EDA Tools Market – Global Industry Size, Share, Trends, Opportunity, and Forecast Segmented by Type (Computer-aided Engineering (CAE), IC Physical Design and Verification, Printed Circuit Board and Multi-chip Module (PCB and MCM), Semiconductor Intellectual Property (SIP), Services), by Application (Communication, Consumer Electronics, Automotive, Industrial), By Region, Competition 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 18.55 Billion
CAGR (2026-2031)	8.24%
Fastest Growing Segment	IC Physical Design and Verification
Largest Market	North America
Market Size (2031)	USD 29.83 Billion

Market Overview

The Global EDA Tools Market will grow from USD 18.55 Billion in 2025 to USD 29.83 Billion by 2031 at a 8.24% CAGR. Electronic Design Automation tools encompass a category of software, hardware, and services utilized by engineers to define, plan, design, and verify integrated circuits and printed circuit boards. The primary drivers supporting market growth include the escalating complexity of semiconductor architectures, which necessitate automated solutions to manage billions of transistors and ensure functional accuracy. Furthermore, the rising demand for energy efficiency and miniaturization in the automotive and industrial sectors compels manufacturers to invest in comprehensive design environments. These fundamental requirements ensure that design flows remain capable of meeting the rigorous specifications of modern electronics.

However, the market faces a significant challenge regarding the substantial cost of licensing and the specialized technical expertise required to operate these platforms, which creates a barrier to entry for smaller enterprises. This high cost of ownership often limits adoption among startups and restricts market diversity. According to the ESD Alliance, in 2025, Electronic System Design industry revenue increased 8.6% to $5,089.4 million in the second quarter compared to the same period in the previous year. This data indicates that while financial hurdles exist, the established sector continues to expand to address technological necessities.

Key Market Drivers

The Expansion of Artificial Intelligence and Machine Learning Hardware stands as a transformative force in the EDA sector, fundamentally altering chip design requirements. As hyperscalers and semiconductor companies race to develop custom ASICs and specialized processing units for training large language models, the need for advanced verification and optimization tools has intensified. These AI-centric architectures demand unprecedented power, performance, and area (PPA) efficiency, compelling engineers to utilize highly automated design flows that leverage machine learning themselves to close timing and routing at angstrom-level nodes. This trend is a primary revenue catalyst for market leaders; according to Synopsys, August 2024, in the 'Third Quarter Fiscal Year 2024 Results', Design IP segment revenue increased 32% year-over-year, specifically driven by the robust demand for interface and foundation IP in AI chips.

Simultaneously, the Surging Demand for Advanced Automotive Electronics and Autonomous Systems is expanding the market's boundaries beyond traditional consumer electronics. Modern electric vehicles and ADAS platforms function as sophisticated supercomputers, requiring EDA solutions that support rigorous functional safety standards like ISO 26262 and complex multi-physics simulation. The shift toward software-defined vehicles has necessitated comprehensive digital twin technologies to prototype systems virtually before fabrication, significantly boosting segment earnings. According to Cadence Design Systems, October 2024, in the 'Q3 2024 Earnings Call', System Design and Analysis revenue grew over 40% year-over-year, largely supported by significant deals in the electric vehicle sector. This momentum across key verticals is lifting the broader industry; according to the ESD Alliance, October 2024, in the 'Electronic Design Market Data' report, overall industry revenue reached $4,685.5 million in the second quarter of 2024, marking an 18.2% increase year-over-year.

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Key Market Challenges

The substantial cost of licensing and the specialized technical expertise required to operate electronic design automation platforms create a significant barrier to entry that directly restricts the expansion of the Global EDA Tools Market. Smaller enterprises and startups often encounter prohibitive capital requirements to access essential design environments, effectively pricing them out of the competitive landscape. This financial exclusion limits the market primarily to large, well-capitalized corporations, thereby reducing the diversity of innovation and slowing the overall adoption rate of advanced design methodologies among potential new market entrants.

Furthermore, as chip architectures become more intricate, the reliance on pre-verified Intellectual Property (IP) blocks to ensure functional accuracy increases, further escalating development costs. This dependence on expensive third-party components reinforces the financial hurdles facing design firms. According to the ESD Alliance, in the first quarter of 2025, revenue for Semiconductor Intellectual Property (SIP) increased by 29.6% to $2,044.8 million. This surge in IP-related expenditure illustrates the intensifying financial burden on the industry, serving as a tangible indicator of how rising ownership costs continue to hamper market accessibility and growth.

