Market Scenario

Global electronic design automation market was valued at US$ 15.8 billion in 2023 and is projected to hit the market valuation of US$ 35.3 billion by 2032 at a CAGR of 9.75% during the forecast period 2024–2032.

Semiconductor industry is heavily dependent on Electronic Design Automation (EDA) software, hardware and services that facilitate automatic chip design, verification and manufacture. The surging demand for electronic design automation market stems from the escalating intricacy of integrated circuits (ICs) and high-level electronic device designs. For instance, advanced ICs now boast more than 10 billion transistors on average which makes design verification much more difficult. As electronics become more sophisticated, the need for accurate and efficient verification processes also increases. At the same time, it is driving demand for EDA tools that can handle these complex designs with great precision in a short time by minimizing errors throughout development cycles too. These modern EDA tools have also shortened the design cycle times by 30%, speeding up product development significantly. The global explosion of consumer and automotive electronics has led to rapid growth in the semiconductor space. For example, Europe leads globally in terms of market share in the provision of EDA tools with over 500 companies engaged in this field together with semiconductor design.

Apart from this, the electronic design automation market growth is driven by the integration of EDA tools with Artificial Intelligence (AI) and Machine Learning (ML). This integration optimizes electronic circuits by developing better interpretations for CAD input files thus helping to enhance efficiency during the design stage. Among other things, AI enabled EDA tools can carry out more than 1,000 checks for design rules every second, which greatly enhances precision in designing. The consumer electronics industry dominated the AI-based EDA solutions market in 2023 due to the need to reduce costs related to mass production volumes. Furthermore, approximately 70% of new EDA tools are cloud enabled, further contributing to the development of this industry segment. These alternatives present flexibility, scalability and resource constraints that enable designers to get computational and storage resources whenever required, making it possible for them finish complex chip designs more quickly.

The automotive industry also affects the demand for electronic design automation market quite a bit, especially with the advent of Advanced Driver Assistance Systems (ADAS) and self-driving vehicles that require complex engineering to satisfy stringent performance and safety requirements. For instance, it is necessary to conduct more than 1000 simulation runs on average to ensure that an ADAS system is safe and works properly. As a result, most leading semiconductor foundries have started concentrating on creating chips specifically designed for these types of advanced automotive systems, while certain foundries are devoting as much as 20% of their design resources exclusively to automotive applications.

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Market Dynamics 

Driver: Growth in Semiconductor Industry

The electronic design automation market is largely driven by the robust growth in the semiconductor industry. Wherein, the global semiconductor market was valued at US$601 billion in 2023, which is mainly attributed to increased demand for consumer electronics, automotive applications, and IoT devices. 5G technology has also contributed significantly to this, as 5G chipsets are projected to generate $23.5 billion in revenue by 2024. Moreover, the industry’s focus on miniaturization and advanced node technologies such as 5nm and 3nm processes is driving the need for sophisticated EDA tools. At the same time, AI applications are increasing demand because the AI semiconductor market is predicted to hit $15.3 billion in 2023.

With the continuous miniaturization of semiconductor technology nodes, design complexities are increasing and driving demand for advanced electronic design automation market. By 2024, over 75% of semiconductor companies will have invested in AI-driven EDA tools to increase efficiency and accuracy. The automotive sector’s shift to self-driving cars is another driver, with the automotive semiconductor market expected to reach $53 billion. Moreover, the HPC chip market worth $44 billion by end of 2023 emphasizes the importance of EDA tools. 

Additionally, the growth in consumer electronics is further fueled by smart home products and wearable technology, which increase the demand for advanced semiconductor designs. The overall size of the Consumer Electronics market is expected to grow tremendously hitting $1.1 trillion by 2023, with a significant percentage being contributed by the smart devices. This will translate into a 30% rise in AI and Machine Learning incorporation into consumer electronics thereby necessitating EDA tools that can accommodate AI-driven complexities during design phases. EDA tools are therefore critical to supporting semiconductor industry growth and innovation as this combination implies.

