EDA software is a small but powerful part of the semiconductor supply chain and is primarily controlled by three Western companies. This gives the United States a powerful point of leverage, similar to the way it sought to restrict access to lithography machines, another crucial tool for chipmaking, last month. So how did the industry become so US-centric, and why can’t China develop its own alternative software?
What is EDA?
Electronic design automation (also known as electronic computer-aided design or ECAD) is the specialized software used in chip manufacturing. It’s like the CAD software that architects use, except it’s more sophisticated, dealing with billions of tiny transistors on an integrated circuit.
There is no dominant software program that represents the best in the industry. Instead, a number of software modules are often used throughout the entire design flow: logic design, debugging, component placement, cable routing, time and power optimization, verification, and more. . Because today’s chips are so complex, each step requires a different software tool.
How important is EDA to chip manufacturing?
Although the global EDA market was valued at only around $10 billion by 2021, making it a tiny fraction of the $595 billion semiconductor market, it is of unique importance to the entire supply chain of supply
The semiconductor ecosystem today can be seen as a triangle, says Mike Demler, a consultant with more than 40 years in the chip design and EDA industry. In one corner are foundries, or chip manufacturers like TSMC; in another corner are intellectual property companies like ARM, which manufacture and sell reusable design units or mockups; and in the third corner are the EDA tools. All three together ensure that the supply chain moves smoothly.
From the name, it might seem like EDA tools are only important for chip design companies, but they are also used by chipmakers to verify that a design is feasible before production. There is no way a foundry can make a single chip as a prototype; it has to invest in months of time and production, and every time hundreds of chips are made on the same semiconductor base. It would be a huge waste if it came across design flaws. Therefore, manufacturers rely on a special type of EDA tool to do their own validation.
Who are the leading companies in the EDA sector?
There are only a few companies that sell software for every step of the chip manufacturing process, and they have dominated this market for decades. The top three companies—Cadence (American), Synopsys (American) and Mentor Graphics (American but acquired by German company Siemens in 2017)—control about 70% of the global EDA market. Their dominance is so strong that many EDA startups specialize in a niche use and then sell to one of these three companies, further cementing the oligopoly.
What is the US government doing to restrict EDA exports to China?
The outsized influence of US companies in the EDA industry makes it easy for the US government to restrict China’s access. In its latest announcement, it pledged to add certain EDA tools to its list of banned technologies. The US will coordinate with 41 other countries, including Germany, to implement these restrictions.