Mergers and acquisitions for 2013

-January 18, 2013

Last year, the big prediction came from Mike Gianfagna Vice President of Marketing Atrenta who expected “TSMC will buy Synopsys and spin out everything above logic synthesis, forming New Company No. 1. Not to be left out, GlobalFoundries will acquire Cadence and do the same thing. Now we have New Company No. 2.” The rest would basically become EDA Company No. 3. But then during the year, Synopsys surprised everyone buying Springsoft, EVE, Ciranova, RSoft, MoSys, Magma, Luminescent Technologies, Inventure and ExpertIO. Notice that these were not all small acquisitions with I believe the number 4, 5 and 6 companies in terms of revenue being acquired by number 1.

So what can we look forward to in 2013? I asked many people in the industry that question and the full list of responses can be found here.  As to be expected, many of them are a linear projection of where things appear to be heading, but there are also some big predictions as well as some useful ones.

Let’s start big. Brad Quinton - chief architect, Tektronix says “The big 3 EDA players will be reduced to 2, one way or another.” Most people tend to assume that it will Mentor that would be the one being acquired given that it has been tried in the past (by Cadence) or split up (as tried by Carl Icahn) and predicted by me in the past, somewhat along the lines of Mike Gianfagna where TSMC would buy Caliber from them.

This year Mike is a lot more placid with his primary comment being “There are too many EDA companies with a product and no sales force.” He does however predict the exact opposite of what Jasper CEO Kathryn Kranen told me in an interview some time back. She said that acquisitions would get larger because it was easier for the EDA companies to assimilate them, but Mike thinks that the exits will be smaller. On the other hand Andreas Veneris - Chief Executive Officer, Vennsa Technologies, thinks that 2013 will be a tough year and that “The EDA market will take its time to “digest” the recent escalation of mergers before the next move.” Brett Cline - VP of Marketing and Sales, Forte Design Systems thinks that another large player will emerge, presumably by the integration of several small and mid-sized companies.

One part of last year prediction continues to follow through into this year in that more vertical integration is foreseen. Lip Bu Tan – CEO, Cadence says that “One trend that will accelerate is the return of the fully integrated OEM. This is illustrated by companies like Apple and Google who are taking control of their own hardware design and manufacturing to ensure fast innovation, IP security, supply chain efficiencies, and economic value.”

Others talk about the growing problems with IP integration and the need for higher levels of collaboration within the team to help ensure product success. The other continuing theme is that EDA companies must continue to follow the trends of the industry with the needs of emerging market segments and demands from things such as mobile and the Internet of Things.

Brian Bailey – keeping you covered

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