Trends: Shift Towards Cloud-Based EDA Solutions

Scalability, flexibility and cost effectiveness are the reasons why cloud-based EDA solutions are gaining popularity. By 2023, the electronic design automation market share for cloud-based EDA tools will grow at a CAGR of 14.2% to reach $2.7 billion. The rate at which semiconductor businesses are embracing cloud-based EDA solutions is approximately 55% in an effort to enhance cooperation and streamline design processes. The reason behind this transition towards cloud-based EDA is increasing demand for high computational power as well as ability to handle large datasets that support advanced semiconductor designs. Designers can use huge amounts of computing resources provided by the cloud without putting much money up front in one shot.

The move to cloud-based EDA tools led to a 25% decrease in the infrastructure costs of semiconductor companies. Additionally, the present hybrid work environment necessitates that there is remote access and collaboration through cloud-based solutions in the electronic design automation market. Furthermore, AI and machine learning will be integrated into cloud-based EDA tools thereby further advancing design efficiency with an expected 18% improvement in design accuracy. It is anticipated that the market for cloud-based EDA will continue expanding with new tool deployment at 70% projected to be cloud based by 2023. This trend is creating a more agile and responsive design environment necessary for rapid technological advancements. By keeping up with the pace of rapid technological development, this trend encourages a more nimble and responsive design space.

Moreover, cloud-based EDA solutions have made it possible for smaller firms and startups to compete against bigger ones by giving them access to modern design tools at a fraction of the cost. Also, Astute Analytica’s analysts anticipate that the democratization of EDA tools on the cloud will lead to 22% more start-ups entering into the semiconductor sector by 2025. Furthermore, they allow teams across different parts of the world to collaborate in real time and reduce design cycle times by 15%, thus increasing overall productivity. This trend is changing how EDA is undertaken as it makes wider availability of sophisticated designs capabilities to numerous companies hence stimulating innovation throughout the scope of this industry.

Challenges: Complexity of Advanced Node Designs

EDA companies in the electronic design automation market face a daunting task with the rising intricacy of advanced node designs. The design and verification processes get tougher as semiconductor technology nodes keep shrinking, reaching 5nm and 3 nm. Design complexity management is the number one challenge for more than seventy percent of chip developers in the year 2023. There is an estimated cost of $540 million to develop a 5nm chip, which will increase as scaling advances further. Advanced-node design accuracy and performance necessitate sophisticated EDA tools and methodologies.

Increased time-to-market is one of the outcomes that come with having complex advanced node designs. A 5nm chip would take around 30 months to design as opposed to a 7 nm chip which takes only 24 months. On top of this, advanced-node design verification now consumes more resources and accounts for over half of the total cost incurred in designing them. In order to overcome these challenges, there must be continuous innovation in EDA tools and development of new design methodologies for managing the increasing complexity and ensuring on-time product release. Additionally, another important aspect the industry should look into is training highly skilled engineers who can effectively work in such sophisticated designs in the electronic design automation market.

The design complexity is also being added by the rising demand for specialized IP blocks and custom solutions at advanced nodes. Custom IP investment is among the top priority of about 65% of semiconductor companies in 2023, which further complicates design process. At the same time, power efficiency and thermal management are becoming acute challenges with a power consumption rise by 10% for each new node expected. These multiple challenges will require combined efforts from EDA tool vendors, semiconductor firms as well as research institutes in finding techniques that could well handle complex advanced node designs.

