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Introduction

 "AI hardware" is not a singular, monolithic market but rather a complex ecosystem comprising of 8 distinct sub-segments (see yesterday's article here for an overview of those 8 sub-segments), each with its own unique dynamics and growth trajectories. Electronic Design Automation (EDA) Software is the first of the initial 4 stages - in what is referred to as the semiconductor value chain - involved in the production and distribution of semiconductor devices. The companies in this stage are involved exclusively (i.e. are pure-play) in the custom design of complex semiconductor chips using sophisticated electronic design automation (EDA) software and MunAiMarkets tracks them in its model Pure-Play Custom Design (EDA) Software Stocks Portfolio as to their constituent stock performances, the reasons behind any changes, and analyses their current situation and future prospects. 

What Is A Semiconductor?

A semiconductor (aka computer chip or wafer) is a material that has an electrical conductivity value falling between that of a conductor, such as copper, and an insulator, such as glass. In many cases their conducting properties are altered by introducing impurities (doping) into the crystal structure and when two differently doped regions exist in the same crystal, a semiconductor junction is created. Connecting the two materials causes creation of a depletion region near the boundary, as the free electrons fill the available holes, which, in turn, allows electric current to pass through the junction only in one direction. and is the basis of diodes, transistors, and most modern electronics. Silicon is a critical element for fabricating most  electronic circuits and is the most common semiconductor. After silicon, gallium arsenide is the second-most common semiconductor and is used in laser diodes, solar cells, microwave-frequency integrated circuits, and others.

What Is Electronic Design Automation (EDA) Software?

Electronic Design Automation (EDA) software is a collection of instruments that address different aspects of the chip design process such as: 

• simulation software that predicts circuit behavior,
• design solutions that help create the physical circuit elements, and
• verification systems that ensure the design is correct and manufacturable.

All these different aspects of the chip design process enable engineers, along with designers, to create advanced semiconductor chips and electronic components with enhanced accuracy and minimal expenditures of time. 

How Big Is the EDA Market?

The EDA market size was valued at approximately USD 12.3 billion in 2024 and is expected to reach USD 22.1 billion by 2033, growing at a compound annual growth rate (CAGR) of about 6.7% from 2025 to 2033. Source

Which Companies Dominate the Market? 

• Cadence Design Systems (CDNS) has a 30% market share but that could decline next quarter given its forecast of only a 1% growth in Q2 compared to the 20% growth expected by Synopsys.
• Synopsys (SNPS) has a 32% market share but that will increase to 38% with its expected upcoming acquisition of  Ansys (ANSS).
  • The $35 billion merger is still under review by the UK’s Competition and Markets Authority (CMA) and the U.S. Federal Trade Commission (FTC) said last Wednesday that it will require the two software companies to divest certain assets to preserve competition across several software tool markets that are critical for the design of semiconductors and light simulation devices to resolve antitrust concerns.
• Siemens EDA has about a 13% market share. It operates as an entity within Siemens Aktiengesellschaft (SIEGY) so no specific financial information is available on Siemens EDA and, as such, it is not included in the Portfolio, and
• another 10 companies, including Nvidia (NVDA), Advanced Micro Devices (AMD), Broadcom (AVGO), Keysight Technologies (KEYS),  Zuken (TYO:6947) and Aldec Inc., make up the remaining market.

Why Is the Market Growing So Rapidly?

EDA market growth worldwide continues to rise because of:

• increasing semiconductor requirements (custom chip designs intended for applications in AI and automotive domains and edge computing systems, for example),
• expanding AI and machine learning applications,
• accelerating 5G technology development, and
• government backing for domestic semiconductor manufacturing

In addition, with new chip manufacturing foundries coming on line over the next few years to meet the dramatic growth in the use of chips in electric vehicles (EV) and to offset the current dependence on the current major foundries such as TSM, UMC and GFS, they will all have to integrate EDA tools to do so. According to Deloitte, for example, the 12-fold increase in electric vehicle (EV) sales by 2030 will require 2-5x more chips than that of current combustion engine automobiles.

The MunAiMarkets Pure-Play Custom Design (EDA) Software Stocks Portfolio

Below are the May performances of the category’s only two pure-play EDA stocks, and YTD, with any available news, analysis and commentary on each:

1. Cadence Design Systems (CDNS): DOWN 0.2% in May; DOWN 4.5% YTD
   • Cadence Reports First Quarter 2025 Financial Results
2. Synopsys (SNPS): UP 1.1% in May; DOWN 4.4% YTD
   • Synopsys Posts Financial Results for Second Quarter Fiscal Year 2025

Conclusion

The MunAiMarkets Pure-Play Custom Design (EDA) Software Stocks Portfolio was only UP 0.6% in May and remains DOWN 4.4% YTD.

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