As part of its services to its members, and to a lesser extent to the EDA industry in general, the EDA Consortium (EDAC) publishes a quarterly Market Statistics Service (MSS). The latest report, that usually is published about three months from the close of the covered quarter, has been made public today. The 1Q2010 industry revenue was $1247 million, a 4.6 percent increase compared to $1192.1 million in Q1 2009. Sequential EDA revenue declined 1.2 percent, while over the last four quarters it declined 5.9 percent.

Not surprisingly the only geographic market sector showing an increase is the Asia/Pacific (APAC) region, which includes all Asian country except Japan. Its revenue increased to $279.0 million in Q1 2010, a 33.2 percent increase compared to the same quarter in 2009. Over the last four quarters, APAC increased 7.0 percent. Unfortunately, The Americas, EDA’s largest region, purchased $492.9 million of EDA products and services in Q1 2010, representing a decrease of 0.2 percent compared to Q1 2009. Over the last four quarters, the Americas were down 5.5 percent.

The above results may be a definitive indicator of the consequences of offshoring employment as a cost saving measure. Although many EDA vendors insist that their customers purchase licenses in the US for use by design centers in other countries via the internet, the use of offshore funds to purchase licenses may be on the increase in order to avoid currency exchange costs.

It must be noted that the data collected for the report comes from two sources: EDAC member companies and, in the case of silicon intellectual property (SIP), from companies who are not members of EDAC, specifically ARM, CEVA, and Rambus. Since the three largest EDA companies are members of the consortium, the report can be used as a reliable picture of industry status and trends.

What The Numbers Show

As my friend Michael Santarini would point out, if we take the SIP contributions out, the results would not have been as positive as they are. Michael and I have had a running debate about whether or not SIP revenue belongs in the MSS. I think it does, so I will deal with the report as issued by EDAC.

The official press release contains a brief statement from Wally Rhines, , EDAC chair and chairman and CEO of Mentor Graphics, that sound both reassuring and neutral at the same time. “Led by increases in the CAE and Semiconductor IP categories, the EDAC revenue numbers show an increase over Q1 2009,” said Wally Rhines. “Geographically, the Asia/Pacific region showed growth both year to year and quarter over quarter.”

The report does show that revenues are still down from the high of 2008 in all sectors with the exception of "Services", but if we consider the results in the first ten years of this century we note that the industry revenues have grown from just over $800 million in 1Q2000, to today's $1247 million.

Unfortunately, the MSS would benefit from a professional editor. The tables included in the official press release were not edited properly, resulting in very confusing data. To begin with the table comparing 1Q09 and 1Q10 numbers has the title "Fourth Quarter Revenue by Segment & Geographic Region" instead of what should have obviously been "First Quarter Revenue by Segment & Geographic Region." The same mistake appears further on in the table reporting moving averages. The title refers to the fourth quarter while the data is for the first quarter. By the way, it would be nice to see some consistency with the nomenclature. The official press release refers to "Sequential EDA Revenue" while the table showing the numbers uses the term "Moving Average" to describe the same thing.

I am not nitpicking details. When issuing a financial report, details do matter a lot.

Although the comparison between 1Q10 and 1Q09 shows progress toward a recovery, the Moving Average, or Sequential Revenue if you prefer, shows that there is still work to be done to achieve parity with 2009. The industry is still down approximately $75 million from the equivalent previous 12 months period and if only CAE and SIP sectors are growing, it may be difficult to achieve parity. Clearly the sector that is most worrisome is "IC Physical Design & Verification". This is the sector that demands the highest license prices by far, and one that significantly contributes to the revenue of all three large EDA vendors, responsible for about 75% of all industry revenue. This sector is showing a decrease of 8.3% year to year. Only PCB is performing worse (-8.9%).

It is clear that design complexity, coupled with consumer products that can be manufactured using non-leading edge processes, is shifting design requirements toward system design tools versus implementation tools. The increase in analog content of designs is also a contributing factor, since the market sectors were defined with a heavy digital design bias.

The MSS reports that companies that were tracked employed 26,099 professionals in Q1 2010, up 0.4 percent compared to Q4 2009, but down 1.7 percent from the 26,561 employed in Q1 2009. Employment figures come mostly from EDAC members. membership in the consortium has decreased with the passing of time. At this writing there were 52 full members listed on EDAC's web site, but four of them, Coware, Denali, Synfora, and Virage Logic ed by companies who are already members.

The EDA Vendors reference table on my site lists 357 companies. So the number of individuals employed in the EDA industry is underreported by the MSS. The employment figure I would like to see from EDAC is the number of employees working in the US versus the number employed in other countries. The suspicion is that employment is growing outside the US but not here, leading to question who really benefits from the growth of the industry.