Pressure on the Semiconductor Industry Demands EDA Vendors to Act More as Partners than Traditional Software Providers

The second half of 2025 saw expanded partnerships between major suppliers of Electronic Design Automation (EDA) software with semiconductor manufacturers and designers. In December 2025, NVIDIA announced a strengthened partnership with Synopsys to accelerate semiconductor engineering and design using NVIDIA Graphics Processing Units (GPUs) while investing US$2 billion into the company. In September 2025, Taiwan Semiconductor Manufacturing Company (TSMC) expanded its Open Innovation Platform (OIP) effort through partnerships with Cadence, Siemens, and Synopsys to certify TSMC’s latest design workflows and ensure quick time-to-market. In June 2025, Siemens deepened its partnership with NVIDIA by announcing its EDA tools would support generative and Agentic Artificial Intelligence (AI) models powered by NVIDIA Inference Microservices (NIM) and NVIDIA Nemotron models. These partnerships between semiconductor manufacturers and EDA/simulation providers reflect their technological codependence rather than traditional supplier-customer relationships, as the competitiveness of a company in one industry relies heavily on the success of its partners in the other. With AI workloads pressuring semiconductor designers and manufacturers for improved chip performance and compressed development cycles, these partnerships reflect an attempt to align EDA/simulation providers to keep pace with the pressure and scale capabilities across both industries simultaneously.

The semiconductor industry is experiencing a whirlwind of demand, complexity, and investment: AI-era chips require extreme compute capability, enhanced memory, and process nodes of 2 nanometers (nm) and below. Chip design and manufacturing have become exponentially more complex to meet these standards. Meanwhile, the rise of AI imposes unprecedented demand for semiconductor technology, not only to power data centers but also for edge devices, electric vehicles, robotics, and more. AI’s potential has spurred billions of dollars of investment in the semiconductor industry (US$630 billion, according to the Semiconductor Industry Association (SIA)), making the stakes extremely high for chip designers and manufacturers.

Pressure on the semiconductor industry trickles down to pressure on EDA and simulation software providers to support shorter development cycles and manage increased complexity. As a result, EDA and simulation software providers are now working side-by-side with semiconductor designers and manufacturers, making them core partners throughout the chip lifecycle.

As EDA software providers develop new responsibilities as larger partners in chip design and manufacturing processes, they will need to improve simulation integration and AI infrastructure to adequately meet the demand of the semiconductor industry. Vendors must:

• Unify execution environments across EDA solvers. Siemens announced in December 2025 the unification of multiphysics solvers into one cloud-based environment: Simcenter X. Similar avenues should be explored to improve user experience with EDA solvers, reducing coordination steps and empowering further AI orchestration in simulation setup.
• Improve integration of EDA and multiphysics simulation tools. While the integration between EDA and electronic simulation software is strong, end-to-end integration with multiphysics simulation for developing complete products still relies on inconsistent user experiences and data models. With the Synopsys-Ansys merger promising silicon-to-systems engineering by embedding multiphysics simulation into EDA workflows, competitors such as Cadence and Siemens must similarly demonstrate the merging of the two domains to enable verification earlier in development cycles, standardize data, and empower Agentic AI to orchestrate analyses.
• Enhance and emphasize protection of Agentic AI models. As suppliers transition to agentic EDA, semiconductor Intellectual Property (IP) will not be the only important asset of chip designers. EDA systems that can demonstrate strong security for AI assets, as they have direct access to a team’s design methodology, will offer a significant competitive advantage. In June 2025, Siemens announced AI-enhanced EDA tools, with emphasis on enterprise-grade security. In the future, major suppliers of EDA software, such as Cadence, Siemens, and Synopsys, must underline the security of AI assets, leveraging encryption, strict permissions, and operational security systems to ease customer concerns over data protection.