Change was in the air in EDA even before the momentous Cadence/Mentor M&A news broke this week, with the news in May of something potentially even more momentous.

On May 27th, Taiwan’s SpringSoft announced a merger with San Jose’s Novas Software and the acquisition of Silicon Canvas, Nanovata, Fortelink, and Novaflow. To some, "merger" and "acquisition" are relative terms in this context, because SpringSoft was itself the entity that founded Novas, Novaflow, and Silicon Canvas in 1997, 2000, and 2001, respectively.

Be that as it may, the newly created SpringSoft, circa 2008, now describes itself as "the largest EDA company in Asia and the first to be publicly traded [there]." And why is this momentous news? Best to answer that question with a question.

True or False? The epicenter of the EDA industry is in Silicon Valley.

Given the news of May 27th, the answer to that question is distinctly, False. In my opinion, the epicenter of the EDA industry is moving steadily to Asia. SpringSoft stands ready and able to prove that’s the case.

Let’s look closely at the evidence:

1)   SpringSoft is claiming two corporate headquarters, one in Hsinchu and one in San Jose. Yet, the org chart for the company clearly indicates the CEO, COO, and CFO are all based out of Taiwan. This set-up looks to my untrained eye more like the headquarters are in Taiwan and a regionally-based administrative team is in Silicon Valley, despite any wording to the contrary in the SpringSoft marketing materials.

2)   There’s no ramp-up involved, relatively speaking, for the newly aggregated SpringSoft. Novas is a known player, with established debug technology. Silicon Canvas is also well known, with established layout technology. Hence, the channels for both product lines are in place – the teams essentially familiar with each other and the respective portfolios, and SpringSoft hits the ground running in Asia, in North America, Europe and Japan. Meanwhile, Novaflow becomes SpringSoft KK and capitalizes on efficient direct sales in Japan.

3)   Most EDA R&D is no longer centered in North America. Cadence, alone, has over 800 developers in India. Similarly, SpringSoft has R&D in Taiwan, China, and the U.S.

4)   Of even greater importance, designers are coming online in ferociously huge numbers in geographies outside of North America, particularly in Asia and India. And they’re not just working on low-level designs at older process technologies, but cutting edge-designs at the foundation of the quick-to-morph consumer electronics industry. Of course, consumers of those electronic products are coming online in Asia and India in ferocious numbers, as well. An EDA company based in Asia is closer to the action.

5)   Per SpringSoft’s published information, the company now has 400+employees in Asia, North America, the Middle East, and Europe, a market cap of $200+ million, and 400+ customers. Contrast those stats with info for the Big Four in EDA (per Yahoo Financials, as of June 18, 2008), and you’ll see that SpringSoft is hot on their heels.

* Synopsys
5300 employees
Market cap, $3.54 billion
Revenues in the range of $1.3 billion

* Cadence Design Systems
5300 employees
Market cap, $ 2.8 billion
Revenues in the range of $1.54 billion

* Mentor Graphics
4300 employees
Market cap, $1.38 billion
Revenues in the range of $870 million

* Magma Design Automaton
850 employees
Market cap, $304 million
Revenues in the range of $215 million

If Cadence swallows Mentor Graphics, that will leave SpringSoft and Magma duking it out for the Number 3 spot – not a bad situation for a company that few thought of 6 months ago as a significant "presence" in the EDA industry.

So, there you’ve got it.

SpringSoft is already large enough to claim the No. 5 spot in the EDA pantheon, and very possibly the No. 4 or even the No. 3 spot depending on how things develop over the next 18 months, or so.

SpringSoft is not the result of the merger and/or acquisition of disparate entities, but the re-aggregation of existing pieces launched separately. The pieces now walk in lock step, share a single global channel, and pursue an integrated corporate vision.

Finally, SpringSoft is an Asia-based company, close to the customers and close to the customers’ customers. I don’t care how often people invoke "globalspeak" to prove it’s an international economy, a flat world, or a place where borders no longer matter – being an Asia-based company in this industry will be the single, most important differentiating factor for any successful EDA company in the emerging era.

Look at SpringSoft. See the future of the industry.

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Copyright (c) 2008, Peggy Aycinena. All rights reserved.