Despite EDA challenges, Mentor keeps faith on India

Great! All of these EDA firms, despite their current financial woes, remain strong and bullish on India! Mentor Graphics is no exception in this case!

It is well documented that the global EDA industry, along with the global semiconductor industry, has not had a smooth ride this year. However, this situation has only made both the industries work harder toward restoring some recovery.

Thanks to Veeresh Shetty, a dear friend, and Marcom Manager-Pacrim South, Mentor Graphics, I had the pleasure of meeting up with Joseph Sawicki, vice president & GM, Design to Silicon Division, Mentor Graphics Corp., during the recently held EDA Tech Forum in Bangalore.

We discussed a range of issues, such as the state of the EDA industry, Mentor's focus on India, and low-power design challenges. I did not discuss the proposed acquisition of Mentor by Cadence, as I feel it is no point in going over what was never on the cards, at least, for now.

According to Sawicki, Mentor Graphics is very optimistic about semiconductors and electronics, especially in India. "The EDA industry is currently having a pretty challenging environment. The recession in 2002 was the deepest in its history," he says.

"We (the EDA industry) haven't had the growth rates we would like. However, we have done better. We have re-invented Mentor," adds Sawicki. "We have now invested more in back-and-route ICs, which is about 40 percent of our revenue. Our product portfolio is the youngest within the company." He adds that the recession has been more in semiconductors. However, take out memory, and the scenario changes.

The drive of the semiconductor industry toward smaller and smaller features sizes requires more sophisticated correction methods to guarantee the final tolerances for the etched features in both wafer manufacturing and mask making.

Flat growth likely for EDA
Commenting on EDA industry's growth, Sawicki, adds that growth will be flat in 2008. Interestingly, the growth rate for EDA was 10 percent during the last two years. He notes: "EDA always does best when it delivers new technology. There are two reasons. One, on the manufacturing side of things. The extra results will be completely delivered by the software."

The other reason is that the aspects of manufacturing power and manageability will assume great importance. "Finally, the ESL space also provides the potential for growth. It also brings out a whole new design capability," he notes.

Given the global semiconductor scenario, Mentor is also looking at other markets outside semiconductors, especially automotive. Sawicki adds that this quarter, 20 percent of Mentor's business has been from the automotive segment.

There have been several global initiatives aimed at consolidation in the recent past. Sawicki says: "Consolidation should not be looked at as a goal. We also do acquisitions in the technology space. It augments a strong position."

So what are some of the other challenges facing the industry? Sawicki lists those as the economics of the industry itself, especially the design and verification costs.

On low power design, Sawicki agrees that there has been a transition of electronics from the US to Asia. "You have got to handle far lower power downward. We can reduce leakage current by 20-30 percent. Looking forward, how do you tie in ESL with physical design? When doing ESL, you can do architectural exploration. I will have my ESL to drive the place-and-route tool. I can get fast execution as well as low leakage power."

He advises that India has the ability to go beyond the innovation that has been happening.

Mentor in India
Mentor Graphics has three sites in India. It has R&D centers in Hyderabad and Noida, near New Delhi, and a sales and support office in Bangalore. The Hyderabad R&D center handles system design, while the Noida R&D center takes care of the front-end side, such as functional verification products.

Raghu Panicker, sales director, India, Mentor Graphics, says that the company has been very bullish on India. "We do not see any lull anywhere. Lot of design starts are happening here, in India," he adds.

I will continue my conversation with Joseph Sawicki in the next blog!