TrendForce’s investigations show that, among the three categories in the upstream semiconductor supply chain, which consist of semiconductor manufacturing equipment, materials, and EDA, China made the most progress regarding self-sufficiency in semiconductor equipment, followed by materials, with EDA coming in last, in 2020. In other words, Chinese companies are relatively slow to develop EDA solutions.

The EDA market is relatively oligopolistic and involves two US companies. That means once the US implements more stringent controls over the export of EDA technologies and products to China, China’s development of semiconductor self-sufficiency will most likely suffer dire consequences as a result. Even if Chinese domestic companies are able to supply semiconductor equipment for mature process nodes as well as technologies for chip design, manufacturing, and packaging/testing, these things are essentially inoperable without EDA software and technical support. That is to say, the EDA industry remains the final piece of the puzzle for China’s quest for semiconductor self-sufficiency. Since China’s new IC policies (termed the Policies for Promoting the High-Quality Development of the Integrated Circuit Industry and the Software Industry in the New Era) place more emphasis on semiconductor equipment, materials, and software, compared to past policies, EDA (for which China’s self-sufficiency rate is lower than 10%) will likely become the top developmental priority within the software category in the new IC policies.

Chinese EDA suppliers are likely to provide domestic substitute solutions for mature process nodes

As the Chinese semiconductor design and manufacturing industries continue to expand, the Chinese EDA software market is expected to grow at a 15.1% CAGR across 2020-2024, which is faster than the global average of 10.3%. Although Synopsys, Cadence, and Siemens still account for an approximately 80% share in the Chinese EDA market, domestic companies in China have been accelerating their pace of development in recent years. For instance, companies that have more than 10 years of experience developing EDA software, including S2C, Empyrean, Primarius, Xpeedic, NineCube, and Cellixsoft, are gradually making waves in the industry, while many other emerging companies, such as X-EPIC, Arcas, LEDA, and AMEDAC have also been attracting more attention in the EDA market recently. Now that China-US trade tensions have yet to be resolved, and China continues to proceed with its new IC policies, Chinese EDA suppliers will likely experience rapid growth going forward, especially in their attempt to create domestic substitutes for 28nm and other mature process technologies.

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