Electronic Design Automation (EDA) Tools Market

Market Overview

The global electronic design automation (EDA) tools market size was valued at USD 11.69 billion in 2021. It is projected to reach USD 26.37 billion by 2030, growing at a CAGR of 9.46% during the forecast period (2022-2030). 

Electronic design automation is a tool for designing and verifying integrated circuits, printed circuit boards (PCBs), and electronic systems. The manufacturing of semiconductors and the electronic design automation sectors are closely intertwined. The demand for an electrical design automation tool is rising as there is a greater demand for sophisticated electronic devices and a desire to make them smaller while improving the performance of integrated circuits (ICs). Chip manufacturers widely use electronic design automation tools to develop electronic products as they benefit by cutting production costs and verifying the seamless design.

Market Dynamics

Global Electronic Design Automation (EDA) Tools Market Drivers

Growing Automotive, IoT, and AI Sectors

Chipmakers are increasingly leaning toward incorporating AI on edge computing, owing to the computational capabilities it brings to the table at the device level, increasing both efficiency and response time. For instance, Intel is concentrating on "edge computing" to enable the integration of AI in smartphones and IoT devices. Over the anticipated time, it is expected that wireless IoT chips will gain popularity due to the arrival of 5G and the vendor's focus on lowering power consumption. According to Silicon Labs, more than a billion wireless chips for the Internet of Things have been installed. All of these factors are anticipated to accelerate the market expansion. The semiconductor makers are expected to be more influenced by the increased demand for AI to create products that serve the market.

Upcoming Trend of EDA Toolsets Equipped with Machine Learning Capabilities

The numerous advantages of EDA, such as reduced design time and error rates, have contributed to its rising popularity. The automobile and aerospace industries are the only two that have seen increased use of EDA tools. EDA design businesses are anticipated to invest in machine learning for EDA toolsets due to the rising demand for chip manufacturers to build sophisticated chips in large quantities for consumer electronic gadgets and other applications. Machine learning (ML) enables modeling and simulation to deliver new levels of insight into the semiconductor business. As a result, engineers can anticipate design tools that are more accurate and effective, as well as a move toward increased automation. The spread of EDA tools across industries is fueled by the machine learning capabilities in the EDA toolsets, which open the door for introducing novel and cutting-edge designs and chips from more businesses.

Global Electronic Design Automation (EDA) Tools Market Restraint

Flawed Moore's Law

Moore's Law, which states that the number of transistors in an integrated circuit will double every 18 to 24 months, has stayed true since the invention of semiconductors. But in recent years, scientists have grown more convinced that underlying physical constraints may eventually make adding more elements to the same tiny space economically tricky. This could ultimately demonstrate that Moore's Law is flawed. Foundries are poised to run into a wall as transistor density may have reached its physical limit. Foundries should reinvent themselves to advance semiconductor technology and satisfy consumer demands. Equipment that can be easily customized to meet numerous developments in semiconductor manufacturing will become highly important as the demand to accommodate more components grows with the industry's evolving needs.

Global Electronic Design Automation (EDA) Tools Market Opportunities

Technological Advancements

The market's early embrace of technology like machine learning, 5G internet, and the Internet of Things is a significant element in the expansion of the market. According to data from two SIA (Semiconductor Sector Association) polls, the semiconductor industry employs more than a quarter of a million people in the U.S. The U.S. dominates semiconductor production, engineering, and development in the EDA tools market. Despite its prominence, the region is not just supported by the export of electronic equipment but also by an expanding number of end users, like the automotive and consumer electronics sectors, who consume enormous amounts of semiconductors. The United States has long been at the forefront of progress in the automation business, especially with the development of sophisticated electronics in the twenty-first century. Additionally, a few American vendors have improved and expanded their product lines in response to the region's rising demand for EDA tools.

Regional Analysis

Asia-Pacific Dominates the Global Market

The global electronic design automation (EDA) tools market is bifurcated into four regions, namely North America, Europe, Asia-Pacific, and LAMEA.

Asia-Pacific is the most significant shareholder in the global electronic design automation (EDA) tools market and is expected to grow at a CAGR of 10.61% during the forecast period. A rise in consumer spending power and the presence of numerous electronics and automobile manufacturing businesses in the region have contributed to the expansion of the EDA tools market in the Asia-Pacific region. The region has also seen an increase in the use of smartphones and the digitization of business processes, which has fueled the use of EDA tools to support a rising market for consumer electronics products. The development of EDA tools has received backing from the Chinese government, providing financing for R&D projects for specific businesses. For instance, the federal and Shenzhen governments have given the Guowei Group RMB 400 million for EDA development work. Many manufacturers in the area have started initiatives to expand outside their current markets and increase their production capabilities for all types of electronic devices they produce. For instance, the Taiwanese company Foxconn bought land use rights in Vietnam and made significant investments in a subsidiary in India. Therefore, increased electronic goods and components production may undoubtedly support the prediction for the market for EDA tools during the forecast period.

North America is expected to grow at a CAGR of 8.21%, generating USD 9.93 billion during the forecast period. The key customers of semiconductor foundries in North America are predicted to contribute significantly to the market in the future due to the region's high concentration of fabless semiconductor enterprises, integrated device makers, and foundries. Apple, AMD, NVIDIA, Broadcom, Qualcomm, Marvell, and Xilinx are the fabless firms in the region. Additionally, the site is essential for designing and producing sophisticated semiconductor systems. For instance, the three categories of semiconductor businesses Intel (IDM), Global Foundries (U.S./Dubai) (foundry), and Qualcomm (fabless), are all world leaders and are based in the United States. In terms of semiconductor industry manufacturing, design, and research, the United States is a mighty nation. Due to the region's prominence, end-user industries, including consumer electronics and the automotive sector, which are significant consumers of semiconductors, are expanding and driving the demand for exporting electronic equipment. For instance, the semiconductor business in the United States employs close to a quarter of a million people, according to the SIA (Semiconductor Industry Association).

