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Byline: JAMES DETAR
The market for chip design software has become a two-horse race, with Cadence Design Systems Inc. and Synopsys Inc. trading the lead.
Synopsys is out front after passing Cadence in sales late last year. The company cemented its lead on Aug. 19, when it reported a strong fiscal third quarter.
But the two companies may be getting more competition. A small firm called Magma Design Automation Inc. is making gains in the market, thanks to a unique approach to chip design. Its software helps chipmakers manage their development process -- the work flow of designing chips -- quickly and cheaply.
"They're probably more efficient at the new design-flow tools needed for today's more complex designs than anyone," said Gary Smith, an analyst with Gartner Dataquest Inc. in San Jose, Calif. "They're in a good position."
Cupertino, Calif.-based Magma Design is one of the fastest growing companies in the chip industry. Its sales grew from $1.5 million in 2000 to $46 million in 2002. The company is on target to post revenue of more than $75 million this year.
In its first fiscal quarter, ended June 30, Magma's earnings grew to 14 cents a share. That was up 133% from the year-ago period. Sales rose 26% to $22.8 million.