( ESNUG 496 Item 6 ) -------------------------------------------- [12/15/11]
Subject: EDA vendors love consolidation and price hikes from SNPS-LAVA
GREED IS GOOD: A number of EDA vendors really like the idea of a SNPS-LAVA
merger because it ultimately increases the prices EDA users will have to
pay for their IC design tools. For them consolidation, less competition,
and price increases are all good news. "Yay! More money for us!"
"I'd like to hear what you think of this SNPS-LAVA merger. Is it
good news for you? Bad news? Neutral? Why do you think this?"
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I think this is good news. In fact, it should be good news for everyone
in EDA. First of all, cost of EDA software is bound to increase as there
is less competition. Semi-companies who feel outraged will look for start
-ups to provide them with tools. More start-ups will be found which
should create renewed interest for the investors. The cycle continues...
- [ An Anon EDA Vendor ]
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Nobody should be surprised to see further consolidation in EDA. It's the
natural conclusion to EDA vendors getting price beat-downs by users over
time. This is simply part of the healing process for the EDA industry;
and for that, this is a good thing for we in the EDA supplier realm.
Multiple simulators, multiple P&R point tools, multiple synthesis tools,
multiple STA tools.
What will be an Harvard Business Review case-study in the making is how
on earth Synopsys is going to integrate (or not) Magma given the massive
overlap in product lines.
If Magma's products are kept intact and permitted to survive, infighting
amongst Synopsys' multiple internal fiefdoms will ensue. Antibodies will
come out of the woodwork to eradicate any foreign bodies.
On the other hand, if Magma's products are killed off it begs the question
as to why SNPS did this in the first place?
Perhaps Aart recognizes that SNPS is not gaining share naturally, and now
has to buy share?
In any case, let's just say that customers will be praying they don't land
on SNPS Park Place nor SNPS Boardwalk. Rent gets pretty darn expensive
when Aart has multiple hotels involved.
- [ An Anon EDA Vendor ]
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Bad news:
- Fewer jobs in EDA
- Confusion for Magma customers
- If Magma tools are killed, that will be a shame and a waste.
They had a good infrastructure, common db, all tcl driven.
Good news:
- What did Costello say once about too many dogs fighting over
the same bowl of dog food? This could mean that some company
who's been dropping their pricing to capture the deal is out
of play, and EDA customers might not expect the
last-minute-hail-marry-drop-your-shorts pricing. It's unhealthy
for an industry when you have that going on.
- For Cadence and Mentor, good news because Synopsys would be
busy with this collision. It's not a 'good deal' for Synopsys.
Every product Magma has, SNPS also has. What are they buying?
- patent portfolio? (unknown....)
- brilliant people? (why not just HIRE them?)
- customer base? (SNPS is already there where Magma is...)
So net of it all, I think it's a big fat waste of money.
- [ An Anon EDA Vendor ]
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As a EDA developer (former VP of IC Compiler, and BDA's AFS) my
perspective is that in the short term this is good for Synopsys/Magma
customers as they will get the best of breeds. Finesim with rest of
analog platform, and Talus with the rest of Galaxy platform. Finesim
has excellent speed, memory capacity. Talus is better at large data
than IC Compiler, but not as strong in QOR and routing closure. And
now Talus can be combined in low power flows and integration with
Design Compiler and PrimeTime, so the Galaxy flow gets much stronger.
In the longer term there will be less competition which is bad for
innovation overall. I do not see Mentor or Cadence putting enough
pressure on analog and digital flows to keep things moving ahead
quickly. Without strong competition, the rate of innovation will
slow down.
Yet overall this is what the semiconductor customers deserve as they
have used tough negotiation and benchmarking tactics to reduce value
of EDA tools and the natural consequence Magma could no longer stay
independent and satisfy their shareholders. Now Synopsys will have a
strong position in analog and digital, so then maybe the price erosion
will slow down.
- Steve Meier, former VP of IC Compiler, and BDA AFS
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Good for Synopsys, Bad for the users.
Synopsys and Magma have many (if not all) competing products. With a
Magma acquisition, Synopsys effectively kills off one of its key
competitors. Leaving the user with fewer choices - which in this
industry typically leads to vendor complacency, lack of innovation,
and higher prices.
