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A Rare Offer from The SHD Group – A Complimentary Look at the RISC-V Market

A Rare Offer from The SHD Group – A Complimentary Look at the RISC-V Market
by Mike Gianfagna on 01-30-2024 at 10:00 am
Categories: AI, Andes Technology, IP, RISC-V

A Rare Offer from The SHD Group – A Complimentary Look at the RISC V Market

The web is a wonderful place to find information on almost any topic. While top-level information is easy to find, a deep dive often requires the services of a market research firm. These organizations specialize in “going deep” on many technology topics, offering insights not available with a Google search. And these services aren’t typically free. Access to focused research can get pricey. So, when a top-drawer research firm offers an 80-page report on a topic as hot as RISC-V for free, that gets my attention. Read on to learn about a rare offer from the SHD Group – a complimentary look at the RISC-V market.

About The SHD Group

The SHD Group was formed about four years ago. The organization brings together skills and services that focus on go-to-market strategies, marketing, market analysis, business development, sales pipeline building and closure on profitable opportunities. It operates across a range of markets, including AI, semiconductor, smart sensors, RISC-V, consumer and automotive.

The leadership team has decades of experience spanning all of these areas and more. The company offers first-hand executive experience, know-how and expertise in AI “from Edge to Cloud & back”.  You can learn more about the breadth and depth of experience offered by this team here. I want to take a moment to focus on the author of the RISC-V report.

Rich Wawrzyniak

Rich Wawrzyniak brings over 35 years of semiconductor industry experience to the organization. Previously, Rich spent 20 years focusing on market analysis at Semico Research. His demonstrated skills span sales management to corporate planning, with an expertise in ASICs, SoCs, SIP, memory, and design starts, as well as emerging areas like AI, RISC-V, and chiplets.

I personally know Rich from his time at Semico when I was in both ASIC and EDA. I have great memories of many in-depth conversations that lead to insightful analysis that helped the companies I worked for in measurable ways. Rich has an inquisitive and highly analytical nature – he gets to the facts that matter and presents results with compelling detail and accuracy. All this fueled my enthusiasm when I found out some of his work was being offered to all for free. This is a great opportunity.

About the RISC-V Report

I attended the recent RISC-V Summit and I can tell you the movement is gaining momentum fast. Open source has found its way into mainstream chip design. It’s exciting to watch. There are a lot of moving parts across many markets, so a comprehensive report that puts all this into perspective is quite valuable. The report offers a top-level, global market view, containing 80 pages, 30 tables, 16 figures and an accompanying ecosystem guide.

Some highlights covered in the report include:

RISC-V SoC Market Growth

  • RISC-V-based SoC unit shipments are forecast to surge to 16.2B units, with revenues reaching $92B by 2030, boasting CAGRs of 44% and 47%, respectively

SoC Market Growth

  • SoC architectures utilizing third-party IP exhibit substantial growth in units and revenues across industrial, automotive, networking, computer, consumer, and other categories, notably driven by the burgeoning AI market
  • Projections indicate SoC unit shipments reaching 69B units and revenues hitting $416B by 2030, showcasing CAGRs of 12.5% and 8.7%, respectively

SoC Design Starts

  • SoC design starts for SoCs using RISC-V CPU cores are forecast to reach 1,371 designs by 2030, a 15.7% CAGR
  • Design starts for consumer applications are expected to show the largest number of designs by 2030, with computer and networking applications following closely behind

Third-Party IP Market

  • In 2022, the worldwide IP market reached $7.9B, marking an 8.4% growth from 2021. Forecasts predict a 5.3% increase to $8.3B in 2023, projecting a potential $15B market by 2030, with a CAGR of 9%
  • The central processing unit (CPU) IP market soared by 22.4% in 2022 to $2.7B and is anticipated to hit $5.8B by 2030, demonstrating a robust 10.4% CAGR
  • RISC-V IP revenues surged to $156M in 2023, with an estimated CAGR of 39.5% through 2030

Comments from the Author

 I had the opportunity to chat with the report’s author, Rich Wawrzyniak recently. I was looking for a more color about how the report was developed and some candid comments from Rich regarding what he discovered. First, Rich explained this was a large project. He surveyed and spoke with about 32 companies spanning IP vendors, software companies, EDA companies, device manufacturers, and end users.  A huge amount of data was compiled as a result of this exercise.

I asked Rich if there were any surprises in the results. He mentioned one regarding classification in the IP segment. It turns out the third largest segment here is do-it-yourself. That is, those who weren’t using a specific RISC-V vendor but rather building their own design. While this type of behavior doesn’t scale well, it highlights the substantial amount of exploration that is going on in the market today around RISC-V.

And that fact illuminates some of the unique attributes of the emerging RISC-V market. We spent some time discussing the impact AI has had here. Rich explained that the ability to customize the ISA extensions RISC-V offers SoC designers allows for fine-tuning of the ISA to more fully support the fast-paced AI algorithm developments that are now occurring in the market.

He went on to say that using this capability, SoC designers can more closely tailor their silicon solutions to match changing market requirements. This is especially important when they are considering development of domain-specific solutions for a wide range of applications. How that accelerator is built will have a dramatic impact on the success of any new AI technology. It’s all about speed and power efficiency. And every new idea has its own unique set of success factors.

The extensible nature of the RISC-V architecture and the rich community of innovators fuel the impact this movement is having on product development. A perfect storm of innovation supply and demand if you will. Rich felt this market is just on the cusp of explosive growth. Where all this takes us is hard to predict, but watching the progress will be quite exciting.

RISC-V International encouraged The SHD Group to launch this analysis effort and did encourage its membership to speak with the organization. The full version is likely the most comprehensive analysis of the RISC-V market available today. Rich has a long history of developing world-class market research – this project represents some outstanding and important work. 

To Learn More

You can download your complimentary copy of the 80-page report here.

