EDA software is a small but powerful part of the semiconductor supply chain, and is largely controlled by three Western companies. That gives the US a powerful leverage point, similar to how it last month sought to restrict access to lithography machines – another key tool for chip production. So how did the industry become so America-centric, and why can’t China just develop its own alternative software?
What is EDA?
Electronic design automation (also known as electronic computer-aided design or ECAD) is specialized software used in chip manufacturing. It’s like CAD software used by architects, except it’s more sophisticated, dealing with billions of tiny transistors on an integrated circuit.
There is no single dominant software program that represents the best in the industry. Instead, a series of software modules are often used throughout the design flow: logic design, debugging, component placement, wire routing, time and power optimization, verification, and more. Because modern chips are so complex, each step requires a different software tool.
How important is EDA to chip manufacturing?
Although the global EDA market was appreciated to only about 10 billion dollars 2021, which makes it a small part 595 billion dollars semiconductor market, it is of unique importance for the entire supply chain.
The semiconductor ecosystem today can be viewed as a triangle, says Mike Demler, a consultant with more than 40 years in the chip design and EDA industry. On one corner are foundries or chipmakers such as TSMC; on the other corner are intellectual property companies like ARM, which manufacture and sell reusable design units or layouts; and on the third corner are EDA tools. All three together ensure that the supply chain runs smoothly.
From the name it may sound like EDA tools are only important to chip design firms, but they are also used by chip manufacturers to verify that a design is feasible before production. There is no way for a foundry to make a single chip as a prototype; it has to invest months of time and production, and each time hundreds of chips are produced on the same semiconductor base. It would be a huge loss if they were found to have design flaws. Therefore, manufacturers rely on a special type of EDA tool to perform their own validation.
What are the leading companies in the EDA industry?
There are only a handful of companies that sell software for every step of the chip manufacturing process and have dominated this market for decades. The three largest companies – Cadence (US), Synopsys (US) and Mentor Graphics (US but acquired by the German company Siemens in 2017) – control about 70% of the global EDA market. Their dominance is so strong that many EDA startups specialize in one niche use and then sell to one of these three companies, further cementing the oligopoly.
What is the US government doing to limit EDA exports to China?
The enormous influence of US companies in the EDA industry makes it easier for the US government to reduce access to China. In his latest announcement, he promised to add certain EDA tools to his list of technologies banned from export. The US will coordinate with 41 other countries, including Germany, to implement these restrictions.