Reflections on DAC

The 42nd Design Automation Conference just concluded in Anaheim demonstrated that the EDA industry is in a transition period. As semiconductor fabrication technology passed the 100 nm mark on its way to 65 and 45 nm features size, the profile of the market has changed drastically. Most EDA firms are still experimenting with different approaches to the new market conditions and in some cases have succeeded in confusing the DAC executive committee. In spite of all this over 6,000 attendees got what they came for: networking with peers, attending panels and papers presentations, watching demos in the vendors’ booths, and collecting giveaways that, for the most part, were significantly less extravagant than in previous DAC events. The great majority of the 240 vendors were satisfied with the quality and quantity of leads collected on the show floor.

Some Facts About DAC
Those attending the Sunday evening Dataquest event, a must see for serious DAC groupies, immediately noticed that things were different when the traditional Gartner Dataquest ESL Landscape, one of three segments the firm divides the EDA market, showed significant growth and diversification over the 2004 version. Although both Gary Smith, Managing VP, and Daya Nadamuni, recently promoted to Research Vice President, forecasted growth for the industry, other analysts and members of the press were less enthusiastic about the short term financial prospects. In fact Wally Rhines in presenting the EDAC state of the industry report, resorted to well delivered humor to enliven what would otherwise have been a guarded financial picture.

Free Monday was well attended although the Microwave Theory and Technology Conference, held up the road in Long Beach at the same time, definitely lowered the number of students and military personnel taking advantage of the free DAC exhibits. The timing and close location of the two conferences also impacted DAC’s Wireless Day, held on Wednesday. Surprisingly only few DAC exhibitors, notably AWR (Applied Wave Research), Agilent Eesoft, and Ansoft had to split their teams and exhibit at both conferences.

The DAC committee reported a greater number of members of the press registered this year than last year. I have no doubt that their numbers are correct but there were less European journalists than in the past, and a few American familiar faces were missing this year. It was a clear sign that the technical press is also in turmoil, trying to adapt to new market demands and the electronic publishing phenomenon. Of course Richard Goering was there and received special recognition for attending DAC for twenty years in a row. As Peggy Aycinena pointed out in her on-line column (www.aycinena.com) I have attended more DAC’s than Richard, mostly as a vendor, and not consecutively, so it is not the number, it is the dedication to do it every year as a respected journalist that counts. Demos on Demand teamed with John Cooley (www.deepchip.com) to hold vendors interviews on the exhibit floor. The companies being interviewed had to pay a fee in advance for the privilege of appearing on the video recording and the feed back at the conclusion of the conference to the Exhibitors Liaison Committee was that most vendors did not wish to repeat the experience next year.

Bernard Meyerson, IBM Fellow, Vice President and Chief technologist of the Systems and technology Group at IBM, delivered the Plenary session keynote address (see the coverage by Tets Maniwa on this web site). He had the courage to say out loud what most people suspected but were afraid to admit: scaling is dead and system designers need to take a more holistic approach to design than just cram more transistors on a piece of silicon and make them operate at higher clock frequencies. This too was a sign of changing times.

The Big Picture
The fundamental problem facing the EDA industry is the changing nature of the markets it serves. Born as an alternative to in-house CAD and CAE tools, the industry has looked at its customers as a collection of three distinct groups: IC designers, FPGA users, and PCB designers. The type of tools they purchased and the price they were willing to pay for the licenses identified each group. Vendors did not need to differentiate their marketing and sales strategy within each group. IC designers, this group of course includes ASIC designers, purchased design entry, simulation, verification, synthesis, and place and route tools. The complexity and size of their designs justified a higher price point. FPGA designers dealt with smaller designs that were easier to verify and correct. For a long time they did not need synthesis and when they did it was a simpler task that required less directives and a smaller cell library. They did buy design entry tools, less powerful simulators, and had no need for place and route, since device vendors performed that task. PCB designers needed schematic entry and a very good router. Very few did any simulation with the exception of checking for signal iintegrity, and engineers placed almost all of the devices by hand.

EDA companies had to care about their customers the way any good business cares about its customers: be reasonably responsive to their needs and keep them happy by providing a reasonable support organization.

