Cadence Design Systems, Inc. (Cadence) is a global market leader that develops computational, AI-driven software, accelerated hardware, and intellectual property (‘IP’) solutions for engineers and scientists to bring new and innovative products to life.
The world’s most innovative technology companies use the company’s solutions and services to deliver transformational products to multiple industries that drive the global economy. The products these companies develop are some of the most comple...
Cadence Design Systems, Inc. (Cadence) is a global market leader that develops computational, AI-driven software, accelerated hardware, and intellectual property (‘IP’) solutions for engineers and scientists to bring new and innovative products to life.
The world’s most innovative technology companies use the company’s solutions and services to deliver transformational products to multiple industries that drive the global economy. The products these companies develop are some of the most complex systems in the world. The company works with its customers, helping them solve their most complex challenges in the semiconductor and electronic systems industries to unlock limitless opportunities.
The company’s customers include semiconductor companies that design and manufacture semiconductor devices and systems companies that design and manufacture products containing many different types of semiconductors, which they either make themselves or buy from a semiconductor company. Semiconductors, also referred to as integrated circuits (ICs), or chips, are the heart of almost every industry. Semiconductors are the catalyst for innovation in many industries, including automotive, aerospace, biotech, hyperscale and cloud computing, data centers, telecommunications, medical technology, industrial internet of things (IIoT), and AI. They are found in a wide variety of consumer products such as cell phones, automobiles, computers, home appliances, home security, drones, and home entertainment systems.
Business Strategy
The company’s Intelligent System Design (ISD) strategy allows the company to deliver solutions to its customers to solve their most complex product development challenges. The company’s industry-leading computational software, accelerated hardware, and IP enable the company to adapt to its customer's dynamic design requirements, allowing them to meet their critical business and environmental concerns, including time-to-market and sustainability. The creation of even the most seemingly simple electronic systems and products typically includes a complex design process and requires highly trained engineers with various areas of specialized knowledge and skill sets. The company’s ability to deliver innovative products that keep up with increasing complexity allows its customers to be successful in meeting their business goals and objectives.
The company’s strategy is focused on three primary areas: Design Excellence, System Innovation, and Pervasive Intelligence.
Design Excellence focuses on the company’s core technology and deep understanding of computational software, accelerated computing, machine learning, and AI to develop best-in-class electronic design and analysis semiconductor solutions. In this area, customers are primarily developing large chips, including those used in computers, laptops, cellphones, medical devices, games and entertainment systems, and many other types of consumer electronics. Design Excellence applies to all types of semiconductor electronics, including CPUs, GPUs, MCUs, memory, radio frequency (RF), analog, and mixed signal, in both mainstream and advanced semiconductor process nodes.
System Innovation builds on the company’s foundation of Design Excellence and deep expertise in computational algorithms and expands that expertise to include Multiphysics-based analysis of systems that contain electronic devices, including printed circuit boards (PCBs), devices with advanced packaging technology, and 3-dimensional IC (3D-IC). This gives customers designing full systems containing multiple electronic devices, the ability to verify that their products will work as intended under various physical conditions. Some examples of electronic systems are a computer motherboard, the electronics in a cellphone, or the electronic transmission or infotainment system in an automobile.
Pervasive Intelligence incorporates AI training and inference algorithms in the company’s solutions to help customers optimize performance and productivity with improved quality of results for their products. The amount of data produced in the design phase of their products has grown exponentially over the last 20 years. The company implements generative AI agents to analyze large data sets and break through the limitations of the conventional human-intensive optimization process to achieve optimal design solutions expeditiously and without compromising accuracy.
The company’s software and hardware products also support cloud access to address its customers' growing computational needs. Customers can access the company’s solutions via its Cadence OnCloud Platform.
Acquisitions
On May 30, 2024, Cadence acquired all of the outstanding equity of BETA CAE, a system analysis platform provider of multi-domain, engineering simulation solutions.
On January 8, 2024, Cadence acquired all of the outstanding equity of Invecas, Inc. (Invecas), a provider of design engineering, embedded software and system-level solutions.
On September 6, 2023, Cadence acquired the serializer/deserializer (SerDes) and memory interface physical layer (Memory) IP business from Rambus Inc. (Rambus). Memory and SerDes IP design and integration continues to be integral to the design of artificial intelligence, data center and hyperscale applications, CPU architectures and networking devices.
