DFT Digest

My interest was piqued as much as anyone else when I saw the public outing of Cadence’s hostile bid for Mentor last week. But as a DFT guy trying to look objectively at how this might affect other DFT guys/girls, it doesn’t seem like a big deal (although if I listen very carefully, I might hear a collective snicker from the DFT-folk at Freescale, who were shoehorned into Cadence tools a couple of years ago after being a predominantly Mentor house for a long time). So I wasn’t going to even offer my opinion.

But then another deal came to light yesterday that for me, drove home the fact that I work for an industry that seems to be circling the wagons and huddling together to weather an economy that’s taken the wind out of most everybody’s sails. And since this is just on the other side of the DFT fence from EDA, I thought I’d blog it. The deal: a 50/50 merger between Credence and LTX, two ‘big iron’ ATE vendors, both distant trailing competitors in the semiconductor test market that is dominated by the test industry’s ‘big three’: Advantest, Teradyne and Verigy.  The move follows on the heels of Credence’s announcement last week that they sold a $5M piece of their automotive test business to Advantest.  Anything to make a couple bucks…

As in any merger or acquisition, the main reasons given for the merger with LTX are ROI improvements due to combining/slimming certain groups to reduce overhead, and to be able to present themselves as a bigger company supporting more facets of a diverse industry. But just as in the Cadence/Mentor possibility, the interesting speculation is in the product ‘overlap’ (as in the Chris Edwards analysis of ‘Cadentor’), or product ‘rationalization’ as it’s termed by Rick Nelson of T&M World, in this blog post.

The big question is, will it keep them both afloat? The combined value of these two companies (if I read the Yahoo financials correctly) combined will still be ~20% of the smallest of the ‘big three’. And the ATE business is every bit as brutal as EDA… maybe it was a big deal for Cadence to pull out of DAC this year, but most of the ‘big iron’ ATE companies pulled out of ITC some years ago.

Oh yeah, and he new company’s name?  I got nothing. Submissions?

Please…