About Cadence Design Systems

Cadence Design Systems, Inc. (Cadence) operates as a leader in electronic system design that delivers essential computational software, hardware, and IP that its customers use to turn their design concepts into reality. Cadence is a leading pioneer of electronic system design software and intellectual property (‘IP’), building upon more than 35 years of computational software expertise. The company is a global company that provides computational software, special-purpose computational hardware, IP and services to multiple vertical sectors, including automotive, artificial intelligence (‘AI’), aerospace and defense, high-performance and mobile computing, hyperscalers, wireless communication, industrial internet of things (‘IIoT’) and life sciences. The company’s solutions are integrated and used in every stage of design creation, implementation, verification, analysis and signoff from chips to printed circuit boards (‘PCBs’) to complete electromechanical systems. Companies that design semiconductors and other electronic devices use the company’s solutions to design, simulate, verify, signoff and manufacture every major type of semiconductor electronics, including analog, mixed-signal, radio frequency (‘RF’) and microwave devices, photonics, memory devices and digital chips for high-performance computing and AI, including central processing units (‘CPUs’), graphics processing units (‘GPUs’), neural processing units (‘NPUs’), three-dimensional (‘3D’) integrated circuit (‘3D-IC’) and advanced package devices. These devices are used in multiple vertical sectors. Companies that design system-level products cover a broad range of vertical sectors, including automotive, aerospace and defense systems, networking and communication systems, high-performance computing, cloud infrastructure and data centers, medical systems and health and life sciences. These companies use the company’s solutions to design, simulate, verify, and manufacture complete system products with the electronics included. The company’s offerings include software, hardware, services, and reusable IC design blocks, which are commonly referred to as IP. The company’s semiconductor customers use its offerings to design, configure, analyze, and verify integrated circuits (‘ICs’). Additionally, customers license the company’s IP, which accelerates their product development processes by providing pre-designed and verified circuit blocks for their ICs. Systems customers use the company’s offerings to design, simulate, and verify the electro-thermal and physical functionality of their ICs, PCBs, and systems products. Some of the company’s software offerings are used by pharmaceutical and biotech companies to help accelerate their drug discovery process. Business Strategy The company’s Intelligent System Design strategy allows the company to deliver essential computational software, hardware and IP that its customers use to turn their design concepts into reality. The company’s customers include many of the world’s most innovative companies that design and build highly sophisticated semiconductor and electronic systems found in products used in everyday life. The company’s Intelligent System Design strategy allows the company to quickly adapt to its customers' dynamic design requirements. The company develops industry-leading computational software and hardware, generative AI, and digital twin algorithms to help solve their toughest challenges. The company’s offerings include and extend beyond EDA to enable computational software for Intelligent System Design across three layers starting with semiconductor and silicon design excellence, followed by system innovation, and then pervasive intelligence. The foundation of design excellence for semiconductors is essential for the company’s customers to produce best-in-class technology for custom IC, digital IC design and signoff, simulation and functional verification, and leverages pre-built semiconductor IP. These tools, IP and associated services are specifically designed to meet the growing requirements of engineers designing increasingly complex chips across analog, digital and mixed-signal domains, and perform the associated verification tasks, including the validation of low-level software running on a digital twin of the silicon model. This enables design teams to manage complexity and verification throughput without increasing their team size or extending the project schedule, while reducing technical risks. The second layer of the company’s strategy leverages its computational expertise, expanding the company’s solutions into the physical analysis in system innovation. It includes tools and services used for system design of the packages that encapsulate the ICs, 3D-ICs, and PCBs. The company’s technology covers system simulation analysis, including electromagnetic, electro-thermal, electromechanics, and other multiphysics analysis necessary as part of optimizing the full system’s performance, radio frequency (‘RF’) and microwave systems, and embedded software. The company also leverages its computational software expertise to life sciences by offering biosimulation solutions. The third layer of the company’s strategy addresses pervasive intelligence in new electronics. It starts with providing solutions and services to develop AI-enhanced systems and includes machine learning, deep learning and digital twin capabilities being added to the Cadence computational software and computational hardware portfolio to make IP and tools more automated and to produce optimized results faster. It also includes deploying generative AI techniques and LLMs to provide a rich set of co-pilots or design assistants to accelerate the design process. The company’s software and special-purpose hardware products also support cloud access to address the growing computational needs of the company’s customers. Acquisitions During the second quarter of fiscal 2023, the company acquired Pulsic, Ltd., a provider of floorplanning, placement and routing of custom IC software. This acquisition enhances the company’s existing generative AI capabilities in Virtuoso Studio to solve advanced node challenges using intelligent AI-based physical design and virtual prototyping techniques. During the third quarter of fiscal 2023, the company acquired the Rambus SerDes and memory interface PHY IP assets from Rambus Inc. This acquisition broadens the company’s enterprise IP portfolio in the design of AI, data center and hyperscale applications, as well as extends the company’s expertise across multiple vertical sectors, including automotive, aerospace and defense and consumer electronics, with the intention of providing broad subsystem solutions that meet the demands of the