SemiWiki.com - Podcast EP340: A Review of the Q4 2025 Electronic Design Market Data Report with Wally Rhines

Episode Date: April 13, 2026

Daniel is joined by Dr. 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 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 Rind, 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 software. sales occurred. It's the most reliable data for the EDA industry and provides insight into what design tools and IP are in highest demand around the world. Wally, what do the results say for the

fourth quarter of 2025? Well, Dan, fourth quarter of 2025 was another good quarter for EDA. It grew at 10.3 percent versus the same quarter last year. Total revenue was $5.5 billion, dollars, so we're now solidly over the $20 billion annual run rate for EDA. The last four-quarter moving average is 10.1% growth, reflecting the continuing demand for EDA software and IP to fuel the large number of chip and system designs in progress. Wow, that's great. And it ties with the strong reported numbers we're seeing from the publicly reported EDA companies. It's tracking quite well. Yes, it does. We saw growth in C.A.E. that's the front end design tools, PCB, semiconductor IP and services.

Geographic regions, including America, Europe and Middle East, and APAC or Asia Pacific, also reported growth in Q4 with a double-digit increase in the Americas and in APAC. Okay, so which regions of the world failed to show up for the fourth quarter of 2025? Well, Japan was the only region where EDA sales decouc. year to year with a 19% decline. Almost all of this decrease was in semiconductor IP. Other major categories grew in Japan, although services was very slightly down. Interesting.

Looks like the Americas and APAC are leading the way with EDA growth, followed by near double-digit growth in Europe. And is APAC back to its traditional strength with China dominating? Well, you're right that the Americas are very strong and that they're leading the way for EDA growth. APAC has changed somewhat. China used to drive the growth, but now APAC is driven by much broader strength, including Taiwan, Korea, and India. So while China grew 7% in the fourth quarter compared to a year ago, India grew 5% and Taiwan, 8%. Korea actually declined slightly at minus 3.3%. Okay, so for all these regions, is it meaningful to look at the split of traditional EDA purchases compared to semiconductor IP?

I mean, generally it is. Yeah, it is. For Korea, growth was 7.5% for EDA software, but negative 23% for IP. For Taiwan, growth was positive for both EDA and IP, but much stronger for EDA at 9.7%. India was positive 6.3% for EDA and negative 6.2% for IP. And China was 10.2% growth in EDA. and minus 4.2% in IP. Overall, it shows a generally stronger growth for EDA tools than for the IP that's embedded in integrated circuit designs in Asia. So what's going on here, Wally? Does that mean that the Asian countries are appending their IP from sources that are not part of your survey?

It certainly could. And for China, that's probably true for some portion of the silicon IP they're using. But I don't think it's broadly true. The world of Silicon IP is still driven mostly by U.S. companies plus ARM. Right, yeah, like synopsis. What about individual categories in the EDA survey? Well, the fastest growing category was services. Next, the semiconductor IP at 18.3%. Non-reporting companies like ARM made up more than 100% of that growth

compared to the reporting companies that are also traditional EDA providers. CAE, or front-end design, was next at 9.4%. CAE is almost always strong. Then comes PCB design tools at 1.8%, and I see physical design at minus 2.6%. Okay, so why is there a weakness in the IC physical design? Well, I see physical design tends to be a more volatile category than CAE and PCB design.

That's probably due to large swings in usage as companies, approach completion of major designs. It might also be due to the large number of startups that are developing AI chips where the physical layout and verification is frequently outsourced. So does the report provide any more detail on these categories? You know, was there growth, for example, in any of the subcategories of physical design? Yes, there's more information in the full report that's available for purchase. In physical design, the category of customer layout grew 10.5% and parasitivism extraction grew 8%. The largest subcategory of physical design is physical implementation,

