CADENCE DESIGN SYSTEMS / SYNOPSYS, INC. : Living up to the Hype(rscaler)

Research evidence excerpt

CADENCE DESIGN SYSTEMS / SYNOPSYS, INC. : Living up to the Hype(rscaler)

Refinitiv

Data centers likely ~9% of EDA spend today

Backed by our analysis of EDA license costs, we extrapolate that hyperscalers today

comprise ~9% of EDA market spends and estimate they helped add 50-100bps to core

EDA growth over the last 10- years. Please reach out to see our analysis. We found that

EDA companies started to mention data center as customers starting in mid-2010s, as

they quickly scaled up their footprint in response to broad cloud adoption.

Figure 1: We think EDA spend has kept up with hyperscaler spend since 2015

Hyperscaler cloud revenue vs. Core EDA spend growth Hyperscaler EDA spend as a % of Core EDA revenue

40% 36% 9%

34%

35%

30% 31% 29% 31%

30% 28%

25% 23%

20%

15% 11% 13%

10% 14%

11% 11% 10%

5% 8% 8% 8% 8% 8.3%

0%

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 91%

Hyperscaler Cloud revenue Core EDA total revenue Hyperscaler EDA spend Core EDA ex-hyperscalers

Source: Bloomberg, Company reports, BNP Paribas Equity Research estimates

Market is split between CDNS/SNPS

Our analysis of EDA users across the largest hyperscalers suggests Synopsys and

Cadence account for a bulk of market share (95%) with the split skewing towards

Cadence (54%), and Mentor (Siemens) has a much smaller footprint (5%). Google leads

in terms of mentions of EDA tools with Amazon, Microsoft, and Meta behind in that order.

From an EDA market share perspective, Google led in Synopsys mentions, while

Cadence was even or slightly ahead across the rest.

Figure 2: Cadence and Synopsys dominate hyperscaler EDA

Mentor (Siemens)

5%

Synopsys 41%

Cadence 54%

Source: Bloomberg, Company reports, BNP Paribas Equity Research estimates, LinkedIn

BNP Paribas Research Cadence Design Systems / Synopsys, Inc.