This is a great article and dissection of the state of the EDA industry. No doubt the industry is going through very tough times and your article provides several different perspectives about why this is happening. Your obesrvation about the role the IDMs play in the food chain is very good, for example. While EDA may be on the "outs" now, it is clear that if semiconductor technology is going to continue to evolve, it will require new technical innovations to solve the tough problems in design, verification, and implementation. Some of this will come from within the large IDMs / semicos, but based on history we also know that a good part of the fundamental innovation will come from startups and academia. The question is ... can the fundamental business models that drive the industry change and evolve as well?
At the DVCon Troublemaker's Panel, I thought that some of Gary Smith's observations/predictions were the most interesting.
A few weeks ago at the EDAC CEO panel, you asked Mike Fister about the rumor last summer that Kohlberg Kravis Roberts and the Blackstone Group might possibly take Cadence private.
On this year's Troublemaker's panel, Gary said that a large part of Cadence's recent financial shortfall was due to private equity (PE). Specifically, some of Cadence's largest customers were taken private over the last two years, e.g., NXP and Freescale. Now, the PE firms realize that they made a mistake and are losing money hand over fist. So, they've cut costs to the bone. As a result, they're not spending as much on EDA software as expected. Gary also said that, due to these financial debacles, PE firms were no longer interested in anything even remotely related to semiconductors, including EDA.
Gary also said in physical implementation, Cadence needed to buy Magma, but probably couldn't afford it any longer after their precipitous drop in market cap. He said that Mentor/Sierra would be able to sustain a viable physical implementation business. And that AtopTech would most likely be acquired, probably by Synopsys.
One last thing he said, that I found to be a bit strange, is that ESL continues to grow, but hasn't reached the "knee of the curve" in terms of market acceptance, yet. I think he said that it would reach that "knee" around 2012. That can't be good news for ESL companies.