Segmental Analysis 

By Offering

The solution segment of the Electronic Design Automation market, which includes Computer-aided Engineering (CAE), Semiconductor Intellectual Property (IP), PCB (Printed Circuit Board) and MCM (Multi-chip Module), and IC Physical Design and Verification, is outpacing the services segment in revenue generation primarily due to its comprehensive and scalable offerings. In 2023, the segment generated more than 73.41% market revenue. The inherent value of these solutions lies in their ability to significantly enhance design efficiency and accuracy, which is indispensable for the rapid innovation cycles in technology. For instance, the implementation of CAE tools can reduce design iterations by up to 40%, leading to substantial time and cost savings. Moreover, Semiconductor IP, which grew by 12% in market share last year, provides reusable design components that streamline development processes, further driving its adoption.

Additionally, the demand for advanced PCBs and MCMs has surged as devices become more complex and require higher levels of integration and functionality. The global PCB market alone is expected to reach $80 billion by 2024, reflecting a CAGR of 4.3%. This growth in the electronic design automation market is fueled by industries such as automotive and consumer electronics, which rely heavily on sophisticated PCB designs. Similarly, IC Physical Design and Verification tools are critical in ensuring that chips meet performance and power specifications, an area that saw a 15% increase in investment due to the rise of AI and machine learning applications. These tools also help in achieving first-time-right silicon, a crucial factor given the high costs associated with re-fabrication.

Service revenue, while essential for customer support and customization, does not scale as effectively as product sales. The EDA solutions offer high upfront costs but provide long-term value through efficiency gains and innovation support. For instance, the average license cost for high-end EDA tools can exceed $100,000, and the return on investment (ROI) is realized through faster time-to-market and reduced development costs. Services, on the other hand, tend to be labor-intensive and less scalable, with a fixed revenue potential. 

By Deployment 

Security, latency and control are the primary reasons why electronic design automation (EDA) users favor an on-premise deployment model. Therefore, security being a paramount concern since EDA tools handle highly sensitive intellectual property such as proprietary chip designs and confidential customer data. The on-premises deployment accounted for more than 57.50% market share of the electronic design automation market in terms of security alone. In their 2023 survey Synopsys found out that among respondents who were using an EDA solution only 68% indicated that they chose on premise because it offered better protection against cyber threats. The next highest-ranking reason for selecting this option was also given by a significant number of people which is data security issues so yes it turns out those concerns about data safety were valid.

In another perspective according to Cadence Design Systems’ report it can be seen that over three quarters or precisely 74 % experienced significant performance benefits with on-premises deployments due to lower latency. This indicates that if these organizations had chosen cloud-based solutions instead there would have been a delay in processing time which could have affected real-time tasks requiring immediate response like simulations during engineering workflows. However, despite all these advantages associated with on premises deployment models there still exists demand from various quarters pushing for adoption of cloud computing in EDA mainly driven by scalability, cost savings and collaboration capabilities. Cloud computing allows businesses to dynamically scale up their computational resources when need arises without making huge capital investment in hardware.

By Tool 

The demand for simulation tools in the electronic design automation market has witnessed a significant increase. This is as a result of the requirement for precision, efficiency and cost-effectiveness when designing complex electronic systems. The segment held more than 36.78% market share in 2023 and it is expected to continue growing at a CAGR of 10.36% in the coming years as well. Simulation tools are used to predict circuit behavior before physical prototypes are built which cuts down on the trial-and-error stage and its associated costs too. Particularly important in industries where mistakes can lead to catastrophic financial losses or safety hazards such as automotive, aerospace and consumer electronics.

Simulation tools possess many advanced features that have made them highly demanded across industries today. These include integrating robust statistical analysis together with 3D visualization thereby enabling engineers carry out risk-free virtual environment tests on what-if scenarios too. This capability especially helps identify potential design problems early on during development which could save millions in redesign costs as well as time also spent waiting for these issues to be fixed later when they become more expensive too. Then there are such solutions like Autodesk Fusion 360 along with PTC's Creo which offer full package deals comprising design, modeling and simulation capabilities.  Thus, simplifying product lifecycle from concept through production stages even further still while being able create digital twins besides running extensive simulation-based experiments for optimizing designs & processes.

