Synopsys recently announced they reached an agreement to acquire Magma. The natural questions are then “why”, and “is it a good thing”. Here are my two cents.

Synopsys logo

The “why” first. For Synopsys, I can think of a few good reasons:

 

  1. Magma’s Talus Vortex is still a disruption for many P&R Synopsys deals.Magma logo
  2. Magma’s FineSim started to make a significant dent into Synopsys’ SPICE market share.
  3. Magma’s Titan is a viable solution against Cadence’s solution for analog and mixed signal design, unlike Synopsys’ in-house tool.
  4. Magma’s Tekton showed how Synopsys’ PrimeTime has been lacking innovations to bring distributed timing signoff to the customers.

For Magma, a good answer to “why “is a 30% premium on its stock price, which Rajeev Madhavan, the CEO of Magma, has been working very hard to push up. Also maybe Rajeev realized that Magma would never realize one of his ambitions, beating Synopsys at his own game, RTL synthesis. Or maybe he finally acknowledged that you cannot grow if you keep discounting your own products, and keep trimming talents for cost reasons. Regardless of the motivations, I am sure that Rajeev leaves with a good deal in his hands.

What about Magma’s employees? For them, the premium on the stock price is good news. But what will happen to their jobs is more of a mixed bag. In such acquisition, sales and marketing are the first to go. Synopsys will certainly retain the R&D talents they care about –FineSim, Titan, Tekton, and possibly a handful of people in the backend. I hear a lot of people in Magma India that wonder what will happen of them. Not to worry. I think it would be foolish for Synopsys not to leverage Magma’s R&D facilities in India. Both Noida and Bangalore’s Magma offices are made of strong, committed, talented people. They can easily be reassigned to other projects.

What about the users? Their reaction is likely to be negative. The reason: Magma out means less competition, thus less innovation and possibly higher prices. Also many users are reluctant to deal with Synopsys sales people that are often perceived as arrogant.

However Magma has been cutting down the price of its tools to a point that it has been hurting the EDA industry as a whole. Being aggressive on price to gain market share is good, but cutting down the price to stay in business is bad. Investing in new tools is good, but dispersing scares resources on too many projects results in unfocused strategies that fail to deliver. My take is that for the longer term, the disappearance of Magma will benefit the user as well.

What about the EDA industry? This is clearly good news. This consolidation is an opportunity for Synopsys to be ambitious. Also Magma’s acquisition will free talents, and will make some startups look like a decent alternative for the customers that want to balance Synopsys’ hold on the industry. Change is good. Thank you Magma for shaking the industry, and welcome to the future movers.

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2 Comments on Why Synopsys buying Magma is good

  1. nick says:

    SNPS buying magma is good for snps and bad for magma customers and employees.

    For Magma customers it’s uncertainity in the short term and increased costs in the long term (both not desirable!). If I were a magma customer, I would be jumping ship right now as there is no point in continuing with magma platform with an uncertain future and uncertain support.

    It’s bad for magma employees because they could in all likely hood lose their jobs. (a job loss doesn’t sound too attractive when you compare it to an increased share price for an ordinary magma employee, who has his hands on a few hundred shares).

    For Rajeev, it’s a pretty good deal as he can dispose off the hundreds of thousands of shares he might be holding on to for years together, not making him money and SNPS will clear all LAVA debts.

    Its good for EDA industry as a new start up might emerge. But we live in uncertain times where VC money has completely dried up.

    Rajeev will have the money to start something soon though 🙂
    Keep an eye out for him over the next few years. For all you know the new tool might be named “Tsunami”.

    Sometimes I wish I could just use open source!!

  2. rajiv says:

    Synopsys bought Magma (and extreme-da) for one reason: Eliminate competition. In both cases, their intent is to kill *all* their tools as quick as possible (only one exception: FineSim – and I am willing to bet money that Synopsys political apparatus will screw up FineSim in a few years). At the same time, they are showing clear hostility to companies that once favored Magma or Extreme.

    This is not good for EDA startup ecosystem. If I were an EDA customer, I’d think twice about going with a non-synopsys/cadence solution: Your favorite tool’s support may halt anytime with a takeover from the big guys.

    It used to be different, most acquisitions were positive. The intent used to be to award the founders, keep the tools and grow with them. Negative acquisitions will hurt EDA growth and customers in the long run.

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