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ELECTRONIC DESIGN AUTOMATION China pursues domestic electronic design automation industry

Author / Editor: Luke James / Nicole Kareta

EDA tools are at the core of modern chip production. Now that it has been cut off from access to the United States EDA tools market, China is quickly developing a homegrown industry as it continues to do battle with the U.S. for global chip market dominance.

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The EDA market in China has historically been relatively small.
The EDA market in China has historically been relatively small.
(Source: ©Andrii - stock.adobe.com)

It’s no secret that one of modern China’s core ambitions is to become wholly independent when it comes to the design and development of computer chips. For several years now, Chinese semiconductor firms have received increasingly higher levels of investment and backing from both the private sector and central government—more recently including state funds for a USD2.35 billion SMIC plant—and the controversial communist state is now very much in a full-blown race with the United States to build the chip technology of tomorrow and dominate the global market.
To aid this chip design effort, many private companies, again with assistance from the state, have been setting up their own electronic design automation companies.

Electronic design automation in China

Electronic design automation (EDA) software tools are essential for the development of the extremely complex semiconductors that we all rely on today. They help chipmakers design and produce core components of computer chips such as integrated circuits (ICs) and printed circuit boards (PCBs).

The EDA market in China has historically been relatively small and where the country lags significantly behind its rivals. The Chinese EDA market that does currently exist is dominated by foreign companies—namely Synopsys, Cadence, and Mentor. As the key technology behind ICs and PCBs, and thus an indispensable technology for designing and manufacturing computer chips, the EDA market is in desperate need of some homegrown innovation in China.

The ongoing U.S.-China trade tensions, which have also restricted China’s access to the U.S. market for EDA solutions, among other things such as an increase in electronics companies in the general Asia-Pacific region, have contributed to an appetite for more domestic innovation, and investments in the Chinese EDA space have been rapidly shooting up as a result.

Poised for Rapid Growth

According to a press release from MarketWatch, the Chinese EDA tools market is expected to achieve a compound annual growth rate of 10.2 % between 2020 and 2025, with the global EDA market expected to reach USD20.89 billion by 2027, up from USD10.20 billion in 2019.
One of China’s biggest companies in the EDA space is X-Epic. Founded in March 2020 by Wang Libin, former vice general manager at Synopsys, the company reportedly raised at least 100 million Chinese Yuan (roughly USD15.4 million) in its Pre-A round of financing led by China V Fund (Yuhui Capital) and has since undergone additional successful rounds. Other big EDA firms include Hejian Industrial Software of Shanghai and Advanced Manufacturing EDA Co. (‘Amedac’), of Hefei. Both companies are also very new. Hejian was founded in May 2020 and Amedac was founded in September 2020, both by former veterans of Synopsys, which itself has an investment in Amedac.

Completely cut off from the state-of-the-art U.S. semiconductor industry and complementary markets such as that for EDA tools, Chinese innovators have had no choice but to quickly pull together resources and develop homegrown tools with support from the pockets of venture capitalists and, to a large extent, the country’s domestic semiconductor industry. The Chinese government is also heavily involved with its own “IC Big Fund”, which has been involved in several financing rounds for EDA start-ups in China.
This commitment to domestic EDA is definitely paying off. In November 2020, X-Epic presented one of the country’s first successful homegrown EDA solutions known as ‘EpicElf’, an FPGA verification tool. The fact that China has very quickly managed to get its own EDA industry off the ground is nothing short of impressive. And with access to the deep pockets of the Chinese government, it’s a virtual certainty that the market will grow at a rapid pace over the next few years as it continues to do battle with the U.S. for chip market dominance.

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