Apache Design Solutions announced on September 8th it has acquired “the assets, IP, and foreign subsidiaries” of Sequence Design. The terms of the deal were not disclosed, but at least one personnel issue was:

Per the Press Release: “Sequence operations will be integrated under Apache’s global R&D, sales, support and marketing functions. Vic Kulkarni, President and CEO of Sequence, will assume the role of Senior Vice President and General Manager of RTL Business Unit in Apache.”

I had a chance to speak by phone with Andrew Yang, Co-Founder and CEO at Apache, and Vic Kulkarni on the day the acquisition was announced. Not surprisingly, both men were extremely upbeat about their news.

Vic Kulkarni started by saying that he leaves shortly for a lengthy trip to Korea, Japan, and India in order to meet face-to-face with the Sequence teams in those locations “We’ve [already] had several conference call with managers and employees over the last several weeks, but I’m leaving shortly for Korea, Japan, and India to meet with [the people in those locations face-to-face].

“Additionally, we’ve sent emails to our key customers, executives, and friends around the world, [plus] met in person with several key customers over the last 10 days [to explain the news]. Everybody is very excited about the news, and the fact that something good is happening in the EDA world. The results will provide benefit to everyone involved.”

Andrew Yang then detailed Apache‘s market niche and why the Sequence acquisition enhances that position: “Apache is 100-percent focused on power and noise. We’re the exclusive EDA company focused in this area. Our niche is growing and becoming more important, not just through our product strength, but through the financial strength of Apache which is helping us to grow this important segment of the market.”

Yang said that the three Apache platforms for power optimization and analysis, RedHawk for physical design, Totem for IP and memory, and Sentinel, based on the Apache acquisition of Optimal several years ago, for packaging and PCB analysis will benefit by adding the Sequence product for RTL power analysis and optimization including PowerTheater, PowerArtist, Cool Products and Columbus will continue to be supported by Apache.

Per Yang, “With less than 20-percent product overlap, this acquisition now allows Apache to stay with the customer from the earliest stages of RTL design, all the way to physical-level sign off, plus a continued strong focus in the PCB and package power analysis and optimization. This last is important because today, the selection of the package and the PCB are an important part of cost control, and are clearly dependent on chip power.

“Power reduction, power analysis, and power delivery network signoff, PCB and package selection -- the many aspects of power all need to be addressed in [converging] on the power solution. If the analysis of the chips is done without [taking into consideration] the board and the package, [the analysis is incomplete].

That’s why our acquisition of the Sequence technology and the addition of their RTL solution will help to complete our flow. Prior to this, we were not playing in the RTL domain, but now we will be serving that market as well. We are now clearly the market leader in the power analysis and optimization space.”

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Next big player in EDA?

Based on this, does Yang believe Apache is set to become the next big player in EDA?

He replied, “We’ll let the market decide. We definitely do not want to be cornered as a single-product company, ready to be acquired, which has been the traditional [exit] in EDA. Instead, we are actively expanding because of our financial strength, which has [been maintained] even in the downturn. However, only the market can dictate how strong our play can be in EDA.

“Like you, we are hearing that consolidation is happening with our customers. We certainly want to be the single vendor for our customers in the power and optimization areas, and we want to do it in such a way that we can provide our customers with an integrated solution and consistent flow from RTL to GDS II, but the only benefit was want to [provide] is to the customers.”

As a result, Yang said, Apache’s focus will remain on the customer, not on the company’s position vis-à-vis the other major players in EDA.

He said, “At the front end, we will continue to invest with the Sequence strategy, more R&D and focus on RTL power reduction. At the back end, we’ll leverage the information we get out of the RTL, and carry it downstream to the physical implementation, to further differentiate our RedHawk product from the competitors. This way we have even more pass-through for the integrated flow.”

Kulkarni added, “This is one of the unique things about [combining] the technologies. To my knowledge, we’ll be the first EDA vendor to bring the RTL power to the backend dynamic power tools, and all the way to the chip package and system. This is why this acquisition makes sense, especially as our customers go to 65 nanometers and below. Front-end design planning will now have deep impact on the backend flow. We will be [realizing] our vision to bring the front end and the back end together.

And why did Apache need to acquire Sequence to affect this integration? Why couldn’t it just happen through cooperation between the two companies in working with common customers?

Kulkarni said, “In some places, our customers were already using this flow and the handoff was no problem. But the integrated flow will tighten up the [process]. Like the whack-a-mole problem, where you fix power and signal integrity problems arise, you whack signal integrity and the noise goes haywire.

“With the [new integrated company and flow], we’re going to bring the whole solution to the customers. Timing, signal integrative, and power together require a tighter integration and technology agreement, not to mention the strategic value in a merger.

Yang added a clarification: “We will not be distracted by areas outside of [our current focus] such as place and route, or timing. We will continue to be 100-percent focused on the power area. That is the area where we will continue to demonstrate our strength through our technology and our financial performance. We’ll continue to move forward in a steady way, and expect to grow into an even more important player in the EDA market.

“We’ve been profitable now for many, many years and our financial model, including that of the combined company, continues to [predict] growth. Product-wise, we want to be well diversified and to provide a wide range of solutions in power and noise. In terms of customers, our focus has always been on the top-tier. With the acquisition of Sequence, we’ll have close to 95-percent customer penetration in the top tier. That’s what we call channel. It’s not just measured by the number of sales people on the street, by the penetration into tier one customers.”

Yang chuckled and referenced the closing slide on the Power Point presentation that had accompanied our conversation. It included a quote from Victor Hugo:

Nothing is so powerful as an idea whose time has come.

Yang suggested an ancient Chinese philosopher offered an even more relevant idea: “Thousands of years ago, Mozi said, More than timing and strategy, it is the people who are powerful.

Yang said it’s the power of the combined human resources of Apache and Sequence which guarantees the continued growth and increased market share of the company: “That’s the real power of our news today, the people.”

September 9, 2009

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