CDNSCadence Design Systems, Inc.

Cadence is the second of the two chip-design tool vendors, operating in the same near-closed market.

The tools cover the whole path from logic to die layout and sign-off verification before manufacturing. As with its competitor, value lies in trust and in engineers' habits: verification methodologies are certified by the foundry, and switching environments means requalifying from scratch.

A separate line is multiphysics simulation: heat, electromagnetics, mechanics. It widens the market beyond chips to whole systems — boards, enclosures, automotive electronics — and grows faster than the core.

The model is subscription-based, revenue is predictable, margins are high and capital needs minimal. Risks: export controls on China, customer investment cycles and competition for engineers. The company pays no dividend, directing cash into buybacks.