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Cadence's (CDNS) Solutions Aid GUC to Offer Advanced Designs

Zacks Equity Research

Cadence Design Systems, Inc. CDNS recently announced that its Voltus IC Power Integrity Solution and Innovus Implementation System have been deployed by Global Unichip Corporation (or GUC).

Cadence’s digital implementation and signoff tools enabled GUC to deliver “advanced-node (N16, N12 and N7) designs” to support the complex computational processes involving AI and HPC (or high-performance computing) applications.

Cadence Innovus Implementation System is integrated with advanced hierarchical partitioning flow capabilities and robust block implementation features.

Meanwhile, Voltus IC Power Integrity solution boasts of distributed processing capabilities, which makes it proficient in analyzing electro-migration processes.

The seamless integration of both the tools enabled GUC to meet its GHz performance target and deliver advanced multi-billion gate designs in time. An expanding clientele is expected to drive the top line in the days ahead.

Notably, the tools are part of the company’s Intelligent System Design strategy, which ensures SoC design excellence.

Moreover, increase in customer base is instilling investor optimism in the stock. Notably, shares of Cadence have returned 51.8% on a year-to-date basis, outperforming the industry’s rally of 39.5%.

Portfolio Strength Holds Promise

Cadence continues to invest heavily in digital implementation and signoff products, which is helping it to launch products that address the ever-growing needs of electronics and semiconductor companies.

The growing clout of AI, 5G and ADAS chipset making is fueling demand for computational software tools, which favors Cadence.

Further, easy integration of its in-house offerings provide support to customers during implementation and signoff stage is bolstering adoption of its solutions.

The growing adoption of Cadence’s offerings is expected to strengthen the company’s presence in the Electronic Design Automation (EDA) market. Per ResearchAndMarkets data, the EDA tools market is forecast to hit $17.35 billion by 2024, compared with $9.76 billion in 2018 at a CAGR of 10.1% between 2019 and 2024.

Moreover, the ongoing digital transformation across aerospace and medical verticals holds promise.

Wrapping Up

Cadence is evolving its silicon-based design strategy with an aim to meet complex computing demands of emerging ADAS, 5G and AI applications. In fact, the company has created a new System Analysis Group to focus exclusively on system analysis and design.

We believe that the latest customer wins and product rollouts in growth markets will bolster the company’s financial performance.

Zacks Rank & Other Key Picks

Currently, Cadence carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks worth considering in the broader sector are Keysight Technologies Inc. KEYS, Marchex, Inc. MCHX and Fortinet, Inc. FTNT. All the three stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Keysight, Marchex and Fortinet is currently pegged at 9.1%, 15% and 14%, respectively.

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