Cadence Design Systems: Powering semiconductors, behind the scenes

Globally, Cadence has about 11,000 employees, one-third of whom are in India. Its second largest R&D centre is also in Noida

Ever wondered how a small chip sitting in our phones makes the hardware so intelligent? Or how cars that have hundreds of chips are designed, especially when the chip size is getting smaller, but its complexity is only increasing?

San Jose-headquartered Cadence Design Systems is one such firm that provides the tools for semiconductor companies to design and build chips. In other words, Cadence is what powers the chips that are used by us in our everyday lives.    

“Virtually every chip which is made uses some form of our solutions…we have an end-to-end solution for doing design verification chips, and systems,” said Nimish Modi, senior VP and general manager, Strategy and New Ventures, Cadence. “So, if you think of a chip as a jigsaw puzzle with many pieces, we provide some of the Lego blocks, but not the chips…our customers buy our Lego blocks.”

According to the company, Cadence is “a pivotal leader in computational software, delivering software, hardware, and IP that customers use to turn design concepts into reality for most market applications, including hyperscale computing, 5G communications, automotive, mobile, aerospace, consumer, industrial, and life sciences.”

Cadence was born in the US out of a merger between two electronic design automation (EDA) companies – SDA and ECAD in 1988. The India operations were started in the form of Gateway Design Automation in 1987. Cadence acquired Gateway in 1989.    

Cadence, Modi says, is a technology company. "We build technology, built by technologists, for technologists…this is the way to think about us…over 35 per cent of our revenue goes into R&D. That is a fairly high percentage. In general, when you look at the semiconductor industry, the R&D spend is typically about 20 per cent of their revenues. R&D is something we put a very high premium on because we feel the best product wins in the market. You have to be the best in class."

5G, autonomous driving, and hyper scalers are driving Cadence’s growth. “All of these have one thing in common. They all require semiconductors at the foundation. As per estimates, the semiconductor industry is expected to touch $1 trillion dollar by the end of the decade,” says Modi.  

Globally, Cadence has about 11,000 employees, one-third of whom are in India. Its second largest R&D centre is in Noida. The three other design centres in India are in Bengaluru, Pune, and Ahmedabad. “India's been one of our fastest growing sites in terms of headcount. Many from our India team are working on the most leading-edge projects as well. So, it's not just the maintenance work,” says Jaswinder Ahuja, Corporate VP and India MD, Cadence.    

Inorganic growth is one of the key growth strategies for Cadence. It has done several acquisitions over the last decade. In 2013, it acquired Tensilica, a leader in data plane processing IP, for approximately $380 million in cash. Tensilica provides configurable data plane processing units that are optimised for embedded data and signal processing targeted at mobile wireless, network infrastructure, auto infotainment and home applications. This was the genesis of Cadence’s Pune operations. In the same year, it acquired Bengaluru-based Cosmic Circuits for an undisclosed sum.

Cadence has also made some acquisitions in the computational fluid dynamics space over the last couple of years. “This helps you get new domain knowledge, customer reach, as well as address a new class of customers…If it makes strategic sense, we will continue to do acquisitions,” says Modi.

In terms of its client base in India, 80 per cent of Cadence’s customers are global customers with a presence in the country. The remaining 20 per cent are Indian-origin clients including services companies, startups, and government.