Cadence Design Systems, Inc. CDNS recently announced that its digital full flow offerings are enabling Efinix to accelerate design closure of its Trion family of field programmable gate arrays (FPGAs) and reduce time to market.
Moreover, the company’s RTL-to-signoff flow solutions aided Efinix in achieving design success of 10 nanometer (nm) technology-based spectrum of nodes.
Following this feat, Efinix intends to expand the utilization of Cadence’s digital flow solutions across its product line and enhance Trion portfolio of FPGAs.
The increasing utilization of Cadence’s offerings is expected to strengthen its presence in the Electronic Design Automation (EDA) market. Moreover, an expanding customer base is instilling investor optimism in the stock.
Notably, shares of Cadence have gained 33.4% year to date, compared with the industry’s rally of 15.3%.
Increasing system design complexity and high cost of failure are bolstering the demand for Cadence’s system design and verification solutions among semiconductor companies.
Evolution of Chip Making Processes Favors Adoption
Semiconductor companies are increasingly looking to deliver chips that support complex workloads of advanced applications involving AI, ML, vision processing, and edge compute, across industrial, mobile and surveillance end-markets.
Moreover, evolution of semiconductor manufacturing processes from 10 nm to 7 nm and even 5 nm technology is expected to boost innovation in design solutions. This, in turn, bolsters prospects for Cadence’s digital full flow offerings.
The company is evolving its Intelligent System Design strategy with an aim to meet complex computing demands of advanced 5G and AI applications.
In fact, the company’s digital flow solutions support the strategy, and aid semiconductor companies to achieve SoC design excellence and accelerate time to market with better predictability.
Markedly, the Cadence digital full flow solution comprises Innovus Implementation Solution, the Genus Synthesis Solution, Quantus Extraction Solution, Tempus Timing Signoff Solution, and Voltus IC Power Integrity Solution.
The growing clout of AI and 5G chipset making is fueling demand for robust computational software tools. Cadence’s latest digital full flow solutions attempt to serve the purpose and enhance growth prospects of the company.
This is expected to bolster adoption of its solutions and drive growth in the quarters ahead.
Deal Wins Remain Noteworthy
Notably, Cadence has expanded partnership with Broadcom AVGO for developing advanced semiconductor solutions. The tie-up is focused on the creation of 5 nm designs.
Additionally, the company announced collaboration with STMicroelectronics to work on a 56G very short-reach (VSR) SerDes in 7 nm for a system on chip (SoC) targeted at the networking, cloud and data center markets.
Per ResearchAndMarkets data, EDA market is expected to witness a CAGR of 6% during 2020-2025.
Moreover, ongoing digital transformation across aerospace, automotive and medical verticals holds promise. Cadence is anticipated to benefit considerably from latest customer wins and product roll outs in strategic growth markets, hence, favoring the top line.
Zacks Rank & Key Picks
Cadence currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector include Dropbox, Inc. DBX and Chegg, Inc. CHGG. Both stocks sport a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for Dropbox and Chegg is currently pegged at 32.5% and 30%, respectively.
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