Today things are much different. The line dividing IC and FPGA designers is blurring as both the size and speed of FPGAs increase, and the non-recurring costs of ASIC design makes the choice of FPGA for volumes up to 100,000 pieces an economic alternative to ASIC design. The integration of PCB and ICs is also becoming more difficult as the layout on the board, the type of connections with the package, and the package itself, all have an impact on the performance of the IC. Additionally, the complexities of VDSM (very deep sub-micron) design require a close cooperation among parties that used to see each other simply as suppliers and customers, not as partners. System companies, foundries, mask shops, EDA vendors, and equipment manufacturers must now work together to insure the technical and financial success of a product. The market is dividing itself in different segments: design entry, simulation, and verification produce the RTL netlist that becomes the basis for IC fabrication, whether designers are implementing an IC or an FPGA. The tools used to produce the RTL netlist constitute the yet ill-defined and unfortunately named ESL market. They demand a different price point and a different support organization than the rest of the tools. Similarly, PCB designers are maintaining their own personality and requirements, although some analysis tools traditionally used in PCB design are now requiring functionality that only IC designers needed in the past, due to higher operating speeds and greater product density.

Although this new market profile only impacts four or five EDA vendors, they represent over 80% of the industry’s total annual revenues, so we cannot ignore the problem. Cadence, Magma, Mentor, Synopsys, and to some extent Synplicity need to develop a new approach to the market or suffer the consequences. Unless they quickly adapt to a new marketing and sales method they will miss significant revenue opportunities and force a change in the electronics industry that will be very difficult to reverse and might be the end of the EDA industry.

Changes I Would Make
Let’s start with DAC. The Executive Committee of DAC needs to find a way to import more content from two other conferences: Embedded Systems Conference and SEMICON. Unless more software engineers and more semiconductor technologists attend and exhibit at DAC, the conference will offer a partial and distorted view of the electronics industry. It would also help if the program committee and the exhibitor made a better effort to attract more PCB designers to DAC. Relegating them to their own shows is ignoring the holistic approach to system design Dr. Meyerson so eloquently proposed.

I do not like the ESL name given to design efforts above RTL of abstraction. The unfortunate label overtly ignores the software component of the system. I have yet to find a software engineer that describes his or her work as doing electronic design. They all correctly think they are producing software, whether it is embedded or application specific and residing in some external storage system. In addition any good architect would also consider the thermo-mechanical implications when deciding how to partition and package a system, so the name the EDA industry now uses for architectural design is clearly non-descriptive and too electronic hardware centric.

I would also suggest that Dataquest discard the labels it uses for its market segments and use very basic descriptions. ESL should be called ADV for architecture, design, and verification, and CAE should be called DFM for development for manufacturing. The third segment, now called CAD/CAM is a catchall collection of analysis tools that should be part of DFM or belong to the third segment: PCB design and development. The advantage of this new method is that it aligns much better with the pricing methodology I propose. Using the new nomenclature makes it clear that EDA vendors, who traditionally have focused on hardware design to address the ADV market, need to collaborate with companies in the software development business and even in the mechanical drawing market in order to provide a development environment that truly supports the development of a product architecture. The goal is to develop an environment that offers a computer based accounting trail of the refinement steps leading to a manufacturable representation of the product.

The most important priority on the part of both EDA vendors and semiconductor companies is to establish a standard RTL handoff method, to clearly separate ADV tools from the work required to prepare a design for manufacturing.

Much has been said and written about a new licensing method that would allow EDA vendors to capture some of the profits generated by their customers on a risk-share basis. The problem is that establishing a clear relationship between ADV tools and manufacturability and yield is difficult at best. We have no data that shows how a particular design method can produce better yielding wafers than another. I am sure that given enough time and experience with VDSM designs we can discover preferred design methods, but EDA cannot wait that long. Annual revenues that are just over 1% of the semiconductor industry revenue level cannot sustain the amount of research and development required to support VDSM designs in a cost effective manner.

DFM tools can, instead, be directly related to silicon success. In fact, at the VDSM level EDA tools and methods must be integrated with the foundry knowledge of the process characteristics, statistical variations, and reticles production. Therefore EDA tools prices can be factored directly into the production costs of a foundry and can then be charged to the customer. Both the foundry and the EDA vendor can then share the revenue in a manner that is established using known accounting methods. Of course this means that every foundry customer has to choose a set of tools from one EDA company that either owns all of the required tools or acts as a consolidator and provides the foundry with a unique source of tools and methods. In fact this is the most cost effective way to progress an RTL netlist to silicon in the VDSM world, since the complexity of project management grow exponentially with the number of parties involved in the development.

