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Cadence 'Formally' Acquires BLDA Forms Three-Year Pact With Lucent For Tools, Services, R&D san jose, calif. -- Confirming earlier reports in Electronic News (EN,July 20,) Cadence Design Systems acquired Lucent Technologies' Bell Labs Design Automation group (BLDA), as part of a multi-faceted agreement. The deal includes a provision outlining a three-year relationship between Cadence and Lucent. Terms relating to the acquisition and the purchase of Cadence software products and services were not disclosed. BLDA places Cadence, a latecomer to the formal verification, squarely in the market's fray. With BLDA's products and technology, Cadence can now be considered the holder of a strong formal verification portfolio. BLDA's FormalCheck, model checking software has been a significant player in the market with more than a year under its belt. When the deal closes, Cadence will boast an equivalency checker (introduced by Cadence at the 35th Design Automation Conference), BLDA's FormalCheck product and a three-year R&D agreement with Lucent to jointly further the technology. Cadence will absorb more than 100 BLDA employees including software engineers, consulting service experts, and 40 doctorate technologists. The company expects these hires will contribute to the company's product development, research and consulting services' expertise. The two companies also formalized a joint development program between Cadence Berkeley Labs and Bell Labs (the research organization) to research and advance chip verification and other tools for next-generation applications. Bell Labs' EDA research efforts fall under the direction of Bob Kurshan. A close friend of Mr. Kurstan happens to be Cadence Berkeley Labs head Ken McMillian. Both top EDA researchers have been occasional collaborators. It appears they will begin working together more closely. More Than Formal Tools FormalCheck, BLDA's flagship software tool, may receive the most attention in the deal; however, Cadence will acquire several other notable software tools in the deal. The BLDA technology portfolio includes Clover physical verification tool suite, Attsim analog/digital/mixed-signal simulator, and the Celerity transistor level simulator. Product roadmaps and integration plans for the BLDA products are currently in development. The No. 1 EDA supplier will evaluate these tools and incorporate pieces of or whole technologies into its portfolio, according to Glenn Abood, VP/GM of Cadence's Logic Design and Verification business unit. Perhaps the second most important in terms of technology, Cadence will be working jointly with Lucent on the Sematech project for 0.18-micron parasite extraction, part of the Sematech CHDS or chip hierarchical design systems contract granted to Lucent. Money To Flow Both Ways While neither Cadence, nor Lucent would reveal the exact terms of the deal, the acquisition was believed to be worth $40 million -- $50 million (EN, July 20). Money will flow both ways, however, totaling probably twice as much as originally anticipated, according to one source. Cadence will pay Lucent an undisclosed amount for BLDA technology, products and expertise. In return, Lucent has guaranteed three years of tool and services purchases as well as joint technology development. Previously, Lucent was believed to be guaranteeing $12 million in services and $2 million in tools per year (EN, July 20). How close this figure is to the actual numbers could not be confirmed. The deal though may be worth more than the cash exchanging hands. For Cadence, it represents another big services contract, the likes of which has not been seen since Cadence/Unisys reached a similar accord. The services aspect of this deal is 'equally as important" as the technology acquired, in the eyes of Jennifer Smith, a research analyst at Robertson Stephens. She rated it on par with the Unisys deal. For one, the relationship developed between the two companies could go far beyond the three-years explicitly outlined in the agreement. It is the type of deal "Cadence is uniquely able to structure," says Ms. Smith. She notes that Cadence has shown an ability to acquire a new set of technology, sell more of their own tools and create a closer relationship with a major company like Lucent. "It is beyond one-transaction-based selling," she says, meaning many transactions over time. Shot In The Unit's Arm In terms of technology, Ms. Smith believes the acquisition of Bell Labs will shore up Cadence's logic design and verification unit, which represents 13 percent of the company's total sales (compared to 50 percent in physical design tools and custom IC design). She notes that the logic design and verification division has been relatively flat when comparing year-to-date numbers. With model checking, BLDA's forte, it is expected to be a bigger market than equivalency checking. BLDA customers include Cray Research, Hewlett-Packard, National Semiconductor, Matsushita, NTT Research Labs, Ricoh, Silicon Graphics Inc., Texas Instruments, among others. Not to be overlooked, the deal pairs the two companies' research organizations. BLDA will lose its name, but not its connection to Lucent's Bell Laboratories. BLDA will be spread out into two facilities in Berkeley Heights, N.J., close to Lucent's and Bell Labs' Murray Hill headquarters, and Allentown, Pa., near Lucent Microelectronics. In a conference call with EN editors, the two companies did elaborate on the research relationship. When first discovered, the deal elicited some questions regarding the future of Bell Labs researchers after consummation of the deal. Previously, it was reported that Bell Labs researchers would not be affected, remaining instead at Lucent. This is partly accurate. Researchers who are "part of the core Bell Labs," according to Bill Evans, head of the BLDA group, i.e. those primarily in mathematics or fundamental sciences departments, will not be affected by the deal; however, Cadence picks up roughly 60 people (of the 100-plus) whom are involved in some way in the development of BLDA tools or technology. As Mr. Evans explains it, BLDA tool development involved two tiers of Bell Labs research resources. At one level software developers within the BLDA group worked on technology and products. These developers also consulted with and employed "core" Bell Labs researchers primarily in the mathematics department to help develop the technology as well. The latter are untouched by the deal. Asked to qualify those "core" Bell Labs researchers involved in BLDA tool development, Mr. Evans said such a number was hard to quantify. BLDA worked with a variety of researchers for varying lengths of time. "What do you count one person (on the project) for a month or 25 for a week? It is not easy to count them," says Mr. Evans. Mr. Evans will remain with Cadence overseeing the Berkeley Heights, N.J. and Allentown, Pa. facilities. For BLDA, the deal is a welcomed change -- Cadence's top executives know what EDA means. BLDA, founded in 1993 as AT&T Design Automation, realized a year ago that in order to grow it would need to address its future within Lucent, according to Mr. Evans. The group sought to be more than 0.1 percent of Lucent's bottom line, a fact that dwarfed the $30 million EDA firm's presence in the telecommunications giant's corporate eyes. At that time,"we really began to see FormalCheck and other products take off in the marketplace and had to invest to help those businesses grow rapidly," says Mr. Evans. "The path we chose (i.e. being acquired by Cadence) is the most rapid one to a worldwide sales force and worldwide support. If we would try to do it by ourselves we would grow slowly, and in this business, it grows so fast it will grow right over on top of you. So we knew that we had to move fast." |