The electronic design automation (EDA) sector is growing rapidly in India, especially because of all the independent design houses located here. In this interview, we take a look at the factors affecting this growth and the strategies taken by EDA companies to beat the competition. Mentor Graphics is a multinational corporation dealing in EDA tools, and is one of the top three in the world in this field. Walden C. Rhines, chairman and CEO of Mentor Graphics, speaks to Dilin Anand from the EFY Group
EB: In the coming year, what are the major growth areas for EDA?
The biggest growth will probably happen in two areas. The first is functional verification, where the hardware acceleration is taking off at a rapid rate and growing very quickly. The second is in automotive design automation, where embedded software, wiring and other automotive design products are in great demand because automobiles are becoming more and more electronic.
EB: In our last interview you had mentioned that automotive growth is higher than EDA growth. Is this still continuing?
Yes. Automotive electronic design automation is growing faster than overall electronic design automation. The strongest growth for our last quarter was also in automotive, and this helps firms to grow faster than the overall industry. In India, we not only have customers who are applying electronic design automation to automotive design, but we also have a major portion of our research and development for automotive products happening here.
EB: Since the computer aided engineering (CAE) sector is a mature market, what is your strategy for growth?
CAE has been the largest segment within EDA for most of its history, and it continues to be so. The worldwide revenue from the PCB design market is somewhere around US$ 500 million per year. It is the most mature EDA market, but new technical challenges emerge all the time because of issues like signal integrity, more complex circuit boards and high-speed performance. Mentor Graphics has been able to grow its PCB business at a rate that’s faster than the industry mostly due to investments in this field, and we do this because our competitors don’t. Our competitors view this area as mature, and they don’t invest much in it and this gives us an opportunity. For instance, our thermal analysis products have been one of the fastest growing segments in design tools.
EB: How are the sales of your PCB tools for electronics assembly?
Chips do not float on air. We recently toured the facility of a large PCB manufacturer here in India. The company uses our PCB tools and our automated design for manufacturing (DFM) software to control and monitor the whole production process, the pick-and-place machines, and the test and related processes. I think that the amount of electronics assembly that will be done in India will certainly grow.
EB: How do you think spending power is affecting the growth of start-ups in EDA?
Every company has finite resources, and one of the key talents of start-up companies is that since they don’t have a lot of money they innovate and do things more inexpensively than bigger companies. But I think it is fiction to believe that big companies can spend whatever they want – we have constraints also. We have investors who put in money and expect a return on that capital. So big private companies, start-ups and public companies — all have to make decisions to optimise where they invest and ensure that they invest in the right things.
EB: Are EDA start-ups contributing at all to emulation?
There are lots of small exciting companies, but it is not likely they are contributing to emulation because it is so expensive to develop the hardware for it. So I don’t expect to see new competitors. However, in a variety of other areas, we will see a lot of new competitors, and that is good because it keeps us innovative and in some cases, it also gives us opportunities to acquire companies. EDA has been a fruitful area for start-ups because they have been then acquired by Mentor, Cadence and Synopsys. While there aren’t as many start-ups now as there used to be, it is still a good way for innovative people to realise a return on their investment without having to go through a public offering.
EB: Any companies on your list that you would like to acquire?
(Laughs) I don’t have any now, but do you have one that I should look at?
