To The Moon

China Galaxy Securities released a research report stating that the domestic EDA industry is currently in a period of triple resonance from "policy drivers, technological breakthroughs, and surging demand." In the short term, focus should be on import substitution and merger integration; in the medium term, on full-process coverage and AI enablement; and in the long term, on gaining global market share. It is recommended to pay attention to the long-term investment value of core players in the industrial chain. EDA occupies a core foundational support position at the upstream end of the integrated circuit industry chain, leveraging a multi-trillion-dollar digital economy industry. EDA is the core technology of electronic design automation, holding a fundamental support role upstream in the IC industry chain. It runs through the entire chip design and manufacturing process, directly determining chip design efficiency, production costs, and performance. By leveraging the semiconductor industry, it indirectly propels the global digital economy industry worth tens of trillions of US dollars, forming the base of an inverted pyramid structure. The EDA industry has long been monopolized by three international giants, leaving vast room for import substitution in China given its low penetration. The global EDA industry exhibits a highly concentrated landscape, with the three giants—Synopsys, Cadence, and Siemens EDA—holding a 74% market share. The global EDA market is projected to reach $18.3 billion by 2026 and is expected to exceed $30 billion by 2034. In China, the market size is forecast to reach 22.2 billion yuan by 2026, with a growth rate of 20% significantly higher than overseas markets, indicating substantial long-term market potential. Triple resonance factors are pushing open the industry's growth ceiling. 1) Rigidity of Import Substitution: In May of this year, the US government began imposing export controls on EDA software, which were partially relaxed in July. However, strict controls remain on tools for advanced processes below 7nm, further compelling domestic EDA vendors to accelerate localization. 2) Technology and Demand Upgrade: Design costs for advanced processes from 7nm to 3nm are growing exponentially. In the post-Moore's Law era, system-level designs like Chiplet, 3D IC, and heterogeneous integration are spawning new demand for AI+EDA. 3) Industrial Consolidation Catalyst: The current Chinese EDA industry is fragmented and composed of small players. Accelerating industry mergers and acquisitions are enabling leading domestic EDA companies to increasingly complete their product lines and enhance their comprehensive capabilities. Risk warnings include intensified industry competition, technology R&D falling short of expectations, slower-than-expected policy implementation, and delays in merger and integration progress.