On May 4, 2023, Cadence acquired all of the outstanding equity of Pulsic, Ltd. (Pulsic), a longtime provider of production-proven technology for floor-planning, placement, and routing of custom ICs. The addition of Pulsic’s technologies and experienced team supports Cadence’s Intelligent System Design strategy and strengthens Cadence’s Custom IC Design and Simulation technology portfolio.
On October 2, 2023, Cadence acquired all of the outstanding equity of Intrinsix Corporation (Intrinsix) from CEVA, Inc. The acquisition enhances Cadence’s system and IC design services resources with the addition of a team with expertise in advanced nodes, radio frequency, mixed-signal and security algorithms.
Business Drivers
The company’s products and services enable its customers to design complex and innovative semiconductor and electronic systems that are driven by key trends, including foundries creating new advanced transistor devices and processes, semiconductor companies designing electrical systems, systems companies designing semiconductors, the hyper-convergence between electrical and mechanical systems, hyperscale computing, autonomous driving, and 5G. These trends are accelerated by the AI super cycle. Demand for the company’s technology and expertise is driven by increasing complexity and its customers’ need to invest in new designs and products that are highly differentiated.
Generative AI is reshaping the entire semiconductor and systems industry development process. From the company’s perspective, the AI super cycle it is experiencing will influence the company’s key business opportunities along three horizons, which are Infrastructure AI, Physical AI and Life Sciences AI. The first horizon, Infrastructure AI, is being driven by data centers and hyperscale computing to provide the necessary power to run AI workloads. The second horizon, Physical AI, is the integration of AI with autonomous systems. It will drive many applications, such as automobiles, industrial robots, and many other autonomous systems. The third horizon, Life Sciences AI, is the application of AI and computer science to biology to drive advancements in the medical and life sciences industries.
In order for the company’s customers to take advantage of such advancements, some of its products need to first incorporate new capabilities such that they can exploit new manufacturing capabilities. This dependency means that it must invest significantly in product research and development (R&D) to keep pace with the latest manufacturing technology. The demand for new IC manufacturing technology directly impacts the demand for the company’s newest products.
Another driver for the company’s business is the differentiation, capabilities and benefits provided to its customers by the company’s products. With the rapid pace of innovation comes the opportunity for the company’s products to address growing key challenges associated with the design of electronic products, such as power consumption, performance, chip area and cost. The company’s products and services have differentiated attributes that its customers value. In general, these attributes can be grouped into broader categories, such as quality of results (in terms of power consumption, performance and chip area), engineering productivity, tool performance, manufacturability, reliability and faster time to market. Many of these attributes contribute to sustainability initiatives by enabling the company’s customers to create innovative products that optimize power, space and energy.
Product Categories
Engineers use the company’s solutions to complete critical steps in the design process, which includes creating, implementing, and verifying the design for functionality, manufacturability and other required industry-related compliance standards. Much of an engineer's time spent with the company’s solutions during the design process involves running simulations to verify that their design will work as expected. The company’s technology, enhanced by AI, allows its customers to build a virtual model or digital twin that accurately predicts how their design will work. The ability to perform these simulations leads to significant time and cost savings for the company’s customers as they can find and fix critical design problems before building their products. The company’s customers rely on its solutions to ensure their products perform safely and reliably.
In alignment with the company’s Intelligent System Design strategy, the company defines its solutions in three product categories: Core EDA, Semiconductor IP, and System Design and Analysis (‘SD&A’). Core EDA includes the company’s software, hardware, and services used to design and verify a wide variety of semiconductors. The company’s Semiconductor IP portfolio includes silicon subsystems, software, and services that are used in semiconductor design. The SD&A category includes the company’s software and services used to design and verify a wide variety of physical electronic systems. Leveraging the company’s AI and computational software expertise, the company has integrated the multiphysics domain (also known as ‘computational fluid dynamics,’ or ‘CFD’) with the company’s EDA solutions to provide customers with complete system-level design and analysis solutions. These categories are tightly integrated to provide complete design solutions for the company’s customers.
Core EDA
The company’s Core EDA product category addresses the design and verification for a wide variety of semiconductor chips and manufacturing process technologies. Examples of the types of chips include analog, custom, digital, mixed-signal, memory, microwave, silicon photonics, and RF. The types of devices addressed by Core EDA covers a wide range of industries, including automotive, aero and defense, hyperscale computing and data center, mobile communication, medical devices, and consumer electronics. As the complexity of chip design, semiconductor process technology, and electronic system design has increased, the company has been incorporating the latest advances in machine learning and generative AI to drive significant improvements for the company’s customers’ design quality of results and engineering productivity.
