“We intend to grow revenue 14% to 15%, continue to drive notable ops margin expansion and aim for approximately 16% non-GAAP earnings per share growth.”
Synopsys is the EDA bellwether since they report early and are the #1 EDA and #1 IP company. In addition to crossing the $5B mark, Aart de Geus shocked everyone with a 14-15% growth estimate for 2023. REALLY?!?!?! Yes, really, and don’t ever bet against Aart. SNPS is generally conservative with fiscal year growth numbers so if you are betting the over/under bet the over.
“Looking at the landscape around us, some of you have asked us why customers design activity remains solid throughout waves of the business cycle. Two reasons. First, the macro quest for Smart Everything devices and with its AI and big data infrastructure is unrelenting and expect it to drive a decade of strong semiconductor growth. Second, semiconductor and systems companies, be it traditional or new entrants, prioritize design engineering throughout economic cycle precisely to be ready to feel competitive new products when the market turns upward again. We’ve seen this dynamic consistently in past up and down markets and expect it to continue.”
As history has shown, semiconductor companies design their way out of challenging times with a “design or die” mantra. When semiconductor companies cut EDA budgets then you should be concerned. And yes, the fabless systems companies (Apple, Google, Amazon, Microsoft, etc…) are now leading the EDA budget charge. In the past few years fabless systems companies have taken over as the leading readers of SemiWiki and I expect that to continue for the foreseeable future.
“Synopsys is uniquely positioned to address these challenges as we provide the most advanced and complete design and verification solutions available today, the leading portfolio of highly valuable semiconductor IP blocks and the broader set of software security testing solutions. In the past few years, we have introduced some truly groundbreaking innovations that radically advance how design is done.”
If I had to rank these Synopsys market segments in regards to importance, I would put the IP business as #1. The other EDA companies just do not get this, IP is everything. This also puts Synopsys in the unique position to capitalize on the chiplet revolution that is coming because chiplets are IP. And the key to chiplets, like IP, are the foundries (TSMC) stamp of silicon proven approval. Synopsys already has the advantage of closer relationships with the foundries since Synopsys IP is always on the first test chips. This has HUGE value today and tomorrow!
“Today, we’re already tracking more than 100 multi-die designs for a range of applications, including high-performance compute, data centers, and automotive, seeing strong adoption of our broad solution. A notable example is achieving plan of record for multiple 3D stack designs at a very large, high-performance computing company as well as expanded deployment at a leading mobile customer.”
You will be hard pressed to find a tape-out that does NOT involve a Synopsys product so these numbers are legit. In fact, I would say multiple products from Synopsys is the tape-out norm.
It really has been an amazing career experience watching the EDA business grow from my first DAC in 1984 to now. Synopsys and Cadence did not even exist back then. It was Daisy, Mentor, and Valid Logic or what we called DMV, and now Synopsys hits $5 billion, simply amazing!
“In summary, Synopsys exceeded beginning of year targets and delivered a record fiscal 2022 across all metrics with the additional spark of passing the $5 billion milestone. We enter FY 2023 with excellent momentum and a resilient business model that provides stability and wherewithal to navigate market cycles. Notwithstanding, some economic uncertainty, our customers are continuing to prioritize their chip system and software development investments to be ready with differentiated products at the next upturn. On our side, many game changing innovations across our portfolio position as well to capitalize a decade of semiconductor importance and impact.”
I am much less concerned with the economic uncertainty of 2023. I have never seen a stronger demand and respect for semiconductors and it will only get stronger as AI touches the majority of the chips being designed today. If you have any doubts look at TSMC’s 2022 numbers, 40%+ growth?!?!?!
In the old days, like Joe Costello said, “We’re stuck in a fixed-pie model. Have you seen three big dogs hovering over one bowl of dog food? It’s not a pretty
picture.” Today there are four dogs hovering over the EDA bowl (Synopsys, Cadence, Siemens EDA and Ansys) but now it is a VERY large bowl and I give Synopsys their due credit for innovating outside of the EDA box, absolutely.