The Big Five at DAC
I decided to spend time with the five largest publicly traded EDA companies and observe their approach to DAC in light of the new business climate prevailing in our industry. Since they are responsible for over 80% of the industry annual revenue, the fortunes of the industry are directly related to their business and technology priorities.

Cadence
Cadence drastically modified its DAC presence from previous years, and, whether on purpose or by accident, differentiated its product line between pre- and post-RTL tools. The acquisition of Verisity provided, I am sure, a natural vehicle for this action, since the Verisity booth was morphed into the Cadence Incisive booth. Most of the marketing work for its tools falling under my DFM label was done in suites at the Hilton hotel, although attendees could find some overview of the tools on the exhibit floor. I attended the Monday morning breakfast that Cadence held for financial analysts and press. The presentation was a sequence of four marketing speeches, although only one speaker officially held a title that had anything to do with marketing. During this event, Cadence announced its Torino initiative. This was most pleasing to me, since it is not often that my native town receives the acknowledgment it deserves, but I left wondering how the choice of the name was received by Alberto Sangiovanni Vincentelli, one of the few technical leaders at Cadence, who was born in Milano, Torino archrival in soccer and other things important to Italians. I have not had the opportunity to discuss this un-enlightened internal event with Alberto, but I look forward to do so at the appropriate time. The most positive experience I had in my interaction with Cadence was my meeting with Jim Miller Senior Vice President Development. Jim came from outside the industry a few months ago and has already learned a remarkable amount about our industry. Additionally he possesses the rare skill of actually understand marketing issues while in charge of an engineering group. We discussed the strategy Cadence will follow to increase revenues in the DFM market. Here I must digress slightly and take the opportunity to differ from Peggy Aycinena. She just wrote an article on her web site that justifies the acquisition of Cadence by TSMC. I think that instead of being good for both companies, such an event would hurt TSMC business and would put Cadence employees out on the streets. Although both companies need to learn how to play effectively with one another and establish the kind of business relationship I described above, neither can afford to be so parochial to merge and thus limit their available customer base to the significantly smaller set that represents their common customers. Cadence needs to play nice with TSMC, but also with other foundries and IDMs like Intel, TI, and STMicro, or it will become a much smaller company. Jim Miller and Ted Vucurevich, Cadence’s CTO, understand this. I have not spoken with Mike Fister, I think he lives in another time warp and materializes in our dimension only at very carefully choreographed occasions, so I cannot tell what he thinks, but at least two of his senior executives understand most of the implications. It is clear that DAC in its present form and with its present attendees profile is not conductive to pursuing this type of business on the exhibit floor, so although the absence of a large monument to Cadence Corporate magnificence is regrettable, I finally understood it.

Cadence seemed taken by surprise by Synopsys decision to join the Si2 Open Access Coalition. They should have prepared better forthis eventuality, regardless of the degree of probability that it would come to pass. The combination of Synopsys willingness to interface its tools to the Open Access data base combined with the advances made by Silicon Navigator in developing a framework of tools around Open Access are bringing into question Cadence’s strategy to open its design data base to the public.

I am not enthusiastic about Cadence’s Incisive strategy. No one could explain to me the Verisity purchase in engineering terms, although Jim Miller did make a lot of sense presenting it in terms of market segment acquisition. My problem with Cadence is that it has been a market follower for over five years, and has not shown the engineering leadership it once possessed in ADV tools. In the last four years it has been third in adopting first SystemC and then System Verilog, after Synopsys and Mentor. We will see what Torino brings. I hope they did not choose the name just to increase my interest in their doings!

Magma
Magma suffers from being the “underdog” and from the EDA environment that encourages brilliant engineers to leave a large company to join a startup and make their fortune. Unfortunately, whether willingly or not, some engineers bring with them the knowledge they applied at their previous employer. I am not making a legal point here, nor am I choosing sides in the existing legal dispute, I am just observing that some of these problems are self inflicted, and that the process of patent granting and enforcement can stand much improvement. Magma is addressing the market almost exclusively by promoting the strength of its technology. It is isolated: does not play well with any of the other big four. I do not know if this is by design, chance, or the result of actions on the part of the others, but it is a fact. Magma has toned down its glitz at DAC. Their booth was elegant and understated, the press dinner (it was my first time I attended it) was good and the presentation brief. It is working hard on new technologies and gives no indication whatsoever of planning to roll over and play dead. Their major obstacle will be to quickly establish the kind of foundry relationships that both Cadence and Synopsys enjoy. If they fail their death will be much slower than that of Monterey Design Systems, but just as certain especially since they have no presence in the ADV market segment.

