( ESNUG 560 Item 2 ) -------------------------------------------- [04/29/16]

Subject: EDA/IP worldwide 2014 vs. 2015 sales, and Lucio Lanza resurgence

YEAR-VS.-YEAR-DATA: Here's all the EDAC (oops!  That's now the "Electronic
System Design Alliance) year 2014 vs. year 2015 total EDA and IP sales stats.

The 2015 breakout of EDA vs. IP vs. Services:

           EDA sold :  : ############################### 62%
            IP sold :  : ################ 33%
      Services sold :  : ### 5%

What's interesting here is:

    - If you add up the CAE + IC + PCB/MCM sales for either 2014
      or 2015, it ballparks around $4.8 billion.  Yet total consulting
      services revenus in the same timeframe is around $0.4 billion.
      That is, the EDA companies make 1/12th their revenues from using
      their own EDA tools vs. selling their own EDA tools.

    - The reason why is EDA companies get significantly lower profit
      margins from selling services around their EDA tools.

      I once asked Wally Rhines, CEO of Mentor, if consulting is so
      close to being unprofitable, why bother offering it all?  "Because
      sometimes that's what's needed to make the EDA tool sale," answered
      Wally.  "We never lose money on a consulting deal, but it's just
      good customer service to rent them our engineers to either learn our
      tools, or to get the customer through a rough spot."

And I don't know why PCB/MCM/packaging went down 5.4%???  (Huh?  Shouldn't
it instead be growing because of the big push in IoT everywhere??  You know,
because IoT is lots, and lots, and lots of little PCB's and MCM's???)

If anyone has an explaination of why PCB/MCM went down, please email me.

         ----    ----    ----    ----    ----    ----    ----

EDA/IP/SERVICES SALES BY GEOGRAPHY...

The 2015 world breakout of EDA/IP/Services total:

           Americas :  : ###################### 45%

       Europe, etc. :  : ######## 15%

              Japan :  : ### 10%

     China, Taiwan,
        Korea, etc. :  : ############### 29%

PacRim and the U.S. are hot and growing.  While Japan and Europe are the
places were sales are shrinking.

         ----    ----    ----    ----    ----    ----    ----

MEANWHILE ON THE IP FRONT...

No surprizes here.  SIP is a double digit (+13.4%) growth sector.  That's
ARM, Ceva, ImagTec, Synopsys DW and ARC, Cadence TenSilica, Silicon Image,
Vivante, Sonics, eMemory, etc. bringing in that $2.6 billion in revenues.

As a comparision, Core (frontend + backend) EDA total world tool sales only
grew +2.2% in 2015 to $4.2 billion.

         ----    ----    ----    ----    ----    ----    ----

EDA/IP/SERVICES EMPLOYEE HEADCOUNT BY GEOGRAPHY...

The Q4 2015 world employee headcount breakout by region:

           Americas :  : ########################## 12,892 employees

       Europe, etc. :  : ############ 6,064

              Japan :  : #### 1,935

     China, Taiwan,
        Korea, etc. :  : ################## 9,013

Which totals to 29,904 employees working in EDA/IP/Services.

Average EDA/IP/Services revenue per employee by region:

           Americas :  : ########################### $274,000 per employee

       Europe, etc. :  : #################### $197,000

              Japan :  : ######################################## $406,000

     China, Taiwan,
        Korea, etc. :  : ######################### $254,000

Which, assuming no math errors, says that hiring engineers in Japan is where
an EDA/IP/services company will make the most in revenue-per-employee!  And
conversely, Europe is were you'll make the least in revenue-per-employee.

         ----    ----    ----    ----    ----    ----    ----

AN UNEXPECTED ODD RESURGENCE...  First the backstory.  As a long time EDA
watcher, I always thought Lucio Lanza was (or still is) one of those fun
and funky characters to run into.  With his heavy Italian accent and a
Godfather-like presence, over the years Lucio "pitched" EDA start-ups like
CadMos, Artisan, Forte, Epic Design, Mohave, Jasper, Gradient, Fabbrix, etc.

and to one degree or another they'd mostly all succeed in some way either
by acquisition or in their own right like PDF Solutions today with a market
cap of anywhere from ~$400m to ~$800m (depending on the moods of NASDAQ).

But something happened 5 years ago at the 2011 DAC.  One of his 3 year old
start-ups, Extreme-DA was trying to take on the Synopsys PrimeTime monopoly
in digital static timing analysis -- and on the first day of that DAC'11,
Aart's lawyers served his Extreme-DA with a patent-infringement lawsuit.

To make a sad story short, within 4 months Extreme-DA was acquired by SNPS
(for what many believe to be at a fire-sale price), and for the past 5 years
after that Lucio Lanza would quietly show up at DAC's but he had pretty
stopped pitching EDA companies.

Then, out of nowhere, while 12 candidates are running for 8 elected slots
on the EDAC board -- 2 weeks ago Lucio is appointed to the board -- as
in "this guy is so special he doesn't have to run" appointed.  ("Hell, even
Aart de Geus himself doesn't get that kind of special treatment!")

So next time you see Lucio, ask him what he knows -- because clearly Lucio
must know some deeeeeeeeep EDA or IP secrets that we don't know.  (grin.)

    - John Cooley
      DeepChip.com                               Holliston, MA

   !!!     "It's not a BUG,
  /o o\  /  it's a FEATURE!"
 (  >  )
  \ - / 
  _] [_     (jcooley 1991)