The extensive full report spanning over 225 pages with 107 tables and 89 figures is also available for purchase. This report provides detailed insights into the current and future projections of the RISC-V market up to 2030. It covers most aspects of the RISC-V market, including end applications, device types, design starts, IP and global projections by region. The report is intended to provide a valuable analysis for business strategists, investors, and technology companies that require deep analysis and granular data. To purchase the full report, email info@theshdgroup.com.

And those are the details about a rare offer from the SHD Group – a complimentary look at the RISC-V market.

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KLAC- OK Quarter & flat guide- Hopefully 2025 recovery- Big China % & Backlog

KLAC- OK Quarter & flat guide- Hopefully 2025 recovery- Big China % & Backlog
by Robert Maire on 01-30-2024 at 6:00 am
Categories: Semiconductor Advisors, Semiconductor Services

KLAC Foundry Logic

– KLAC reported an OK QTR & flat guide-waiting for 2025 recovery?
– China exposure remains both risk & savior & big in backlog
– Wafer inspect strong- Patterning on long slide- PCB biz for sale
– Some bright spots but memory still weak- Foundry/Logic OK

Bumping along the bottom of the cycle looking towards a hopeful 2025

KLAC reported $2.49B in revenues and $6.16 in non GAAP EPS. The street was at $2.46B in revenues and EPS of $5.91, so a little better as usual.

Guidance was more or less flattish to slightly down at $2.3B +-$125M and EPS of $5.26+- $0.60.

One of the reasons for March being down is some business that is slipping out of the quarter into future quarters making March lower and future quarters higher. So while technically March is a bottom, its NOT because its the bottom of the cycle but rather customer orders shifting around. Other than that we heard the same story that we heard from Lam that the back half of the year should be better than the front half (we have heard that before)

China is also “stable” at 41% of business but still a risk

China remains the double edge sword of both a risk and savior at the same time. Without the inflated China business KLA would be in a world of hurt (along with other equipment makers) but we continue to wonder how long its going to last.

Its very interesting to note that China is clearly making up a huge portion of the companies backlog as new Chinese buyers are putting down deposits to secure a place in line hopefully before any sanctions kick in. Perhaps the view is that by having an order in they will eventually get a tool.

We obviously see risk in this and remain concerned about the huge amount of business China represents on both a quarterly basis as well as in backlog.

Selling off the PCB business?

Management announced they were looking at strategic alternatives for the PCB business they acquired as it represents less than 1% and has not been great for KLA.

Our observation is that the acquisition of Orbotech almost 6 years ago has clearly not worked out as well as expected .

In our view, the $3.4B acquisition price would likely have been better spent inside KLA’s wheelhouse rather than venturing outside to try to diversify. While the aim to diversify was a good one, especially when comparing KLA to more diversified equipment companies like Applied Materials, the results of the effort have been less than stellar.

Unfortunately given todays political environment there is not a lot in KLA’s wheelhouse that they could buy so it is likely best to double down on existing markets and inside the company.

Wafer inspection strong while Patterning continues long slide

We would note that wafer inspection has become the lions share of KLA’s business at 47% while pattering was about a third of that coming in at 17% of overall revenues. Patterning was down 50% year over year and 21% quarter over quarter while wafer inspection was down a very small 7% year over year and up 15% quarter over quarter. For the year in total, wafer inspection was only off 5% while patterning was off by four times that at 20%.

While these businesses are lumpy from one quarter to the next and account for a lot of variations, the long term pattern is quite clear that KLA’s dominance in patterning is in decline and the growth is slowing significantly especially as compared to wafer inspection. This is obviously a significant change from the long term model where both markets were the two pillars of KLA’s business.

DRAM is somewhat alive with NAND still dead

DRAM represented 85% of memory business while NAND was at near zero levels of 15%, not much different than we have heard from other equipment makers.

HBM memory and DDR5 are bright spots that are driving DRAM while there remains a ton of excess and unutilized capacity in the market that we expect will take at least a year or more to sop up so we don’t expect a major broad recovery any time soon but specific area strength in memory

The Stocks

KLAC was down about 5% in the after market. Obviously the bad guide out of Intel did not help a luke warm report with no definitive recovery other than sometime in 2025.

We did not hear much different out of KLA than we heard from Lam and would expect similar stock performance from both as well as AMAT.

It is clear that a real recovery is a year away and memory will be slow to recover which will keep the pace of recovery in check.

China remains a both risk and reward for all three companies at 40% ish of business.

The stocks continue to trade at relatively high multiples for companies that are still in a downcycle. There is still a lot that can happen before we get to a real recovery and we don’t even know the slope or speed of the recovery other than a hope that it will be in 2025.

About Semiconductor Advisors LLC

Semiconductor Advisors is an RIA (a Registered Investment Advisor),
specializing in technology companies with particular emphasis on semiconductor and semiconductor equipment companies. We have been covering the space longer and been involved with more transactions than any other financial professional in the space. We provide research, consulting and advisory services on strategic and financial matters to both industry participants as well as investors. We offer expert, intelligent, balanced research and advice. Our opinions are very direct and honest and offer an unbiased view as compared to other sources.

Also Read:

ASML – Strong order start on long road to 2025 recovery – 24 flat vs 23 – EUV shines

2024 Semiconductor Cycle Outlook – The Shape of Things to Come – Where we Stand

Is Intel cornering the market in ASML High NA tools? Not repeating EUV mistake

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2024 Outlook with Steve Roddy of Quadric

2024 Outlook with Steve Roddy of Quadric
by Daniel Nenni on 01-29-2024 at 10:00 am
Categories: IP, Quadric

Man on Llama

Quadric Inc. is the leading licensor of general-purpose neural processor IP (GPNPU) that runs both machine learning inference workloads and classic DSP and control algorithms.  Quadric’s unified hardware and software architecture is optimized for on-device ML inference. I have know Steve Roddy for many years, he is a high standard in the IP business.