Recent figures indicate an increasing use and impact of simulation tools within electronic design automation market. Development time may be cut by 30% using simulations; Costs reduced by up to 20%; Product quality improved by 25%; Reliability increased by a quarter through integrating simulators into designs among others.

By End User

The Telecom and Data Centre industry has emerged as a prominent end user of Electronic Design Automation market with revenue share of 27.45% due to their unique demands for high-performance, reliable, and scalable hardware solutions. In order to cope with the exponential rise in data traffic caused by IoT devices, 5G networks and cloud computing, design and optimization tools need to become more complex too. The design of sophisticated integrated circuits and systems-on-chip (SoCs) which are necessary for advanced networking and data processing capabilities can be facilitated through EDA tools within these sectors. Telecommunications firms or centers dealing with large amounts of information may achieve quicker time-to-market periods along with reduced costs through using such software packages.

Several compelling statistics underpin the leadership of the Telecom and Data Centre industry in the electronic design automation market. Robust infrastructure upgrades will be needed when global data traffic reaches 396 exabytes per month by 2024. The current cloud computing market is worth $1.05 trillion and growing rapidly due to continuous expansion of data centers, with more than 600 hyperscale data centers worldwide. In order to cope with high-speed data transmission caused by the rollout of the 5G network which has over 1.5 billion subscriptions predicted; cutting-edge chip designs must be used. Also, projected at $3096Bn market size, adoption of AI and machine learning calls for advanced EDA tools that can help develop specialized AI chips while dealing with this fact – semiconductor fabrication is becoming increasingly complex as nodes shrink to 3nm so there needs to be sophisticated EDA design.

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Regional Analysis

In 2023, North America took the lead as the largest revenue-generating region in the global electronic design automation market and accounted for about 43.65% of total market share due to a number of key factors; its modern technological infrastructure, large presence of key industry players and extensive research and development activities among others. It is also a hub for some of the leading players in electronics manufacturing namely Cadence Design Systems, Synopsys and Mentor Graphics that have been able to secure their positions by way of consistent innovation and massive investments in research and development. The United States especially has a very well-developed semiconductor industry which has led to such giants like Intel and Advanced Micro Devices demanding sophisticated Electronic Design Automation tools in order to maintain a competitive edge over other major chipmakers across the world as well as stretch technology’s limits. Furthermore, this growing market is supported by established wireless infrastructures across North America together with significant government financing which make it one of the principal regions for EDA.

The Electronic Design Automation market enjoys North America’s supremacy as a result of its robust ecosystem of tech giants and startups, especially in Silicon Valley that has become synonymous with innovation in electronics and semiconductor technologies. High spending on electronic devices in the region and presence of some key market vendors have also played a role in increasing the market significantly. Besides this, United States is home to the largest number of semiconductor design professionals globally which bolsters its capacity for innovations and developments in the Electronic Design Automation sector. Additionally, concentrating on implementing new technologies as well as enhancing operational efficiencies through automation solutions are other factors responsible for sustaining their leading position.

electronic design automation market’s regional position in North America is significantly influenced by end users, including tech giants and small start-ups in the region. These units have been continuously pushing the boundaries of semiconductor design and electrical engineering. They are innovating so much that their quest for more advanced electronic design automation tools is making them very popular. In 2023, the consumer electronics application segment was a major part of market share, which expressed both its appetite for novelty and new styles. Furthermore, the rising complexity in automotive industry due to sophisticated electronics boosts EDA demand, thus enabling engineers to form intricate integrated circuits (ICs), sensors as well as control systems. North American has maintained its dominance in the market because it consists of key market participants who are always at the forefront of innovation and R & D activities. The presence of leading market players and strong focus on innovation and technology development ensure that North America maintains its dominance in global electronic design automation market.

