COVID-19 Impact on the Global Electronic Design Automation Market

The outbreak and the spread of the COVID-19 had a negative effect on the electronic design automation market in 2020, resulting in decreased subscriptions of electronic design automation. This resulted in the declined revenues generated from them. As a result, a dip was witnessed in the growth trend of the market during the first half of 2020. This trend continued to prevail till the first quarter of 2021. The demand for electronic design automation is expected to surge with the increase in the production volume of the semiconductor chips in the second or third quarter of 2021.

Opportunity: Growing adoption of cloud-based services

As electronic systems have become more sophisticated, the processing, power, and infrastructure needed for designing, testing, validating, and building them have increased considerably. Computer-aided engineering (CAE) and electronic design automation have fueled the demand for enormous scale computation and data management in next-generation electronic devices. In these systems, a large portion of the overall designing time is spent on verifying components; thus the electronic design automation companies have made high investments in large server farms and high-performance storage systems to enable excellent quality and fast turnaround of semiconductor test and validation.

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Nowadays, semiconductor firms employ cloud-based services to benefit from the quick and flexible deployment of electronic design automation infrastructure. These cloud-based services are dynamic, i.e., on an as-needed basis, eliminating the need for large upfront capital expenditures that are normally necessary for performance-critical electrical design automation workloads. Some of the companies have adopted cloud-based services through collaborations and acquisitions.

Challenge: Impact of COVID-19 on companies offering electronic design automation solutions

In the pre-COVID-19 period, the electronic design automation market was experiencing significant growth as tech companies were focusing on bringing innovative products to the market. However, IC designers and product designers are facing difficulties in deciding whether to invest in designing their IPs or sourcing them to third parties, as high investments are required in both scenarios. Besides, it is difficult to determine the economic value of different electronic design automation solutions. Moreover, due to the outbreak and widespread of the COVID-19 pandemic, companies have witnessed a global chip shortage, consequently affecting the production of ICs. They are highly apprehensive about this situation to bounce back to normalcy. On the other hand, major tech companies are identifying the key innovation verticals that are currently existing and restricting themselves toward working in only those verticals. These factors are the major challenges faced by electronic design automation companies in generating revenue during the pandemic period.

The market for the IC physical design & verification segment is expected to grow at the highest CAGR during the forecast period.

The market for the IC physical design & verification segment is expected to grow at the highest CAGR during the forecast period. The complexity of semiconductor verification and manufacturing requirements is constantly rising, making it increasingly difficult for IC design companies to provide cutting-edge, competitive products on a timely basis to a fast-moving market. To cater to the demand and achieve set goals, companies require electronic design automation solutions that can offer reliable results and assist them in achieving their aims.

The market for the cloud-based segment is expected to grow at the highest CAGR during the forecast period.

The cloud-based is expected to grow at the highest CAGR during the forecast period. As cloud-based design and verification are expected to provide excellent outcomes in high-speed operational processes, reduce costs associated with the manufacturing of semiconductor chips, and allow companies to reduce time to market and speed up innovation while maintaining or lowering operating costs. Hence, these factors are accelerating the growth of cloud-based electronic design automation solution.

The memory management units segment of the electronic design automation market is projected to record the highest CAGR during the forecast period.

The memory management units segment of the electronic design automation market is projected to record the highest CAGR during the forecast period. The increasing digitalization, which has accelerated the need for faster processors and efficient memory management tools have accelerated the growth. Companies have been using organic and inorganic growth strategies for the development of the segment.

The consumer electronics industry end user held the largest share of the electronic design automation market, and this trend is expected to continue during the forecast period.

The consumer electronics industry held the largest size of the electronic design automation market in 2020 and a similar trend is likely to be observed during the forecast period. This segment has witnessed rapid growth in the last few years owing to factors such as advancements in technologies used in earphones and headphones; rising demand for technologically advanced, large-size television sets; increasing disposable income and spending capacity of consumers; and growing penetration of smartphones. Further, the top companies have been enhancing their product portfolios and cracking deals by signing agreements with various companies to improve their products by adopting electronic design automation solutions.