Tell us a little bit about yourself and your company.
Quadric is a startup processor IP licensing company delivering a unique general-purpose, programmable neural processor (GPNPU) IP solution. In a marketplace with more than a dozen machine learning “accelerators” ours is the only NPU solution that is fully C++ programmable that can run any and every AI/ML graph without the need for any fallback to a host CPU or DSP. With more than 25 years of marketing and management experience in the IP business, I lead the marketing and product management teams at Quadric.

What was the most exciting high point of 2023 for your company?
2023 was exciting for Quadric because it marked the debut of our first licensable IP product in May 2023 – both first production RTL deliveries of the Chimera GPNPU and the launch of our online Quadric DevStudio. In the seven months since we’ve been expanding or our sales & FAE team around the world. 2023 was an eventful and successful year, indeed.

What was the biggest challenge your company faced in 2023?
The biggest “news” in 2023 in the market for NPUs/GPNPUs was the dramatic upsurge in interest in Large Language Models (LLMs) in devices, rather than running purely in the cloud. Whether it is the rise of the so-called “AI PC” or the embedded of LLM-based voice assistants in countless end products, the surge in user demand for transformer-based LLMs dramatically impacted the NPU IP market. Many existing NPUs could not efficiently run LLMs, putting stress on the silicon ecosystem.

How is your company’s work addressing this biggest challenge?
Unique among NPU vendor offerings, the Quadric Chimera GPNPU is 100% programmable. As a result, we tackled the on-device LLM wave by demonstrating the Llama-2 LLM less than 5 weeks after it was published. Meanwhile our competitors were announcing new cores that won’t be available until mid-2024 (or later). The rate of change of LLMs has only accelerated since mid-2023 with a myriad of new language model type and topologies. This rapid pace of change demands flexible hardware that can run as-yet not invented machine learning models.

What do you think the biggest growth area for 2024 will be, and why?
The ML inference market that we serve is rapidly changing. The dominant ML algorithm styles of three and four years ago were classic convolution-based CNNs, such as the Resnet and MobileNet and Yolo families of networks. Today, newer structures leveraging transformer topologies – such as LLMs and ViT models – are rapidly displacing the older CNNs. That is turn is causing silicon design teams to respin older devices to be positioned to support these newer algorithms in the coming years.

How is your company’s work addressing this growth?
Quadric is continuously adding ports of new algorithms to our processors. Adding demonstration of a new ML model is a pure software effort for us, and we are focused in 2024 on widening the array of models further with each periodic software release. Today we support all the major modalities of ML inference, including a variety of leading-edge transformers.

What conferences did you attend in 2023 and how was the traffic?
In 2023 we attended smaller, focused technical conferences (Embedded Vision Summit, DAC, Design Solution Forum). We avoided the bigger mass-gathering shows in 2023 (CES, MWC, Embedded World) because those shows were not all the way “back” to pre-pandemic attendance levels. However, I did go to CES 2024 this month for some very interesting meetings and to take a pulse of the marketplace.

Will you attend conferences in 2024? Same or more?
I think the world has fully returned to “normal” in 2024. CES in Las Vegas this month was a good indicator – full crowds reminiscent of 2019. As a result we will be attending both the small, focused IP-centric conferences this year as well as the broader shows.

Also Read:

Fast Path to Baby Llama BringUp at the Edge

Vision Transformers Challenge Accelerator Architectures

An SDK for an Advanced AI Engine

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LRCX- In line Q4 & flat guide- No recovery yet- China still 40%- Lags Litho

LRCX- In line Q4 & flat guide- No recovery yet- China still 40%- Lags Litho
by Robert Maire on 01-29-2024 at 6:00 am
Categories: Semiconductor Advisors, Semiconductor Services
1 Comment

Lam Research LCRX

– Lam reported as expected and guided flat- No recovery yet
– Some mix shifts but China still 40% (8X US at 5%)-NVM still low
– HBM is promising but Lam needs a broad memory recovery
– Lam has not seen order surge ASML saw- Likely lagging by 3-4 QTRs

An in line quarter and uninspiring flat guide for Q1

As compared to ASML’s huge order report this morning Lam put up relatively in line numbers and a flat guide with no visibility on an upturn. Revenues were $3.76B and EPS of $7.52 with the year at $14.3B and $27.33EPS.

Although the company suggested that overall WFE would go from low $80B 2023 to mid $80B in 2024 we did not hear that they were on the road to recovery just yet.

The flat guide coupled with conservative language makes it clear that we are not yet in recovery mode. This sense was underscored by a headcount reduction and keeping expenses and inventory under control.

They talked about memory fab utilization remaining low DRAM was 31% of business , NAND remained relatively low at 17%. Service was $1.46B or about 39% of business so tools sales continue to be very weak.

China is “stable” at 40% of business- Could represent over 50% of tool sales

Lam still remains highly dependent upon China which was 40% of business and according to management will likely remain at elevated levels. This compares to the US at 5%, so China is outspending the US at Lam by eight to one.

We think this exposure remains an overall negative on the story. If we back out the service business which is obviously dominant in older markets we could imagine that China is likely over 50% of Lam’s sales which is exposed if there are any serious restrictions imposed.

Lam will likely lag ASML by 3-4 quarters

given the lead times of litho tools versus the turns business that are Lam’s tools we would expect Lam to see an order pick up in the second half or end of 2024. Customers are not going to buy dep and etch tools without having a litho tool to drive patterning.

This would tend to imply a flattish 2024 overall with perhaps some pick up at the end of the year.

High Bandwidth memory and DDR5 are bright spots

As we have mentioned many times HBM will clearly be great given how strongly it will be driven by AI growth, however HBM is a relatively small part of the overall memory market. We also remain concerned about potential oversupply and price collapse as all HBM makers are rushing to put on more capacity or move existing other DRAM capacity to HBM. There will clearly be a bunch of HBM spend in the near term but Lam needs a much broader recovery in the broader memory market.

The NAND/NVM market remains oversupplied with capex spending at historical lows.

