EDA software will become the next front in the chip war between the US and China

EDA software is a small but powerful part of the semiconductor supply chain and it is mainly controlled by three Western companies. That gives the United States a strong point of leverage, similar to how it wanted to restrict access to lithography machines — another key tool for making chips — last month. So how did the industry become so American-centric, and why can’t China develop its own alternative software?

What is EDA?

Electronic design automation (also known as electronic computer-aided design, or ECAD) is specialized software used in chip manufacturing. It’s like the CAD software architects use, except it’s more complex, since it handles billions of microscopic transistors on an integrated circuit.

screenshot of KiCad software for circuit board design and prototyping
Screenshot of KiCad, a free EDA software.


There is no single dominant software program that represents the best in the industry. Instead, a series of software modules are typically used throughout the entire design process: logic design, debugging, component placement, wire routing, timing optimization, and power consumption. functionality, verification, etc. Because modern chips are so complex, each step requires a different software tool.

How important is EDA for chip manufacturing?

Although the global EDA market is appreciated only about 10 billion dollars in 2021, make it a small part of 595 billion dollars semiconductor market, it is of unique importance to the entire supply chain.

Mike Demler, a consultant who has worked in chip design and EDA for more than 40 years, said today’s semiconductor ecosystem can be thought of as a triangle. In one corner are foundries, or chipmakers like TSMC; from another angle are intellectual property companies like ARM, which create and sell reusable design or layout units; and in the third corner are the EDA tools. All three together ensure a smooth running of the supply chain.

From the name itself, it sounds like EDA tools are only important to chip design companies, but they are also used by chip manufacturers to verify that a design is viable before manufacturing. or not. There’s no way a foundry could make a single chip as a prototype; it takes months of time and manufacturing investment, and each time, hundreds of chips are built on the same semiconductor substrate. It would be a huge waste if they were found to have flaws in the design. As a result, manufacturers rely on a special type of EDA tool to do their own validation.

What are the top companies in the EDA industry?

There are only a handful of companies that sell software for each step of the chip manufacturing process, and they’ve dominated this market for decades. The top three companies – Cadence (US), Synopsys (US) and Mentor Graphics (US but acquired by Germany’s Siemens in 2017) – control about 70% of the global EDA market. Their dominance is so strong that many EDA startups specialize in a niche and then sell themselves to one of these three companies, further cementing their monopoly.

What is the US government doing to limit EDA exports to China?

The overwhelming influence of American companies on the EDA industry makes it easy for the US government to squeeze China’s access. In their latest announcement, they pledged to add certain EDA tools to the list of technologies banned from export. The US will coordinate with 41 other countries, including Germany, to implement these restrictive measures.

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