which grew 8.6%. So what's left in physical design? What didn't the overall category grow? Well, resolution enhancement was a big negative at minus 55%, along with mask data preparation at minus 30.5% and yield enhancement at minus 22%. Those three subcategories add up to a dollar decrease of $200 million when comparing Q4 of 2025 to Q4 of 2024. So that's surprising to me. So why should resolution enhancement be decreasing so much? You know, we're in a race down to 4 nanometer, 3 nanometer, 2 nanometer. You know, what is your thinking on this, Wally? Well, I suspect this result is more a matter of timing of major orders, especially for the

companies that recognize their revenue up front rather than rateably over the life of the contract. There could, however, be some effect from China where major resolution enhancement users like Huawei and Smic were moved to the entity list and can no longer purchase these tools from the reporting companies in the U.S. All right, yeah. Okay, so what about subcategories of CAE? Well, big dollars are in logic verification and RTL simulation. Together, they account for more than $6 billion of annual sales. They all grew with a weighted average over 20%. Formal verification and logic synthesis were also strong,

averaging over 20%. Okay, what about the one category that is near and dear to your heart as CEO of Savaco? How did TCAD do for process development? Yeah, well, overall T-CAD was flat, despite a great quarter at Silvaco that drove our stock price up more than 70%. That's just amazing, Wiley. Congratulations. Well, thanks. And what about Printed Circuit Board?

Any interesting subcategory information there? Well, PCB physical layout and PCB analysis tools largely offset each other. They both contribute about the same amount of revenue, but the first was up 10 percent, and the latter was down 9 percent. PCB schematic was strong at 16 percent, as was library data management at 27 percent. All right, let's talk about the category that is near and dear to my heart, still IP, do you have any more detail on what particular types of IP are showing strength? Yeah, it's an interesting point.

The biggest silicon IP categories are macrocells and cores, which grew 3.3%, and interface and peripheral cores at minus 1.1%. Verification IP at 40% growth helped to pull up the overall category. Wow, that's amazing. Yeah, I don't understand that. I do notice that some of the big EDA companies are showing weakness in IP and I still trying to figure out what the real reason is. What about employment in the EDA industry?

This number always seems to grow. It's just amazing. And it did again by a lot. Worldwide EDA employment grew 13.8% compared to last year. Now we're at 71.5,000 or 71,500 employees worldwide. That's just crazy. You know, as one of the early EDA employees myself in the early 80s, I could have never imagined such growth.

This is just an amazing industry. So EDA has been a really great business in recent years. I mean, since we've been doing these reports, for sure. Well, it surely has been. And EDA companies have been one of the most attractive investments in recent years as well. Yeah, I've noticed a lot of EDA companies, especially the IP-infused EDA companies, are getting a lot of funding. So is there any insight on how AI is affecting the EDA industry on a whole? Well, nothing comes out of the EDMD survey, but I've been watching a lot of revolutionary change.

Productivity of software developers of EDA tools is soaring due to platforms like Claude. Much of the drudgery in development has been removed by AI, and engineers can now concentrate on the creative aspects of their jobs. So what about AI benefits for EDA customers? Are we seeing some tangible results? There's some more important changes there as well. Most of the traditional design flow has been upgraded with enhanced features for designers to do far more designing verification work in much less time. By building in machine learning models, verification coverage has improved and verification times have been reduced. Optimization of placement and routing has been a major 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, Slovakco, 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. I don't know, Wally, I don't think I can remember a more exciting time in the EDA industry. I know when Synthesis first came out, that was pretty exciting, but AI-infused EDA, that's just amazing. I agree. It's really an era of significant change, and it's not just over-stasy. years, it's over months. Yeah, yeah, that's true. I've never seen a disruption happen so fast in EDA. Well, it's been another very good quarter for the EDA industry. Wally, thanks for providing these

details. Thank you, Dan. It's good to talk. And as always, it's great to speak with you, and I look forward to seeing you again at the TSMC Technical Symposium at the Santa Clara Convention Center on April 22nd, right? You will indeed. See you there, Dan. That concludes our podcast. Thank you all for listening and have a great day.