EDA revenues grow despite declining Semiconductor revenues in Q1 2019

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Global semiconductor revenues dropped by 13.0% to $96.8 billion in Q1 2019 vs. Q1 2018 (WSTS), and by 15.5% vs. Q4 2018, while Q4 2018 were an 8.2% sequential decline from Q3 2018. Gartner is forecasting -3.4% full year drop in 2019 semiconductor revenue to $458 billion.
Despite this declining trend in semiconductor revenues for 3 sequential quarters, revenues in the EDA market grew steadily, with Synopsys growing quarterly revenues by 7.7% Q1* 2019 vs Q1* 2018 to $836.2M, while Cadence reported even higher 11.5% growth to $576.7M:

For comparison, the % growth rates in the previous quarter, Q4* 2018 versus Q4* 2017 were Synopsys 6.6%, Cadence 13.6%, ESD Alliance -3.1% and semiconductor 0.6%, so the broader EDA market revenues already declined in Q4 while Synopsys and Cadence grew their market share.
Examining the delta in revenue growth in dollars, Synopsys and Cadence’s Q1* 2019 vs Q1* 2018 revenues both increased by the same amount, $59.4 Million, surpassing their prior mid-point guidance by $6.2M and $6.7M respectively:

Guidance for the next quarter

The headwinds of declining Semiconductor revenues are not impacting the EDA companies’ own mid-point guidance either, which is for revenue growth as follows in Q2* 2019:
• Synopsys: 6.5% ($50.3M growth to $830M under ASC 606 rules)
• Cadence 11.9% growth ($61.6M growth to $580M – under ASC 606 rules)

In summary, global semiconductor revenue dropped by 13.0% to $96.8 billion in Q1 2019 vs. Q1 2018 (SIA), while Synopsys revenues grew by 7.7% and Cadence by 11.5%. The EDA companies own guidance for Q2* 2019 is for similar growth to continue: Synopsys to grow revenues by 6.5% and Cadence by 11.9%, despite the backdrop of declining Semiconductor revenues.

The author, Gerry Byrne, founder of edalics, will be at DAC in Las Vegas from June 2 to 5 (and also in San Jose from May 27 to 30). If you wish to learn more about edalics EDA Budget Management services or just discuss the latest EDA news, simply email query@edalics.com to schedule a meeting. edalics is the only consultancy which benchmarks and reduces EDA budget costs for leading semiconductor companies. For more information about edalics services please see: www.edalics.com

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