R&D spending and acquisitions in the EDA market have strengthened the sector which is now valued at over $170bn.

Jay Vleeschouwer, managing director software research at Griffin Securities, gave a positive review of the EDA industry at DAC 2026. Revenues reached close to $16bn in 2025, up 6% form 2024. R&D spending was “robust” at $5bn per annum. He said growth in 2026 and predicted growth for 2027 will build on last year’s growth and rely on the ‘three c’ formula of core, convergence and customisation.

At the heart of EDA, he said is a strong core EDA business (software) alongside hardware and IP.

Convergence is where the world of EDA meets adjacent and complementary disciplines to engineering software. “This has been a phenonomenon which we track very closely. Cadence and Synopsys now account for over 70% of industry revenue. That’s up 15 to 20 points from where it was a decade ago,” he added.

Vleeschouwer highlighted what he called strategic moves in the industry, including the acquisition by Synopsys of Ansys ($34bn) and Cadence Design Systems of MSC Software ($3bn).

Customisation Is an important phenomenon, he continued, with specific custom devices with various levels in the architectural stack, up to and including physical AI.

There appear to be two separate but related arms races in technology, ventured Vleeschouwer. One is software development, including AI, and the other is silicon development. “These two are becoming increasingly related – which ties back in to the convergence phenomenon,” he said.

“There is considerable debate or apprehension with regard to what AI means for software generally, and engineering software specifically, but we are taking the position that engineering software is going to benefit from, infuse and absorb and enable AI and ML.

“EDA companies are clearly further along that other parts of engineering software in terms of delivering, enabling and absorbing AI and ML capabilities. . . Software is not a dinosaur and AI is not a meteor,” he concluded.

See also: Synopsys unveils autonomous workflows agents