EDA software will be the next battleground in the US-China chip war

EDA software is a small but powerful part of the semiconductor supply chain, which is largely controlled by three Western companies. That gives the U.S. a powerful leverage point, similar to how it last month wanted to limit the use of lithography machines — another key tool in chipmaking. So how did the industry become so US-centric, and why can’t China develop its own alternative software?

What is EDA?

Electronic Design Automation (also known as Electronic Computer Aided Design or ECAD) is specialized software for chip manufacturing. It’s like CAD software used by architects, only it’s more complex because it handles billions of tiny transistors on an integrated circuit.

Screenshot of the free EDA software KiCad.

Jon Neal/Wikimedia Commons

No single dominant software program can represent the best in the industry. Instead, a series of software blocks are often used throughout the design flow: logic design, debugging, component placement, routing, timing and power optimization, verification, and more. Because modern chips are so complex, each step requires a different software tool.

How important is EDA to chip manufacturing?

Although the global EDA market is valued only about $10 billion By 2021, only $595 billion The semiconductor market, which is of unique importance to the entire supply chain.

Mike Demler, a consultant in the chip design and EDA industry for more than 40 years, said today’s semiconductor ecosystem can be viewed as a triangle. In one corner are foundries, or chip makers like TSMC; in another corner are intellectual property companies like ARM, which manufacture and sell reusable design cells or layouts; and in a third corner are EDA tools. The three work together to ensure that the supply chain runs smoothly.

From the name, EDA tools seem to be important only to chip design companies, but chip makers also use them to verify that designs work before production. Foundries cannot make individual chips as prototypes. It has to put in months of time and production, and hundreds of chips are made on the same semiconductor each time. It would be a huge waste if they were found to have a design flaw. Therefore, manufacturers rely on a special type of EDA tool to perform their own verification.

Who are the leading companies in the EDA industry?

Only a handful of companies sell software for every step of the chip-making process, and they’ve dominated the market for decades. The top three companies—Cadence (US), Synopsys (US), and Mentor Graphics (US, but acquired by German company Siemens in 2017)—control about 70% of the global EDA market. Their dominance is so strong that many EDA startups focus on one niche use and then sell themselves to one of these three companies, further cementing the oligopoly.

What is the US government doing to restrict EDA exports to China?

The enormous influence of US companies on the EDA industry makes it easy for the US government to squeeze China’s access. In its latest announcement, it pledged to add certain EDA tools to its list of prohibited technologies for export. The U.S. will coordinate the implementation of the restrictions with 41 other countries, including Germany.

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