[Peace&Chips] Why the Semiconductor Industry Values Software as Much as Equipment

'EDA Tools' Used in Semiconductor Design and Manufacturing
Key Software to Reduce Semiconductor Defects
AI Adoption Trend... US-China Hegemony Competition Arena

Editor's NoteSemiconductors, often called the rice of modern industry. Although it's a term we hear every day, it’s hard to explain when asked. Peace & Chips will make the complex concepts and overall flow of the semiconductor industry easy to digest for you. Just hold your spoon ready.

[Peace&Chips] Why the Semiconductor Industry Values Software as Much as Equipment

[Asia Economy Reporter Kim Pyeonghwa] When considering a crucial pillar in semiconductor production, equipment is likely the first to come to mind. No matter how excellent the technology developed is, without the hardware (equipment) to manufacture semiconductor chips, it would be useless.

However, as semiconductor production advances toward cutting-edge fine processes, another pillar is becoming increasingly important. That is software (SW).

Semiconductor manufacturing is the process of drawing fine circuit patterns on a silicon-based circular substrate called a wafer to produce multiple semiconductor chips as small as a fingernail. It takes several months of painstaking steps to complete a single semiconductor chip.

The process of semiconductor chips being produced on a wafer /
[Photo by SK Hynix]

What if a semiconductor chip with design defects is only discovered after completion? Due to the nature of semiconductor processes, where many chips are produced simultaneously, the amount discarded would be significant. The enormous cost invested in completing the product would also be wasted.

The software used to solve this problem is called the 'Electronic Design Automation (EDA) tool.' EDA tools assist in circuit design, error detection, and problem verification through pre-manufacturing simulations. They are software that reduces defect rates throughout the entire semiconductor design and production process.

Especially at the current stage where the semiconductor industry competes in single-digit nanometer (nm; 1 nm = one-billionth of a meter) scales, the importance of EDA tools is growing. A nanometer is a unit for semiconductor circuit line width, and 1 nanometer is about one hundred-thousandth the thickness of an adult human hair, making it extremely fine.

Global EDA Tool Market Size by Year / [Image Source=TrendForce]

Recently, there has been a trend to combine artificial intelligence (AI) technology to enhance EDA tool performance. According to a report released on the 13th by Deloitte Korea Group, the sales growth rate of AI-based EDA tools is expected to exceed twice that of general EDA tools from next year through 2028.

As EDA tools become more advanced, their importance is expected to increase further. Consequently, EDA tools have become a key battleground in the US-China semiconductor hegemony competition.

In August last year, the US implemented export control policies to prevent China from using domestically produced EDA tools used in advanced processes. The US, which has two domestic companies (Synopsys and Cadence) among the top three companies holding nearly 80% market share in the global EDA tool market, exercised its influence.

Number of Chinese EDA Tool Companies by Year /
[Image provided by KOTRA, Source: S2CEDA Research Institute]

The market predicts that if the Chinese semiconductor industry cannot use US-made EDA tools, it will suffer long-term negative effects. Feeling the urgency, China has recently been actively promoting domestic EDA tools by providing subsidies to local semiconductor companies using them.

According to MIT Technology Review, a technology journal published by the Massachusetts Institute of Technology (MIT), former Synopsys and Cadence employees in China are reportedly founding EDA tool startups domestically. However, industry experts believe that it will be quite challenging for Chinese-made EDA tools to establish a foothold in the market.