Custom IC Design and Simulation
Virtuoso Studio is the foundation of the company’s solution platform for custom, analog, mixed-signal, photonics, and RF semiconductors. It is a complete AI-enabled solution that integrates the key Cadence technology required for silicon design, layout, and verification. Engineers use this solution to define the chip functionality (schematic) and physical layout descriptions for the complete design of chips, advanced packaged devices, and PCBs. Designs are functionally verified in simulation with the Spectre simulation solution. Spectre is the gold standard for circuit design, including analog, custom, memory, silicon photonics, and RF. Pegasus Physical Verification, the company’s physical verification solution, is fully integrated with Virtuoso.
Digital IC Design and Signoff
The Innovus Implementation System is the foundation of the company’s full-flow digital IC design and signoff solution. A typical digital full-flow solution has four primary areas, which include creating the functional description (design synthesis), performing functional verification, running the physical implementation (place and route), and performing sign-off checks for manufacturing. The Innovus Implementation System is integrated with the key full-flow solution areas. For functional design, customers use the Genus Synthesis solution. For sign-off checks, customers use the Quantus Extraction, Timing Signoff, Voltus C Power Integrity, and Pegasus Physical Verification solutions. While these are the main areas in the digital flow, there are other important technology solutions for a comprehensive flow that includes the need for test synthesis, logic equivalence checking, high level power analysis, and optimization. The solutions are Joules RTL Power, which is designed to deliver fast power analysis while preserving near-signoff accuracy; and Cadence Modus DFT software, which reduces system-on-chip (SoC) design-for-test time. Cadence Cerebrus is the company’s generative AI solution that combines all elements of the full-flow IC through signoff, enabling additional productivity, automation, and improved quality of results throughout the entire design flow.
Functional Verification
Functional verification is an important aspect of the design process. Design engineers rely heavily on the capability to verify that the chip's functional description is equivalent to the physical description used to manufacture the silicon. Functional verification is done multiple times throughout the design process as changes are incorporated, with the objective of identifying as many potential functional issues as possible before manufacturing the circuitry, thereby significantly reducing the risk of discovering a costly error in the completed product. The company offers two functional verification software solutions, the Jasper Formal Verification Platform, and the Xcelium Parallel Logic Simulation Platform. These software solutions help engineers compare the functional view of the design with its physical view to make sure they match and help ensure that the design will successfully pass all functional tests.
The company’s hardware acceleration and software prototyping solutions address another important aspect of functional verification in design flows. This capability is essential for chips that are used in high-performance computers like microprocessors, graphics processors, and AI processor chips. Some of the functional tests for these designs are so large that they may take weeks or even months to complete. Hardware acceleration, also known as emulation, and software prototyping can reduce these large simulations to hours or a few days.
The company’s Palladium Enterprise Emulation Platform and Protium field programmable gate arrays (FPGA)-Based Prototyping Platforms are for more comprehensive chip verification, often running low-level embedded software on top of a model of the chip, to ensure proper functionality before silicon manufacturing. These engines are used for early bug detection, verification of block-level functionality, verification acceleration and emulation of system-level functionality, system-level power exploration, analysis and optimization, and system-level prototyping for hardware/software co-verification. The company’s Palladium platform provides high throughput, capacity, data center reliability, and workgroup productivity to enable global design teams to develop advanced hardware-software systems. The Protium platform leverages a common front end with the Palladium environment to move designs rapidly from emulation to the prototyping stage, enabling software development to begin weeks to months earlier than otherwise possible. Verisium is the company’s generative AI solution for multi-run verification that enables additional productivity, automation, and quality of results throughout the entire verification flow.
Semiconductor IP
The company’s semiconductor IP product category includes strategic and mission-critical design architectures that the company’s customers use to integrate into their highly differentiated design blocks, SoC subsystems, and chiplets. These are typically designed into silicon chips that are found in high volume in multiple markets, such as automotive, hyperscale, mobile computing, and many consumer products, including mobile phones, and AI chips. The company’s IP offerings include controllers and physical interfaces, which are commonly used in computing, networking, and embedded systems. It has a broad portfolio of PCI Express, Universal Accelerator Link, Compute Express Link, multiple memory interfaces, including High Bandwidth Memory and Graphics Double Data Rate, and many other standards. In addition, the company’s portfolio includes a wide variety of digital signal processor IPs.
