Innovating through tough times

BANGALORE, INDIA: The semiconductor industry has been battling through the economic downturn, and EDA vendors large and small are adjusting to a world where customers’ design-tool budgets face greater scrutiny.

The Indian market has not been affected by the recession as much as other parts of the world, and with India’s growing prominence in semiconductors EDA companies operating in India are witnessing the rise of tool consumption, and the growing consumer market offers enormous opportunities in sectors such as telecommunications, healthcare and energy.

But we should look at the flagging economy as not something to be survived but an opportunity for success. What continues to drive the electronics industry is genuine innovation. The semiconductor industry is headed for increasing challenges from higher design costs and greater imperatives for production at smaller process geometries.

The cost of design is rising because of the increased need for embedded software development and hardware/software co-verification. And implementing complex system-on-chip (SoC) designs cannot be done with current EDA tools alone. These changes might prove to be the catalyst for the next wave of true innovation.

Though for now survival may be the No. 1 focus for many companies – it’s not easy to push for innovation when facing the stark reality of reluctant customers, depressed stock prices and profit pressures – history reveals that economic adversity helped winners to emerge during other market downturns. Apple is one great example. Companies such as Hewlett-Packard, FedEx and CNN also have thrived during tough economic times. Adversity often can help spur innovation.

Many innovative companies are struggling or dying right now, and many innovative initiatives have been put on hold in favor of survival. Yet, like a hardy weed that keeps popping up through a crack in the concrete, innovation is amazingly tenacious. Creative people still find ways to develop exciting new technologies and products.

Leaders in the electronics industry achieve success not because they severely cut costs but because they did so judiciously. They have achieved success not because they looked better than competitors, but because they looked beyond them. These leaders succeeded not because they reacted quickly, but because they did not react at all – rather, they anticipated.

I believe the most important approach to survival is also one that drives success. If design teams face the imperative to innovate, EDA companies must innovate as well.

To support changes in semiconductors and electronics, and to survive the downturn, we must provide more effective solutions for SoC design. We need to increase the productivity of digital SoC designers and to integrate analog IP blocks as part of large chip designs. The adoption of SoCs for new process geometries will require new EDA tools, new approaches and doing something different.

And, although the number of design starts has been declining, growing design complexity is presenting requirements of a different kind for EDA tools – a welcome opportunity. Hand-held devices, more integration of the functions on a single chip and power consumption for battery-operated devices will be major factors influencing the semiconductor industry today.

Successful companies are now shifting their emphasis away from increased performance and sophistication toward increased accessibility and affordability to help them to tap into an under-served market. If we can keep the innovations coming, our industry can emerge from the current turmoil with even bigger opportunities ahead of us. The semiconductor space has tremendous opportunities for innovation and we must assess every aspect of how we operate to get through this uncertainty.

Hard times have the ability to re-invigorate the entrepreneurial spirit. While there’s turbulence in EDA right now, the need for the critical technology we provide is greater than ever. Entrepreneurs must hang on – EDA will thrive again.

(The author is the chairman and CEO, Magma Design Automation, a provider of chip design software. The author can be reached at madhavan@magma-da.com. The views expressed in this article are the views of the author and do not necessarily reflect the views or policies of CIOL)