The industrial strategy of the European Union (E.U.) aims to boost the competitiveness and expansion of the region's manufacturing industry. The government implements a wide range of trade, energy, and innovation-related programs under this. Additionally, it is envisaged that this will assist regional EDA service suppliers and developers. Numerous industries focused on semiconductors have benefited from the growing engagement of the provincial government in promoting research initiatives, which are supported by a high-tech networking environment. Companies that offer semiconductor packaging and testing services include Force Technologies, Reltech Limited, Micron Semiconductor Ltd., and Fabrinet UK. Fabrinet UK currently provides on-demand services for a number of fabs and fabless semiconductor companies throughout the world. These services include rapid prototype assembly and high-temperature over-life testing.

Additionally, several international companies, including Intel, GlobalFoundries, etc., have production operations in the area. To meet the demand for EDA Tools in the area, these players are expanding the steps they are taking to increase their production capacity and invest in modernizing their manufacturing facilities. The use of driverless vehicles is supported in the U.K. The U.K. Connected Intelligence Transport Environment has also received GBP 100 million in funding from the U.K. government (UK CITE).

Latin America's manufacturing sector may continue to grow faster in Mexico, which is anticipated to help the region's market for EDA tools expand. Many manufacturers in the area have started initiatives to expand outside their current markets and increase their production capabilities for all types of electronic devices they produce. For instance, the Taiwanese company Foxconn bought land use rights in Vietnam and made significant investments in a subsidiary in India. Therefore, increased electronic goods and components production may undoubtedly support the prediction for the market for EDA tools during the forecast period.

Segmental Analysis

The global electronic design automation (EDA) tools market is segmented by type and application.

Based on Type, the global electronic design automation tools market is bifurcated into computer-aided engineering (CAE), IC physical design and verification, printed circuit board and multi-chip module (PCB and MCM), semiconductor intellectual property (SIP).

The computer-aided engineering (CAE) segment is the highest contributor to the market and is expected to grow at a CAGR of 9.81% during the forecast period. Computer-aided engineering (CAE) results in more complex designs, better operational procedures, and better standards. These benefits have prompted the automotive sector to use CAE widely. The usage of particular software for engineering tasks is a part of computer-aided engineering. This section contains several tools, including logic and formal verification, hardware-assisted verification, analytic tools, synthesis, analog, and mixed-signal simulators, formal verification, design entry, and electronic system-level design. These tools are used to carry out flight tests, solve partial differential equations, determine boundary values, create algorithms from fluid flow issues, and solve partial differential equations. The models produced by CAE are converted into manufacturing instructions for numerically controlled machines using EDA software tools. CAE is revolutionizing the sensor business with cloud services.

Intellectual property (IP) cores are essentially reusable building elements, commonly referred to as semiconductor intellectual property (SIP). These are employed in the manufacture of cutting-edge integrated circuits (ICs). Owners (Enterprises) exchange these design elements for the right to use and replicate the design, also referred to as intellectual property. Since the semiconductor business first emerged, semiconductor intellectual property (SIP) has existed. Manufacturers of integrated circuits (ICs) such as Fairchild, Intel, TI, and Motorola developed their unique SIPs early on for use within the company. The market's growth has been fueled by the steadily expanding demand from sectors including automotive, engineering, power, and healthcare for high-performance and dependable semiconductors. Manufacturers of semiconductor chips are forced to cram the components into a smaller space by end users' demands for tiny, fully working devices. With the introduction of new designs like SoCs and 3D ICs, the complexity of chip designs has increased.

Based on Application, the global electronic design automation tools market is bifurcated into communication, consumer electronics, automotive, industrial, and others.

The communication segment owns the highest market share and is expected to grow at a CAGR of 7.97% during the forecast period. To aid smartphone makers, component suppliers are also upgrading their production capabilities. For instance, Qualcomm announced at the IFA electronics show in Berlin that its partners are creating more than 150 designs using its 5G processors. In order to make 5G available to more than 2 billion smartphone users, the business is integrating 5G across its whole product line. Together with service providers, these 5G chipsets primarily support and improve the capabilities of three critical applications: enhanced mobile broadband, ultra-reliable and low latency communications, and enormous machine-type communications. These applications are anticipated to fuel the demand for a greater reliance on EDA tools during the forecast period.

As makers of consumer electronics (including smartphones, wearables, and smart home devices) increase the battery capacity of their products, the market for low-charging devices is expanding. High demand is being created for electronic design automation tools by wearable technologies. Electronic design firms are encouraged to invest in cutting-edge design tools by the rising popularity and acceptability of smart fitness devices.

Recent Developments

• February 2022- Ansys announced its inaugural partnership with IFS Accelerator EDA Alliance to provide best-in-class EDA tools and simulation solutions that will support customer innovation, including bespoke silicon for customizable three-dimensional integrated circuit (3D-IC) designs.
• July 2022- Cadence Design Systems Inc announced Machine Learning Electronic Design Automation: Unlocking New Designs.