Industry update: Rajeev Madhavan
By Peggy Aycinena | March 11, 2011
Magma CEO Rajeev Madhavan has been at the helm of the ship for well over a decade. Chatting by phone earlier this week, Rajeev gamely answered questions about the state of the EDA industry, and the state of Magma Design Automation in particular.
Q – How do you think the EDA industry is doing these days?
Madhavan – The EDA industry is doing very well. The increased attention by Carl Icahn helps, but generally EDA is behind by a year from the semiconductor industry, which did very well last year – so EDA should see growth this year. During the recession, customers did cut down on spending on EDA, but it's my hope that everyone will return to pre-recession bookings levels very quickly. At Magma, we clearly believe we'll get very close to that level by the end of this fiscal year. Things are looking very good from that perspectives.
Q – What's the latest 'fad' in EDA?
Madhavan – There are a lot of changes in the industry, but having said that – the current fad is just catching up to the earlier levels. It's not really anything more than that. We had such a drop down during the recession. Of course, there's a continued interest in EDA [in the financial community] because of Carl Icahn, but even before that, the industry had realized it's important to learn how to control the finances.
That message has definitely been heard by the EDA industry loud and clear throughout the recession, and now we are controlling ourselves. Now, we're past the recession and [financial] people are stepping in to ask, Why aren't you more profitable? With that increased scrutiny comes an increasing focus on management to improve things.
Q – What are the things that Magma's doing to improve things?
Madhavan – Pre-recession, we wanted to be a Me Too vendor in a lot of different areas. We were leaders in some places, but we went on a binge to be the supplier of everything in IC design.
During the recession, I asked my team why would we be differentiated, for instance, in IR drop tools. There was no answer to substantially differentiating ourselves, so we decided that [technology niche] was not a business for Magma, nor one that could improve our bottom line. That decision also applied to some other areas, as well.
Being a Jack of all Trades and Master of Nothing in EDA is useless. Rather than being a good supplier to the customer, just packaging everything together has lead to a decrease in the available EDA market.
Q – Has the industry evolved away from those all-you-can-eat bundling practices?
Madhavan – Yes, I do see some behavioral changes from my competition. Now it's not just about packaging the whole thing together, reducing the price, and delivering the whole thing to the customer. Fundamentally, that's not good for the industry, so I am seeing some behavioral changes from my competition in that area.
Now it's about making maximum dollar on every product. If you do, you will reach better margins, and be a better supplier to your customers – not just an all-you-can-eat supplier. Mentor, for example, has made substantial changes on that front.
Q – What is Magma focusing on now?
Madhavan – Starting out into the recession, we had place & route tools, tools for digital test, IR drop, etc. Today, we're all about analog/mixed-signal design. We're changing the way designers do that work.
I don't have dreams like EDA360, although I'm aware of that initiative. At Magma, however, we really are changing things completely around [in a move we call] AMS 180, because it's a 180-degree change in how things have been done up to now in analog/mixed-signal design.
Today, if you look at any of the wireless mobility chips out there, they have content that's both analog and digital. You need to be able to verify with the accuracy of SPICE in some regions, digital in some regions, and memory in some regions. That's all phenomenally differentiated in our new technology.
In addition, designs today are being done a 28 nanometers, which in turn means variability. We know that and have responded. Our timing tools, our extractions tools, everything we sell comprehends variability from the get-go. And, our tools allow you to optimize power and area in the digital and the analog portions of the design. We're all about providing complete optimization and verification, Spice verification and implementation of the mixed-signal design in a much more automated way to meet the current needs of our customers.
Q - Are you getting analog tool user traction?
Madhavan – Absolutely. Our FineSim SPICE has grown from zero to $40 million in bookings in a single year. We're grown from zero customers in analog implementation 2 years ago, to 2 customers last year, to 17 customers this year – and all 17 of those will become big accounts in analog implementation.
[In fact], for 4 of our customers, the things that we're delivering have convinced them to do it all with Magma. That's a reflection of the growth the company has had. We're headed into a great year. We will grow in analog 5-to-10 percent in size and dollars, and on the digital side, we'll see 10-to-15 percent growth.
Q - What about an exit strategy for Magma?
Madhavan – My responsibility is to make our AMS tools come to market, and Magma is a public company so I also have a fiduciary duty to our shareholders. I'm maximizing the value of all of the products that we have, [not focusing on an exit strategy]. We know we are very capable of growing at a phenomenal rate. That is my focus today.
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