The company’s Tensilica configurable digital signal processors are vertically targeted subsystems for AI, audio/voice, baseband and vision/imaging applications, controllers and physical interfaces for standard protocols and analog IP. The company’s design IP portfolio includes solutions for high speed serializer/deserializer (SerDes), peripheral component interconnect (PCI), USB, and many other standards. In addition to the IP portfolio listed above, customers rely on its Verification IP (VIP) portfolio to perform system-level validation. The VIP models are designed to work seamlessly with its Xcelium simulator and Palladium Enterprise Emulation solutions.
The company also offers design services to provide customers with end-to-end solutions from design specifications to final working silicon. In the first quarter of fiscal 2024, the company acquired Invecas, a leading provider of design engineering, embedded software, and system-level solutions. With this acquisition, it has added a highly skilled system design engineering team with expertise in providing IP design services for a wide variety of advanced node and mixed-signal chip designs, verification, product engineering, advanced packaging, and embedded software.
System Design and Analysis
The company’s SD and A product category is a comprehensive Multiphysics platform that helps the company’s customers design and simulate electronics and entire systems. It encompasses key areas of analysis including electromagnetic, thermal, structure, computational fluid dynamics, molecular, PCB and packaging, mechanical and structural analysis.
The capabilities in the Allegro System Design Platform include PCB design and implementation, IC package and system-in-package design, signal and power integrity analysis, and PCB library design management and collaboration. The need for compact, high-performance mobile, consumer, and automotive design with advanced serial interconnect is driving the technological evolution of the company’s PCB offerings. For mainstream PCB customers, where individual or small team productivity is a focus, it provides the OrCAD family of offerings, which are primarily marketed worldwide through a network of resellers.
The company’s Clarity 3D Solver for electromagnetic and power electronics analysis and simulation, as well as the company’s Celsius Thermal Solver, provide the foundation for Multiphysics analysis technology, with complete electrical-thermal co-simulation for electronic systems from ICs to physical enclosures.
The company’s Fidelity CFD Software expands its ability to meet the growing design challenges of electronic and systems companies. Fidelity CFD is a physics-based analysis solution for mechanical design and complements the electronic system analysis portfolio. The company’s comprehensive suite of computational fluid dynamics (CFD) solutions enables the company’s customers to extend their multiphysics analysis workflows to address simulation and analysis challenges for applications, such as aerodynamics, hydrodynamics, propulsion, turbomachinery, heat transfer, and combustion.
The company’s Cadence Reality Digital Twin platform brings physics-based design and analysis to the data center sector for performance-aware design and operational planning. Data center professionals can future-proof designs and assess operational decisions with this digital twin and empower designers, owners, and operators to address the need for reliability, capacity, and energy efficiency.
The company’s Millennium Multiphysics Enterprise Platform is an industry-first turnkey AI-enabled digital twin. Millennium M1 is the first release and is designed to overcome traditional CFD speed/accuracy and compute resource limitations with a combination of GPU resident CFD solvers, such as Fidelity LES for large eddy simulations (LES) and scalable high-performance hardware.
For 3D-IC and multi-chiplet designs, the company’s customers use the Cadence Integrity 3D-IC Platform. Built on the Innovus solution, Integrity allows system-level designers to plan, implement, and analyze stacked die systems for a variety of packaging styles (2.5D or 3D). Integrity 3D-IC is the industry’s first integrated system and SoC-level solution that enables system analysis, including co-design, with Virtuoso and Allegro implementation environments.
The company also offers molecular modeling and simulation solutions and services. These solutions and services are used by a wide range of organizations in the pharmaceutical and biotechnology sectors to accelerate the drug discovery process and make more informed decisions in developing new therapeutics.
Product Arrangements
The company primarily licenses its software using time-based licenses. The company’s time-based license arrangements offer customers the right to access and use all of the products delivered at the outset of an arrangement and updates throughout the entire term of the arrangement, which is generally two to three years, with no rights to return. In addition, certain time-based license arrangements include the right for the customer to remix among the products delivered at the outset of the arrangement and use unspecified additional products that become commercially available during the term of the arrangement.
A small portion of the company’s software is licensed under perpetual licenses, which does not include the right to its new technology. Payment terms for time-based licenses generally provide for payments to be made over the license period, and payment terms for perpetual licenses generally are net 30 days.
The company’s hardware products are either sold or leased to its customers. The company’s emulation hardware can also be accessed remotely via a Cadence-managed cloud arrangement.
The company generally licenses its design IP under nonexclusive license agreements that provide usage rights for specific designs. Some customers enter non-cancelable commitments, whereby the customer commits to a fixed dollar amount over a specified period of time that can be used to purchase from a list of products or services. In addition, for certain IP license agreements, the company collects royalties as its customers ship their product that includes its IP to their customers.
