Cadence Design Systems, Inc. (NASDAQ:CDNS) Q1 2023 Earnings Call Transcript

So, I think that can also provide a lot of growth. I talked about AI and all for chip and system, but this acceleration on GPUs, accelerated compute for system analysis is another big vector. And even in OpenEye, we use GPUs for acceleration. So, I think that’s — we have multiple ways to accelerate our position in SD&A, but we’re always focused on best-in-class first, right?

Joe Vruwink: Thank you.

Operator: Your next question comes from the line of Andrew DeGasperi with Berenberg. Your line is now open.

Andrew DeGasperi: Thanks for fitting me in. I guess one question I had is, and I know you’ve talked a lot about AI on this call, but just wondering if you think this could potentially lead to more pronounced market share shifts in the future? I know historically, there’s not been a lot of market share changes in EDA. But just wondering if we thought with the portfolio that you have relative and your investments that you made relative to your competitors, do you think that could change?

Anirudh Devgan: Yes, that’s a good point. I mean, in general, like I mentioned, we’re always focused on best-in-class right, so and that AI can play a big role in that. But I do think that the real opportunity for the industry, both for EDA, SD&A is more and more share of R&D going to automation. I think that will be good for all players, of course, we invest heavily. We want to have best-in-class solutions in our products. But I think the bigger trend will also be — these things are getting so complex. There’s not going to be enough headcount to design these things five, seven years from now. So, the bigger opportunity for the entire industry is more shift to automation, and that’s, I think, good for everyone.

Andrew DeGasperi: That’s helpful. And then — sorry, go ahead.

Anirudh Devgan: Yes, please.

Andrew DeGasperi: No, go ahead.

Anirudh Devgan: I mean yes, the other thing I think the way we are unique is not just apply best-in-class products in EDA, but we combine chip and systems. I think that’s also provided us unique differentiation with our customers and our market position. And that’s the strategy we have been implementing for the last four or five years. And applying AI improves our EDS solution, but also the combination of EDA plus SDA and computational software, that also improves our competitive position in the market.

Andrew DeGasperi: That’s helpful. And then, maybe on just general trends this quarter. Just wondering in terms of the systems business, have you seen any change, particularly in the data center side in terms of demand, or is it being kind of consistent relative to the previous quarters?

Anirudh Devgan: I think that — I mean you know the news is — I mean it’s a tough environment for our — in general, with all the news. But in general, like I said, the design activity is strong, okay, and so — and our results are strong. I think the data center customer is still invest heavily in automation and R&D. And the new uptick like beginning of the call we talked about, the new uptake, I think, is more to the infrastructure to serve generative AI. I think that’s definitely a very active area for the big data center companies, because these things are really complicated and complex to serve this whole generative AI base. So, that will require use of specialized hardware, also different kind of hardware mix in the infrastructure. So, I think that’s going to be a change, and that’s good for our opportunities for us.

Andrew DeGasperi: Great. Thank you.

Operator: Your next question comes from the line of Arsenije Matovic with Wolfe Research. Your line is now open.