EDA industry records dismal second quarter

EDA industry records dismal second quarter
SAN JOSE, Calif. — Electronic design automation industry revenues were down 10 percent in the second quarter of 2002 compared to the previous year's quarter, marking the sharpest year-to-year drop in revenues since the EDA Consortium started tallying numbers in 1996.

A nearly 50 percent drop in services revenue and an unprecedented 5 percent decline in product licensing and maintenance revenues combined to drive down revenue totals.

Total EDA revenues for the second quarter were $876 million, down from $973 million in the prior year's quarter, according to EDAC's market statistics service. Hardest hit was the services area, which declined 49 percent from $118.3 million in the second quarter of 2001 to $59.7 million in the second quarter of 2002.

"The customer base is seeing its most difficult environment," said Wally Rhines, EDAC chairman and chief executive officer of Mentor Graphics Corp. "As the lack of electronics business continues, people are purchasing only what they absolutely have to."

On a positive note, Rhines said there is a lot of pent-up demand in the current market. "As soon as business recovers, I think you'll see a scramble to catch up on the design infrastructure," he said.

There were a few bright spots in the latest report. Second-quarter revenues grew for IC physical design and verification, design for test, and IC analysis. These gains were offset by declines in computer-aided engineering and pc-board layout segments.

This past June, EDAC reported that overall EDA revenues in the first quarter of 2002 showed a 3 percent year-to-year decline. But license and maintenance revenues still showed a year-to-year increase at that point.

Geographically, revenue from North America, Europe and Japan dropped in the second quarter of 2002, but the rest-of-world region posted double-digit gains. Rhines said the Pacific Rim, aside from Japan, was particularly strong. In North America, which accounted for 57 percent of total EDA revenues, there was a 10 percent year-to-year decline in spending.

One interesting development of the latest quarter was an increase in Unix-based revenues and a decrease in Windows-based revenues. Unix software revenues increased from $689 million in the second quarter of 2001 to $695 million in the second quarter of 2002, while Windows software revenues fell 36 percent to $84 million. One explanation may be the 19 percent year-to-year decline in revenues from pc-board layout products, many of which are Windows-based.

IC physical design and verification grew 4 percent year-to-year, to total $269 million in the second quarter. But computer-aided engineering, the largest single reported category, was down 7 percent to $437 million. The CAE category includes nearly all front-end design tools.

Within CAE, however, design for test was up 16 percent, analysis tools were up 11 percent, and synthesis was up 7 percent year-to-year. Declining segments included analog/mixed-signal tools and design entry.

Semiconductor intellectual property products and tools, meanwhile, showed a 2.9 percent year-to-year revenue gain, totaling $26 million in the second quarter.

EDAC's quarterly revenue reports are available from the consortium on a subscription basis.