With the current and continued oversupply in memory we don’t see the need for any new memory fabs in quite some time. What we will likely see are mainly upgrades in existing fabs to HBM or DDR5.

Lam has historically been the poster child for memory and Korea related to it. Lam has done a good job in the weak memory market by diversifying into foundry/logic. China has obviously made up for much of the Korean weakness as well.

The Stocks

Lam was flat in the after market after being up 2% on the strong ASML news.

We are not motivated to go out and buy either Lam or AMAT based on Lam’s mediocre earnings call. There is not enough evidence of a near term recovery and the stock is already trading at a premium that we believe is above what the stock deserves given where the company is in the cycle.

Given the differential between what we heard from ASML and Lam, ASML remains our clear preference.

We do think Lam will obviously recover but after ASML and the recovery may not be nearly as strong as ASML which is driven by EUV and the High NA introduction.

We have maintained the view that the memory over supply is large. If we are just now starting to see an uptick in memory fab utilization it will likely be a much longer time before they start buying more NAND equipment and even the bright spots of HBM and DDR5 are not nearly enough to make up the difference.

About Semiconductor Advisors LLC

Semiconductor Advisors is an RIA (a Registered Investment Advisor), specializing in technology companies with particular emphasis on semiconductor and semiconductor equipment companies. We have been covering the space longer and been involved with more transactions than any other financial professional in the space. We provide research, consulting and advisory services on strategic and financial matters to both industry participants as well as investors. We offer expert, intelligent, balanced research and advice. Our opinions are very direct and honest and offer an unbiased view as compared to other sources.

Also Read:

2024 Semiconductor Cycle Outlook – The Shape of Things to Come – Where we Stand

Is Intel cornering the market in ASML High NA tools? Not repeating EUV mistake

Podcast EP205: A Multi-Decade View of Process and Device Innovation at Intel with Paul Fischer

Podcast EP205: A Multi-Decade View of Process and Device Innovation at Intel with Paul Fischer
by Daniel Nenni on 01-26-2024 at 10:00 am
2 Comments

Dan is joined by Paul Fischer. Paul is the director of Chip Mesoscale Processing in Intel’s Components Research. He and his team are currently working on Gallium Nitride for energy efficient power delivery and RF communications, and technologies for heterogeneous monolithic integration.

Paul discusses the innovations he’s seen during his 30-year career at Intel, starting with the 130 nm process node. Paul describes the breadth and depth of material, device and process developments at Intel during his time there.

He discusses some of the advances presented by Intel at the recent IEDM across backside power delivery, vertical transistor stacking, the energy efficiency offered by gallium nitride devices and 2D material innovations. The combination of this work will open new pathways for continued Moore’s Law scaling of devices and systems.

The views, thoughts, and opinions expressed in these podcasts belong solely to the speaker, and not to the speaker’s employer, organization, committee or any other group or individual.

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ASML – Strong order start on long road to 2025 recovery – 24 flat vs 23 – EUV shines

ASML – Strong order start on long road to 2025 recovery – 24 flat vs 23 – EUV shines
by Robert Maire on 01-26-2024 at 6:00 am
Categories: Semiconductor Advisors, Semiconductor Services
3 Comments

ASML Cleanroom EUV Wafer Stage Training

– ASML orders more than triple sequentially- Utilization increases
– Management remains conservative with flat revenues 2024 vs 2023
– Recovery will be slow, targeting 2025- Long & weak cyclical bottom
– Litho orders are leading indicator of future wider recovery

Strong orders pave the way for a transition 2024 & recovery in 2025

ASML reported revenues of Euro 7.2B and EPS of Euro 5.21 with gross margins of 51.4%. Outlook is between Euro 5B and 5.5B in Q1 2024 for a variety of factors as the industry moves through the bottom of the cycle.

2023 was a great year for ASML with business up 30% year over year.

We continue to view China restrictions as essentially non impactful as other business clearly makes up for it.

Most importantly orders more than tripled quarter over quarter to Euro 9.2B a new record. Given lead times on systems, most of these orders will contribute to revenue in 2025 rather than 2024. Weakness in Q1 is evidence of prior weak orders and continued slow industry environment.

Perhaps just as important as the huge order number is the fact that we are now up to Euro 39B in backlog. This huge backlog is key to future financial and management performance as it represents almost a year and a half of future business. This helps improve business planning and more importantly manage the cyclicality of the business.

Given the large price tag of EUV systems and especially High NA systems, we would almost focus more on backlog as orders will be lumpy given the large numbers involved

Utilization increasing is a positive sign for the industry and future business

ASML can monitor the pulse of the industry on a daily basis by looking at the utilization of its tools which clearly has been down over the down cycle. ASML is now seeing an up tick in utilization after a long decline which is a good indicator that we are transitioning through the bottom of the cycle.

After a strong logic/foundry business in 2023 there is an expectation that there will be some “digestion” of all those sales coupled with signs of life coming out of the memory business, so we will see a shift in market share towards memory.

Conservative outlook for 2024 flat with 2023

Management suggested that the second half of 2024 will be better than the first half which we would expect in a “transition year” to a recovery in 2025.

We would remind investors that the quarters strength in orders won’t become revenue until 2025 or late 2024 at best.

This one year or longer lag effect between orders and revenue obvioulsy explains the weak Q1 revenue expectations but obviously investors will be able to look through this

In line with our earlier note

We put out a note two days ago that previewed 2024 and we suggested that 2024 would be a slow recovery but a recovery none the less. Our views were echoed by the conservative outlook for ASML in 2024. We agree that 2024 will be a “transition” year. We would also suggest that lithography will lead the industry out of the downturn as litho systems are always the first ordered given their long lead times, we would expect metrology and inspection to follow after which will come dep and etch and other process tools.

We pointed out ASML as our top pick in the industry and we were not disappointed. ASML continues to dominate the equipment industry as the only true monopoly in town. ASML will likely continue to take capex and semiconductor equipment market share away from others as the overall spend on litho accelerates especially given the cost of EUV and specifically High NA. One high NA tool could easily be the cost of 50 process tools. made by others in the industry.

