Electronic Design Automation (EDA) financial analyst Jay Vleeschhouwer, Managing Director of Software Research at Griffin Securities, carefully tracks the design portion of the semiconductor industry and offers insightful analysis used by this community. He also presents the State of EDA, a yearly report on EDA, during the Design Automation Conference (DAC). After this year’s presentation, he and I talked about trends, the difference between EDA and Architecture, Engineering, and Construction (AEC), security and chiplets. A condensed version of our talk follows. Smith: Now that the Synopsys-Ansys merger closed, what changes? Vleeschhouwer: Synopsys is now the largest company by revenue and backlog in all of Engineering Software, a well over $30-billion industry, including all the parts of that market—AEC, EDA and Technical Software. The pro-forma backlog, about $9.84 billion as of the most recently reported quarter, is the largest in the industry. An important question is how will Synopsys integrate, employ and leverage the four-fifths of Ansys that is not strictly EDA? That is, other than Ansoft and Apache, the two entities that mostly comprise Ansys' EDA, and that ties into the convergence theme. Also, the question in any acquisition is the balance between leaving the operations and the portfolios as they were, or not. In other words, let them continue doing what they were doing if they were doing it well or quickly absorbing, integrating and leveraging those portfolios into the buyer's portfolio. That roadmap is something that we would be interested in hearing more about in terms of its purely EDA aspects and as well the convergence aspects.Smith: Have you observed any new trends in 2025 that surprised you? Vleeschhouwer: The short answer is that it's more of the same in terms of the main technical and business trends. Of course, the most recent important exogenous effect is the advent of tariffs and new export restrictions, or the variability around export restrictions. That's perhaps the main thing that's occurred in the last few weeks and months. We're seeing a continuation of trends that have been in place for a number of years in terms of many of the technical and business results that we've highlighted in our reports. From industry data, there continues to be multiple EDA categories that are continuing to grow. It’s observable and important that we see this breadth of product adoption and growth across multiple categories. This has been beneficial to each of the four largest EDA companies. There have been compelling technical reasons for this, and I would expect it to remain the case. In terms of those significant multi-year trends, the answer would be no. Otherwise, in terms of 2025 specifically, the thing that was interesting about this year’s DAC was the presence of more startups, something that we've not seen in EDA for a long time. It's interesting that we are seeing startup activity not only in EDA, but even in one of the other areas of Engineering Software that we cover: AEC has little to do with semiconductors and electronic systems and it too has more startup activity than we've seen for about a quarter of a century. Although the rationales for the startups in these two different areas of Engineering Software are quite different. The rationale for the EDA startups is one set of rationales, whereas in the case of AEC, it's different, which to me is analytically interesting. Smith: What is the difference between the rationales for startup activity in EDA and AEC? Vleeschhouwer: AEC has to do with the design and construction of commercial buildings, residential buildings, infrastructure, meaning roads, bridges, airports, tunnels, civil engineering, public works. Among the companies that we follow in those markets are Autodesk and Bentley Systems. Autodesk has a small connection to EDA because one of their mechanical CAD products has some integration with some PCB design tools. In any case, the rationale for startups in AEC that we've seen has mostly to do with what has been some vocal dissatisfaction with the incumbent or large incumbent products. That's different from EDA, where we can’t make a case that there is dissatisfaction or sufficient dissatisfaction with the incumbent tools that would necessitate, or be a catalyst, for startups. What we're seeing here is the ongoing, complex, rapid evolution of semiconductor design and electronic systems design because of the unusual breadth of EDA tools and functions, far more so than in AEC. There's much more opportunity for niche products to perhaps complement existing tools. As you know, it can be difficult to dislodge an existing tool in EDA. The industry has become consolidated among the big four—Ansys, Cadence, Siemens EDA and Synopsys—and now three with Synopsys/Ansys merger. Backlogs have continued to grow and book-to-bill has been positive for 15 years. It’s hard to infer any dissatisfaction with incumbent tools or insufficient satisfaction showing up in the numbers. Whereas in AEC, it's different in terms of the profile of the customers or the way the tools are used. There are far more customers than in EDA—thousands upon thousands of architectural firms and construction firms and so forth. The installed base of the AEC software is an order of magnitude more than in EDA. It just so happens that there was one tool from Autodesk that has been getting considerable attention from customers in terms of how modern it is and so forth. This created an opening for some startups. Notwithstanding the nominal dissatisfaction with this tool, however, that particular brand continues to grow. It has the largest base in the industry. At the end of the day, the largest product of its kind in the market continues to grow at a decent rate. The vendor in this case, Autodesk, has acknowledged some of the things needed to do to improve the tool, and it's investing toward that. In any case, there are differences in why these startups exist, how they're approaching the market.Smith: The big topics now are 2D and 3D and chiplets. Where is the market relative to chiplet-based design? Vleeschhouwer: It’s still early, based on commentary from the EDA vendors, about developing and delivering the tools. I don't have a precise measure as to how much of the business is attributable to it. It’s still something that has a considerable runway, which is a good thing. As more tools that can enable it come together, then we'll continue to see this cycle of enablement and delivery. That phenomenon will continue to grow. We would love to hear the vendors’ provide more precise attribution in terms of how much of the business is coming from this. For investors, it will be incumbent upon the vendors to be more explicit about the contribution from the new technical phenomena because it is a new growth catalyst. Smith: The ESD Alliance is starting to see more interest in securing the design flow. This is a huge issue. The design flow is more complex and it's going to require cooperation, collaboration and new standards. Vleeschhouwer: Yes. Siemens EDA is the largest in classical product lifecycle management (PLM) or managing the whole process, an important issue for the industrial and manufacturing markets with its Teamcenter product. Interestingly, Siemens EDA still has work to do to integrate Teamcenter with Calibre, which would seem to have been a natural thing to have done, and I think still is. Teamcenter and Calibre are the two billion-dollar brands that Siemens Industry Software has as an entity. Calibre is by far the predominant product of its kind for semiconductor manufacturing. It's got at least two-thirds market share. Teamcenter is the market leader in classical PLM. The connection between those two brands, owned by the same company, would be an interesting executable to observe.About Jay Vleeschhouwer Jay Vleeschhouwer, Managing Director of Software Research at Griffin Securities, has more than 40 years of research analyst experience in the technology sector, including software, semiconductors and computer hardware. Vleeschhouwer does a yearly presentation on the State of EDA during the Design Automation Conference (DAC). The slides can be found at: DAC presentation (June 2025) 2.pdf Note: The ESD Alliance will host a three-hour design track “The Convergence of Semiconductor Manufacturing and Design” Tuesday, October 7, from 1 p.m. until 4 p.m. during SEMICON West in Phoenix, Ariz. Robert (Bob) Smith is executive director of the ESD Alliance, a SEMI Technology Community.