Mentor
The company sees no reason to change its course. It offers a collection of point solutions. Three of its businesses, Simulation, PCB design and RET generate the greater portion of its revenues, and new tools announcements are aimed at market segments of ever decreasing size. At its press and analysts dinner it focused on Catapult C a product that generates a RTL netlist from an ANSI C design description. Not a very unique idea, considering Celoxica, Forte, and Coware also play in that space. I know that the dialects of C are all different, some more extensive than others, but in the final analysis the C description must represent a synthesizable circuit. The same presentation also introduced Questa, a platform that seems to have copiedthe Cadence Incisive idea. Mentor does dominate the simulation market for FPGA design and the same product can handle the most complex ASIC design in a multilingual environment, yet, for some reason, it has not successfully clinched the synthesis market for FPGA. Go ahead Wally, make peace with Ken and buy Synplicity or at least integrate your tools with theirs. You will both be happier afterward. This will also help you to forever bury the John Cooley donut curse. Calibre continues to lead its market, but unfortunately when you are number one there is only one way to go. Mentor needs to continue to invest significant engineering talent to complete Calibre with other products that help analyze and verify silicon against design, process, and mask features.

Synopsys
Due to its long established leadership in synthesis, Synopsys enjoys very good relationships with most foundries and IDMs, so on paper it has an advantage in establishing the closely integrated development environment needed by system companies utilizing VDSM processes. On Wednesday June 15th Synopsys surprised Cadence by joining the Si2 Open Access Coalition thus laying the groundwork to lower the barrier to access Cadence’s installed base. Judging by the lack of comments on the part of Cadence, I think the lement of surprise worked in Synopsys favor. Synopsys is continuing to execute on its strategy to build a strong inventory of IP blocks, covering both functional and verification IP. My discussions with Aart De Geus confirmed his belief that IP will be a significant differentiator in the next few years and that a new type of IP might in fact play a strategic role in convincing foundries to implement the Synopsys flow. This year Aart and his fellow musicians were a feature group at the Denali Party. Of course Denali Software is the market leader in verification IP for memories. Remembering the failed attempt by Synopsys to acquire Mosys, I wonder if next year Aart and his band will be the feature group at the Synopsys/Denali Party!

Synopsys is also recovering from its mishandled attempt to introduce SystemC to the EDA industry. It realized that SystemC was only a partial technical solution and that it would never reach the sales volume required by the company to maintain its presence in a market, and made a timely switch to System Verilog. With the cooperation of Mentor, Synopsys is succeeding in establishing this new language as the preferred tool for hardware design at an abstraction level higher than register transfer.

Synplicity
According to Andy Haines, VP of Marketing, the company continues to enjoy a leadership position in FPGA synthesis, in spite of the annoying attempts by both Altera and Xilinx to extend the power of their EDA tools. The fact that the price of an FPGA device is higher than it should because both these companies find it necessary to make design tools available for practically free to their customers has not yet bothered any large system company. It should, since this behavior is a clear example of the incapacity of the EDA industry to raise its revenues. As long as EDA tools are seen as marketing tools used to promote silicon sales, they will be heavily discounted and hurt everyone in the long run. The increasing non-recurring costs of ASIC design in VDSM are fostering a growth in the use of FPGA devices. The shorter market time of consumer products is also working in favor of FPGA use, so Synplicity is well positioned for growth.

Synplicity is also taking advantage of the growing market for structured ASIC and offers support to PCB designers in integrating FPGA devices on the board. It lacks front-end tools and could not easily displace Mentor’s Modelsim simulator in the FPGA market. The same comment I made about Mentor is valid here. Ken, bury the hatchet and talk to Wally. There are ways to cooperate that do not involve a takeover if you really value your independence. A tool flow that integrates Mentor and Synplicity tools would be a formidable competitor in both the FPGA and the structured ASIC markets.