Key Market Trends

The Emergence of Chiplet-Based Design and Heterogeneous Integration Architectures is fundamentally reshaping semiconductor engineering by moving beyond the physical limitations of monolithic dies. As scaling at advanced nodes becomes increasingly difficult and costly, manufacturers are adopting 2.5D and 3D packaging technologies to integrate multiple specialized dies, or chiplets, into a single package. This architectural shift necessitates rigorous multi-physics simulation and high-speed interconnects to manage the complex thermal, mechanical, and signal integrity challenges inherent in high-density integration. The commercial impact of this transition is evident in the surging demand for specialized intellectual property that enables these interconnects; according to Cadence Design Systems, April 2025, in the 'Q1 2025 Earnings Call', IP business revenue grew 40% year-over-year, a performance explicitly attributed to the robust market opportunities provided by chiplet-based architectures and the foundry ecosystem buildout.

Simultaneously, the Widespread Adoption of Cloud-Based and Hybrid EDA Workflows is transforming the industry's operational model, driven by the need for scalable compute power and remote collaboration. Engineering teams are increasingly migrating from rigid, on-premise data centers to flexible cloud environments that offer infinite capacity for peak verification and regression workloads. This transition supports the shift towards software-as-a-service (SaaS) licensing, allowing firms to optimize costs while accessing the most advanced simulation tools on demand. This structural evolution is reflected in the financial growth of key market players; according to Keysight Technologies, January 2025, in the '2024 Annual Report', annual recurring revenue, underpinned by its expanding software-centric solutions and services portfolio, grew to approximately $1.5 billion, highlighting the sector's decisive pivot toward recurring, cloud-enabled revenue models.

Segmental Insights

The IC Physical Design and Verification segment is currently the fastest-growing category in the Global EDA Tools Market, driven by the escalating complexity of modern integrated circuits. As the industry transitions to smaller process nodes, the imperative for precise verification to prevent costly manufacturing failures has intensified. This momentum is further sustained by the automotive sector, where compliance with stringent safety standards set by the International Organization for Standardization mandates exhaustive testing. Consequently, semiconductor manufacturers are prioritizing investment in these critical design solutions to ensure the reliability of advanced System-on-Chip architectures.

Regional Insights

North America maintains a leading position in the Global EDA Tools Market due to the high concentration of established market vendors and a robust semiconductor ecosystem. The region benefits significantly from government initiatives, such as the CHIPS and Science Act, which incentivize domestic chip production and research. This legislative support fosters a favorable environment for advancement in integrated circuit design. Additionally, the consistent adoption of cloud-based design platforms by regional technology enterprises drives the demand for electronic design automation solutions, ensuring sustained market dominance.

Recent Developments

• In October 2025, Cadence Design Systems announced a collaboration with TSMC to develop AI-driven design solutions for advanced process nodes. The partnership focused on accelerating chip development for artificial intelligence and high-performance computing applications. Cadence’s design flows were optimized to support TSMC’s N2 and A16 technologies, while new silicon-proven intellectual property was made available for the N3P process. This cooperation enabled customers to utilize advanced automation features, such as automated design rule check violation fixing, to improve efficiency and shorten design closure times for complex semiconductor projects.
• In July 2025, Synopsys, Inc. completed its acquisition of Ansys, a transaction valued at approximately $35 billion. This strategic move combined Synopsys’ established semiconductor electronic design automation capabilities with Ansys’ broad simulation and analysis portfolio. The merger aimed to create a leader in silicon-to-systems design solutions, addressing the increasing complexity of intelligent systems that require deeper integration of electronics and physics. The unified entity was positioned to empower engineering teams to innovate faster across various sectors, including automotive and aerospace, by delivering a holistic approach to product development.
• In June 2025, Siemens Digital Industries Software unveiled an AI-enhanced toolset for its electronic design automation flow at the Design Automation Conference. The company introduced a new system specifically designed for semiconductor and printed circuit board design environments, which leveraged generative and agentic artificial intelligence. This innovation allowed engineering teams to integrate their own data and create custom workflows, thereby improving productivity and accelerating time-to-market. The solution also supported advanced microservices and models to provide high-context reasoning and automation capabilities across the entire design verification and implementation process.
• In November 2024, Keysight Technologies introduced a new electronic design automation software portfolio, Keysight EDA 2025, aimed at transforming how engineers address next-generation technology demands. The suite integrated artificial intelligence, machine learning, and Python capabilities to significantly reduce design time for complex radio frequency and chiplet products. By enhancing data manipulation and control over simulators, the software enabled more efficient workflows across multiple tools. This release focused on critical challenges in the development lifecycle, allowing designers to move from simulation to verification with greater speed and confidence in their digital twins.

Key Market Players

• Altium Limited
• Ansys Inc.
• Cadence Design Systems Inc.
• Keysight Technologies Inc.
• Agnisys Inc.
• Aldec Inc.
• Lauterbach GmbH
• Siemens PLM Software
• Synopsys Inc.
• Xilinx Inc.

By Region

North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global EDA Tools Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• EDA Tools Market, By Region:

• North America
• United States
• Canada
• Mexico
• Europe
• France
• United Kingdom
• Italy
• Germany
• Spain
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• South Africa
• Saudi Arabia
• UAE