Semiconductor Insiders - Podcast EP355: An Overview of the Q126 Electronic Design Market Data Report with Wally Rhines

Episode Date: July 13, 2026

Daniel is joined by Wally Rhines, CEO of Silvaco to discuss 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 SemaiWiki, the Open Forum for Semiconductor professionals. Welcome to the Semiconductor Insiders podcast series. Today we're talking with Wally Rines, 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 System Design Alliance collect data from almost all of the electronic design automation companies in the world and compile it by product category and 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. Wally, what do the results say for the first quarter of 2026? Well, thanks. Dan, Q1 of 2026 was another very good quarter for EDA at 12.7% growth compared to the same quarter last year. Total revenue was $5.7 billion. So that equates to an annual run rate for the industry of $22.8 billion. The last four-quarter moving average is a 10.3% 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 great. We're back in the double digits. And it ties with the strong reported numbers

we're seeing from the publicly reporting EDA companies. Yes, it does. We saw growth in every major category of EDA with double-digit growth in computer-aided engineering or CAE and in semiconductor IP. Every major region of the world except Japan experienced double-digit growth. And APAC, or the PACRIM and Europe, led the way with growth that was slightly above 17.5%. IP sales had a substantial effect on the total since design tools were stronger in Japan, and IP was stronger in the Americas. If we eliminate Silicon IP and look at just the EDA tools, the regional growth rates were all positive with double-digit growth in all regions except the Americas. So what happened in China this quarter? Ah, remarkable total growth of 31.1%.

EDA grew 28.2% and IP 43.6%. Now this is really not so remarkable, however, when you consider the comparison of Q126 is with an extremely weak Q125 result, the lowest in recent history for China. Q125 sales in China were $38 million, while Q126 was $508 million, which was still below the recent high quarter in Q3 of 25 of $615 million. But didn't we have an embargo or something back then, some politics that messed up the EDA sales to China? Yeah, I believe it was in about that time frame. So that would certainly have affected things. Well, it's nice to see we got a good rebound. So what about the rest of PACRIM? How did the other countries do? Well, not as well as China, but the other countries had more difficult

year-to-year comparisons since they've grown fairly consistently. Taiwan was the strongest individual country at 22.7%, while India grew 8.4% and Korea minus 2.2%. The rest of Asia grew a hefty 43.4%, but accounted for a smaller percentage of total EDA sales in PACRM than any of the individual countries I mentioned. So was it EDA tools or IP that drove growth in APEC? Well, it was both, but except for China, EDA tools were in general strong. than IP in the PACRIM. What about Chinese purchases from local Chinese suppliers? I know that China-based EDA companies are doing quite well.

Yeah, that's likely to add to these numbers since most of the domestic Chinese companies don't report to the semi-EDMD survey, something that we'd like to correct and we'll work on in the future. So what about individual categories in the EDA? Fastest growing category was CAA, computer automated, and computer automated. engineering representing the front end of the EDA design flow. The next largest was summit conductor IP at 14.1%. The SIP non-reporting companies like ARM who don't submit their survey data grew faster than the EDA and IP companies that do report. The difference was 18.5% growth versus 4.9% growth. Other categories reporting growth were physical design at 8.3% services,

at 6.5% and the printed circuit board Mully Chip module category at 4.8%. Well, it looks like printed circuit board seems to be weaker than recent history. What is the reason for that? Well, the survey doesn't provide that information. One contributor could be the automotive industry, which is a very big user of those tools.

But the growth of EDA is driven by increasing design starts and increasing customer engineering employment. When PCB is weak, it suggests that new system design starts are not increasing as rapidly as in the past, which ultimately leads to weaker IC design growth over the much longer term. Right now, exceptional activity for data center growth is driving both IC and system design, so it's hard to attribute trends in PCB to more specifics.

One thing that we do watch is package design, which saw a very strong quarter with 45.8% growth. But some companies report their package design software in the PCB layout category, so we can't attribute all of that growth to increasing activity in package design. Interesting. So looking at the detailed data in the product categories, is there any other interesting information? Well, there always is.

We encourage companies to buy the full report with all that detail. But to give you some examples, I see layout tools were much stronger than recent history with about double the growth percentage of recent quarters. That speaks well for increasing chip design activity. PCB schematic capture was much weaker than normal, while PCB analysis tools continued their usual strong growth at 16%. Again, suggesting future new PCB design starts, but continuing growth in the complexity of thermal power analysis, as electromagnetic interference and other things that are analyzed with those tools. So let me ask us, what stands out about the strong CAE growth?

