Gabe Moretti, EE Times (11/07/2008 10:01 AM EST) The subject of how to grow the EDA industry has been around for a few years, and is now even more pertinent since the consensus is that we have covered all aspects of electronic design, from architectural investigation to mask making and yield analysis. The present economic situation is a powerful stimulus to transform the issue from a subject of academic speculation and after hours banter, to a topic for analysis by CEOs and executive managers, not to speak of the venture capitalists looking for a way to gainfully invest the few resources still available.
The financial picture
A month ago or so, Magma announced that it was restructuring its operations and reducing its workforce, by the now traditional 10%, give or take a couple percentage points. The news is a clear indication that even a company with good technology and access to the public financial market cannot, in our present industry climate, gain significant market share when competing broadly with the three other companies each of which have annual revenue at least four times larger than its own.
What the established companies have in their favor is the length of acceptance and use of a new technology by our customers. Even a breakthrough tool will take about two years to generate a significant revenue stream, since it will take that long for a semiconductor or system company to evaluate, accept, and use a new tool. The cost of training its engineers, integrate the new tool, and use it in pilot production mode to minimize losses due to unexpected bugs, is just too large. It takes a major error on the part of the established vendor to induce users to consider a change.
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