Flat Semiconductor & steady EDA revenue growth in Q4 2018

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Global semiconductor revenues grew only slightly by 0.6% to $114.7 billion in Q4 2018 vs. Q4 2017 (SIA), but were 8.2% less than in Q3 2018, following double digit % growth in previous quarters of 2018. Gartner is forecasting 14.4% full year growth in semiconductor revenue to $481 billion for 2018.
Despite slowing semiconductor revenue growth, revenues in the EDA market grew steadily, with Synopsys growing quarterly revenues by 6.6% Q4* 2018 vs Q4* 2017 to $820.4M, while Cadence reported 13.6% growth to $569.9M:

For comparison, the % growth rates in the previous quarter, Q3* 2018 versus Q3* 2017 were Synopsys 14.1%, Cadence 9.7%, ESD Alliance 7.7% and semiconductor 15.1%.
Examining the delta in revenue growth in dollars, Synopsys and Cadence’s Q4* 2018 vs Q4* 2017 revenues increased by $51M and $68.1M respectively, surpassing their prior mid-point guidance by $27.9M and $19.8M respectively:

Guidance for the next quarter

The EDA companies’ own guidance (mid-point) for Q1* 2019 equates to percentage revenue growth as follows: Synopsys: 6.8% ($53.2M growth to $830M – transitioning to ASC 606 rules); Cadence 10.2% growth ($52.7M growth to $570M – according to ASC 606 reporting rules):

In summary, Q4 2018 global semiconductor revenue growth moderated to 0.6% or $114.7 Billion, while Synopsys revenues grew by 6.6% and Cadence by 13.6%. The EDA companies own guidance for Q4* 2018 is for continued moderate growth: Synopsys to grow revenues by 6.8% and Cadence by 10.2%, despite a downward trajectory in Semiconductor revenues.

To subscribe to future quarterly EDA results updates, simply email: subscribe@edalics.com. The author, Gerry Byrne, is the founder of edalics, the only consultancy which benchmarks and reduces EDA budget costs for leading semiconductor companies.

If you are interested in edalics services and attending DAC in Las Vegas, June 2-5, 2019, please feel free to email Gerry.Byrne@edalics.com to request a meeting.

* Based on each company’s reported financial quarterly data which most closely match that calendar quarter.

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