...Continued
--------------------------------
The third start-up, Amedac, was founded in September 2019 by Chieh Ni, a former vice-president of Synopsys China who worked with the US company for 10 years. Synopsys, moreover, holds a more than 20 per cent stake in the start-up and Ge Qun, global senior vice-president at Synopsys and chairman of its China operations, is a board director at Amedac. Other key investors of Amedac include Summitview Capital and the state-owned Institute of Microelectronics of the Chinese Academy of Sciences.
Willy Shih, a professor of management practice at the Harvard Business School, said Synopsys and Cadence dominate the market because they can “lock in” their client base. Switching to an alternative provider is difficult, he said, because design tools are closely linked to existing chip process flows.
“Now China’s motivation, of course, is access for Chinese firms to these critical tools. So of course they will want homegrown tools not subject to the whims of a US administration . . . Given enough time and money, they could probably develop alternatives but it won’t be easy,” Mr Shih told Nikkei Asia.
“With the US and China locked in a prolonged tech war, the whole Chinese tech industry is aware of the significant insufficiencies in some areas (of chipmaking) and they definitely want to build their own versions of chip design software to replace current ones,” said a source at a company that works with both Synopsys and Cadence. “Synopsys knows it will lose some market share in China in the long run due to the Washington-Beijing tensions, so it wants to also hold stakes in some of these potential Chinese rivals to secure the market.”
Synopsys set up a $100m strategic investment fund for the Chinese market in 2017 to “expand engagement” with the booming Chinese chip design community — the world’s largest and fastest-growing market has more than 1,600 chip designers. The same year, Cadence decided to build a China semiconductor hub in Nanjing to better serve local clients and foster engineering talent. The company pledged to invest Rmb100m ($15.2m) in the project over the years.
Synopsys said at the time that the strategic fund, operated and managed by its China unit, was designed to collaborate with local companies and venture capital in investing in the areas of chip design, artificial intelligence, cloud-computing, software security and EDA tools.
“The China strategic investment fund is an important milestone of our China strategy and it represents Synopsys’ confidence and commitment to the Chinese market,” Chi-foon Chan, Synopsys president and co-chief executive, said in a statement in 2017.
It is not uncommon for foreign companies to forge deeper ties with local partners through investments or joint ventures to expand their presence in the Chinese market. Such ventures do not always bear fruit, however.
Intel’s venture capital arm, Intel Capital, invested in three Chinese chip-related unicorns in May, having previously paid $1.5bn for a 20 per cent stake in a subsidiary of Tsinghua Unigroup, a Beijing-based chip conglomerate.
The partnership between the world’s biggest PC microprocessor maker and Tsinghua Unigroup’s mobile chip unit Unisoc to develop 5G modems ended abruptly after just one year of collaboration.
US chip developers Qualcomm and AMD also formed joint ventures with local companies to expand in the Chinese market, but these too faced setbacks.
“If companies like Synopsys and Cadence invest in Chinese partners, it is a way to stay in the market and keep those players close to them,” said Mr Shih at the Harvard Business School. “‘Stay close to your friends, stay closer to your enemies’ is one quote that comes to mind.”
In the event trade tensions die down one day, buying back stakes in their Chinese joint partners could be an option, he added.
Synopsys declined to say whether it had expanded the scale of the fund over the years or if investing in Chinese peers was part of the scope of the fund, nor did it comment on the talent exodus in China. Cadence did not respond to Nikkei Asia’s request for comments.
--------------------------------
The third start-up, Amedac, was founded in September 2019 by Chieh Ni, a former vice-president of Synopsys China who worked with the US company for 10 years. Synopsys, moreover, holds a more than 20 per cent stake in the start-up and Ge Qun, global senior vice-president at Synopsys and chairman of its China operations, is a board director at Amedac. Other key investors of Amedac include Summitview Capital and the state-owned Institute of Microelectronics of the Chinese Academy of Sciences.
Willy Shih, a professor of management practice at the Harvard Business School, said Synopsys and Cadence dominate the market because they can “lock in” their client base. Switching to an alternative provider is difficult, he said, because design tools are closely linked to existing chip process flows.
“Now China’s motivation, of course, is access for Chinese firms to these critical tools. So of course they will want homegrown tools not subject to the whims of a US administration . . . Given enough time and money, they could probably develop alternatives but it won’t be easy,” Mr Shih told Nikkei Asia.
“With the US and China locked in a prolonged tech war, the whole Chinese tech industry is aware of the significant insufficiencies in some areas (of chipmaking) and they definitely want to build their own versions of chip design software to replace current ones,” said a source at a company that works with both Synopsys and Cadence. “Synopsys knows it will lose some market share in China in the long run due to the Washington-Beijing tensions, so it wants to also hold stakes in some of these potential Chinese rivals to secure the market.”
Synopsys set up a $100m strategic investment fund for the Chinese market in 2017 to “expand engagement” with the booming Chinese chip design community — the world’s largest and fastest-growing market has more than 1,600 chip designers. The same year, Cadence decided to build a China semiconductor hub in Nanjing to better serve local clients and foster engineering talent. The company pledged to invest Rmb100m ($15.2m) in the project over the years.
Synopsys said at the time that the strategic fund, operated and managed by its China unit, was designed to collaborate with local companies and venture capital in investing in the areas of chip design, artificial intelligence, cloud-computing, software security and EDA tools.
“The China strategic investment fund is an important milestone of our China strategy and it represents Synopsys’ confidence and commitment to the Chinese market,” Chi-foon Chan, Synopsys president and co-chief executive, said in a statement in 2017.
It is not uncommon for foreign companies to forge deeper ties with local partners through investments or joint ventures to expand their presence in the Chinese market. Such ventures do not always bear fruit, however.
Intel’s venture capital arm, Intel Capital, invested in three Chinese chip-related unicorns in May, having previously paid $1.5bn for a 20 per cent stake in a subsidiary of Tsinghua Unigroup, a Beijing-based chip conglomerate.
The partnership between the world’s biggest PC microprocessor maker and Tsinghua Unigroup’s mobile chip unit Unisoc to develop 5G modems ended abruptly after just one year of collaboration.
US chip developers Qualcomm and AMD also formed joint ventures with local companies to expand in the Chinese market, but these too faced setbacks.
“If companies like Synopsys and Cadence invest in Chinese partners, it is a way to stay in the market and keep those players close to them,” said Mr Shih at the Harvard Business School. “‘Stay close to your friends, stay closer to your enemies’ is one quote that comes to mind.”
In the event trade tensions die down one day, buying back stakes in their Chinese joint partners could be an option, he added.
Synopsys declined to say whether it had expanded the scale of the fund over the years or if investing in Chinese peers was part of the scope of the fund, nor did it comment on the talent exodus in China. Cadence did not respond to Nikkei Asia’s request for comments.
