ARTICLE
AI fuels $24 billion chip design market
Bloomberg Intelligence
This analysis is by Bloomberg Intelligence Lead Software Analyst Niraj Patel. It appeared first on the Bloomberg Terminal.
Sales and profits for electronic design automation (EDA) software makers are set to accelerate as tool capabilities expand for more complex chip architectures. New buying interest from system companies, a scarcity of global suppliers and expanding portfolios for design and simulation can create multiyear tailwinds for leading vendors like Ansys, Cadence, Synopsys and Siemens. Our analysis finds that AI-enabled EDA tools will add value by boosting engineering productivity and performance, with industry sales growing at an 11.8% compound annual rate through decade’s end, 200 basis points higher than baseline analyst and industry forecasts.
Key research takeaways
- Market to Reach About $24 Billion by 2030: We see the EDA total addressable market at $23.9 billion by 2030. The 11.8% CAGR can outpace the overall semiconductor market by 440 bps, application-specific chips by 230 bps and semiconductor R&D expense by 500 bps.
- Solving AI Challenges: Chiplets, which are key enablers of AI semiconductors, and advanced semiconductor packaging on semiconductors create challenges that are core capabilities of EDA and simulation software leaders like Ansys, Synopsys and Cadence.
- M&A Full Speed Ahead: Engineering software M&A should continue at a fast pace next year, following recent deals like Synopsys’ planned $35 billion purchase of Ansys, Renesas’ $5.9 billion acquisition of Altium and Cadence’s $1.2 billion deal for Beta CAE. Consolidation likely will extend beyond the top 10 vendors, which account for 77% of the market.
- Empowering Engineers: AI-enabled EDA tools are increasing engineer productivity by more than 5x on chip design tasks. Though generative AI software for EDA remains in the embryonic stage, it could help address a shortage of US semiconductor design engineers, estimated to reach 23,000 by 2030.
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