Refuting the “AI disrupting software” theory: Cadence (CDNS.US) chief says AI is a growth “turbocharger” rather than a threat

The Zhitong Finance App learned that Anirude Devgan, president and CEO of Cadence (CDNS.US), a global leader in electronic design automation (EDA), said on Tuesday that artificial intelligence (AI) is the growth driver of this chip design software company, not a threat.

Devgan said, “Combining AI with Cadence, an appropriate analogy is like installing a turbocharger.” “Our basic tool is like a V6 or V8 engine, and AI itself can't do these tasks independently.”

Despite the booming semiconductor industry and strong earnings reports in July, Cadence's stock price fell 11% over the past year. The stock was involved in a broader wave of software stock sell-offs as investors feared AI might disrupt traditional software companies. But Devgan argues that these concerns overlook Cadence's irreplaceable role in designing increasingly complex chips, which are fueling the construction and expansion of AI.

“We are an integral part of the semiconductor industry,” Devgan said.

Cadence provides software and other tools for designing semiconductors, and has partnerships with major chipmakers, including Nvidia and Intel. As chips become more complex and more technology companies begin to design custom chips themselves, Devgan expects demand to grow.

“Demand for our products has only increased and will continue to grow for the next 5 to 10 years,” he said.

Devgan pointed out that AI cannot replace Cadence's core tools because designing advanced chips (some of which have 200 billion transistors under the 3-nanometer process) requires precise physics and mathematics. Instead, Cadence is incorporating AI into its products to help customers explore more design possibilities and create more efficient chips.

“What customers want is to improve the performance of the chip. If it's 3 GHz, they want to reach 3.5 GHz; if it's 10 watts, they want to adjust to 90 watts,” Devgan said. “It's an optimization problem, and AI can provide more scenarios we can run and use this to improve performance.”

In addition to the current boom in data centers, Devgan sees greater opportunities in “physical AI” (physical AI, that is, the application of artificial intelligence to machines that interact with the real world). He pointed out that autonomous vehicles, drones, and robots are the main future markets, and they all require specialized chips and increasingly complex electronic systems.

“The number of electronic devices and semiconductors in cars is expected to increase tenfold over the next few years, so this will create a large number of new customers,” Devgan said.

He saw greater potential opportunities in the field of robotics, calling humanoid robots “the largest product category ever.”