The question on the table: Part II Is there significant EDA tools development going on in China and/or India?
[Editor’s Note: This article is a continuation of two-part series begun last week in EDA Confidential. The first article available in the Archived Articles section.]
In the week after DAC, I was able to converse by phone with SoftJin CEO Nachiket Urdhwareshe, and Sales and Marketing Manager Kamal Aggarwal. The two of them were spending the week after DAC in Silicon Valley before flying home to Bangalore, so happily we were in the same time zone when we spoke on June 18th. The following summarizes their comments regarding the question on the table. Q: We’re being told that there’s no significant EDA tools development going on in India, yet this is what you do. Please explain your business model. "Our business model is to undertake outsourced EDA R&D for in-house CAD teams in semiconductor companies, as well as for EDA product companies. We differentiate ourselves by offering these services across the design flow. We have approximately 40 EDA engineers in our development center in Bangalore, while our customers are in India, Japan, and the U.S. Basically, we do EDA development for companies who use EDA tools" Q: If you’re developing EDA tools, do you have access to an adequate tools development talent pool in India? "There’s a lot of technical capability in Bangalore, just a whole lot of available engineering talent in that city. We’ve never had any trouble finding people in Bangalore for EDA tools development with the right backgrounds in both electrical engineering and computer science - and also in terms of the right level of experience in software development. Fundamentally, we believe an EDA developer needs to bring good computer science knowledge to the work, and then we build on that." "There’s a great deal of technical momentum in Bangalore today. There’s also [opportunity] in Hyderabad and areas around New Dehli - those would be our next best choice [for looking for talent] in India after Bangalore. Of course, we also need to have a presence here in Silicon Valley, so we have a sales office here and a development manager based out of Santa Clara. But as far as tools development is concerned, we’re doing just fine with respect to having all of our engineers in Bangalore." Q: Where are your customers? "We’re now seeing a significant amount of design engineering done in India - in particular, in Bangalore. There are large companies at work there - companies like TI and Intel - which are in turn spawning off design services companies. So, we’re certainly seeing a growing market in Bangalore for our design tool services." "However, with respect to the kind of R&D resources that we’re offering, we still need to target the key design markets in the U.S. and Japan. In Japan, it’s really the semiconductor companies we’re interfacing with - the larger ones that have wide-spread tool developer groups in-house." Q: Do you have potential advantages selling into design houses in India because you’re an Indian-based operation? "Yes, it is an advantage to us that we are based in India. But companies like TI and Intel are international companies, which happen to have operations in India. To those types of companies, our being in India is not necessarily an advantage." "However, we also always need to stay focused on what would be our largest market. And for right now, that is Japan and the U.S. The European market is certainly one we are interested in, but as yet we don’t have the bandwidth to look there." Q: Do you approach customers differently in different geographies? "Well, in Japan we definitely need to be very sensitive to Japanese business practices and the manner in which the sales process is carried out there. When pursuing business in Taiwan, we are equally sensitive to local business customs there. Of course, we have to be sensitive to those things in the U.S. as well [when we pursue sales in North America]. Certainly in the Indian market in terms of targeting large companies there, the process is similar to what we have to follow when targeting customers in the U.S. because there is a great similarity in behavior between those two locations [in terms of business practices]." "Beyond that - beyond the extent to which we have to be sensitive to local cultures and practices - we don’t see any real fundamental differences between any of these geographies in dealing with our customers." Q: Are you targeting potential customers in China? "Not in the near future, but we are thinking about how to approach that market. We’re essentially looking at the market to see the extent of internal tools activity and trying to gauge [the value of approaching that market]. We certainly are examining the profile of the EDA companies selling into that market [to help determine when we might consider approaching the Chinese market]." Q: From your vantage point, what’s the current ratio of in-house tools use to third-party tools use for your customers? "Even for us, that’s a tough thing to measure. If we wanted to be conservative, we’d say that there’s more than a billion dollars, probably closer to 2 billion dollars worth of internal EDA tools in use today. That works out to be about 50 percent of the CAD tools in these big semiconductor companies being in-house tools, and 50 percent being third-party tools." "When we come into a customer’s site, we’re brought in to fill in gaps in the tools that they already have. Our target customers are the more sophisticated tool users, and we come in to either customize their existing tools - whether third-part tools or in-house tools - or to help them develop new tools