company’s worldwide customers. During the fourth quarter of fiscal 2023, the company acquired Intrinsix Corporation, a wholly owned subsidiary of CEVA, Inc., and a provider of design engineering solutions focused on the U.S. aerospace and defense industry. This acquisition adds a highly skilled engineering team that has expertise in advanced nodes, radio frequency, mixed signal and security algorithms. In January 2024, the company acquired Invecas, Inc., a leading provider of design engineering, embedded software and system-level solutions. This acquisition adds a skilled system design engineering team with expertise in providing custom solutions across chip design, product engineering, advanced packaging and embedded software. Business Drivers The company’s products and services enable its customers to design complex and innovative semiconductor and electronic systems that are accelerated by the trends of semiconductor companies designing electrical systems, systems companies designing semiconductors, the hyper-convergence between electrical and mechanical systems and generative AI. The most promising new opportunities for the company involve enabling the design of electronic systems for consumers, including digital twin, generative AI, augmented reality (‘AR’), virtual reality (‘VR’), IIoT, edge computing, hyperscale computing (including data center infrastructure), mobile, communications (including 5G networks), automotive, aerospace and defense, and industrial subsystems, as well as the emerging opportunities in life sciences. Large and existing electronics categories, such as data center infrastructure, networking, mobile, smartphones and AI products, continue to provide business opportunities for the company as customers initiate new design projects. In order for the company’s customers to take advantage of such advancements, some of the company’s products need to first incorporate new capabilities such that they can exploit new manufacturing capabilities. This dependency means that the company 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 the company’s customers by its 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 (‘QoR’) (in terms of power consumption, performance and chip area), engineering productivity, tool performance, manufacturing, 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. Products and Product Categories The company’s Intelligent System Design strategy enables its customers to address a broad range of challenges that arise as they develop electronic products. The company’s solutions are categorized according to the role they play in the electronic product design process. The company groups its products into categories related to major design activities, including custom IC design and simulation, digital IC design and signoff, functional verification, IP, and system design and analysis. All of the company’s product categories have generative AI solutions that augment the core product offering. Custom IC Design and Simulation The company’s custom IC design and simulation offerings are used by the company’s customers to create schematic and physical representations of circuits down to the transistor level for analog, mixed-signal, custom digital, memory and RF designs. These representations are verified using simulation tools optimized for each type of design, including the design capture environment, simulation and IC layout within the Virtuoso custom IC design platform. Other tools in the custom IC portfolio are used to prepare the designs for manufacturing. The Virtuoso Advanced-Node Platform adds functionality to the base Virtuoso package to enable the use of 3D transistors (‘FinFETs’), multi-patterning and other technologies required for advanced designs. The Virtuoso RF Solution addresses the challenges of RF design across chip, package and board. The Spectre Simulation Platform provides large-scale verification simulation. The Virtuoso System Design Platform enables engineers to design and verify concurrently across the chip, package and board. The Virtuoso Studio platform is the company’s generative AI solution for custom IC and mixed-signal design and simulation that enables additional productivity, automation and quality of results throughout the entire design flow. Digital IC Design and Signoff The company’s digital IC design and signoff solutions are used to create logical representations of a digital circuit or an IC that can be verified for correctness prior to implementation (please refer to the discussion under ‘Functional Verification’ below). Once the logic is verified, the design representation is implemented, or converted to a format ready for silicon manufacturing, using additional software tools within this category. The manufacturing representation is also analyzed and verified. The company’s digital IC design and signoff technology suite provides a full flow to achieve power, performance and area (‘PPA’) design targets, and includes three major categories: logic design, physical implementation and signoff. The company’s logic design offering is consisted of logic synthesis, test and equivalence checking capabilities and is typically used by customers to create and verify designs in conjunction with the company’s functional verification capabilities. The offering includes the Genus Synthesis Solution, a logic synthesis offering that provides fast throughput while also offering high quality results, and the Joules RTL Power Solution, which delivers fast power analysis while preserving near-signoff accuracy. The company also offers the Cadence Modus DFT Software Solution, which reduces SoC design-for-test time. The company’s physical implementation offering comprises tools used near the end of the design process, including place and route, optimization and multi-patterning preparation. The Innovus Implementation System is a physical implementation offering that delivers fast design turnaround time while also delivering improved PPA characteristics. This offering enables customers to address the technology challenges of the latest semiconductor advanced-process nodes, create a physical representation of logic models and prepare a design for signoff. The company’s signoff offering is consisted of tools used to sign off the design as ready for manufacture by a semiconductor foundry, which provides certification for this step. This offering includes the Tempus Timing Signoff Solution, Voltus Power Integrity Solution, Quantus Extraction Solution and Pegasus Physical Verification System. The company’s design-for-manufacturing products are also included in its signoff offering and are used by customers to address manufacturing and yield issues as early in the product development process as possible. Cadence Cerebrus is the