Asia Pacific’s Rapid Growth

In terms of the electronic design automation market, Asia Pacific is catching up with the rest of the world rapidly. The continent held a large portion of this market in 2023. It was helped by such countries as Japan, South Korea and China. The authorities in Beijing invested heavily into semiconductors during the last ten years alone – their contribution amounted to more than $150 billion so far. This money has been spent on advanced design automation systems which are now widely used throughout this area where they saw a twelve-percent rise just within one year. South Korean chip exports were worth around $128 bn, which shows that without them we wouldn’t have had any use for those electronic devices made by companies like Samsung or TSMC – two leading electronics manufacturers based there; however, Taiwan’s TSMC alone invested US$ 30 billion into researching new semiconductors back in 2023 itself while at the same time regionally over 1 billion 5G connections were already established within that year thus driving demand even further.

One can’t overlook automotive electronics either – they accounted for US$ 65 billion worth sales across APAC during 2023. Furthermore, R&D partnerships between academia and industry (examples being Tsinghua University together with Huawei) helped propel advancements within design automation tools themselves.

Europe’s Steady Contribution

Europe is still a key player in the electronic design automation market despite being left behind by North America and Asia Pacific. In 2023, it occupied a significant share due to its powerful semiconductor industry and automotive industry. Approximately $50 billion came from Germany which is the biggest semiconductor market in this area. The European Union’s Horizon 2020 program has greatly impacted the growths of EDA technologies through allocating €80 billion for research and innovation. Leading automobile manufacturers like Volkswagen or BMW have created needs for EDA tools especially used in designing electric cars as well as self-driving automobiles. In terms of electric vehicles sales, Europe took up 30% worldwide in 2023.

Moreover, there was also a 10% rise recorded for using renewable energy related project based electronic design automation tools adoption because of region’s focus on sustainability and green technology. Besides that, joint research projects such as EPI (European Processor Initiative) have served to strengthen advanced semiconductor designs capability within different parts of Europe where they are carried out. Investments made towards aerospace industry alone were estimated at US$250 billion but it does not stop here since those funds injected into R&D activities will also impact on how much can be tapped into from this sector with regards to EDA markets. Furthermore, digitalization drive across all sectors supported by Digital Europe Program has enabled faster uptake advanced EDA tools thus fueling demand within EU member states as well other countries across Europe.

Top Players in Global Electronic Design Automation Market

• Aldec, Inc.
• Altair
• Auto Desk Inc.
• Cadence Design Systems
• HAMMERSPACE
• Keysight Technologies, Inc.
• Nipon Data
• Siemens
• Silvaco Inc.
• Synopsys, Inc.
• Vennsa Technologies
• Xilinx, Inc.
• Zuken Inc.
• Other Prominent Players

Market Segmentation Overview:

By Offering

• Solutions
  • Computer-aided Engineering (CAE)
  • Semiconductor Intellectual Property (IP)
  • PCB (Printed Circuit Board) and MCM (Multi-chip Module)
  • IC Physical Design and Verification
• Services

By Deployment

• On-Cloud
• On-Premises

By Tool

• Simulation Tools
• Verification Tools
• Design Tools
• Ensuring Reliability (DFM) Tools

By End User

• Automotive Industry
• Healthcare Industry
• Aerospace & Défense Industry
• Telecom and Data Centre Industry
• Consumer Electronics Industry
• Industrial Sector
• Others

By Region

• North America
  • The U.S.
  • Canada
  • Mexico
• Europe
  • Western Europe
    • The UK
    • Germany
    • France
    • Italy
    • Spain
    • Rest of Western Europe
  • Eastern Europe
    • Poland
    • Russia
    • Rest of Eastern Europe
• Asia Pacific
  • China
  • India
  • Japan
  • Australia & New Zealand
  • South Korea
  • ASEAN
  • Rest of Asia Pacific
• Middle East & Africa
  • Saudi Arabia
  • South Africa
  • UAE
  • Rest of MEA
• South America
  • Argentina
  • Brazil
  • Rest of South America