The other day I had one of those VC weasils call me up asking what I thought
about the future of his specific DFM start-up was.  It was funny.  He had a
built-in assumption in his question.  He was asking what kind of financial
return should he expect from his investment, 3X, 5X, 10X, 20X?

The VC wasn't too happy when I replied: "Are you talking about a positive X
or a negative X?"

Yes, DFM got a LOT of hype at the recent DAC, but the reality is that means
we're in the Death Watch for the bulk of these DFM start-ups.  It's exactly
like watching the Titanic sinking.  In ESNUG 453 we listed 27 companies as
passengers doing DFM, 21 of which were start-ups.  That's waaaaaay too many
companies to keep afloat in this niche; now it's just a question of how are
they going to die.  I see 5 to 7 lifeboats when the fog clears.  The first
4 boats (like what happened when the real Titanic went down) are reserved
for the wealthy Big 4:

   Boat 1: Cadence with Praesegus
   Boat 2: Synopsys with Numerical Tech, HPL, Sigma-C
   Boat 3: Mentor with ?
   Boat 4: Magma with ?

Depending on money and whim, these Big 4 lifeboats can hold even more of
the struggling DFM start-ups.  Not only are they big, these Big 4 boats are
well built and don't sink.

The remaining 1 to 3 lifeboats are single seaters.  That is, they'll only
hold one DFM start-up each.  In addition, they're flimsy, poorly made boats
that could sink at any moment.

   Boat 5 (maybe): PDF Solutions?
   Boat 6 (maybe): ?
   Boat 7 (maybe): ?

Now it's a death watch to see out of: Aprio, ClearShape, Ponte, Brion, 
Pyxis, Takumi, Nannor, Blaze DFM, Prediction, Invarium, Pulsic, SoftJin,
Luminescent, Sagantec, KLA-Tencor, ChipMD, and LogicVision who is going to
be let into one of these lifeboats and who's going to drown.

All I'm saying is that in 18 months these 27 DFM companies are going to be
winnowed down to 5 to 7 working DFM solutions on the market.  Every press
release, every DFM story you see planted in the trade publications, every
behind-the-scenes business deal -- it's all about jockeying to get into
one of these lifeboats and under what terms.  It's not about conquering
the known DFM world, it's about not drowning.

         ----    ----    ----    ----    ----    ----   ----

From: [ An Anon EDA Employee ]

Hi, John,

I'm sure you know by now that KLA-Tencor is not a DFM company and has a
market CAP of $8.73 billion?  Big as the Titanic but much more sea worthy.
Funny just the same!

As for the DFM floaters: Predictions Software has production customers and
profits, so take them off your death list.  Pulsic is a P&R company so they
are off.  Sagantec has a solid chip migration business, Brion has traction
with the fabs, and that's about it.

I'll wager you $5 that Ponte will be the first to drown.  After burning
through $10m+, having no production customers, and being turned down after
due diligence by the funding VC's, Synopsys and Mentor, where can they go?

Anon of course...... Protect me from the lawyers please!

    - [ An Anon EDA Employee ]

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From: John Cooley <jcooley=user domain=zeroskew hot gone>

Hi, Anon,

I think you misunderstood how I see this.  When I talk about DFM start-ups
here, I'm talking about the DFM activity that the company is doing.  I'm not
stupid.  I know KLA-Tencor is a multi-billion dollar monster; but what I'm
thinking of is its internal DFM R&D.  The same with tiny Pulsic P&R and
good olde Sagantec chip migration.  I'm talking about their separate DFM
work -- all 3 (plus the 19 other DFM start-ups I listed) are in an ugly sink
or swim situation because the Big 4 are going to do their damnedest to pimp
their own DFM solutions to the fabs and design community.  Once the Big 4
own the DFM space, KLA-Tencor/Pulsic/Sagantec et al will have to defer to
those widely used DFM solutions vs. stupidly dumping money in doing duplicate
homegrown DFM work.  Pulsic will refocus back into P&R, Sagantec will refocus
back into chip migration.  And to be honest, my gut says KLA-Tencor won't be
quiting the yield game (because it's central to their multi-billion dollar
process business) so it's much more likely they'll just become an overly
ballyhooed "DFM technology partner" with one or more of the Big 4.  So, yea,
you're right; KLA-Tencor is an exception in my list that won't be dying any
time soon, but I still stand by my prediction that most of those 19 other
DFM start-ups will either be dead or absorbed within the next 18 months.

I have no idea how Predictions Software is really doing.  I have yet to hear
of one hands-on user confirming your report of their supposed profitability
(or even their customer use for that matter!)  Brion is in the same boat;
lots of press releases from their marketing department, but no customers on
the side independently confirming Brion's supposed "traction" in the fabs.

Concerning Ponte, according to Mike Santarini, you got the rumor wrong.  In
his blog, Mike says that Ponte was the one who turned down Mentor; not the
other way around!  "She didn't break up with me; I broke up with her!"  :)

    - John Cooley
      ESNUG/DeepChip.com                         Holliston, MA

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From: [ An Anon EDA Employee ]

Hi, John,

Well, Santarini and I are both right.  Mentor low-balled Ponte and Ponte
declined.  The technology was just not there but the noise Ponte is making
is bothersome so it was worth $X to shut them up.  The competitive info
Mentor got in the process was gravey.

    - [ An Anon EDA Employee ]

         ----    ----    ----    ----    ----    ----   ----

From: John Cooley <jcooley=user domain=zeroskew hot gone>

Hi, Anon,

I just noticed that yesterday Anchor Semiconductor got $7.2 million in VC
funding.  I forgot to put them in my list of 27 (make that now 28) companies
doing DFM in ESNUG 453.  So, in your opinion, what's the real Anchor story?
What do they do?  How does it differ from the 27 other DFM approaches?  Who
are Anchor's biggest rivals?  Does Anchor have any real customers or just
tire kickers playing with their tool?  Who?  Do you think their new VCs will
see a return on their $7.2 M or were they snookered into the DFM craze?

    - John Cooley
      ESNUG/DeepChip.com                         Holliston, MA

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From: [ A Second Anon EDA Employee ]

Hi, John,

I hear quite a bit of rumor, BS, and some truth is intermingled.  Please
keep me anon, too.

Anchor does have some real customers (TSMC/UMC/SMIC) but it is for their
NanoScope PRV product, an inspection tool.  Their DFM Litho Hot Spot tool
is very slow and of little value.  For DFM, they compete with Mentor,
Synopsys, Brion, and Aprio.

Anchor is backed by a very rich Chinese guy who likes to play at EDA.  The
new money is from him and friends because DFM is vely vely HOT!  For my
money, I give Anchor slim or no chance of acquisition or success.

    - [ A Second Anon EDA Employee ]

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From: John Cooley <jcooley=user domain=zeroskew hot gone>

Hi, Second Anon,

Thanks for joining in the discussion.  I also got a phone call from a 3rd
person who said Anchor will probably be bought out by KLA-Tencor eventually,
but that's just from one source.  If this rumor's true, the rich Chinese guy
who invested in Anchor will become even richer.  Tencor has deep pockets.

One guy says Anchor has no chance of success, while a different guy says
they'll be a hot acquisition target.  Funny how that works!  :)

    - John Cooley
      ESNUG/DeepChip.com                         Holliston, MA