As a leading analyst covering the electronic system design segment, Laurie Balch is well steeped in identifying and analyzing technology trends and forecasting new market opportunities. She’s also a great resource for a company’s strategic planning, mergers and acquisitions and market insights and development, which is why I looked forward to our recent discussion.
Industry longtimers remember Laurie from Dataquest, then Gary Smith EDA when she and other senior analysts joined the late Gary Smith at his market intelligence and advisory services firm. Laurie is now President and Research Director at Pedestal Research, a market research firm for the design and engineering industries. Pedestal Research, a member of the ESD Alliance, was founded in 2018 when it took over the business operations of Gary Smith EDA.
Smith: Are you seeing any significant new trends emerging in the EDA or Semiconductor IP markets?
Balch: It’s extremely exciting that we’re now actually seeing widespread recognition of the necessity of a shift to a system-level design perspective. We see this view taking hold among the major EDA vendors, even as they have diverging strategic directions. Though clearly Cadence, Siemens, Synopsys and Ansys maintain their primary focus as EDA companies, they are all signaling different outlooks on where they see their futures headed. What they all seem to agree on (as do I!) is that EDA needs to expand into other related design domains.
But they are choosing to pursue various directions for that future growth via distinct emphasis on semiconductor IP, mechanical/system design, or software development tools. Branching out beyond pure electronics design really speaks to the criticality of engineering teams having an all-encompassing system-level design perspective, versus the silo-based approach traditionally taken by engineering teams.
Smith: There is a lot of talk about open source EDA and a few companies (and even the U.S. government via DARPA) that are active in this area. What is your take on this movement and its potential impact on the future market?
Balch: Open-source EDA is not unlike other open source initiatives in the tech world in that it has the potential to offer solutions for particular types of use cases and user groups. For small-scale developers or engineers doing preliminary design exploration, the prospect of open source tools creates some exciting new opportunities for expanding their design capabilities. It also serves as the framework for broader collaboration and creative inquiry among leading researchers and EDA innovators who seek to test out original approaches to design problems.
For the bulk of the EDA market, though, open source tools are not a looming threat. The majority of design teams necessarily rely on the rigorous testing and heavy technical support that accompanies commercially developed EDA tools. Transitioning to open source tools requires users to accept an additional layer of uncertainty about the ultimate production success of their designs and forgoing reliance on EDA vendors for bug support and addressing technical glitches along the way.
Most users need a much higher level of assurance that they will achieve design closure when they select their tools for complex designs whose development is costly and time intensive. While open source EDA presents intriguing new avenues for tool innovation, which is always profoundly welcome and eagerly encouraged in the EDA community, it’s unlikely to imminently jeopardize the commercial EDA market.
Smith: Is cloud-based design going to go mainstream at some point? How will that impact the existing business models? Could it possibly drive more innovation by making design tools more affordable by using pay-per-use pricing?
Balch: We’ve been talking about some iteration of cloud-based design for decades and yet it has remained an elusive fantasy. But I think there have been several fundamental changes that make this the right time for cloud-based design to finally gain traction. Though no one would have wished for a global pandemic to create new paradigms for our working environments, here we are. We cannot ignore that working from home or other remote locations has become normal for a significant population of workers, including engineering teams.
The idea of always working in a central office with on-prem hardware/software infrastructure is no longer a given. Diverse design teams encompassing a broad range of engineering functions that all need to access interconnected tools are becoming more common. Design teams are increasingly interested in buying adaptive software licenses that can be moved among different tools at different design phases instead of owning static tool seats.
Perhaps most importantly, the underlying third-party cloud infrastructure is now fleshed out enough to provide a practical platform for this vision. Cloud providers have addressed concerns about security and confidentiality of design data, which were a major roadblock for a long time.
Migrating design work to the cloud will demand more licensing flexibility from EDA vendors but can definitely create opportunities to reach more customers who have found it cost prohibitive or technically daunting to try new tools. This could be especially impactful for many point tools (analysis software, for example) that design teams often shy away from using until they run into trouble. If cloud-based tool access removes some of the IT integration obstacles and affordability barriers, we could see new users adopting all sorts of EDA tools they hadn’t employed previously.