China is a non issue

We maintain our view that the restrictions on sales to China is not a significant issue in light of the huge order numbers without China immersion tools. Being able to sell into China would be a few Euros more but is less significant when you are capacity constrained.

We also continue to point out many times that the semiconductor industry is a zero sum game…..chips not made in China due to technology restrictions will be made elsewhere and ASML will ship those advanced litho tools to those elsewhere places where there are no restrictions. If those places happen to be new fabs in the US or Europe or Japan, so much the better.

At this point, even artificial restrictions which shift chip capacity away from China who has been trying to spend their way into market dominance, would be a good thing as the world needs to disperse chip capacity around the globe and not watch China take over yet another industry through market force.

The Stocks

The 10% reaction in ASML’s stock was even better than we expected and took much of the semiconductor stock market along with it.

We would point out that some process companies are likely trading at too high multiples as they do not have the ASML monopoly nor the share gains of ASML and will be late to the party as compared to ASML.

As we suggested in our last note we would remain more selective and focus on leaders and differentiated stories such as ASML & TSMC etc;.

We would also remind investors, as we did in the note, that its not just “off to the races”, that this is going to be a recovery that will take time and likely not gel until 2025.

There is a lot positive in the market such as AI and associated High Bandwidth Memory but we don’t have a very broad based macro recovery to drive every corner of the chip market just yet.

ASML did point out that foundry/logic will be weaker in 2024 versus memory which has been virtually dead for over 2 years. We would be cognizant of that in trying to be more selective in our stock picks as well.

But in the end its nice to know that things are finally getting better…..

About Semiconductor Advisors LLC

Semiconductor Advisors is an RIA (a Registered Investment Advisor), specializing in technology companies with particular emphasis on semiconductor and semiconductor equipment companies. We have been covering the space longer and been involved with more transactions than any other financial professional in the space. We provide research, consulting and advisory services on strategic and financial matters to both industry participants as well as investors. We offer expert, intelligent, balanced research and advice. Our opinions are very direct and honest and offer an unbiased view as compared to other sources.

Also Read:

2024 Semiconductor Cycle Outlook – The Shape of Things to Come – Where we Stand

Is Intel cornering the market in ASML High NA tools? Not repeating EUV mistake

AMAT- Facing Criminal Charges for China Exports – Overshadows OK Quarter

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Why Did Synopsys Really Acquire Ansys?

Why Did Synopsys Really Acquire Ansys?
by Daniel Nenni on 01-25-2024 at 10:00 am
Categories: Ansys, Inc., EDA, Synopsys
3 Comments

Synopsys Ansys Logos

Mergers and acquisitions have been a big part of EDA since the beginning. We keep an EDA/IP Mergers and Acquisitions Wiki, it is 13 years old now and has more than one million views. Personally, I have been involved with dozens of acquisitions over my 40 year career, some good, some bad, all are interesting and are an important part of EDA history.

If you have been listening to my quarterly EDA revenue podcasts with Wally Rhines you will know that EDA has been killing it lately with double digit revenue growth. Here is the thing, EDA revenue reports are from the big EDA companies while dozens of smaller EDA companies go unreported. It is those  EDA companies that have been acquired at an alarming rate over the past 10 years adding to the big EDA company’s growth numbers. Looking at the Wiki you can see that hundreds of mergers is what made EDA what it is today, three big dogs eating out of the same bowl, not a pretty site (Joe Costello quote).

I think the Siemens acquisition of Mentor Graphics was one of the all-time greats of course. Siemens has acquired quite a few EDA companies since then and will continue to do so, my opinion. From what I have heard the Siemens acquisition of Solido Design Automation (I worked for Solido) is viewed as one of the most successful Siemens EDA acquisitions thus far, to which I agree completely. It was a 1+1=10 type of deal. Siemens also acquired Fractal Technology (I worked for Fractal) which fits perfectly with the Siemens Solido group.

Prior to Siemens I worked for Tanner EDA (acquired by Mentor) and Berkeley Design Automation (acquired by Mentor) so I know them well. One of the most interesting acquisitions I worked on was S2C. A company out of Hong Kong seriously outbid the usual EDA suspects, it was quite an international experience.

So that is what I do during the day, I help small EDA/IP companies with their exit plan which is much more complex than it sounds and my recipe is secret, like the formula to Coke and the Kentucky Fried Chicken secret herbs and spices.

Quite a bit has been written about the Synopsys / Ansys acquisition so I will try and not be repetitive. I also asked Chat GPT about it and the response was absolutely ridiculous.

From my perspective the acquisition has been in process for a while. Synopsys and Ansys have been close partners for some time. There is no real overlap in products and the two companies are quite compatible. So, you have to ask about timing since Synopsys just finished its big CEO transition. The simple answer is that Synopsys was not the first bidder.

In my M&A experience getting the first term sheet is always the hardest and Synopsys is not the quickest to a term sheet. To get maximum value for your EDA company you must have multiple offers. The most I have personally seen is four offers but I usually see three or two offers or sometimes it is a CEO to CEO single offer type of deal.

Considering the top 3 EDA companies, the ones who could pay a premium price for Ansys, my guess would be that Cadence was the first bidder. Siemens has too much overlap with Ansys and there would be anti-trust concerns. The Ansys ($2B in 2022 revenue) acquisition would put Cadence ($3.5B 2022) ahead of Synopsys ($5B 2022) which is a very big deal given the competitive history of the two companies. Synopsys may also be getting out of the software integrity business which would be a revenue hole that must be filled. The Synopsys Ansys combined revenue will be close to $8B when 2023 is reported.

Of course there are many other reasons for Synopsys to acquire Ansys but, if I had to pick one, in my experience ego plays a very big role in M&A and Synopsys has the #1 ego in EDA and it is well deserved, absolutely.

