Only by developing the “small sampan” into a “destroyer”, “cruiser” or even an “aircraft carrier” can it be possible to form an “aircraft carrier battle group.”
1. The eclipse of the sun-the words written in the front
In March 2016, an internal email directed at ZTE from an international EDA giant caused a small wave and aroused public attention to the ZTE incident and EDA. However, the presence of EDA in this incident was quickly attracted by news from other aspects of the industry. After all, the chip industry in 2016 was still colorful and the chip market was still thriving. The undercurrent of China’s chip market seems to be peaceful.
In 2018, ZTE renewed its twists and turns; the Huawei incident broke out on May 16, 2019, and industrial sentiment was pushed to a climax. Up to now, nearly 147 Chinese-funded companies have been included in the entity list, and many of them are chip companies. As the most upstream technology of the chip industry chain, EDA is a big killer that can “seal the throat with one sword” and become the most useful and efficient one. “Corn neck” tool. As a result, this industry, which is highly monopolized by the Big Three, has only 20,000 employees in the world, and which is not well understood by the niche and the employees’ families, has become popular and has begun to enter the public eye.
Capital immediately seized this opportunity and quickly gathered to EDA. The domestic EDA, which has been struggling in research and development for a long time, has finally waited for their spring. According to friends in the industry, nearly 50 large and small EDA companies have sprung up like mushrooms after a rain, and this does not include those that are secretly accumulating strength and preparing to establish. This narrowly-populated industry has seen unprecedented prosperity.
But there are hidden worries under the prosperous fire. EDA is an industry with a small market but a long technical process. It requires a wide range of software and hardware tools to cooperate to form a tool chain . Take Synopsys, one of the Big Three, as an example, its tool chain that fully covers the entire chip design process is called There are more than 500 kinds. However, domestic EDA companies that “suddenly come in the spring” have only made breakthroughs in “point tools”, and they have only broken through multiple “point tools” when they have done relatively well. Only a few companies have initially formed relatively A complete tool chain, but it is not yet advanced enough. On the whole, the accumulation of domestic EDA technology is very small.
Judging from the financial reports of Synopsys and Cadence among the Big Three, these two companies spend more than 35% of their total revenue on research and development each year, and Synopsys’ research and development investment is even more staggering at the level of billions of dollars. Obviously, R&D funds and technology are the two wheels that an EDA company can operate normally, and neither is indispensable . How should the problem of relatively shallow technology accumulation of domestic EDA companies be broken? Many friends told me that capital is OK, because referring to the development history of the three major international EDA giants is a history of mergers and acquisitions. As long as you have money, you can acquire technology. Then there are two wheels of capital and technology, and the company can move forward. The author is not an investor, nor has I paid close attention to the capital market. I cannot express this right or wrong from the perspective of investment. I just want to share some information with you based on the EDA industry and technology I know for your leisure time. When I discuss, provide some materials.
2. Stones from other mountains-the history of mergers and acquisitions in the development process of the three majors
It is true that the history of EDA is a history of mergers and acquisitions. Even Cadence, one of the Big Three, was formed by the merger of ECAD Systems and SDA Systems in 1988. EDA companies represented by Cadence/Synopsys/Mentor have developed from the 1980s to today (Mentor was acquired by Siemens in November 2016) and indeed experienced a large number of mergers and acquisitions. Some people have counted that in the past 30 years, there have been nearly 300 mergers and acquisitions in the EDA industry, and there have been about 20 mergers and acquisitions in a year at its peak. The author simply counted the mergers and acquisitions of the three major EDA companies. Because of the relationship between space and time, the list is not exhaustive. Even if it is an incomplete statistics, we can see that mergers and acquisitions are an important part of the history of EDA. Figure 1, Figure 2, and Figure 3 respectively show the major mergers and acquisitions of the three major EDA companies and (the merger and acquisition process is based on EDA, and only partially extracts IP and software security companies).
Figure 1: Part of Synopsys’ M&A route
Figure 2: Part of Cadence’s M&A route
Figure 3: Part of Mentor’s M&A route
There are two deep-seated reasons for EDA giants’ mergers and acquisitions. One is to complement their own tool chain through mergers and acquisitions, and the other is to “stamp” potential challengers in the bud. Among the many mergers and acquisitions, there are many cases that have changed the historical trend and industrial structure of EDA. The most classic one is that Synopsys acquired Avanti for US$780 million at the end of 2001. Of course, many people may be more interested in Cadence and Avanti happened in Silicon Valley jungle that field century litigation, but few people will pay particular attention to Synopsys through the acquisition of Avanti, filled in one fell swoop a few words the whole process of integrated circuit EDA needed The team and technology have achieved nearly 40% of the market for chip back-end layout and routing in one fell swoop. It is this acquisition that has changed the traditional “Synopsys accounted for the front end, Cadence accounted for the back end” pattern, allowing Synopsys to complete the layout of the cornerstone technology before entering the post-Moore’s Law era. I don’t know if anyone later asked the CEO of Cadence, who led this incident, how Joe Costello felt. If he acquired Avanti after winning the lawsuit, would history change as a result?
