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What Is Custom Design Software?

Given that today's chips contain more than a hundred billion transistors compared only a few thousand back in the 1970s, electronic design automation (EDA) software is now used to assist engineers in the custom design and development of such complex chips.

How Big Is the EDA Market?

According to research by Deloitte, the market is anticipated to have a compound annual growth rate (CAGR) of 11% between now and 2028 reaching $21.6B by then.

Which Companies Dominate the Market?

• Cadence Design Systems (CDNS) has a 40% market share,
• Synopsys (SNPS) @ 30% which will increase to 36% with the upcoming acquisition (see here) of Ansys  (ANSS),
• Siemens EDA @ 20% (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 making up the remaining 4%.

Why Is the Market Growing So Rapidly?

Over the next few years new chip manufacturing foundries will be coming on line 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, and 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 munKNEE Pure-Play Custom Design (EDA) Software Stocks Portfolio

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

1. Cadence Design Systems (CDNS): up 7.5% in June; up 38.4% YTD
   • Cadence Expands System IP Portfolio with Network on Chip to Optimize Electronic System Connectivity
   • Cadence and Intel Foundry Collaborate on Systems Foundry Enablement for the AI Era
   • Cadence and Samsung Foundry Accelerate Chip Innovation for Advanced AI and 3D-IC Applications
2. Synopsys (SNPS): up 6.1% in June; up 15.6% YTD
   • Synopsys Accelerates Chip Innovation with Production-Ready Multi-Die Reference Flow for Intel Foundry
   • Synopsys Achieves Certification of its AI-driven Digital and Analog Flows and IP on Samsung Advanced SF2 GAA Process

Conclusion

The munKNEE Pure-Play Custom Design (EDA) Software Stocks Portfolio was up 6.6% in June and is now up 22.5% YTD.

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