Looking forward maybe Siemens EDA will acquire Cadence? That is the only hope if either company wants to catch up to Synopsys. Then there would be two big dogs eating out of the same bowl, not a pretty sight.

Congratulations Synopsys and Ansys! Well played!

Also Read:

Synopsys Geared for Next Era’s Opportunity and Growth

 

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2023 Retrospective. Innovation in Verification

2023 Retrospective. Innovation in Verification
by Bernard Murphy on 01-25-2024 at 6:00 am
Categories: AI, Cadence, EDA

Innovation New

As usual in January we start with a look back at the papers we reviewed last year. Paul Cunningham (GM, Verification at Cadence), Raúl Camposano (Silicon Catalyst, entrepreneur, former Synopsys CTO and now Silvaco CTO) and I continue our series on research ideas. As always, feedback welcome. We’re planning on starting a live series this year to debate ideas and broader topics and to get your feedback. Details to follow!

The 2023 Picks

These are the blogs we posted through the year, sorted by popularity. We averaged 12.7k engagements per blog, a meaningful increase from last year which we take as an indication that you continue to enjoy our reviews of current research in verification. The leader was no surprise, applying LLMs to automated code review at almost 17k engagements. A close second uses ML to develop model abstractions. In fact the top 4 blogs in 2023 were on all on applications of AI/ML. Petri nets made an appearance again this year, here for validating rapidly evolving DRAM protocols. Using dedicated hardware for speculation in simulation, and a method to find anomalies rounded out the list. The retrospective for 2022 did about as well as usual but was overshadowed by interest in other papers through the year. It is a safe bet we will be looking at more applications of AI/ML in 2024!

Automated Code Review. Innovation in Verification
ML-Guided Model Abstraction. Innovation in Verification
Deep Learning for Fault Localization. Innovation in Verification
Assertion Synthesis Through LLM. Innovation in Verification
Better Randomizing Constrained Random. Innovation in Verification
Petri Nets Validating DRAM Protocols. Innovation in Verification
Developing Effective Mixed Signal Models. Innovation in Verification
ML-Based Coverage Acceleration. Innovation in Verification
Speculation for Simulation. Innovation in Verification
2022 Retrospective. Innovation in Verification
Anomaly Detection Through ML. Innovation in Verification
Information Flow Tracking at RTL. Innovation in Verification

Paul’s view

Another year flies by, and 49 papers read since we started the blog in November 2019! Back then we were thinking it would be a great way to bring together our verification community and show our appreciation for continued investment in verification research at academic institutions around the world.

What I didn’t predict was how reading all these papers would inspire new investments and innovations at Cadence. Writing this blog as has taught me that even at an executive level in engineering, staying connected to ground level research and reading papers regularly is good for business. So thank you readers, and thank you Bernard!

No surprise that our top 3 hits last year were all papers on using AI in verification, one on AI to automate code review (link), one on AI to help find bugs more quickly in high level SimuLink models of mixed-signal devices (link), and one on using AI to automatically identify which line of source code is the root cause of a test failure (link). We absolutely need to continue to invest in research here both in academia and in the commercial world. Somehow, over the next decade we need to find our next 10x in verification productivity, and it’s most likely to come from AI.

That said, my personal shout out from 2024 is not AI related. It’s for two papers in logic simulation: one on parallelizing simulation using speculative execution of the event queue (link), and the other on improving distribution quality of randomized inputs in constrained random tests using clever hashing functions (link). I call these “engine-level” innovations –making the building blocks inside EDA tools fundamentally better. We also need to continue research and innovation here. These two papers were very innovative but had nothing to do with AI. Let’s not forget to keep investing in non-AI related innovation as well.

Raúl’s view

Writing this retrospective during the holidays inevitably collides with one of humankind’s necessities which can be elevated to an art: eating. Reviewing restaurants perhaps shares enough with reviewing papers to justify ratings such as ★★★ exceptional, worth a special journey, ★★ excellent, worth a detour, ★ high quality, worth a stop, and 😋 exceptionally good at moderate prices. Paul already stated that our September review was a “Michelin star topic”. I will continue in this vein, using your preferences (number of views), dear readers, as the yardstick.

While last year’s blog was largely about cool algorithms, this year’s was about AI/ML and Software (SW). The top three ★★★ papers were all about verification of SW using AI/ML. The top rated blog (July) was about code review with generative AI, the second (November) dealt with testing and verifying SW for Cyber-Physical Systems using surrogate AI models, and the third (May) was about detecting and fixing bugs in Java augmenting with AI classifiers. Two of these three papers use large datasets from GitHub for training. Such data is not available publicly for hardware (HW) design; which is arguably different enough from SW to at least raise the question whether these results can/will be replicated for HW. Nevertheless, looking at what the SW community is doing about verification is certainly a source of inspiration.

The next three papers, ranked with ★★, are an eclectic collection of AI/ML, a very cool algorithm, and Petri-Nets. All deal with verification in EDA. September’s paper was a preview on using a LLM (GPT-4) and a model checker (JasperGold) to translate English into System Verilog Assertions (SVA). The next one (June) addressed how to sample the solution space for constrained random verification uniformly (meeting the constraints) – a cool algorithm for a hard problem, back from 2014. The last contribution in this group (April) extended Petri Nets for the verification of JEDEC DDR specifications; it is educational both on JEDEC specs and Petri Nets, and uncovers one timing violation.

Papers 7-9, ranked with ★, deal with analog design verification, CPU verification and parallel SW execution. In October we reviewed an invited paper to the IEEE open journal of the Solid-State Circuits Society, besides being a good tutorial on analog design and validation, the main contribution consists of replacing analog circuit models by functional models to accelerate Spice simulation by 4 orders of magnitude. February’s paper was about using DNNs to improve random instruction generators in CPU verification, showing a reduction of “the number of simulations by a factor of 2 or so” in a simple example (IBM Northstar, 5 instructions). March brought us the complete design of a HW accelerator to implement the Spatially Located Ordered Tasks (SLOT) execution model to exploit parallelism and speculation, and for applications that generate tasks dynamically at runtime.