History has no ifs, but at least after Synopsys sued Nassda in 2004, it directly acquired Nassda to understand the lawsuit, leaving no opportunity for Cadence or Mentor. Even though the SPICE emulator family in the Synopsys product list in 2004 was overcrowded, even though Nassda’s technology and team were not so significant to Synopsys, Synopsys still did not hesitate to take Nassda, because they wanted several representatives of Nassda Sexual customers come to expand business. These two examples that happened to Synopsys respectively reflect the two main purposes of mergers and acquisitions: “complement the industry chain” and “eliminate potential competitors in the budding state” , and also strongly prove that mergers and acquisitions play an important role in industrial integration in the EDA industry. ability.
3. Mingzhu secret investment-those unsuccessful M&A cases
However, when carefully reviewing those mergers and acquisitions, there are actually only a handful of cases that can bring glory to the company and realize 1+1>2. There is no doubt that the acquisition of Avanti Speaking in front of Synopsys EDA is the whole history of the most successful with acquisitions. Cadence’s acquisition of Altos in 2011 should also be a good acquisition. It further bundles Cadence’s process with Foundry, which provides a lot of help for the follow-up Cadence’s efforts in advanced technology.
However, throughout history, in addition to glamorous buying and buying, the integration after mergers and acquisitions is mostly just a feather. There are few examples of sound development of technology after mergers and acquisitions, a large part of those who die without disease, and there are many cases of extremely failure. For example, Cadence’s acquisition of Verisity in 2005 is a typical failure case. Cadence hopes to lead the industry in the next generation of high-level languages through this acquisition and reshape the glory of Cadence in front-end verification. From the acquisition of Verisity’s main tool Specman supports E-Language, we know that the company’s ambitions in this field are not small. It believes that E language is a high-level language that is more than one level higher than C language (C and E are separated by a D Woolen cloth). However, it turns out that there is no best language, only the most suitable language, and SystemVerilog eventually becomes the de facto industry standard language. With the dust settled in SystemVerilog, the VCS simulator of Synopsys combined with VMM will be a great success. After Cadence acquired Verisity, the entanglement in the E language was unclear. Not only wasted the acquisition cost, but also lost a huge time cost. To this day, Cadence is still making unyielding efforts to break the monopoly of VMM and working hard to change this fact.
Synopsys’ struggle in the analog field is obvious to all. However, until now, Synopsys’s market share in the analog field is still extremely weak. Even though Spring Soft, which defeated the Cadence Virtuoso platform with Laker’s own power, disappeared after being acquired by Synopsys. Until now, how many people still remember that Synopsys acquired the highly anticipated mask calibration simulation tool Rsoft and the analog EDA tool Ciranova in the 2012 acquisition year? At that time, BDA, which was known as a clear stream in the SPICE simulator industry, played Hspice and Spectre in the single-core era, with almost no failure. However, after being merged into Mentor in 2014, the industry originally thought that Mentor would borrow multi-core parallel computing to make BDA reach a higher level, but the reality is embarrassing.
4. Haste is not reached-the harm of large-scale mergers and acquisitions of Chinese EDA software vendors at this stage
Can EDA’s M&A history in the past 30 years refer to the road to success as a domestic EDA? Perhaps the reasons behind the mergers and acquisitions of the international EDA giants can be given to us by comparing our current industrial environment.
In the previous discussion, we mentioned that international EDA mergers and acquisitions are nothing more than two reasons. One is to obtain technology and teams to complement one’s own tool chain; the other is to obtain markets and customers to prevent potential competitors from growing bigger. Then we can do some analysis and discussion on the current domestic EDA status from these two aspects.
Can Chinese EDA companies buy good technology at this stage?
It should be said that before 2016, we did buy some technology. However, with the deterioration of geopolitics, the western international community has repeatedly tightened export controls. The most recent cross-border acquisition, Fujian Hongxin’s acquisition of the German company Aixtron, was directly stopped by the United States. Obviously, it is more difficult to import technology directly from the world or to buy a company. Any overseas valuable target will introduce great uncertainty due to the political interference of Western society. Although there are nominal channels for applying, the time for approval and possible results will be an unbearable cost for Chinese EDA companies. In this situation, the technologies that can be legally purchased must be those technologies that are considered “insignificant” by Western countries. In the highly concentrated industry of EDA, the value of these “insignificant” peripheral technologies is a very debatable topic. Therefore, in the current industrial environment, if Chinese EDA companies want to rapidly develop themselves through mergers and acquisitions, especially those with European and American backgrounds, they will definitely encounter a dilemma: there is no channel for the fancy target to be acquired, and there is no target that can be acquired. Too much M&A value.
