Tag Archives: Lip-Bu Tan

Changing of the EDA Guards

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Turnover among the heads at the major suppliers of electronics design-related software is rare indeed. Since 2010, the top spot of a leading PCB software company has changed hands only once.

The dean of PCB EDA, Makoto Kaneko, founded Zuken in 1976. Wally Rhines has run Mentor Graphics since 1993. His counterpart at Cadence, Lip Bu Tan, has been in place since 2009.

Altium has had three chiefs in its existence, the most recent being Aram Mirkazemi, who was installed in 2014. But for a shareholder revolt in 2012, however, Nick Martin, who founded the company in 1985, might still be in charge.

That’s why it’s was so unusual this week when, on the same day this week, Ansys and NI each named the successors to their respective thrones.

Ansys appointed Dr. Ajei S. Gopal CEO-in-waiting, succeeding longtime head Jim Cashman. Gopal’s been a familiar face around the company, however, having joined its board in 2011.

Cashman joined Ansys as president in 1999, and was named CEO a year later. On his watch, Ansys’s revenues have grown from $50 million to almost $1 billion.

In NI’s case, it’s in some ways an even bigger transition. As a researcher at the University of Texas, James Truchard cofounded National Instruments in his garage in 1976. Come Jan 1., when Alex Davern takes the reins, it will be as chief executive and president of a $1.2 billion firm employing more than 2,000 workers worldwide.  If Davern has an advantage, he’s held a variety of positions in finance at NI dating to 1997, and he’s been Cashman’s right-hand as COO and CFO since 2010.

What’s clear is that the software industry, while dependent on innovation, also prides itself on stability. Since the market is characterized by a relatively small number of major players, the ability to maintain relationships with key customers may have something to do with that. That the leadership at most of the aforementioned companies has been relatively controversy-free doesn’t hurt, either.

From the looks of it, the heir apparents promise more of the same. Given the respective performance of the CEOs they are following, that’s not a bad thing.

 

 

The New Verticals

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Chasing the vertical OEMs is not a new strategy in EDA.

But it is becoming that much more widespread as the major players extend their reach from automotive (long the domain of Mentor Graphics) to other sectors.

Semiconductor design companies — the linchpin to the product development and cash flow of Synopsys, Mentor and Cadence — are expected to consolidate over the near term, and the revenue outlook from that market is being tempered.

But the “new verticals” — military, aerospace, IoT, cloud — offer the chance for the EDA titans to extend their reach by not only selling IC design software but also an ever-growing array of emulation, analysis, and system design tools to a single customer. Doing so tightens the binds between EDA firm and customer, potentially making the deal more profitable as some list price devaluation that naturally occurs with bundling is offset by a lower cost of sales (including commissions).

As Cadence CEO Lip-Bu Tan said this week, “We had been emphasizing system design development. That basis is providing the entire vertical solution spec that is from IT tool and PCB and a host of system design and verification and we strongly believe that is the strategy going forward to meet the requirement of some vertical (markets).

“IoT, the cloud infrastructure and the massive cloud infrastructure fueling up; the automotive as kind of the connective devices; some of the medical field and DNA sequencing … and a few others: those can be clear application for some of our IT portfolio and some of our EDA flow and also some of our hardware PCB and system analysis requirements.”

We are starting to hear the major EDA companies discuss the PCB segment on their quarterly conference calls. This is an emerging trend; not long ago PCB was an after-thought to most analysts because the revenues were so puny compared to those of semiconductor. Now that PCB is part of a larger strategy, as opposed to simply a (profitable) business unit, that’s changing.

As this strategy ramps, it could very well shift the scope of acquisitions by the major EDA players. For decades, Synopsys has stayed far away from owning PCB design tools  although some of its tools have been tied into Zuken’s. Its last foray into PCB came when it acquired Viewlogic in 1997; management quickly bought out the PCB design segment the next year. Would a shrinking semi customer base lure them back in?

Most PCB design M&A related deals these days are tied to filling gaps in technology. There’s still a disconnect between ECAD and MCAD, and there will be some shakeout as new disruptive hardware startups enter the field. So while Cadence and Mentor are pursuing true top-down strategies, not everyone is following suit.

Altium corporate director, technology partnerships and business development Dan Fernsebner told me at PCB West last month, “Incubators and hardware startups have to put products out very quickly, and they have to be right the first time.” Fernsebner says the model for these companies is shifting from enterprise engineering to relying on reference designs.

Does the change to entrepreneurship pose a challenge for the developers in terms of having to reevaluate their business models, I asked Fernsebner. “I think you’ll see explosive new companies changing the business model for those who have been in it for years,” he said, citing Telsa, Nest and Skully, companies that develop products that are field-upgradeable.

It’s rare that any single model wins out completely. But if the end-customers in key industries begin to flex their muscles, it won’t be long before the M&A activity gets really interesting.

Change Time at Cadence?

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John Bruggeman, senior vice president and chief marketing officer of Cadence, is leaving the company after two years. This comes as something of a surprise to many industry watchers, given Bruggeman’s prominent role in reshaping the EDA vendor following its revenue drop and ill-advised play for Mentor Graphics in 2008.

In laying out his EDA360 vision, Bruggeman asserted software must help profitability as much as productivity, and that future designs will be app-driven, in which users would start with the applications and then overlay the optimized hardware/software.

In doing so, Bruggeman echoed hardware design industry guru Lee Ritchey, who famously said at a Printed Circuit Design-sponsored tech session that users buy the hardware to run the software.

Bruggeman’s departure has raised the question about Cadence’s executive succession plan, and whether he lost a battle to run the company in the future. Again, some analysts feel CEO Lip-Bu Tan plans to step down sooner rather than later, and that Bruggeman’s resignation paves the way for senior vice president of worldwide field operations Charlie Huang to ultimately ascend the throne.

Stay tuned.

On Deals Never Done

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About three years ago, Cadence made a play for EDA competitor Mentor Graphics, an offer the latter never seriously considered. That move, coupled with sharply falling revenues, cost then Cadence CEO Mike Fister his job.

On Friday, the San Jose Mercury-Times reporter Steve Johnson asked current Cadence chief executive Lip-Bu Tan about that merger attempt. While Tan doesn’t specifically address that deal, his words are telling: “In general, industry consolidation is always good.”

It’s a bit frightening to consider a PCB CAD world with one major player taking up the lion’s share of the North America and European markets. (Zuken more than holds its own in its native Japan.) As we learned when AT&T dominated the phone equipment and services market, monopolies (or near monopolies) are the enemy of innovation. Let’s hope it never comes to that.