Which leaves us with two 😋 recipients. In August we reviewed a paper from 2013 which pioneered k-means clustering (2013) for post silicon bug detection. And in December we looked at a very important topic, security verification using IFT (Information Flow Tracking) and it’s extension from gate level to RTL. Not surprisingly, December’s contribution got the least hits as our readers were probably facing the dilemma described initially.

Ratings can be arbitrary at times, all these contributions are star worthy and advance the state of the art. We can be grateful for an active, international research community in academia and industry tackling really hard problems. As of my personal preferences, you can guess…

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AI and SPICE Circuit Simulation Applications

AI and SPICE Circuit Simulation Applications
by Daniel Payne on 01-24-2024 at 10:00 am
Categories: EDA, Siemens EDA

Figure 1 min

Can you name the EDA vendor that first used AI starting 15 years ago for circuit designers using SPICE simulators? I can remember that vendor, it was Solido, now part of Siemens EDA, and I just read their 8 page paper on how they look at the various levels of AI being used in EDA to help IC designers work smarter and faster than using manual methods.

Custom designs including cell, memory and analog IP libraries require SPICE simulations to be run across many Process, Voltage and Temperature (PVT) combinations as well as local variation to be fully verified to target yield, such as 3, 4, 5, 6 sigma, or higher. In addition, timing models used by logic synthesis and static timing analysis tools also require many SPICE simulations for .lib modeling and validation, especially with statistical variation included in Liberty Variation Format (LVF) sections of .libs. These tasks need millions or billions of SPICE simulations, and may take weeks to complete.

Solido technology uses an adaptive AI approach that uses SPICE simulations to get initial results, selects sample points, simulates more tail-end points, then self-verifies and adapts as needed, with results matching brute-force Monte Carlo methods in a fraction of the time.

Any EDA tool that uses AI must meet a criteria to be trusted, like can it be verified, is it accurate compared to a reference, will it work in general on all my designs, is it strong enough to save me time and effort, and can it be used by an engineering team. You can also think about the maturity level of your EDA tool with AI features.

  • Level 0 – no AI approach, SPICE with brute-force Monte Carlo.
  • Level 1 – partially reliable AI, where it works on some cells, but not all.
  • Level 2 – partially reliable AI, with self-verification and acceptable accuracy.
  • Level 3 – adaptive, accuracy-aware AI, where low accuracy results are replaced by higher accuracy results through more data collection, improving models automatically.
  • Level 4 – full production AI that works for all cells, all corner cases, all the time.

Here’s an EDA tool approach for the Level 3 of AI maturity:

AI Maturity

This automated methodology produces accurate results very quickly, yet doesn’t require manual intervention. Reaching the level 1 of AI takes days, level 2 will take months, level 3 requires years, and level 4 will require decades of developer years to attain.

Solido Design Environment has a feature for high-sigma verification, where AI speeds up SPICE runs by an order of magnitude, yet the accuracy is full SPICE. Engineers can reach 6 sigma verification results in much less time versus brute-force methods. Using the High-Sigma Verifier approach showed a speed improvement of 4,000,000X faster than brute-force in a cell example. With old methods an engineering team wouldn’t even consider high sigma verification, because the runtimes would be too slow.

Furthermore, additive AI enables Solido Design Environment to re-use AI models from one run to help further speed-up subsequent runs, accelerating incremental verification tasks by up to an additional 100X.

Solido Design Environment

To create and verify Liberty (.lib) models with AI, an engineer would run Solido Generator which produces new PVT corner .libs using existing PVT corners as anchor data, and Solido Analytics to fully validate .libs, including detecting outliers and potential issues in.lib data automatically. Both these tools are part of Solido Characterization Suite. The AI techniques here reduce .lib production and validation time from weeks to just hours of run time.

Solido Analytics

The roadmap for AI techniques with Solido tools includes Assistive AI, where generative AI will help engineers find and choose design optimization options.

Summary

Solido has a 15 year history of applying AI techniques to circuit designers for high-sigma verification and cell characterization, giving them verification results in much shorter run times. Ask your EDA vendors what their experience is in applying AI methods to their tools and try to see what level of AI maturity is being offered. Reaching a level 3 or level 4 AI maturity requires decades of development effort.

Read the 8 page article at Siemens EDA.

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2024 Semiconductor Cycle Outlook – The Shape of Things to Come – Where we Stand

2024 Semiconductor Cycle Outlook – The Shape of Things to Come – Where we Stand
by Robert Maire on 01-24-2024 at 6:00 am
Categories: Semiconductor Advisors, Semiconductor Services

Semiconductor Industry Outlook 2024
  • What kind of recovery do we expect, if any, after 2 down years?
  • What impact will China have on the recovery of mature market chips?
  • What will memory recovery look like? Will we return to stupid spend?
  • Stock selection ever more critical in tepid recovery
Chip stocks have rocketed but the industry itself, not so much, “Anticipation….is keeping me waiting”

You wouldn’t know that the semiconductor industry has been in the doldrums for two years and more from the look of semiconductor stocks but that’s the reality.

The stock market seems to always be a leading indicator of future performance but then again the stocks have been pricey all through the down cycle seemingly anticipating a recovery that was always delayed.

The question now at hand is if 2024 will finally be the recovery that everyone has been anticipating?

So far the signs look OK but certainly not what we would call great and in no way back to the very heady days of crazy spending and expectations.

The very high spend that the industry saw to build capacity after the Covid induced shortage clearly overshot the runway by quite a bit which resulted in the overcapacity induced downcycle that has lasted over 2 years now.

We think chip makers will likely be a bit “gun shy” about spending capex given the length of the downturn.

We saw that TSMC is projecting “flattish” spend for 2024 and projects such as Arizona are pushed out or going slow on purpose.

TSMC not doing a buy High NA buy from ASML will also keep their capex under control.

