EDA is experiencing a golden period of development, with the global EDA market size projected to increase to approximately $19.27 billion in 2024, reflecting a seven-year compound annual growth rate of 11.3%. EDA is progressively evolving from being a software tool for the semiconductor industry into a full product lifecycle solution spanning multiple fields, extending towards system-level simulation across various domains. Concurrently, EDA is no longer merely an auxiliary tool for practitioners; it has begun to provide reverse empowerment, becoming an industry assistant or even an expert. The main viewpoints of Zhongtai Securities are as follows: The EDA sector and its leading companies are maintaining robust growth momentum. In recent years, the EDA sector has quietly entered a golden development phase. 1) Looking at the sector: According to CIMdata data, the global EDA market size grew from $9.12 billion in 2017 to approximately $19.27 billion in 2024, achieving a seven-year CAGR of 11.3%. Furthermore, the proportion of the EDA market size relative to the global PLM market size increased from 20.9% in 2017 to 24.0% in 2024. 2) Looking at companies: The two EDA industry leaders, Synopsys and Cadence, have seen sustained and steady revenue growth in recent years. For fiscal year 2025, Synopsys reported revenue of $7.054 billion, a year-on-year increase of 15.1%, while Cadence achieved revenue of $4.641 billion in 2024, up 13.5% year-on-year. What factors are driving the continued rapid growth of the EDA sector? In short, the semiconductor market is expanding, the number of industry participants is increasing, demand complexity is rising, and the supply of talent remains insufficient. The semiconductor market is expanding, and industry participants are increasing: Against the backdrop of the intelligent interconnection of all things, many traditional industries are also undergoing intelligent and electronic/electrical transformation, generating continuously growing new demand for semiconductor investment. New breakthroughs in AI have shattered previous ceilings in terms of intelligent capability supply. Demand complexity is increasing: 1) More participants in the semiconductor industry bring increased demand for customized, vertical electronic equipment. Simultaneously, the slowing of Moore's Law and the pace of process iteration are pushing the industry to explore more diverse and complex semiconductor design and production technologies. 2) As the advancement of semiconductor process technology slows, it becomes difficult to enhance product performance simply by rapidly improving processes; instead, optimization must increasingly focus on the entire product lifecycle. A full-flow, holistic solution "from silicon to system" represents a new demand trend, which must begin with the initial design of each chip. Talent supply is insufficient: The increase in industry participants and the emergence of more complex and comprehensive demands have opened new development space for the semiconductor industry. However, the semiconductor industry remains one with high entry barriers, and talent is still in short supply. Consequently, there is a growing reliance on software and hardware capabilities. This signifies that EDA software is no longer just a tool; its rich portfolio of case studies and practical experience is enabling it to provide reverse empowerment to the industry. Risk warnings include fluctuations in the macroeconomy and geopolitical situation; risk of technical talent attrition; intensifying industry competition; risk of market estimation deviations; and risk of untimely updates to research report information.
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