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Cadence's (CDNS) Clarity 3D Solver Adopted by Ambarella

Zacks Equity Research

Cadence Design Systems, Inc. CDNS recently announced that its Clarity 3D Solver solution has been adopted by semiconductor design company, Ambarella AMBA. The solution will support the development of Ambarella’s next-generation AI vision processors.

In two recent simulations that were run on the Clarity 3D Solver, the solution took only 29 hours to identify defects in Ambarella’s design and correct the scattering parameter (S-parameter) response.

Per Amabarella, the speed, capacity and accuracy of Cadence’s solution will help it tospeed up the design process, thereby shortening its schedule. Ambarella now expects Clarity 3D Solver to address the challenges of its next-generation 5nm AI design project.

Robust Adoption of Solutions Hold Promise

Cadence has been witnessing solid traction for its solutions in recent times. This is likely to boost top-line growth in the coming quarters and instill investor confidence in the company’s stock. Notably, Cadence shares have returned 33.2% in the year-to-date period, outperforming the industry’s rally of 12.9%.

Year-to-Date Performance



Recently, the company’s digital full and verification suite offerings were selected by Arm to accelerate the development of mobile devices based on its Cortex-A78 and Cortex-X1 CPUs.

In the first quarter, Cadence’s flagship emulation platform Palladium Z1, witnessed four new client wins and nine expansions while Protium X1 platform witnessed six new deals and six repeat orders.

In January, the company’s digital implementation solutions were adopted by Broadcom AVGO for the development of 5 nm technology-based designs. Cadence’s offerings will also be used to design robust 5nm chips with optimized PPA parameters.

These client wins have been aiding the company’s top line and has positioned Cadence for long-term sustainable growth. Markedly, the company’s Product & Maintenance revenues increased 7% year over year in the first quarter and the trend is likely to continue on the back of strength in the data-center and mobile devices end-markets.

Moreover, Cadence Tensilica HiFi digital signal processors (DSPs) has been optimized to efficiently execute TensorFlow Lite for Microcontrollers, part of the TensorFlow end-to-end open-source platform for machine learning (ML) from Google, division of Alphabet GOOGL.

Further, the growing adoption of Cadence’s offerings is expected to strengthen the company’s presence in the Electronic Design Automation (EDA) market. Per Mordor Intelligence data, the EDA tools market is expected to witness a CAGR of 10.2% between 2020 and 2025.

Additionally, Cadence collaborated with STMicroelectronics to successfully tape out a 56G very short-reach (VSR) SerDes in 7nm for a system on chip (SoC) targeted at the networking, cloud and data center markets.

Nevertheless, the coronavirus-induced economic downturn is likely to put pressure on the Zacks Rank #3 (Hold) company’s prospects in aerospace and automobile end-markets. Additionally, export limitations for certain China-based customers are expected to be a headwind for near-term revenues. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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