Technical Support and Maintenance
Customer service and support is critical to the adoption and successful use of the company’s products. The company provides its customers with technical support and maintenance to facilitate their use of the company’s software, hardware and IP solutions.
The company’s education services offerings can be customized and include training programs that are delivered online, through an app, or in a classroom setting. The content of these offerings ranges from the latest design techniques to methodologies for using the most recent features of the company’s products. The primary focus of education services is to accelerate the company’s customers’ path to productivity in the use of its products.
Services
The company offers a number of services, including design services, services related to methodology, education and hosted design solutions. These services may be sold separately or sold and performed in conjunction with the license, sale, or lease of the company’s products. As necessary, specialized design services engineers are assigned to internal R&D projects associated with the company’s design IP business.
As part of the company’s services offerings, the company designs advanced ICs, develop custom IP and help customers address design challenges. This enables the company to target and accelerate the development of new software technology and products to satisfy design requirements.
The company offers engineering services to collaborate with its customers in the design of complex ICs and the implementation of key design capabilities, including low power design, IC packaging and board design, functional verification, digital implementation, analog/mixed-signal design and system-level design. The customers for these services primarily consist of semiconductor and systems companies developing products for the consumer, hyperscale computing, 5G communications, mobile, automotive, aerospace and defense, industrial and life science vertical sectors. These ICs range from digital SoCs and analog and RF designs to complex mixed-signal ICs.
The Cadence Cloud portfolio, which consists of Cadence-managed and customer-managed cloud environments, continues to expand, with additional cloud-based and software as a service (SaaS) product, including cloud-based solutions for SD and A and functional verification. Contractual arrangements with customers for both environments are time-based, like the on-premises software license arrangements described above and may include usage-based terms.
In delivering methodology services, the company leverages its experience and knowledge of design techniques, the company products, leading practices and different design environments to enable improved productivity of its customers’ engineering teams. Depending on the customers’ projects and needs, the company collaborates with customers using outsourced, consultative and collaborative offerings.
Third-Party Programs and Initiatives
In addition to the company’s products, many customers use design tools that are provided by other companies, as well as design IP available from alternative suppliers. The company supports the use of third-party design products and design IP through the company’s Cadence Connections program and through the company’s participation in industry groups, such as the Silicon Integration Initiative and Accellera System Initiative. The company actively contributes to the development and deployment of industry standards.
Marketing and Sales
The company markets its products and provides services to existing and prospective customers through a direct sales force consisting of salespeople and applications engineers. Applications engineers provide technical pre-sales and post-sales support for the company’s products. Due to the complexity of many of the company’s products and the system design process, the sales cycle is generally long, requiring up to six months or longer. During the sales cycle, the company’s direct sales force generally provides technical presentations, product demonstrations and support for on-site customer evaluation of its solutions. The company also promotes its products and services through advertising, marketing automation, trade shows, public relations and the internet. The company selectively utilizes value-added resellers to broaden its reach and reduce cost of sales. The company’s OrCAD products and certain Allegro products are primarily marketed through these channels. With respect to international sales, the company markets and supports its products and services through the company’s subsidiaries. The company also uses a third-party distributor to license its products and services to certain customers in Japan.
Hardware Manufacturing and Software Distribution
The company’s hardware, including all individual PCBs, custom ICs and FPGA-based prototyping components, is manufactured, assembled and tested by subcontractors before delivery to the company’s customers. Software and documentation are primarily distributed to customers by secure electronic delivery.
Competition
The company competes most frequently with Synopsys, Inc., Siemens EDA, and ANSYS, Inc.; and also with numerous other tools providers, electronics device manufacturers with their own EDA capabilities, technical or computational software companies, electronics design and consulting companies and other IP companies. These include the U.S. based companies, such as Keysight Technologies, Inc., Schrödinger, Inc. and CEVA, Inc.; and foreign companies, such as Zuken Ltd. (Japan) and emerging competitors in China like Huada Empyrean, Xpeedic, X-EPIC, Primarius Technologies, Univista and Giga-DA.
Governmental Regulations
The company is subject to laws and regulations in the United States and other jurisdictions concerning anti-corruption and anti-bribery, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act, which prohibit corrupt payments to governmental officials and bribes to other persons.
The company is subject to laws and regulations in the United States and other jurisdictions governing data privacy and data protection, including the EU/UK General Data Protection Regulation, which regulate its collection, handling and use of personal information.
History
Cadence Design Systems, Inc. was incorporated in 1987.
