The EDA Consortium (EDAC) unveiled its quarterly report yesterday, showing numbers for the third calendar quarter of 2009. The figures give a mixed picture, showing encouraging signs of growth compared to the rather dismal second quarter, but still an overall decline of just more than 7% compared to the third quarter of 2008.
Walden Rhines, Mentor Graphics chairman, president, and CEO, and current 
chairman of EDAC, pointed out that the year-on-year comparison is against the last relatively strong quarter in 2008-before the bottom fell out of the EDA industry-so in his words "Q3 2008 sets a fairly high bar."
Specifically, total EDA revenue for Q3 2009 was $1,168 million, up 3.8% from Q2. As always, the strongest product segment was computer-aided engineering tools, accounting for about $450 million of the total revenue and declining 3.3% from Q3 2008. The largest 
year-on-year decline was in semiconductor intellectual property (IP) revenue, which shrank by 10.1%, and would have fallen much more if it were not for non-reporting companies ARM and Rambus.
A few specific areas bucked the downward year-on-year trend. Revenues from printed-circuit and multi-chip module design tools actually grew year-on-year, by a modest 1.5%, where all other areas-computer-aided engineering tools, physical-design tools, semiconductor IP, and design services-declined year-on-year.
And once again, as last quarter, the Asia-Pacific region posted slight positive growth for the aggregate EDA revenue number year-on-year, while all other regions declined. Japan, which is not included in the Asia-Pacific numbers, declined slightly. The Europe, Middle-East, and Africa region showed the largest like-quarter decline percentage, dropping from $248 million in Q3 2008 to $204 million in Q3 2009.
For the most part, with the exception of the European numbers, the percentage changes, both year-on-year and quarter-on-quarter, were small enough that it would be difficult to infer patterns from them. It seems relatively clear that the European market is declining more rapidly than other areas, while Asia-Pacific is growing. This may indicate a longer-term trend as well as the impact of the recession. It is possible that the stronger showing for PCB and MCM tools reflects an earlier recovery in design activity by systems houses compared to semiconductor companies. But Rhines warned that this would be speculation, not a conclusion strongly supported by the numbers.
One figure in the report is worrying from any angle, however. Total employee headcount for reporting companies declined by 8% year-on-year, and 1.4% from Q2 of 2009, indicating that layoffs and closures continued well into the Q3 of last year. This would probably come as a surprise to no one in the industry.
Rhines noted that normally, EDA revenue lags electronics industry R&D spending by about one year. But for Q3 of 2009, EDA revenue turned up sequentially, more or less coincident with an upturn in electronics industry revenues and R&D spending.
This may be a reflection, he observed, that the 2008 recession was not a typical industry event driven by oversupply, but rather a reaction to a global economic event. Thus the recovery may behave quite differently from typical electronics-industry recoveries. Certainly the sequential growth numbers are encouraging, but they are starting from a low base, and in an atmosphere of continuing unemployment.
By Ron Wilson, Executive Editor - EDN