Chinese chip design software startup SEIDA is facing challenges amid market headwinds. The startup, which aims to develop indigenous electronic design automation (EDA) tools to break the monopoly of US firms, has announced a significant reduction in its workforce. X-Epic, founded in 2020, is cutting as much as half of its workforce, including its core research and development unit. This move comes as Chinese EDA firms, including X-Epic, are working to develop software tools for chip designs in order to reduce reliance on imported EDA software, which is seen as a vulnerability in China's chip value chain.
X-Epic had a workforce of about 400 as of March 2023. The big three foreign vendors control about 70% of China’s EDA market, with the largest Chinese player having a 7% market share. Chinese EDA firms saw their business slow in Q1 2024 after China’s semiconductor sales fell 14% in 2023. The value of China’s EDA market is expected to reach 18.5 billion yuan in 2025, up from 9.3 billion yuan in 2020 [7ff3f44e].
Despite export controls and restrictions, SEIDA has gained support from influential Chinese investors, including Semiconductor Manufacturing International Corp (SMIC), China's leading microchip maker. However, the recent challenges faced by SEIDA highlight the complexities and headwinds in the Chinese chip industry. The competition for dominance in chipmaking between the US and China will continue to have far-reaching implications for emerging technologies like artificial intelligence and quantum computing.