EDA is the “industrial master” of modern chip design. EDA, the full name of electronic design automation, refers to the computer software used to assist in the whole process of VLSI chip design, manufacturing, packaging and testing. With the increasing complexity of chip design, EDA has penetrated into all links of chip design and production. Chip design can not be completed without EDA. EDA has a significant leverage effect. According to esdalliance and WSTS data, the global EDA market scale in 2020 is only US $11.5 billion, but it is leveraging the semiconductor industry with a market scale of US $440.4 billion. Once there is a problem in the foundation of EDA industrial chain, the whole integrated circuit industry will be greatly affected, and EDA industry is also the key field most likely to be “stuck”.
The global EDA market is oligopoly, and China’s EDA market is growing rapidly. According to esdalliance data, the global EDA market scale was USD 11.5 billion in 2020, and the 10-year compound growth rate from 2010 to 2020 was 8%, and the market scale grew steadily; In 2020, the three giants in the global market accounted for nearly 70% of the closing market, and the pattern was stable. According to the data of CCID think tank, China’s EDA market sales in 2020 was 6.62 billion yuan, and the compound growth rate from 2018 to 2020 was 21.42%, much higher than the global growth rate in the same period. In 2020, the three giants of the United States accounted for 78% of China’s EDA market revenue, the localization rate was less than 15%, and there was a broad space for domestic substitution.
It is the stone of the mountain, which can attack jade. From the strength of EDA in the United States, we can see the law of industrial development. 1) Government support is the cornerstone. EDA’s basic research has high difficulty, long cycle and small early investment return. Since the 1980s, government agencies such as NSF, SRC and the Department of defense have invested tens of millions of dollars every year to support the development of EDA. 2) Talent is the core. It often takes ten years for an EDA talent from university research to practice. Therefore, EDA talent training system is very important. 3) Technology R & D is the driving force. EDA development involves computer, physics, mathematics and other knowledge, and the technical barrier is very high. At the same time, the speed of chip design change is accelerating, and EDA software companies need to continuously increase R & D investment to promote technological progress. 4) Ecological synergy is the guarantee. The advanced technology of chip design is the result of joint promotion by wafer factories, design companies and EDA software manufacturers. The progress of EDA software needs immediate feedback and parameter sharing from ecological partners. 5) M & A is an important means of expansion. EDA has many subdivided fields and fast technology iteration speed, and small companies with new technologies continue to appear. Customers prefer EDA manufacturers to provide complete solutions. Since the segment track belongs to the niche market, the cost of self-developed technology to replace these companies is high, so M & A is the best choice.
Domestic EDA can start a prairie fire. At the moment when the game between China and the United States enters the deep-water area, EDA localization is imperative. In terms of policy, the “14th five year plan” for the development of software and information technology service industry clearly puts forward key breakthroughs in industrial software, in which EDA software is clearly listed. In terms of capital, according to the data of core thought research institute, the number of financing in EDA industry has reached 16 in 2020. In 2020, about 49 EDA enterprises have been established in China to make technological breakthroughs in various fields. As of December 30, 2021, four EDA enterprises in China have applied for IPO, of which, Gallen electronics has been listed. According to the data of CCID think tank, the revenue share of EDA localization market gradually increased from 6% to 11% from 2018 to 2020, and the pace of localization gradually accelerated.
Key investment points: EDA is an indispensable tool for modern chip design. It is the key industrial software that is most likely to be “stuck”. It has significant leverage effect and economic effect in the electronic industry. Although the localization rate is low and China’s foreign trade gap is large, the market share of domestic EDA is gradually increasing under the promotion of policies and capital. Domestic EDA has just started and is forming comparative advantages in subdivided fields. It is suggested to pay attention to the four EDA companies that have applied for IPO: Huada Jiutian, Kelun Electronics (listed), guangliwei and silxin.
Risk warning: policy support is less than expected; The progress of technology research and development is less than expected; Ecological construction was not as expected.