So is it feasible to directly acquire domestic companies? Data shows that the number of employees in the global EDA industry is around 20,000, and there are about 1,500 domestic engineers engaged in EDA software development, most of which are concentrated in the Chinese R&D center of international EDA companies, and less than one-third of the personnel who actually do R&D for local EDA one. In recent years, as the EDA industry has received policy inclination and capital attention, more and more startup companies have poured into this field. However, talents are not a day’s work. More and more emerging companies actually further disperse their already stretched R&D forces objectively, and emerging companies will form “small sampans” instead of “aircraft carriers.” Can the small sampans be tied together to form an “aircraft carrier”? The Battle of Chibi more than 1800 years ago gave the answer.
Are there any customers for the technology purchased by Chinese EDA companies at this stage?
Synopsys always stares at the fourth place in the subdivision field for mergers and acquisitions. Behind it is the customer factor. The acquisition of such a company can bring direct market and revenue. The company launched in 2012, M & A wave , next year’s revenue jumped on the stairs reach $ 2 billion, of which no doubt have a big merger contribution. In addition, the customer is the only truth in the inspection technology. If a technology or product is imported by industrial customers, it means that someone has already evaluated and recognized the maturity of the technology. EDA is an industry highly dependent on technology iteration, not a guest user of technology has no future. Unfortunately, there is no EDA technology and product in China that has gained a good market share.
Do Chinese EDA companies have the ability to integrate M&A technology at this stage?
International EDA giants have the confidence to carry out a large number of industrial mergers and acquisitions. In fact, there is another big reason, and the reason that is most easily overlooked by us, is their strong technology and talent integration capabilities.
After nearly 34 years of development of EDA, Synopsys/Cadence/Mentor has already formed a full-process platform technology. Any new technology has already been developed by their internal team, and products of the same type have been iterated in the market. At the same time, there is a strong platform-based technology foundation and counterpart professional talents. When based on market or technology considerations, after embarking on the acquisition of external companies and teams, they have a mature foundation to integrate mergers and acquisitions. Even if the technology integration fails, they still have mature internal technology storage and similar technology routes, which will not hurt the bones. Do our Chinese EDA companies already have this capability at this stage? I think BGI has the ability to acquire in the field of analog technology, because BGI Jiutian already has a relatively complete analog integrated circuit full-process solution . With the exception of BGI, most of the domestic EDA companies are providers of partial solutions or point tools, and they need to consider their integration capabilities when acquiring them.
5. The light of the right way-a little advice written at the end
Teacher Yuan Lanfeng, a well-known popular science worker, mentioned a word when talking about how to develop integrated circuits in our country in a popular science program-“Go the right way”! The other content of the program will not be repeated in the text, but the author deeply agrees with this concept .
It is impossible to force the “small sampan” into an “aircraft carrier”. Only by developing the “small sampan” into a “destroyer”, a “cruiser” or even an “aircraft carrier” can it be possible to form an “aircraft carrier battle group.”
At this moment, major domestic EDA companies should take the “right path”, work harder to consolidate their internal strength, accelerate their own technology research and development and product development, and promote their own internal construction and growth. Take a quick walk on the “right path”, and don’t expect to copy the “short path.” In the field of hard technology research and development, “short-cut” is often thorny.
The above are some of the author’s immature views, welcome to criticize and discuss.
About the author: Huang Letian, associate professor, School of Electronic Science and Engineering, University of Electronic Science and Technology of China, Ph.D., University of Electronic Science and Technology of China. The main research direction is computer system architecture and system-level chip design. More than 50 high-level papers have been published in high-level journals such as IEEE Transactions on Computers (CCF A-type journals) and top conferences such as CODE+ISSS, FCCM, ASPDAC, ISCAS, etc. , Applied for 11 patents and published 1 academic book. Since participating in the work, he has presided over and participated in national key scientific research projects such as key projects of the National Natural Science Foundation of China, key equipment pre-research projects, major national science and technology projects, national “863” key research projects and other national key scientific research projects. He has won the gold training of Altera Corporation (Intel PSG) division, seventh, eighth, twelfth graduate electronic design large SunYour show instructor, teacher UESTC network and so on. He has successively held academic positions such as the Publicity Chair of ICICM 2016, Session Co-Chair of ISOCC 2016, and Special Session Chair of APCCAS2018.
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