ESDA Reports Double-Digit Q3 2021 YOY Growth and EDA Finally Gets the Respect it Deserves

It’s that time again. ESDA has recently released the numbers for Q3, 2021. Industry revenue increased 17.1% year-over-year from $2,953.9 million to $3,458.1 million in Q3 2021. The four-quarter moving average, which compares the most recent four quarters to the prior four, rose 16.1%. Further, the companies tracked in the report employed 51,182 people globally in Q3 2021, an 8.7% increase over the Q3 2020 headcount of 47,087 and up 2.4% compared to Q2 2021. Another banner quarter and another upbeat outlook. The numbers also roll up in an interesting way. Read on to see how EDA finally gets the respect it deserves.

A Look at the Numbers

This report remined me of last quarter’s report. According to Wally Rhines, executive sponsor of the SEMI Electronic Design Market Data report, “Geographically, all regions reported double-digit growth, with product categories CAE, Printed Circuit Board and Multi-Chip Module, SIP, and Services also showing double-digit growth.”

Revenue by Product and Application Category – Year-Over-Year Change

• CAE revenue increased 13.7% to $1,054.7 million. The four-quarter CAE moving average increased 11.8%.
• IC Physical Design and Verification revenue increased 0.7% to $612.6 million. The four-quarter moving average for the category rose 16%.
• Printed Circuit Board and Multi-Chip Module (PCB and MCM) revenue increased 14.5% to $298.3 million. The four-quarter moving average for PCB and MCM increased 10.9%.
• SIP revenue rose 30.6% to $1,373.3 million. The four-quarter SIP moving average grew 22.1%.
• Services revenue increased 12.5% to $119.1 million. The four-quarter Services moving average increased 9.2%.

Revenue by Region – Year-Over-Year Change

• The Americas, the largest reporting region by revenue, purchased $1,494.5 million of electronic system design products and services in Q3 2021, a 14.3% increase. The four- quarter moving average for the Americas rose 15.8%.
• Europe, Middle East, and Africa (EMEA) revenue increased 22.6% to $451.7 million. The four-quarter moving average for EMEA grew 11.9%.
• Japan revenue increased 11.8% to $259.8 million. The four-quarter moving average for Japan rose 3.3%.
• Asia Pacific (APAC) revenue increased 19.7% to $1,252.1 million. The four-quarter moving average for APAC increased 21.3%.

A Look Behind the Numbers

Dan and I had the opportunity to chat with Wally about the report. Wally always has vast amounts of information and deep perspectives on the data. This time was no different. What are some trends that are noteworthy?

First of all, emulation had a very strong showing at 32% growth. This reflects the complexity of the designs being done. Highly complex designs will need hardware/software verification and emulation is the best approach to do that. The types of companies driving this growth are noteworthy as well. We have seen many system companies in the information processing arena enter the semiconductor market as new “chip companies”,

Wally pointed out that we’re now seeing the same thing happen in the automotive sector. Of course, Tesla has always been there. But now, companies like VW, Hyundai, Ford, and GM (among others) have all announced their intention of becoming more active in chip design. These are large entities with potentially big appetites for silicon.

We asked Wally if there were any weak spots of note. IC layout was a bit weak this quarter, as was services. When you look at the rolling averages, none of that has a large impact, however. IP was also noted as a large segment with excellent results. So, the general view is that the train continues to run strong and fast.

A final note. Wally sees EDA approaching a $14B industry. For many years, his view was that if you took two percent of semiconductor revenue, that would be EDA revenue. With semiconductor revenue north of $550B, we can clearly see EDA’s percentage growing beyond 2 percent. So perhaps EDA finally gets the respect it deserves.

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