Actually, it doesn’t need to be Magma. I just agree with Isadore that it would be better for EDA if one of the full-line EDA suppliers went away. Magma is taking on the mantle of sick man of the industry now that Mike Fister and his team have moved on and Cadence no longer looks like it is going to implode imminently. Magma announced Friday that it would lay of another 17% of its workforce, on top of a bit more than 10% that went a few months ago.
Magma risks entering the death spiral, where lack of confidence in its ability to invest in next generation tools, or even its ability to survive at all, leads to defections which gradually make its demise a self-fulfilling prophecy. It is the EDA equivalent of a bank run. Magma could survive if they can invest enough in R&D, but it is hard to see how that can come simply from their revenue, and the external investment climate is challenging, to say the least.
Prices for EDA tools are simply too low to adequately fund the R&D that the semiconductor industry requires, as I discussed a few days ago as a sort of “tragedy of the commons.” That overall shortage of investment is aggravated by the need to keep 4 (or 3 depending on whether you count Mentor) RTL to GDSII flows current, which means that the 20% or so of EDA revenue that flows through to R&D is spread thinner because it is spread across that extra group.