Semiconductor Insiders - Podcast EP327: Third Quarter 2025 Electronic Design Market Data Report Overview and More with Dr. Walden Rhines

Episode Date: January 16, 2026

Daniel is joined by Wally Rhines, CEO of Silvaco, about the Electronic Design Market Data report that was just released. Wally is the industry coordinator for the EDA data collection program called EDMD. SEMI and the Electronic System Design Alliance collect data from almost all of the electronic design automation companies … Read More

Hello, my name is Daniel Nenny, founder of semi-wiki, the open forum for semiconductor professionals. Welcome to the Semiconductor Insiders podcast series. Today we're talking with Wally Rinds, CEO of Savaco, about the electronic design market data report that was just released. Wally is the industry coordinator for the EDA data collection program called EDMD. Semi and the Electronic Systems Design Alliance collect data from most of the electronic design automation companies in the world. and compile it by product category and the region of the world where the sales occurred. It's the most reliable data for the EDA industry and provides insight into what design tools and IP are in the highest demand around the world. Thanks for joining us again, Wally.

Thank you, Dan. Glad to be here. So Wally, what do the results say for the third quarter of 2025? Dan, the third quarter of 2025 was another good quarter for EDA. at an 8.8% overall growth compared to last year. Total revenue was $5.6 billion. So we're now solidly over the $20 billion annual run rate for the EDA industry, a remarkable growth over the last decade. The last four-quarter moving average is a 10.4% growth,

reflecting the continuing demand for EDA software and IP to fuel the large number of chip and system designs in progress. Well, that's good. It ties in strong with the reported numbers we're seeing from the publicly reported EDA companies, for sure. Yes, yes, it does. We saw increases in all EDA product categories with semiconductor IP and services actually showing double digit gains. And which regions of the world showed the most strength in Q3 2025? 2025. Well, geographic regions, including the Americas, Europe, Middle East, and the Asia Pacific,

all reported growth in the third quarter with double-digit growth in Asia Pacific. Only Japan failed to show overall growth, although if you exclude IP, Japan actually grew in EDA purchases by about 9.5%. Growth numbers for the regions compared to the same quarter a year ago, where North America growing 3.4%, Europe, 4.6%, and Asia Pacific at 20.5%, and then Japan at minus 11.5%. Interesting. It looks like we may be returning to our previous trend of APAC leading the growth for EDA around the world. You know, recent quarters have shown stronger growth for North America and weaker growth for Asia Pacific because of China. So what's going on?

Are things changing back to the market trends of a few years ago? Well, I wouldn't jump to any conclusions based upon one quarter of data. It's true that China is back in growth mode, at least for one quarter. But the APAC strength also comes from growth in Korea and Taiwan, whose EDA purchases are now increasing, and each of them has more than half the level of purchases of China. And so what's the overall EDA growth picture in Asia? Well, China is the largest purchaser of EDA software with about $1.9 billion over the last year and growth in the current quarter of 9.6%. As you noted, growth over the last year in China has been negative, down 4.3% if you look at full year comparisons.

Basically, China accounts for about 10% of the world's EDA process. purchases. And what about other parts of the Pacific Rim? How do countries like Korea and Taiwan compare to China in terms of EDA purchases and growth in those purchases? Well, closest behind China is Korea with $1.4 billion in EDA purchases over the last 12 months. In Q3 2025, their purchases grew 16.4 percent, and much faster than China. that comes Taiwan with annual purchases of about a billion dollars. Taiwan grew even faster in

Q3 of 2025 at 27 percent. India's not as big with about 460 million dollars in annual sales. India numbers were weak in Q3 at minus 25 percent, but I don't think that's indicative of what we see in the longer term. So for these regions, is it meaningful to look at the split of traditional EDA purchases compared to semiconductor IP? It is. For Korea and Taiwan, the growth was significant in both EDA software and silicon IP. Not so for China. IP purchases actually declined in China by minus 11 percent, while EDA grew 17%.

That's enough information on regional strengths and weaknesses. What about more detail on the categories of EDA? So how are each of the traditional EDA categories going? Well, I'm glad you asked, Nathan. The strongest among the categories was Silicon IP with a strong 13.6% growth in the third quarter. We got our IP data, both from EDA member companies who participate in the EDMD survey, as well as from public companies who report but don't submit their data to semi. For a third quarter of 2025, those public companies, which are dominated by ARM, reported exceptionally strong growth in sales at 31.9%.

