Anecdotally we’ve known for some time that North America has been reestablishing itself as the hub of the electronics industry. While China struggles to maintain its recent gains, simultaneously fighting to keep a hold on skyrocketing wages while placating its restless middle class, competitors are happily picking off manufacturing with enticements of legal protections and worker stability that the Beast of the East lacks the will or means to provide.

Meanwhile, the two titans of handhelds – Samsung and Apple – are underway on their respective new North American campuses, Apple’s 175-acre “donut” complex in Cupertino (there are some great drone images available on the Web), and Samsung’s glass-laden, 650,000 sq. ft. tower in San Jose. The two sites are important as much for their symbolic importance as their technological standing, for they represent the multibillion dollar bets the market leaders in the highest-volume, fastest-moving electronic products area are willing to place on the US.

They are not alone. Flextronics seems to be taking a page from Foxconn by locating design centers near key customer bases. The ODM last month unveiled another center in Detroit dedicated to automotive electronics. They join other large and mid-tier EMS companies in doubling down on their pursuit of the upfront business.

Design is the critical component in this, as the supply chain seems to broadly recognize that, in the absence of true verticality, a tighter link between the OEM and those tasked with building their products is an imperative. So even if the volume-build remains (for now) elsewhere, the concepts are coming from America-based engineers.

The data bear this out.

As noted in Market Watch this month (p. 14), printed circuit board and MCM design software sales carried the overall EDA market in the September quarter, the most recent reporting period. PCB license and maintenance growth was up nearly 10% year-over-year, besting semi, SiP and other tracked segments.

Can this last? Going back to 2010, the PCB side of EDA has not had more than four straight quarters of year-over-year growth prior to a dip.

Since 2010 the PCB/MCM segment has generally been up and to the right, but there appears to always be one quarter that’s a bit of an outlier in terms of sales, followed by a few down quarters until the next big spike. And it’s usually the fourth quarter where that happens.

Q314    9.7%
Q214    20.3%
Q114    1.6%
Q413    14.2%
Q313    -0.3%
Q213    5.2%
Q113    6.7%
Q412    19.5%
Q312     9%
Q212     -2.7%
Q112     5.1%
Q411    -13.6%
Q311    11.6%
Q211    21.7%
Q111    28.3%
Q410     26%
Q310     -5.4%
Q210    2.6%

Still, parsing the data requires some doing. Despite how the numbers above look, Mentor Graphics chairman and CEO Wally Rhines told me last month that PCB design software sales have been “relatively flat” for the better part of two decades, with place-and-route tools more or less flat for the past five to seven years. In short, once everyone has a toolset, they will buy new ones occasionally, but the technology to do the job is in hand. Developers make money from maintenance, and from new features.

But while PCB routing and front-end tool sales have been declining, those losses have been more than offset by analysis tools. “Most growth in EDA comes from new capability,” says Rhines. “Every once in a while you’ll see a broad category take a step up, and it is because something new had to be acquired by a broad range of people.”

The EDA Consortium compiles the data based on reporting by the major tool vendors. The results are backward looking: EDAC does not attempt forecasts. Speaking for himself, Rhines singled out vehicle electronics as a promising area. “Design tools do have room to grow, and automotive is very healthy.

“It wouldn’t surprise me if PCB design and analysis tools grew in the future,” he added.

If design is a leading indicator, the current outlook appears bright. The four-quarters moving average for PCB and MCM – which compares the most recent four quarters to the prior four quarters – is up to 11.4%. Employment numbers are up quite a bit as well. Per EDAC, design employment was up 3.3% year-over-year in North America alone and has been growing worldwide for a year.

What would be interesting to track are new design starts. Perhaps individual EDA companies try to do so, and certainly some EMS/ODMs do. Being able to capture this on a broad basis, however, would continue to add focus to the all-important design picture.

P.S. See us at IPC Apex Expo this month, booth 113. And be sure to come by for the annual NPI and Service Excellence Awards on Feb. 24 at 10:30 a.m.

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