Electronic Design Automation Tools Market Expected to be Worth $9.49 Billion by 2024

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According to a recent report by Reportbuyer, the electronic design automation (EDA) tools market is expected to be worth USD 9.49 billion by 2024, up by USD 6.32 billion in 2018 at a CAGR of 7.8%. EDA tools have provided the silicon industry with the ability to innovate over the past few years. It is responsible for developing the design tools that enable the IC design process to be achieved at a design cost that allows the ecosystem to operate at a profit.

EDA is an integral component of semiconductor design. It is a term for a category of software products and processes that help to design electronic systems with the aid of computers. These tools are often used to design circuit boards, processors, and other types of complex electronics. Therefore, the growth of the semiconductor industry positively impacts the EDA market studied. The booming automotive, IoT, and AI sectors drive the growth of the semiconductor market, which requires electronic devices with complex designs.

Since the inception of semiconductors, Moore's Law, the prediction that the number of transistors in an integrated circuit will increase two-fold every 18-24 months has held true. However, in the recent years, scientists have increasingly come to believe that fundamental physical limits may soon make it hard to place additional elements on the same small area in an economical way, which could ultimately prove that Moore's Law is faulty. The increasing demand for advanced electronic devices with complex designs and the need to reduce the size while improving the performance of ICs compel IC manufacturers to increase their R&D investments and adopt EDA tools. Therefore, the demand for EDA tools, compared to the other sectors, is expected to be high.

KEY MARKET TRENDS

Automotive Expected to Be a Significant Application

Semiconductor foundries are accelerating their efforts in automotive chip production in preparing for a surge in semiconductors used in advanced driver-assistance systems (ADAS) and autonomous driving. All of the major EDA vendors are scrambling to expand their process portfolios for automotive customers. The companies are seeing a growing demand from automotive IC customers amid the push toward traditional cars with more connectivity features - ADAS, and electric/hybrid vehicles. The automotive sector is also attractive because many devices don't require leading-edge processes, and hence, a large number of vendors can participate with less effort.

Virtual verification of designs has become an inevitable part of chip manufacturing, because of the increased requirement for safety and performance. The verification process involves testing the electrical and electronic components under various temperature and pressure conditions. The test ensures that the failure of a device does not lead to any mishap. The increasing complexity in the automotive industry is positively impacting the demand for EDA tools across the industry.

EDA vendors have started to offer their tools and software online. Increased Internet penetration worldwide has made it easy for potential customers to access these tools online, and use them to design and fabricate chips. Consequently, the capital expenditure for companies has reduced because of reduced TCO and infrastructure costs to accommodate these tools. This also helps improve SCM as the total number of resellers and distributors reduces considerably.

Asia Pacific Region Expected to Witness Significant Growth

The semiconductor industry of China has been showing an upward trend for the past ten years. The objective has been to become competitive with the Taiwanese semiconductor industry. The strength of the sector comes from fabless companies. The fabless segment of China's semiconductor industry accounted for revenues that exceeded USD 20 billion for the first time. China represents one-quarter of the global fabless industry.

China's growth in foundry services is reflected by the capital spending of Semiconductor Manufacturing International Corporation (SMIC). SMIC's capital spending was USD 2.3 billion in 2017, up by 87% from 2016 and the fastest growth rate of the top eleven spenders. Taiwan maintained its position of no.2 in the global fabless market with 16% market share of the total chip-design sales in 2017, and it has been consistent from 2010. Companies like Realtek, MediaTek, and Novatek each had more than USD 1 billion in IC sales in 2017, and each ranked among the world's top-20 fabless IC companies.

The Asia-Pacific semiconductors market has been boosted by a strong domestic demand, causing the market to become the largest in the world. A particular trend in the Chinese market has been that of consolidation, wherein state supervised Chinese players have been amalgamated to increase their manufacturing capacity and ability to compete with foreign rivals. Through a process of consolidation, new Chinese semiconductor giants are emerging and have been able to utilize their financial power and production capacities to augment domestic production and reduce the country's reliance on imports.

Competitive Landscape

The EDA market is highly fragmented. New opportunities in the automotive, IoT, artificial intelligence, and virtual/augmented reality sectors have allowed semiconductor companies throughout all phases of the IC production cycle to prosper, with sizable revenue increases. This has occurred despite significant gains in chip performance, but at relatively flat unit sales prices. Some of the key players in the industry include Mentor Graphics, Synopsis and IBM.

One of the key developments in the EDA market was Synopsys’ announcement of investment in AI design solutions, to address the extreme complexities of leading-edge design. The AI implementation was aimed at expanding the Synopsys Design Platform, accelerating time-to-results (TTR), achieving new levels of push-button automation, and setting new standards for quality-of-results (QoR) in digital and custom design.

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