- [ An Anon EDA Vendor ]
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This seems like a defensive move to block Mentor or Ansys from
expanding. Maybe they are blocking Cadence, too.
That's definitely worth $500 million to Synopsys; especially in the
RTL-to-GDSII flow and their image as a technology leader.
1. SNPS can stay #1 in RTL-to-GDSII flow
2. SNPS can pick up a chunk of sales in SPICE/FastSPICE
3. SNPS can finish their AMS suite and chip away faster
in that market as a #2 or #3 player.
Synopsys can do this by killing most of the Magma tools.
- [ An Anon EDA Vendor ]
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I think I've figured out Synopsys' method-to-the-madness in M&A:
1.) Target them
2.) Sue them
3.) Buy them to settle
4.) rinse and repeat.
Extreme-DA, Nassda, Magma have all experienced the death grip of Barney,
the Purple Dinosaur. Who's next? Check your local litigation listings.
- [ An Anon EDA Vendor ]
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My 2 cents is more suppliers, more competition, better for clients since
suppliers work hard in developing their product to make a difference from
their competitor.
As for me personally, I'm so glad that I didn't accept Magma's high paying
sales job for Canada, since now I would be out of a job.... :-)
- Jean Godbout, Canadian Sales Manager of EDA Force, Inc.
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Hey John, was Magma ever profitable?
$500+ million for a company whose 15 minutes was over three years ago?
It seems to me that Synopsys is so far ahead in the EDA space these days
they are buying companies out of sheer boredom. Congrats to Magma.
- [ An Anon EDA Vendor ]
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I own Magma a.k.a LAVA stock and I agree SNPS under paid for this
company. In my approximate calculations, Magma should at least have
went for $10 a share.
- [ An Anon EDA Vendor ]
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Please keep me anon if you are to publish my quote.
This probably indicates SNPS's underlying problems w/ their technologies
and products. But SNPS got LAVA relatively cheap. This merger will
surely put more pressure on other EDA vendors. But it is good for
customers and for EDA industry overall. There simply don't have big
enough of a pie in EDA to support this many established companies.
- [ An Anon EDA Vendor ]
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Probably it is bad because in the short-term we may see more layoffs as
LAVA and SNPS get rid of redundant technology and "problematic" people.
(Let us face it - these layoff decisions are 99% political.)
- [ An Anon EDA Vendor ]
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Finesim is important, but the market is not that big and certainly not
worth paying $500 M for. Synopsys needs to get into analog and M/S but
Finesim in not the only issue. That's a large nut to crack and analog
designers don't move quickly to new tools.
- [ An Anon EDA Vendor ]
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The problem with this merger is the product overlap is HUGE.
1. Synopsys simulation technology is still formidable.
2. Synopsys has a leading RTL-to-GDS solution which is the bulk of
Magma's technology.
3. Synopsys has already invested a lot in analog and M/S solution
and Magma is not bringing many customers in that space plus the
Magma tool is also brand new.
Merger's of this scale are very hard. If Synopsys bullies the Magma
employees, then they get de-motivated and the tools stagnate. If
Synopsys throws away strong internal tools, then they de-motivate
their core group. It is a delicate balancing act.
- [ An Anon EDA Vendor ]
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I think this is a good deal for Magma. Magma had run the course of its
innovative growth phase and it was only a matter of time that it was
acquired by one of the Big Three.
This is good news for Synopsys and the EDA industry as a whole also, as
I think now there will be some consolidation of competing tools with the
better tools surviving.
Also, quite possibly this could make way for newer innovative players to
come to the forefront in the future.
- [ An Anon EDA Vendor ]
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I believe this acquisition is a hinder to the EDA industry. EDA is
becoming smaller and smaller. A RIF is to be expected from the many
SNPS-LAVA overlaps. And in order to feed the big fish, acquistion is
way of increasing that market share.
When are we due for a boom again? Aren't we on the verge of any kind
of breakthrough such that new processes and technologies are to be
leveraged? How small can we go with current technology? Is EDA losing
some of it's businesses to FPGAs?
Looks like I am answering your question with more questions.
- [ An Anon EDA Vendor ]
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