EDA market growth driven by AI, IoT, and automotive through 2031

Global Market for Semiconductor EDA Software was valued at USD 784 Million in the year 2024, and is projected to reach a revised size of USD 1235 million by 2031, growing at a CAGR of 6.8% during the forecast period.

Semiconductor EDA software market is witnessing sustained momentum due to the relentless innovation in chip design, manufacturing complexity, and evolving end-user needs. The software's ability to optimize time-to-market, ensure design accuracy, and support next-gen applications across verticals makes it a cornerstone of the semiconductor ecosystem.

The convergence of IoT, AI, electric mobility, and high-performance computing continues to push the boundaries of what chips can do, thereby increasing dependency on advanced design automation tools. This comprehensive value proposition ensures strong and continued growth for the EDA software market.

Trends influencing growth
Increasing complexity and miniaturization of ICs are fueling the demand for advanced electronic design automation (EDA) tools. IC design today requires intricate layout planning, accurate logic verification, and precise power optimization, all of which are efficiently facilitated by EDA software. 

As chip manufacturers strive to meet the demand for high-performance computing and energy-efficient electronics, they rely heavily on these tools to reduce design cycle time and prevent costly errors. The surge in custom chip design across industries such as telecommunications, healthcare, and consumer electronics further drives the adoption of EDA software. This creates a continuous feedback loop of innovation and dependency, propelling the market's consistent growth.

The demand for faster and more reliable electronic products necessitates robust circuit design and simulation capabilities. Semiconductor EDA software enables engineers to create, test, and validate circuits in virtual environments before any physical prototyping. This reduces the cost of development and accelerates time-to-market. As product lifecycles shorten and design complexity increases, especially in analog, mixed-signal, and RF circuits, simulation-driven design has become indispensable.

Furthermore, EDA tools support iterative testing, thermal analysis, and error correction, ensuring the final design adheres to performance and safety standards. This enhanced design efficiency and cost management contribute significantly to the growing reliance on EDA tools across diverse sectors.

The automotive industry's shift toward electric vehicles, autonomous driving, and smart mobility solutions is amplifying the need for high-performance semiconductors. EDA software plays a vital role in designing and testing automotive-grade chips that meet stringent safety and real-time performance standards.

Features such as advanced driver-assistance systems (ADAS), infotainment units, and powertrain controls demand chips with precise specifications. EDA tools help ensure compliance with automotive industry standards like ISO 26262, reducing the risk of faults. As vehicles become increasingly electronic, the use of EDA software expands across multiple stages of design, validation, and verification, driving robust growth in this market segment.

The push toward smaller, more powerful electronic devices is a major growth driver for the EDA software market. Modern applications, including wearables, smartphones, and medical implants, require ultra-compact chipsets with high processing power. To achieve this, designers turn to EDA tools to streamline workflows, ensure precision, and reduce manual intervention in layout planning and verification.

The capability to simulate behavior under various constraints enables designers to test edge cases, minimize design iterations, and achieve optimal configurations. This increased reliance on EDA tools for managing physical design and fabrication-ready outputs boosts market demand.

As semiconductor manufacturing technologies evolve from traditional nodes to advanced nodes like 7nm, 5nm, and beyond, the design process becomes significantly more complex. EDA software supports this complexity by offering tools for multi-patterning, parasitic extraction, and lithography compliance checks. These features are critical for ensuring manufacturability and yield optimization.

Moreover, EDA tools are instrumental in creating test benches, layout-versus-schematic comparisons, and timing closure analysis. Without automation, managing these intricate details would be time-consuming and error-prone. Hence, the increasing sophistication of chip fabrication processes fuels greater adoption of EDA solutions.

The proliferation of artificial intelligence, machine learning, and edge computing applications necessitates the development of specialized chips optimized for parallel processing, low latency, and energy efficiency. EDA software facilitates the development of such complex architectures, including neural processing units (NPUs) and tensor cores.

Tools that support hardware-software co-design, verification, and synthesis are increasingly important. As more tech companies invest in custom AI accelerators, the need for robust EDA platforms grows, fostering demand in sectors such as data centers, robotics, and intelligent consumer electronics.

The rapid growth of the Internet of Things (IoT) is creating a massive demand for compact, low-power, and cost-efficient chips. EDA software enables rapid prototyping and multi-domain simulation, which are essential for embedded system development. Designers use these tools to integrate sensors, communication modules, and microcontrollers into cohesive solutions.

The emphasis on battery efficiency and real-time data processing in IoT devices necessitates precise circuit and architecture design. This rising dependence on EDA tools for embedded system integration is a key driver in the market's continued expansion.

The reuse of Intellectual Property (IP) cores is gaining popularity as it reduces design time and cost. EDA software enables efficient IP management, integration, and compatibility checks across design environments. It facilitates verification at the IP level and across subsystems, enabling faster development cycles. Industries increasingly depend on pre-verified IPs for functionalities like memory control, interfaces, and security features.

The ability of EDA tools to streamline integration, debug issues, and ensure performance consistency is critical, thereby bolstering the market growth.

Market share
North America leads with a strong ecosystem of fabless companies and EDA tool developers, supported by robust government initiatives.

Asia-Pacific follows closely due to the presence of large semiconductor foundries and increasing investments in chip design capabilities across countries like Taiwan, South Korea, China, and India.

Europe contributes significantly in automotive and industrial applications, further driving regional adoption. The regional landscape is influenced by policy shifts, chip shortages, and the global push for self-reliant semiconductor manufacturing.