China Galaxy Securities: A surge in domestic EDA mergers and acquisitions, AI+ advanced manufacturing processes drive the rise of the “mother of chips”

The Zhitong Finance App learned that China Galaxy Securities released a research report saying that domestic EDA is in a triple resonance period of “policy driving+technological breakthrough+high demand growth”. Looking at domestic substitution and mergers and acquisitions integration in the short term, full process coverage and AI empowerment in the medium term, and global share growth in the long term, it is recommended to focus on the long-term investment value of the core goals of the industrial chain.

The main views of China Galaxy Securities are as follows:

EDA is at the core foundation of the upstream integrated circuit industry chain, leveraging the multi-trillion dollar digital economy industry

EDA is the core technology for electronic system design automation. It is at the core basic support position in the upstream integrated circuit industry chain. It runs through the entire chip design and manufacturing process, directly determines chip design efficiency, production costs, and performance. By leveraging the semiconductor industry, it indirectly leverages the global multi-trillion dollar digital economy industry, and is the foundation for an inverted pyramid structure.

The EDA industry has long been monopolized by the Big Three. Under China's low penetration, there is plenty of room for domestic alternatives

The global EDA industry as a whole shows a highly concentrated pattern, with the three giants Synopsys (Synopsys), Cadence (Cadence Electronics), and Siemens EDA (Siemens EDA) accounting for 74% of the market share. The global EDA market will reach 18.3 billion US dollars in 2026 and is expected to exceed 30 billion US dollars in 2034; China's market size is expected to reach 22.2 billion yuan in 2026, the growth rate is significantly higher than overseas, and the long-term market space is broad.

Triple resonance opens the industry's growth ceiling

1) Domestic alternative rigidity: The US government began export controls on EDA software in May of this year, then liberalized in July, but there are still strict controls on advanced process tools below 7nm, further forcing domestic EDA manufacturers to accelerate the localization process; 2) Technology and demand upgrades: from 7nm to 3nm advanced process design costs have increased exponentially, and post-Moore era system-level designs such as Chiplet, 3D IC, and heterogeneous integration have spawned new demand for AI+EDA; 3) Industrial integration and catalysis: China's EDA industry is currently showing a small pattern of fragmentation and fragmentation Industry mergers and acquisitions are accelerating, Domestic EDA leaders are increasingly complementing their product lines to enhance their comprehensive strength.

Risk warning: Industry competition increases risk; technology research and development falls short of expectations; policy progress falls short of expectations; merger and acquisition integration progress falls short of expectations.