Intel is spending at a reasonable clip but far from overspending, and appears to be more selective related to technology rather than capacity.

We certainly don’t expect Samsung to bounce back in memory spend as memory capacity is still off line and not fully back to 100% utilization. The primary spend we see out of Samsung is again technology driven not capacity driven

Technology spend without capacity spend is a muted up cycle

The semiconductor industry is importantly more than just a singular supply/demand capacity driven cycle.

The secondary cycle, though not as big as the capacity cycle, is the technology cycle. We obviously go through technology nodes and new fabs which create a separate wave of spend in parallel to the overall capacity driven spend.

We expect much of the spend in 2024 to be technology driven rather than capacity related and thus to be lower in amplitude.

Intel is spending on technology as is TSMC. Samsung and other memory makers have to keep up with technology node transitions even while keeping capacity off market. They need to keep up with technology to remain competitive on a Moore’s Law basis which drives basic costs in the memory business.

Essentially, technology spending remains almost a constant, though variable, while capacity spend has big swings.

We would temper expectations for a rip roaring Capacity spend in 2024

We don’t see a huge potential jump in demand for either memory or logic in 2024 that would bring back full fledged capacity spending.

While AI remains the near term focus and driver of the industry at the margin, AI alone is not enough to get the entire industry back in gear at full speed.

High bandwidth memory is great but far from enough to soak up all the excess memory capacity especially since retooling is needed to convert capacity to high bandwidth production. Memory makers are going to have to be careful not to overshoot HBM memory demand that may be more limited by AI logic chips capacity and availability.

We still need a more broad based macro-economic recovery to push demand for PCs, servers & wireless which are far and away the majority of the market.

The China Syndrome

It is still unclear what the impact of the $40B worth of semiconductor equipment tools bought by China in 2023 will have on the chip making market.

Obviously they are not all on line and productive,  just yet. The question is, when they come on line what the impact will be?

There are already signs of weakening foundry pricing at the trailing edge where China plays as China wants to put equipment and all its new fabs to work and take market share.

$40B is an awful lot of equipment and likely doubly so as its not relatively expensive bleeding edge equipment which suggests that the $40B represents even a larger bump in capacity since its mostly at trailing edge.

It obviously does not include big ticket items like $150M EUV tools or even expensive DUV immersion tools.

So this is a very significant bump in capacity as it is all concentrated on lower cost, mature nodes.

Second tier foundries will get squeezed

We remain concerned that second tier foundries such as Global Foundries and UMC etc… will likely get squeezed between China catching up and cutting prices to gain market share at the low end and TSMC lowering pricing to keep market share. Both China and TSMC have significant cost advantages over mid range foundries.

The main way to avoid this will be to try to lock in business from customers who don’t want to do business with China for what ever reason. GloFo has done a good job of this but the vast majority of chip customers just care about price, price and delivery.

China will likely be on of the biggest factors keeping a lid on the rate of recovery in the semiconductor industry in 2024. While it has no impact on the leading edge , we need to remember that the vast majority of semiconductor units is for mature technologies that China already serves and can and will impact that large market.

We know what Chinese competition did to the LED and Solar panel markets.

Stock selectivity matters

We think there will be more differentiation in the performance of semiconductor companies going forward into 2024, so stock selection will matter more as not all stories will rise with the same tide.

We still like the ASML story. One of the few true tech monopolies in the market. The High NA roll out story that will present positive news flow which will overshadow and China restrictions.

We like TSMC as the main beneficiary of the AI revolution as well as near term demand from both Apple and Intel. They are cautiously spending and more immune from Chinese competition in the trailing edge. They are still the best chip maker in the world hands down.

Samsung is more of a mixed story as its foundry offerings still don’t fully measure up to anywhere near TSMC and memory will likely have a slow recovery as demand is still not huge. Pricing has moved off a long term bottom for memory but not a strong bounce just yet. It feels more like the restrictions in capacity finally had an impact rather than a return of strong demand. If this is correct and memory prices are better due to holding capacity off line its not going to be a super recovery.

Still HBM remains a bright spot although limited

We might be more inclined to look at SK Hynix as a pure memory play as opposed to Samsung which is under performing in foundry.

In general we would be more selective in purchases of stocks as many are already overbought and many of those are overbought for no good reason and could see weakness as reality of differentiation sets in.

The Stocks

We think overall this earnings season will be positive for chip stocks as we expect many management teams will talk about a brighter outlook for 2024 even though it remains more of a hope than reality.

The dream of AI is still one of the biggest drivers of the outlook for a recovery and so far AI hasn’t hit any major bumps that would see it slow down.

Equipment spending recovery will be slower as compared to chip producers as there is still not huge demand for capacity in either memory or general foundry (other than China spending)

There is still a very wild card of geo-politics and China/Taiwan. The pot of tensions continues to boil, perhaps on the back burner rather than the front burner as the rhetoric has been dialed down a notch or two. We haven’t heard a lot out of Gina Raimondo and there haven’t been any recent major military exercises.

The stocks still feel overbought as the S&P broke back into record territory. Perhaps its just P/E expansion as everyone likes to believe rather than over exuberance that investors fear.

I guess we will find out if earnings season can support the stocks resurgence.

About Semiconductor Advisors LLC

Semiconductor Advisors is an RIA (a Registered Investment Advisor),
specializing in technology companies with particular emphasis on semiconductor and semiconductor equipment companies. We have been covering the space longer and been involved with more transactions than any other financial professional in the space. We provide research, consulting and advisory services on strategic and financial matters to both industry participants as well as investors. We offer expert, intelligent, balanced research and advice. Our opinions are very direct and honest and offer an unbiased view as compared to other sources.

Also Read:

Is Intel cornering the market in ASML High NA tools? Not repeating EUV mistake

AMAT- Facing Criminal Charges for China Exports – Overshadows OK Quarter

The Coming China Chipocalypse – Trade Sanctions Backfire – Chips versus Equipment