specific to their current project. We are [essentially] developing custom tools on-site to be used as the project requirements dictate." "For example, right now we’re working with a Japanese company on a new technology for developing silicon. That customer is looking for tools that are not at all available yet from third-party vendors [to help in that process]. This is the type of case where what we’re doing is very specific to the customer or the technology." Q: After completing such a project, are you inclined to commercialize the tools you’ve developed for that specific case? "In fact, many times customers work with us specifically because they know we won’t attempt to productize [something we’ve helped them develop]. It’s part of the appeal of what we offer." "Right now, the solutions we’re developing are too project specific to be commercialized. And, of course, we have non-disclosure agreements that we honor for all of our customers, but if at some point any one of our customers were to see our solutions to be strategically beneficial commercialized, maybe then we would move to position our solutions as products."Q: How do you differentiate your business model with respect to design services versus product development? "Those are definitely two different business models. Right now, we’re really focusing on our services, but we’re not really providing design services. We’re providing tools development services. We’re very strong in tools for logic design, as well as point tools development for the physical flow and masks. When we go into a customer, we try to be very clear in sorting out where their real tool gaps are and provide services to help bridge those gaps." "Our customers are very aware of where their existing design tools are insufficient. We use our own knowledge, and we continue to build on that knowledge, to make a judgement as how to assist our customers [in enhancing their tool flow]." Q: So, at this point are you a product or a services company? "There’s always a dilemma for a company like ours whether to position ourselves as a services or a product company. If you’re not careful in this positioning, you end up positioning yourself [inadvertently] as a competitor to your customers." "We believe we have a fairly unique business model here, and we certainly don’t see a category like ours on the Dataquest landscape of EDA companies. [Laughing] So without being on the landscape poster, we don’t really know how to categorize ourselves." Q: The large EDA companies are quite confident, per reports, that there is little by way of EDA tools development going on outside of the traditional geographies. Do you think they’re aware of your business model or that you’re offering services and custom product development that competes with some of their offerings? "Certainly the big EDA companies are aware that some of our customers have specific requirements that the products of those EDA companies do not address. But, for various reasons, those large EDA vendors are not willing to service those customers’ requirements. Perhaps they believe the economics of servicing requirements specific [to one customer or another] do not service their own business model. It comes down to a question for the EDA vendors [as to whether or not] they are willing to work outside of their mainstream markets where they sell products in large volumes - if they would be willing to cater to real cutting-edge, leading-edge customers." Q: How would you advise the large EDA companies based on what you’re seeing with your own customers? "We’re definitely too small at this point to be advising the large EDA companies, but we think they might want to look seriously at the new technologies that are coming out of some of the semiconductor companies. If some of those technologies were to succeed commercially, the large EDA companies would be losing a great deal of market share [because they are not prepared to serve those customers]. Right now, the large EDA vendors might tell us that those customer requirements are too specific, too unique to each customer, but you never know when a market [for tools to support those technologies] might emerge. There’s a growing need for tools specific to a particular problem, problems that exceed the abilities of generalized tool solutions." Q: Returning to the question on the table, are we going to see the emergence of third-party EDA tools providers based in India? "Definitely. As the market demand in India grows for design tools, you will definitely be seeing EDA product companies emerging in India. It’s already happening today."
Further reading in EDA Confidential The use of third-party EDA tools in Taiwan and the PRC is discussed at length in an article based on comments from Dataquest’s Nancy Wu. That article was initially posted on March 24, 2003 in EDA Weekly. An edited version is now available in the archives for EDA Confidential. Additionally, the question of off-shore/outsourcing is addressed in a lengthy set of comments included in an article now available in the EDA Confidential archives. Initially, that article was posted in EDA Weekly on November 10, 2003. The article includes comments from Mentor Graphics’ Wally Rhines, QualCore Logic’s Mahendra Jain, Monterey Design Systems’ Jacques Benkoski, Aptix Corp.’s Charles Miller, Magma Design Automation’s Rajeev Madhavan, Giga Scale IC’s George Janac, Comit Systems’ Niladri Roy, Nassda’s Sang Wang, Cadence Design Systems’ Jaswinder Ahuja, and InTime Software’s Robert Smith.
June 30, 2004 Peggy Aycinena owns and operates EDA Confidential. She can be reached at peggy@aycinena.com
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