Well, it's continuing strong growth in logic verification at 26%. Now, part of that verification is RTL simulation, which grew 16%. But another part is hardware-assisted verification or emulation, which grew 32%. Other parts of CAE were consistently strong with the exception of power analysis at minus 16%. That category has been quite flat all year, but I don't think people are losing interest in power analysis. Quite the contrary. It could be due to corporate changes among major providers of that software. If so, that weakness would be temporary.

What about the category that is near and dear to your heart as CEO of Slovakco? how did TCAD for process development do? You should be able to provide some additional color here. TCAD did very well at 10.9%. This category could be benefiting from the growth of development that goes beyond traditional TCAD into the creation of virtual machine learning AI models to simulate the entire manufacturing process.

All right, now category near and dear to my heart. Do you have any more detail on what particular types of IP are showing stress? Most of the growth in IP comes from, macrocells and cores, which grew 78% in the first quarter of 2026. There was some growth in verification IP at 10.5% and PCI controllers at 21.7%. What about employment in the EDA industry? This number always seems to grow. Yeah, and it did again, by a lot. Worldwide EDA employment grew 12.6%, bringing the total to 72,544 employees. employees. It's become a great growth industry, and it's really an exciting place to work.

Oh, absolutely. More now than ever before. So any insight on how AI is affecting the EDA industry? I mean, on semi-Wiki, AI is the number one topic, agentic AI. I even see at the DAC conference so many AI EDA companies, new companies, and EDA AI is one of the strongest topics that is being presented. Absolutely right. We see it everywhere. But not. Nothing comes out of the EDMD survey, but I've been watching a lot of revolutionary change. And we've seen productivity of software developers of EDA tools is soaring due to platforms like Claude. And much of the drudgery in development's been removed by AI and engineers can now concentrate on the creative aspects of their jobs. What about AI benefits for the EDA customers?

You know, we're working with a dozen brand new EDA AI company. companies, most of which they're at, or some of them are DAC. I'm seeing some amazing case studies. Yeah, I'm exposed to quite a few, and I'm sure we'll have more new ones at DAC. But there are some important changes to the existing infrastructure as well. Most of the traditional design flow has been upgraded with enhanced features for designers to do far more design and verification work in much less time because of AI. By building in machine learning models, verification

coverage has improved and verification, times have been reduced. Optimization of placement and routing has been an important impact. And companies are working on true co-pilots to guide design decisions and reduce the time to timing and power closure. In my own company, Zavocco, we're now providing capabilities for virtual manufacturing process development and optimization, dramatically reducing the time to market and the number of test wafer runs that are required in Waifer Fabs. So is there any threat from EDA taking over functionality that was previously performed with EDA software? There's nothing that's apparent in the EDA survey numbers, nor in the reported results of EDA companies.

In fact, substantial growth of EDA employment is coming from dozens of new startups that use EDA in conjunction with traditional design tools. It's been another very good quarter for the EDA industry. You know, I've been in the EDA industry for more than 40 years, and it's just an amazing way to see the growth of the industry. And thank you again for providing details. Glad to do it, Dan. And I guess I'll be seeing you at DAC. We're both on panels.

You know, I'm on a panel, an interesting one. It's AI, you know, do you build it internally or do you buy it, build versus buy? And we have six companies on the panel. And, you know, I've been in the industry so long. And a lot of the companies I started with replaced internal to a lot of. internal scripts, internal spreadsheets, Toledo was the most recent one. But you know, the build versus buy, it always went to buy. How do you see that in the AI world?

Are people going to use Claude or they're going to find out that it's not quite enough for commercial EDA use? Well, so I went through the struggles in the 70s and 80s where the principal competitor was the company's own tools. At Texas Instruments, we had all of our EDA tools were internally developed. And so it was a very gradual process for commercial tools to take over. This new wave you're talking about is where companies say, wait a minute, do I need to pay the price of buying commercial tools? Can't I train a model to emulate that behavior or can't I do many of the functions with tools that are available simply for the price of tokens to use them? And I think that's a worthwhile question. I'm as a representative of the EDA industry.

I hope that actually we get the benefit of both, the companies like chip agents that are able to provide acceleration and improvement in design while still utilizing the inherent infrastructure of the EDA industry. But that's a story yet to be told. And just as I live through that evolution, I'm making a return to the old days after many years. I'm going to be on the Cooley panel at DAC, something people say, wow, you're really brave.

Wally, but I'm doing it again, and some of my close associates like Robbie Subramanian and King Gupta and others will be there. And so I guess we'll have a lot of fun. Cooley will get to take his barbs at all of us and remind us that we all work for one common goal. Yeah, it's always entertaining. Definitely a must see. All right, great, Wally. Hey, we'll see you at Dak. I'll see you, Daniel. That concludes our podcast. Thank you all for listening and have a great day. Thank you.