By Ed Sperling
Mentor Graphics sent a letter to shareholders urging them to ignore Carl Icahn’s proxy materials and pulling out all the stops in explaining Icahn’s underlying intentions and his nominees to the board of directors. The most interesting nominee in this group is Gary Meyers, former CEO of Synplicity. This one should keep you reading. Hold all calls.

Cadence swung solidly back into the black in Q1, reporting net income of $6 million on $266 million in revenue compared to a loss of $12 million in Q1 2010 on revenue of $222 million. CEO Lip-Bu Tan said demand was strong for products and services across all regions and that demand for the Verification Computing Platform was strong. Break out the champagne. Just don’t drive afterward. Cadence also rolled out the latest version of its Allegro PCB and IC packaging technology. This is version 16.5, by the way, so we figure it’s well tested.

Synopsys was touting the advances in its IC Compiler after one of its customers, HiSilicon, cut standby power consumption by up to 40% without affecting timing on blocks in a recently taped out design.

Sonics is distributing Synopsys‘ DDR memory controller IP, creating end-to-end memory subystems that use a NoC fabric and scheduler. This is an interesting move, and it will take on particular significance once the market turns to 2.5D stacking.

Tensilica’s audio IP core was awarded DTS Broadcast and Digital Media Player (DMP) certification, which is a big deal in the audio world. No other IP core vendors have it, which should say something. The certification is based on highly accurate pipeline-modeled instruction set simulation models of the audio DSPs. This should be coming to a home theater near you—assuming you actually get to spend time at home with a global semiconductor rebound now under way.

Witness the strong growth at MIPS. Q1 revenue was up 15% to $20 million, compared with $17.5 million in Q1 of 2010. Net income was $3.3 million vs. $3.1 million in 2010, reflecting an increase in R&D and marketing costs.
MIPS also announced that it now has the source code for Android 3.0, aka Honeycomb, which it is porting to the MIPS architecture.
The company also won a deal to provide SoCs to Taiwan’s ALi Corp. for the “triple play” market for voice, digital TV and broadband services.

If you think things are bad, be glad you’re not in the Taiwanese foundry business—where the pain level is strangely uniform.

TSMC’s sales dropped 59.5% in February compared to the same month last year, and 7.5% compared to January. How many ways can you spell ouch? 

UMC’s numbers are down 56.9 percent in February 2009 vs. the same period in 2008. That’s pretty close. In fact, it’s remarkably close.

This kind of information is only available in Taiwan. SMIC, based in Shanghai, and Chartered, based in Singapore, don’t report monthly sales numbers.

Nevertheless, there was at least some encouraging news out of Chartered. It said that sales seem to be stabilizing and wafer starts appear to be increasing for Q2. 

There is evidence of this showing up in other parts of the market. U.S. retail sales, excluding big-ticket items like cars, show modest increases in areas like clothes and consumer electronics. Numbers were up in January and February. It certainly wasn’t a robust gain, but it wasn’t negative, either. That will translate into new design starts sometime in the next few months, which barring any more major drops will start this whole cycle rolling again.

Design activity has to begin at least six months prior to any turnaround, which means that if the overall economy is expected to show growth in 2010,  electronic designs have to begin by mid-year—perhaps even sooner.

None of this is perfect, however. Why, for example, did National Semiconductor just announce plans to cut 26% of its workforce? At least part of that can be explained by closing of an assembly and test plant in China and a fab in Texas. Too much capacity is expensive, and we wouldn’t be surprised if National ultimately begins outsourcing some of its work to foundries. Yes, it’s analog, but is it still more efficient to run fabs yourself, even if they’re fully depreciated, when TSMC and UMC are begging for business?

Meanwhile, in the FPGA realm, chip design is getting so complex that EDA vendors are finally beginning to find inroads. This is a market previously owned by tools from the FPGA vendors, which they readily gave away to customers at little or even no cost. That worked fine before the industry got to 90nm, and at 45nm it’s tough enough even with the best of tools.

Mentor introduced its Precision Synthesis Tool family for Altera’s Stratix and Arria families. Our guess is that you can expect to see a lot of activity in this market in the near future, and not just from Mentor. Synopsys’ purchase of Synplicity gives it a vested interest in the FPGA market, as well.

–Ed Sperling