Part of the  

Chip Design Magazine


About  |  Contact

Archive for February, 2014

Starting A New EDA Company

Friday, February 21st, 2014

Gabe Moretti, Contributing Editor

Every once in a while the topic of what the EDA industry should be resurfaces.  In the last few weeks I have read ideas from Rick Carlson, Joe Costello and Chris Rowen.  All three are seasoned, successful EDA personalities who are, mostly due to the lack of new funding in the industry, unhappy with EDA.  Unfortunately all three must bear some of the blame, since they are part of the successful EDA entrepreneurs who made the industry what it is today.

By this I mean the industry is a service industry providing engineering tools to semiconductors and system houses to be used to develop and build semiconductor ICs.  The fact that the end users make much more money selling their products while EDA vendors fight over the Costello proverbial dog food bowl is a fundamental characteristics of a service industry such as EDA.  Yes, our technology is supreme and second to none, but we still just build tools to build ICs and thus the price of a tool is bound by the availability of similar tools fighting for the relatively few customers available.

Where are the new entrepreneurs?

I did not read any suggestions by Rick, Joe or Chris that would change the nature of the industry.  But what is worth nothing is the total lack of new ideas from younger people.  Are the new leaders all too busy finding new ways to gossip on the net?  Are we really all so lonely that we must post a picture of what we just ordered for lunch?  Is it possible that there is no other business plan in EDA than the old one developed when tilting an IC the proper way in the sunlight would show the transistors built on the substrate? (Yes I was there then).

The concept of unbundling the development of CAD tools in order to decrease costs and concentrate leading edge knowledge in a third party vendor is over thirty years old, an eternity in this business.  The problem I fear is complacency.  People like Rick, Joe, and Chris are comfortable with the professional and financial success they have achieved.

The disruption created by a new business approach is as scary as the prospect of a  large earthquake.  Is there any young creative person that can look at today’s reality and propose a new approach?

Given the vacuum I decided an old guy needs to speak up.

A New Model

To come up with a new business model one has, of course, to describe the requirements first.  Semiconductor process technology has progressed so much that the need for a greater number of transistors on a chip is no longer the principal concern for the vast majority of designs.  The majority of semiconductor products today are fabricated with 90 nm or 65 nm processes.  They are at least four generations ago!  Thus the pressure to continue to double the number of transistors every 18 months is practically gone with the exception of less than twenty system houses.  So the emphasis is no longer on transforming a RTL netlist into a network of transistors, but to architect an heterogeneous system that satisfies particular requirements.

A new successful EDA company is one that has the characteristics of Mathworks and ARM put together.  Mathworks focuses on providing solutions for specific application areas, while ARM provides components that are an integral part of the final product and thus benefits form the revenue generated by the end sale.

A new EDA company is one that understands thoroughly the application industry it serves and provides tools and components that enable the creation of leading edge products in that industry.  Providing tools to produce leading edge semiconductors is no longer profitable, since the customers base is so small.  But providing the same collection of tools and components to develop the smart home or the distributed medical industry is not.  I would have also listed automotive as an opportunity if it were not too late.  That train has left the station a few years ago.

The Bottom Line

If you want to start a new successful EDA company look at the system level.  Develop hardware and software components and the tools to assemble them together with third party proprietary components into a leading edge system.  Sell the environment, or give it away for free, and license the components.  Forget the silicon as your primary focus: it is just one way to implement hardware.  A few companies, less than a handful, will profit from enabling foundries, but many more will be profitable by being true business partners in developing end users products.

To read more from Gabe go to