company’s generative AI solution that combines all elements of the full-flow IC through signoff that enables additional productivity, automation and improved quality of results throughout the entire design flow. Functional Verification Functional verification products are used by the company’s customers to effectively and efficiently verify that the circuitry or the software they have designed is consistent with the functional specification. Verification is largely done throughout the design process, with the intention of identifying as many potential functional problems as possible before manufacturing the circuitry, thereby significantly reducing the risk of discovering a costly error in the completed product. The company’s Verification Suite includes four primary verification engines, starting with the JasperGold Formal Verification Platform and Xcelium Parallel Logic Simulation Platform, which are used in the early stages of design verification, often at the IP and subsystem level. Once the design is more mature, with early formal and simulation verification tasks performed, verification engineers deploy the company’s Palladium Enterprise Emulation Platform and Protium field programmable gate arrays (‘FPGA’)-Based Prototyping Platforms 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, allowing for software development to begin weeks to months earlier than otherwise possible. These engines are also supported by other verification tools that provide an environment that allows for effective verification throughput and management, including verification planning and metric tracking, testbench automation, debugging and software-driven tests, enabling the company’s customers to coordinate verification activities across multiple verification engines, teams and locations for effective verification closure. Additionally, 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. IP The company’s IP offerings consist of pre-verified, customizable functional blocks, which customers integrate into their ICs to accelerate the development process and to reduce the risk of errors in the design process. The company offers many types of IP, including Tensilica configurable digital signal processors (‘DSPs’), 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 SerDes, peripheral component interconnect (‘PCI’), USB and many other standards. The company also offers a broad range of Verification IP (‘VIP’) with memory models, which model the expected behavior of many industry-standard protocols when used with verification solutions and are complementary to its design IP offerings. The company’s VIP and accelerated VIP are used with its full suite of functional verification engines to emulate and model the expected behavior and interaction of standard industry system interface protocols, including DDR, USB and PCI Express in silicon. The company’s customers also use its System VIP offerings to perform full system-level chip verification. System Design and Analysis The company’s system design and analysis offerings are used by its customers to develop PCBs and advanced IC packages and to analyze electromagnetic, electro-thermal and other multiphysics effects. The capabilities in the Allegro System Design Platform include PCB authoring 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 for the company’s PCB offerings. For mainstream PCB customers, where individual or small team productivity is a focus, the company 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 Millennium Multiphysics Enterprise Platform is an industry-first turnkey AI-enabled digital twin. Millennium M1 is the first release and overcomes 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. Augmenting all the company’s multiphysics analysis solutions is Optimality Intelligent System Explorer, an industry-first generative AI-driven multiphysics optimization solution that enables additional productivity, automation and quality of results throughout the entire analysis flow. Optimality Explorer breaks through the limitations of the conventional human-intensive optimization process and is designed to produce the optimal system design solution expeditiously and without compromising accuracy. An additional AI digital twin solution of the company’s Data Center Design and Insight 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 also offers molecular modeling and simulation solutions obtained through its acquisition of OpenEye Scientific Software in 2022. 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 the development of 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. The company’s updates provide continued access to its evolving technology as the company’s customers’ designs migrate to more advanced nodes. 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 use 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 emulation and prototyping 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 into 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, app-based, 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 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, consisting of Cadence-managed and customer-managed environments for electronic product and life sciences companies using the scalability of the cloud, continues to expand, with additional cloud-based and software as a service (‘SaaS’) products added or under development in the year ended December 31, 2023 (fiscal 2023), including cloud-based platforms for e-commerce and molecular sciences. Contractual arrangements with customers for both environments are generally time-based, similar to the on-premises software license arrangements described above and may also include usage-based terms. In delivering methodology services, the company leverages its experience and knowledge of design techniques, the company’s products, leading practices and different design environments to improve the productivity of its customers’ engineering teams. Depending on the customers’ projects and needs, the company works 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 generally 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 generally 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 emulation and prototyping 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. 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 General Data Protection Regulation in the European Union, which regulate the company’s collection, handling and use of personal information. 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 Altium Limited (Australia) and Zuken Ltd. (Japan), as well as emerging competitors in China like Huada Empyrean, Xpeedic, X-EPIC, Primarius Technologies, Univista and Giga-DA. History Cadence Design Systems, Inc. was incorporated in 1987.