though India is a key EDA product development center, its EDA market is barely
five years old, and much of its growth has been driven by the presence of MNC
technology companies. California-based IKOS Systems, which entered the space in
May 1998, has been quite optimistic about its Indian operations. Its software
development facility at Noida is now the largest among IKOS’s three such
centers across the world. Last year, IKOS also started its sales operations in
India and is trying to increase its visibility.

IKOS caters to the electronics industry worldwide and its clients include
Texas Instruments, ST Microelectronics, Microsoft and IBM. The company’s
president and CEO Ramon Nunez has been instrumental in creating a niche for IKOS
in the high-end design verification solutions market. Nunez not only has a long
experience in marketing, but has also developed an insight into the technical
evolution of the EDA industry. He was recently in New Delhi, en route to attend
the International Conference on VLSI Design in Bangalore. He spoke to DATAQUEST
on the trends in the EDA market and IKOS’s plans and future strategy.

How critical is design verification for a technology company?

Design verification is the most critical issue that technology companies face
while developing high complexity products. When 50-70% of the design cycle is
spent in designing and adding the functionality of the product, verification of
the functionality becomes very crucial. The biggest opportunity for us is to
develop products that address this issue. And within this area, functional
verification is the biggest problem because you are dealing with very large
complex designs and you need to test the complete functionality of that system
on a chip (SoC). To do that, we have to deal with system-level issues,
chip-level issues, immigration and other properties that involve a lot of

The SoC functionality seems to be increasing endlessly. Do you see any
leveling out or slowdown?

Technology has moved so quickly that every time there appears to be an end,
the engineers solve it, so that hurdle is no longer around. I don’t think
there is any end in sight in the next 5—10 years. What I think is going to
happen, though, is that the design methodology and tools will have to change to
address more of the broad-based design solutions because we can’t see
engineers developing 50 million gate designs from scratch. They are going to
develop those kind of large complex designs by bringing in pre-designed blocks,
so the new part is going to be not more than 10%. So the increasing complexity
in designs will not slow down but lead to change in design methodology and
emergence of new design tools.

How would you position your company globally and in India in terms of market share?

We are the second largest verification company in the world. The largest is
Cadence with the acquisition of Quickturn. It’s only been about a year since
we started selling our products directly in India, but we expect a growth of
40%. There is tremendous growth opportunity here.

Considering the fact that your products are on the high end, what kind of
growth do you see for your business?

There are two main businesses we have–simulation acceleration and
emulation. Simulation acceleration is a quite mature product so that has a flat
growth. Emulation is a fantastic technology that has grown very fast. In 2000,
we saw a growth of 60% in that business and we expect over 50% growth this year.

But the technology sector is expected to see a slowdown this year. Won’t
this affect growth of a niche industry like EDA?

In comparison with the electronics industry, EDA is a small market. But
within the EDA market, we have tremendous opportunity. So, in that context, we
have grown at an average rate of 30% annually in the last eight years and we
expect this growth to continue. I don’t see this technology revolution slowing
down. Although in 2001, we expect to see a slowdown in some areas in the
technology sector, but all this is relative. If you had a 30% growth till now,
an 18% growth is certainly a tremendous fall, but it is still a healthy growth.

What kind of a set-up do you have in India?

Today we have three components of our company based here in India. The
largest one is the research and development team and the second is a team of
technology engineers that help our customers use our products. The third area is
sales and that’s the smallest group today. The Indian market is still in the
formative stage to be able to represent a huge market opportunity for IKOS or
even the EDA industry as a whole. But it is a very key center for product

Could you elaborate a bit on your marketing approach here?

There are two facets to the approach we have taken with respect to India. One
opportunity is to sell our products here because most technology companies have
a presence here–Texas Instruments, ST Microelectronics, Microsoft, IBM, and so
on. Unlike Europe or North America, where they have long-term established
development centers, India has not had that. It is only during the last five
years that India has seen a growth in this area. So we can now sell our products
to the companies that are based here. The other opportunity for us is to develop

in New Delhi.

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