In contrast, our reporting company IP data was actually down 12%. This 13.6% growth is the total of the two put together. And what about the other categories? Well, the fastest growing was traditional computer automated. engineering or CAE that's really the front end design software the CAE category grew 9% compared to the same quarter a year ago particular strength in this category came from Asia Pacific at 15 and a half percent but North America was also strong in CAE at 8.5 percent. Now next strongest category was PCB design at 3.4 percent driven mostly by the Asia Pacific region. The other category is physical design. It grew only 1.3%, but interestingly, was very strong in Japan at almost 22%.

Europe was at 13%. And Asia Pacific was at 13%. So the drag on physical design growth was North America at minus 12%. That's an unusual distribution. What happened? Well, to provide more insight, we report a four-quarter moving average for every category in every region. When you look at those numbers, you see a much more orderly evolution. For example, the four-quarter moving average for physical design is down

only slightly in North America, minus 1.2%. Asia Pacific physical design four-quarter moving average is down 9%, reflecting the weakness we've seen past quarters for China purchases of EDA software. Okay, so what drove the strength of CAE? Well, the biggest part of the growth in dollars was in verification, particularly RTL simulation and emulation. And for physical design? There wasn't any growth overall, but parasitic extraction and optical proximity correction for resolution enhancement were both relatively strong. And what about the printed circuit board market? We've already talked about the strength in the Asia Pacific region. What caused that for a printed circuit board?

Well, for printed circuit board, the growth was strongest in package design, library management and analysis tools. That makes sense that we would see strong package design software performance. Can we infer any broader trends in the worldwide EDA market? Well, the four quarter moving average for total EDA revenue gives the best insight. It's the kind of stable trend we've come to expect. North America, a four-quarter moving average is 10.3%. Europe is 7.6%. Japan, 2.4%, and Asia Pacific, 12.8%. And you haven't said anything about services. So that's a trend that sometimes reveals economic changes not shown in the tool or the IP categories, right? Good point, Dan. Worldwide services revenue was

strong at 10.2% growth for the quarter and the four quarter moving average is 13.7%. Those are good numbers. All regions are strong in services except for Europe. Most analysts view strong EDA services numbers as indicative of greater demand for design resources than can be supported by existing staff. That means growth in the number of designs being undertaken. Well, that's good. Speaking of number of designers, what happened to the number of employees in the EDA industry? That almost always grows, right? And it did again, by a lot. Worldwide EDA employment grew 17.3% compared to last year.

Now pegging 73,000 employees worldwide in EDA. What an industry. So EDA has been a really great business in recent years. Is that what attracted you to move? recently from CEO of a fabulous semiconductor company to the CEO of a public EDA company, Salvaco. Well, good times or bad, I love managing EDA businesses. So Waco is particularly exciting because it has missed a few steps since its IPO in 2024, but still has the same great potential that people saw at the time of the IPO.

I'm going to have a lot of fun working with the Silvaco team to show customers just how much impact we can have. So what's driving that impact, Wally? Well, two things in particular. Self Occo has increased its portfolio with the acquisition of Mixel and now has the world's best IP for the MIPI standard. MIPI physical interface chips or FIs are really difficult to do well. And Mixel has a reputation for the best quality in the world. I think we can grow our overall IP business dramatically this coming year. The other thing is Silvaco's early lead in AI-driven machine learning for semiconductor manufacturing process development and yield improvement.

Micron was the driver of this methodology. They worked in close partnership with Silvaco to develop the environment for generating true digital twins of the process steps. Now Silvaco is taking it to the broader market. This kind of AI-driven approach to process development is really the only way our industry will be able to handle the increasing complexity of processes that have to be developed and optimized in a very short time window. Running test wafers just doesn't hack it anymore. Yeah, it's expensive. Well, that's great to hear, Wally.

We look forward to seeing the results. And I'm really looking forward to your next investor call. I listened to the last one, your first one. And it was great. It was great. I'm really looking forward to the next one. Thanks very much, Dan. All right. Happy New Year, Wally. And we'll talk to you again next quarter. Thank you, Dan. That concludes our podcast. Thank you all for listening and have a great day.