EDA revenue grew sequentially in Q309, says EDAC

SAN FRANCISCO—EDA revenue improved on a sequential basis in the third quarter of 2009, ending the longest string of successive declines since at least 1997, according to the EDA Consortium (EDAC) trade group.

Walden Rhines

EDA revenue for the third quarter of last year totaled nearly $1.17 billion, up 3.8 percent compared to the second quarter of the year, according to a report issued Thursday (Jan. 14) by EDAC's market statistics service. But revenue continued to decline on a year-to-year basis, down 7.2 percent compared to the third quarter of 2008. EDAC's four-quarter moving average also declined 13.1 percent.

"For the first time in a while we've seen some sequential improvement. That's the good news," said Walden Rhines, EDAC chair and chairman and CEO of Mentor Graphics Corp. "But we've got a ways to go to get back to where we were."

EDA revenue had declined sequentially for six consecutive quarters from the first quarter of 2008 through the second quarter of 2009. It was the longest period of successive declines since EDAC began tracking EDA revenue in 1997.

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Revenue from all major product categories tracked by EDAC improved in the third quarter of 2009 compared with the second quarter, with the exception of IC physical design and verification, which was down close to 4 percent sequentially. The most notable sequential increases were in the categories of printed circuit board, semiconductor IP and services, Rhines said.

But revenue declined in every category compared with to the third quarter of 2008. Revenue also declined year-to-year in every consuming region, with the exception of Asia/Pacific, which improved by 1.6 percent.

Rhines said the sequential increase could be mean the current cycle continues to defy the traditional semiconductor/EDA cycles, in which EDA revenue continues to grow about a year after a semiconductor industry downturn, but then takes about a year to recover after the semiconductor industry recovers. In this case, he said, it appears that EDA's recovery lagged the chip industry's by about six months.

Emphasizing that he was speculating, he suggested that this downturn and recovery cycle may be different simply because the semiconductor industry experienced a downturn like no other in its history, with a very steep decline late in 2008, followed by a sharp recovery beginning in early 2009.

Rhines said the trend in sales data would seem to favor continued sequential improvement in EDA revenue. But, he added, EDA normally tracks closest to semiconductor industry R&D and thought semiconductor executives are optimistic about current trends, many are still cautious about economic uncertainty and have yet to resume hiring.

EDA companies that were tracked employed 25,942 professionals in the third quarter of 2009, down 7.9 percent year-to-year and down 1.4 percent sequentially, EDAC said.