Cadence p.e. buyout would require caution from all parties

I think it is safe to say that all of the world’s top semiconductor companies still do in-house tool development to some extent, and therefore, EDA software companies are beholden to them to assist with new tool development.

With that in mind, I have been wondering about the potential impact to the market, if in fact, the private equity buyout rumors are true about Cadence Design Systems entertaining suitors, especially because two of the p.e. firms named are the very same ones that made deals with NXP and Freescale.

Cadence has been vocal about its close relationship with Freescale, which is what got me thinking. A source confirmed that Cadence is Freescale’s main EDA tool supplier.

Other sources at the Design Automation Conference being held this week in San Diego point out that Cadence would have to be really careful not to alienate its other semiconductor customers, since it might appear that the EDA software supplier is giving competitive advantage to Freescale. And Freescale would have to be cautious with its other EDA tool vendors in the same regard.

All the sources I spoke with were positive about the potential deal and point out that it is about time for a move like this.

The cash-rich EDA leader’s stock is still closing higher than before the rumor surfaced Monday.

What do you think? Would Cadence going private be a good move for the company and the industry?

–Ann Steffora Mutschler, Senior Editor