EDA acquisitions point the way to long-elusive growth
Every year there is a flurry of activity in the EDA industry leading up to the Design Automation Conference (DAC) in early June, and then (almost overnight) everything seems to go quiet with the onset of summer vacations and shutdowns. This year, however, what transpired after the 48th DAC is perhaps more significant than what came before. A series of acquisitions may show a way for growth that the EDA industry has long been seeking, but up until now has overlooked.
Mergers and Acquisitions (M&A) has been nearly synonymous with EDA, going back at least as far as the formation of Cadence from the marriage of ECAD and SDA Systems back in 1988, a year before the design tool companies gathered together to form the EDA Consortium (EDAC). Many acquisitions have followed, most often characterized by a larger, more established EDA company snatching up some new technology from a much smaller startup.
That script was rewritten in May, when 35-year-old National Instruments (NI) – maker of testbench software and hardware development tools such as LabVIEW – announced their intent to acquire AWR Corporation. AWR developed the Microwave Office suite of EDA tools, which engineers use to design RF and high-frequency components. In announcing the acquisition, NI emphasized that the increasing complexity of RF and wireless systems is driving a need for better integration of design and test.
Then on June 30, multiphysics engineering simulation software provider ANSYS (founded in 1970), announced that they would be acquiring 10-year-old Apache Design Solutions. ANSYS has been known for providing tools that are used to analyze structural mechanics and fluid dynamics, along with Electro-Magnetic (EM) simulation tools the company acquired with their purchase of Ansoft in 2008. Apache specialized in developing EDA tools for analyzing power and signal integrity in integrated circuit designs before extending their offering to chip-package-system co-design with analysis that includes Electro-Static Discharge (ESD) and Electro-Magnetic Interference (EMI) effects. In an interview shortly after the acquisition was completed in August, Apache President Dr. Andrew Yang said that the vision for the combination of Apache and ANSYS is to develop a unified solution to address signal integrity and power integrity, from chip to package to Printed Circuit Board (PCB). ANSYS plans to integrate the Apache tools into a consistent workflow with their Workbench platform, as they had previously done with the Ansoft tools. Apache had previously announced their filing for a planned Initial Public Offering (IPO), but the acquisition by ANSYS would prove to be much more lucrative. As a non-EDA software company, ANSYS – with a 2010 annual revenue of less than half of EDA industry leader Synopsys – commands a market valuation that is nearly 50 percent higher. It's understandable that low valuation has been a subject of much frustration within EDAC.
To complete the summer buying spree, on July 5, 65-year-old test and measurement company Tektronix announced that they had purchased EDA startup Veridae Systems. Veridae was founded in 2009 to commercialize research from the University of British Columbia. In May at the Silicon Valley Embedded Systems Conference (ESC), Veridae introduced the Corus suite of tools for debug and verification of FPGA-based systems. Veridae designed Corus from the outset to provide interoperability with software debuggers and test equipment, using Joint Test Action Group (JTAG) ports connected to on-chip signal capture probes that a designer would add to their FPGA in order to analyze and manage data during design validation. The Veridae tools are a natural fit for use with Tektronix logic analyzers and signal generators, which were a key part of Veridae's demonstrations at ESC.
I think there is a clear message here. For many years, the EDA industry has sought to grow by replaying an old script – that is, raising the level of IC design abstraction, by pushing upward from Register-Transfer Level (RTL) into Electronic System-Level (ESL) design and verification. Meanwhile, packaging, test, and PCB design tools that are just as necessary to complete an electronics product design have been segregated into separate business units or left for smaller companies to deal with. In many cases, the PCB and package tools have been sold by completely separate sales forces from the IC design tools. Users and CAD support teams have been left with the task of assembling and stitching together an end-to-end set of tools in order to complete shippable products. By moving down the design chain to the chip level, companies such as Tektronix and NI will be able to provide more complete (and hence higher value) solutions for their users.
This trio of recent acquisitions should serve as a reminder to the industry that EDA means Electronic Design Automation, and there is a lot more in that than counting chip "tape outs." By providing a better integration of tools across the entire electronic products value chain, the EDA industry can grow and achieve the higher valuations that the non-EDA software companies enjoy today.