Smith: Right now there is a lot of talk about the need to make sure that the semiconductor design and manufacturing supply chains are geographically distributed. EDA has historically been dominated by companies based in North America. Do you see this changing? (Clearly, China is one answer to this, but other regions like the EU are making a lot of noise about funding more domestic supply chain operations and I would guess this includes EDA and IP.)
Balch: We live in an international world. Though U.S.-based companies have long dominated the EDA vendor landscape, we have seen the user base and EDA spending rising rapidly in the Asia Pacific region for many years. There has also historically been a very large user community throughout Europe. Even Latin America and the Middle East have had sizable increases in the number of EDA users. This is partly due to electronics manufacturers expanding operations into different geographies, which in turn has reinforced the educational training programs for engineers globally.
The electronics ecosystem is not exclusively Silicon Valley centric anymore. So it’s inevitable that engineers across the globe will seek opportunities to develop careers outside of the United States, and this includes launching new EDA technologies. Other countries and regions also recognize the enormous economic potential of building homegrown electronics industries beyond just manufacturing. We most certainly know that China is aggressively pursuing this strategy and it isn’t the only country doing so.
On the other hand, software products, and EDA in particular, typically aren’t subject to the same supply chain pressures as more tangible products. No one is rethinking their chosen EDA suppliers because their EDA tool purchases are sitting inaccessible right now in a cargo container at a port somewhere. The price of EDA tools isn’t being inflated due to an instantaneous spike in shipping costs. Users reevaluate their EDA suppliers if their tools aren’t meeting their technical needs.
Do their tools perform at best-in-class levels? Are the tools easy to use and well-integrated with their complete EDA flows? These are questions that transcend the originating locale of an EDA tool. Today’s leading EDA vendors can – and I believe will – stay competitive by prioritizing top-notch technology in their tools and working closely with the international academic research community to productize advancements in electronics design.
Overall, I think the emergence of more EDA vendors outside the US is a net positive for the industry. A greater pool of investment money will be available to birth new EDA startups able to address a wider range of design concerns. Geographic diversity of EDA vendors has the potential to expand the EDA market for everyone more than I believe it to be a threat to existing EDA companies. A thriving EDA startup environment worldwide benefits users most of all.
We must recognize, however, that a primary concern with international EDA and IP suppliers is in the area of security, especially with IP developed in countries known to exhibit questionable security practices. Fear of undetectable security vulnerabilities will make design teams reluctant to rely on IP developed in regions where it’s impossible to obtain security assurances. This uneasiness will likely be a business-limiting factor for IP, and to a lesser extent EDA, vendors based in many geographies.
Smith: What is your position on extending Moore’s Law? What do you see that keeps Moore’s Law moving forward (albeit in different ways)?
Balch: I have always been a staunch believer in the creativity and prowess of our scientific community. Whether it be in the realm of developing new COVID treatments or innovating semiconductor technology, I have confidence in our ability to work around roadblocks. Maybe we ought to stop referring to it as Moore’s Law, but I think it’s inevitable that we’ll devise new ways to continue increasing electronics content. I don’t believe there will be a single miraculous technology that makes that happen; design teams will need to incorporate a mix of advanced materials, packaging, and process technologies to optimize design content.
There’s a significant opportunity for EDA tools to offer engineers more ability to conduct early trade-off evaluations for all the various technology considerations. It’s amazing how far the industry has continued to push the envelope on both the design and manufacturing fronts with architectures using 3D stacked ICs, MCMs and chiplets, gallium nitride, and advanced interconnect and interface schemes. The determination and tenacity of the electronics design community is certain to keep inventing ways of leapfrogging the boundaries of today’s technical limitations.
About Laurie Balch
Laurie Balch is Research Director at Pedestal Research. She has more than 20 years' experience as a leading analyst covering a broad range of technologies targeting the design and engineering community. Formerly Chief Analyst with Gary Smith EDA and a Research Director in Gartner, Laurie has tracked market trends in EDA, semiconductor IP, embedded software, semiconductor automated test equipment (ATE), design for test (DFT), mechanical CAx (CAD/CAM/CAE) applications and product lifecycle management (PLM). Among Laurie's research focuses is system-level design and ESL, DFT and test methodologies, IP and enterprise tools, circuit analysis tools, forecasting and statistics.
Robert (Bob) Smith is executive director of the ESD Alliance, a SEMI Technology Community.