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1/ Cadence creates applications used to design semiconductors and other electronic systems, referred to as Electronic Design Automation, EDA
EDA acts like a tax on the semiconductor industry’s R&D spend
Needham Conference, 8/13/2020, highlights:
https://twitter.com/bizalmanac/status/1267543120910188544?s=20
EDA acts like a tax on the semiconductor industry’s R&D spend
Needham Conference, 8/13/2020, highlights:
https://twitter.com/bizalmanac/status/1267543120910188544?s=20
2/ Cadence is the second largest EDA business behind Synopsys with $2.4B and $3.3B of TTM sales respectively
Together, they represent ~60% of EDA revenues globally
The mission critical nature of their products allow them to not compete on price
Together, they represent ~60% of EDA revenues globally
The mission critical nature of their products allow them to not compete on price
3/ Lip-Bu Tan joined as CEO 11+ years ago and CDNS stock has compounded at 35% under his watch
He credits a culture of innovation, customer obsession and their ability to build and rebuild business lines into market leaders
He credits a culture of innovation, customer obsession and their ability to build and rebuild business lines into market leaders
4/ Intellectual Property (“IP”) integration is a common use for EDA software
Cadence did not offer any IP tools in 2009
Tan responded to customer requests by purchasing Denali in 06/10 for $296.8mm and Tensilica in 04/2013 for $319.3mm
IP generates 14% of Cadence’s revenue
Cadence did not offer any IP tools in 2009
Tan responded to customer requests by purchasing Denali in 06/10 for $296.8mm and Tensilica in 04/2013 for $319.3mm
IP generates 14% of Cadence’s revenue
5/ Cadence hired Anirudh Devgan away from IBM in 2012 to revitalize their Digital Design and Sign-off functions.
Digital represents 29% of revenues currently
Cadence is entering the systems simulations market
Customers have grown from 30 to 125 in the half year
Digital represents 29% of revenues currently
Cadence is entering the systems simulations market
Customers have grown from 30 to 125 in the half year
6/ The semiconductor industry is benefiting from 5 macro trends
1) 5G
2) Cloud Computing
3) AI / ML
4) IoT
5) Electrification of Cars / AV
1) 5G
2) Cloud Computing
3) AI / ML
4) IoT
5) Electrification of Cars / AV
7/ Cadence has responded well to the challenges posed by Covid
Employees are prepared to work remotely
Customer engagement remains high through video chatting
Financial impacts are very minor and guidance is for business as usual
Employees are prepared to work remotely
Customer engagement remains high through video chatting
Financial impacts are very minor and guidance is for business as usual
8/ China has stated their intention of transitioning to a fully local semiconductor value chain
Cadence's China business continues to do well even as they navigate tariffs
The risk is known but mitigated by the quality of CDNS and SNPS software compared to substitutes
Cadence's China business continues to do well even as they navigate tariffs
The risk is known but mitigated by the quality of CDNS and SNPS software compared to substitutes
