( ESNUG 425 Item 1 ) -------------------------------------------- [03/24/04]
Subject: ( ESNUG 423 #1 ) Aart on Paying $430 Million for MoSys
> What justifies paying $430 m for a company with a revenue stream of
> around $16 m (MoSys)?
From: [ Aart de Geus, CEO of Synopsys ]
Hi, John,
The price was actually around $350 M, once you take into account the cash
that MoSys has. We believe this was a fair value for the very unique,
differentiated technology and excellent team that MoSys brings
to Synopsys. The MoSys embedded memories complete our DesignWare IP
portfolio strategy and enable us to provide all the on-chip IP
infrastructure to our customers.
As embedded memory content continues to grow, fast, low-power, low-area
memory has become incredibly important to designers and manufacturers of
complex SoCs. It will continue to grow in importance over the next 10
years. Consumer and multimedia convergence applications, which are
driving the current semiconductor turnaround, demand even more memory
with lower cost and lower power. Today, the average complex SoC
consists of approximately 50% memory (by area). ITRS predicts that this
will grow to over 90% by 2011. This means that memory will have a
dominant impact on chip cost, area, power, and yield.
MoSys' patented 1T-SRAM technology provides significant savings in all
four areas: cost, area, power, and yield. The savings in area is
approximately 50%-80% over traditional (6-transistor or "6T") SRAM
technologies. These MoSys technology advantages translate into cost
savings of up to 35% in area for a typical SoC today, growing to 45%
in 2011.
MoSys achieved about $19 M in revenue in FY03 -- all with a very small
sales force and no other IP. Many potential customers were reluctant to
do business around such a crucial technology with what they perceived
to be a fairly small company. The combination of MoSys' technology and
Synopsys' sales/distribution/support channel, plus links to our
DesignWare IP portfolio, should provide the ability to deliver great
value to our customers and translate into significant sales for
Synopsys.
> Has Aart been infected by the acquisition bug? Avanti, inSilicon, MoSys
> etc? Does Synopsys still do internal development?
About 25% of our revenue is invested in R&D -- a very high percentage
compared to any company our size! So we are clearly heavily investing
in internal development. Just a few examples of recent technology that
was internally developed are Magellan, the next-generation constraint
solver technology in Vera, the assertion technologies in VCS, a major
set of signal integrity-related capabilities in PrimeTime, BIST for
logic circuitry in test, and many other continuous improvements across
the board, including Design Compiler, Physical Compiler, and Astro, just
to name a few.
Our strategy is to grow both through internal development and through
acquisitions, as appropriate to our expertise, what's available, and
what makes the most business sense. When we execute acquisitions, we
invariably follow requests, suggestions, and hints from our customers as
they see their needs evolve. The recent M&A work around design IP, for
example, is a direct result of our customers' asking us to broaden our
IP portfolio and provide them with a larger collection of building
blocks that they can trust (from a verification point of view) and can
buy under the same contractual umbrella that they already have with us.
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