Do EDA makers precede or follow a general semiconductor upturn?
EDA always lags the semiconductor industry in a recovery. The reason is that during the downturn, semiconductor companies have their revenue shrink rapidly, but they don’t reduce their R&D costs — which include EDA software — as rapidly. As they lay off people, chipmakers end up with extra licenses for this software, which is sold per user. Plus, they try to keep their R&D costs down. That usually means they start spending again on EDA software about a year after their businesses begin to recover. So we’ll see the EDA industry begin to recover sometime next year. Q: Which of your customers are showing the most signs of life at this point? A: We had a very severe electronics recession during the past three years, and Mentor was the first company to recover from that, largely due to the strength of the military-aerospace market. Plus, we see a strengthening in the consumer-electronics business. With the number of audio and video recorders, flat-panel TVs, and [global positioning system
