Synopsys makes verification move

Electronic News, Feb 16, 1998 by Ann Steffora

Mountain View, Calif.--Synopsys Inc., spun out of General Electric's Microelectronics Center in North Carolina, has moved into the big leagues of design automation. Long the leader in synthesis tools, where it holds more than 80 percent of the market, the company moved into the second place in DA standings when it acquired Viewlogic last year.

Now diversified beyond its original synthesis technology, Synopsys is focused on verification. Earlier this month it entered the formal verification tool market and is joining the race to produce the tools necessary for deep submicron design while industry bodies duke it out over the next library standard.

The company, based in Mountain View, Calif., now employs about 2,800 people, and reported revenue of approximately $500 million in its 1997 fiscal year. With the addition of Viewlogic, revenues now total more than $700 million.

55 percent of that revenue comes from the U.S., while another 40 percent comes from Japan and Europe, and the remainder of Asia accounts for the rest. Synopsys has diversified itself by investing in its own development, spending about 23 percent of revenue on R&D, and acquiring a number of companies , specifically in the past 12 months. The EPIC Design Technology merger in February 1997 brought Synopsys into the deep submicron arena and the ViewLogic acquisition, completed in December, brings expertise in simulation, timing tests, and hardware/software co-design.

Recently, Synopsys president and CEO Dr. Aart J. de Geus spoke with Electronic News over breakfast to discuss last year's ViewLogic merger, Synopsys' company strategy, as well as the company's stance on intellectual property issues.

EN: In the future, what role will acquisitions play in the company strategy?

Dr. de Geus: "We've always said that acquisition is one of many mechanisms for growth. Typically, if you're in high tech, you first and foremost focus on developing the high tech yourself, because if you're not investing massively in it, you don't have the ability to actually recognize and acquire high-tech companies.

"Secondly, the number of technology companies in EDA has somewhat narrowed in the last couple of years, and so it's not like there are many new acquisitions available, but we keep the radar scope on for all the new technologies that may appear. At this point in time, we have developed a certain know-how on how to do it, including learning how not to do it. That gives us the opportunity, if something comes up, to really jump."

EN: Since the acquisition of ViewLogic was completed in December, how are the two companies getting along?

Dr. de Geus: "One of the things you look at in a merger is, what are the key drivers that bring you together in the first place? And so in the situation of ViewLogic, there were a number of technologies that we had coveted for a long time, leading with the developed simulation side of things. These are also technologies that are eminently close to what we've been doing; therefore, our field knows well how to deal with them, how to sell them, how to support them.

"One of the things that we've done, I think, differently from previous mergers is that we've appointed somebody to full-time drive closure of the merger, based on, essentially, for lack of a better word, a recipe or a playbook that we've developed over the years. And, in that, one of the most important things to resolve first, is the field relationships, because you want to be able to interact with the customer on the basis of being knowledgeable, knowing who's going to be in charge, what's going to happen with the product. Customers want to know and rightfully so.

"And it has allowed us, in the first two months of interacting, after announcing the deal, to resolve about 90 percent of the questions, by the time we actually closed the deal. We always say, 'The faster we do it, the better.' In reality, it's actually difficult, because there are many, and rightfully-so, human issues that have to be taken into account, and one needs to spend the time to get to know the people, make sure that you have the right people. Otherwise, they become sort of 'management decisions.' What you want is really make sure that there is both input and decisiveness and the two conflict sometimes.

"So, from that perspective, I think we are ahead on our timeline, and have been helped a little bit by the fact that both the market and the technology that ViewLogic serves are eminently close to what we've been doing anyway."

EN: Is there going to be a time when ViewLogic's label will stop being used?

Dr. de Geus: "ViewLogic itself was originally made up of many sub-companies, but fundamentally has two parts. One is a part that is the ASIC-oriented tools or the semiconductor-oriented tools, and one part that's oriented toward the PCB design. And we've kept the two separate. We have integrated strongly the ASIC part of the business. The PCB part of the business, which has a different dynamic, remains View Systems. We will keep that brand name and it is run by the former CEO of ViewLogic, Will Herman, and I think he is doing a terrific job of that.