA tool system, storage circuit design full-process EDA tool system, RF circuit design full-process EDA tool system, digital circuit design EDA tool, flat panel display circuit design full-process EDA tool system, wafer manufacturing EDA tools and advanced packaging design EDA tools and other software. And provide technology development services around related fields. Products and services are mainly used in the field of integrated circuit design, manufacturing and packaging. The biggest advantage is that it is the only one in China that can provide analog full-process EDA system and RF EDA tools.
Primarius:
Founded in 2010, it is the first listed EDA company in China. Based on the DTCO (Design-Process Collaborative Optimization) methodology, Primarius currently has several world-leading EDA key technologies serving more than 100 of the world's leading integrated circuit companies. According to its 2023 annual report, 64.34% of its revenue comes from the domestic market.
The company has a wide range of products and services, providing the whole process of customized circuit design EDA in the field of memory & analog/mixed-signal design; For process development, manufacturing and yield improvement, provide model/PDK/standard cell library; In the field of semiconductor device testing, we provide device electrical performance/reliability/noise test systems; One-stop engineering services, including IP design and development services, standard cell library design and characterization, SPICE modeling and PDK development, and test structure design and testing services.
Chips and Semiconductors:
Founded in 2010, it is a high-tech enterprise engaged in the research and development of EDA software tools, with simulation-driven design, providing EDA solutions covering the whole industry chain of IC, packaging to system with completely independent intellectual property rights, supporting advanced technology and advanced packaging, and is committed to empowering and accelerating the design of a new generation of high-speed and high-frequency intelligent electronic products, which have been widely used in 5G, smart phones, Internet of Things, artificial intelligence and data centers.
At the IMS International Microwave Symposium in June 2023, Xinhe Semiconductor officially announced that through its large-scale production-proven IPD development platform, the shipment of chips and integrated passive devices (IPDs) has exceeded 2 billion, which are widely used in RF front-end modules.
6. Write at the end:
With the major mergers and acquisitions and continuous market consolidation in the global EDA industry, the pace of international giants has not slowed down, and the position of domestic EDA has become increasingly important. Despite facing many challenges, including technology localization, market acceptance, and competition with international giants, domestic EDA manufacturers must continue to innovate and strengthen core technologies to consolidate and expand their domestic and foreign market share.
In the future, domestic EDA needs deeper industrial cooperation and policy support, as well as continuous investment in technology research and development. Only in this way can we occupy a place in the global semiconductor design tool market and truly realize the transformation from following to leading. For domestic EDA, now is a critical period for building a foundation and leaping, and every step may determine the fate of the entire industry. Hopefully, in the near future, we can witness the outstanding performance of domestic EDA on the global stage.
Reference Sources:
Shanghai Integrated Circuit Industry Association: EDA Science Popularization Handbook
Shanghai Integrated Circuit Industry Association: "2023 Shanghai Integrated Circuit Industry Development Research Report"
Jiwei Consulting: Global EDA/IP Industry Market Research Report
Semiconductor Comprehensive Research: "The product statistics of domestic EDA manufacturers have been updated again, and the number of suppliers has reached 29"
Ni Guangnan: "Vigorously Develop Industrial Software"
Core stuff: "Xinhe Semiconductor Su Zhouxiang: Full support for 2.5D/3DIC Chiplet design"
Interface News: Synopsys Completes Acquisition of Intrinsic ID