Constraint · Moderate
3/4
Process-linked design workflows are difficult to reproduce, but multiple qualified providers exist.
Counterevidence: Foundry alliance materials document multiple qualified EDA providers and prevent a uniqueness claim.
sPEG Index · member
Cadence
SDS 15/20 · [3 · 3 · 3 · 3 · 3] · ordinal
Integrated EDA and system-design workflows; acquired system-analysis activity is not automatically assigned core EDA scarcity.
Five judgments
Substitution resistance · Moderate
3/4
Migration requires workflow rebuilding, validation, and foundry-linked qualification.
Counterevidence: Foundry alliance materials document multiple qualified EDA providers and prevent a uniqueness claim.
Economic capture · Moderate
3/4
Current earnings persist after substantial R&D, although acquisition and compensation effects require continued review.
Counterevidence: Foundry alliance materials document multiple qualified EDA providers and prevent a uniqueness claim.
Persistence · Moderate
3/4
Recurring process integration supports a three-to-five-year case while process transitions remain a named risk.
Counterevidence: Foundry alliance materials document multiple qualified EDA providers and prevent a uniqueness claim.
Cost of defense · Moderate
3/4
Material operating benefit remains after reported research spending and compensation costs.
Counterevidence: Foundry alliance materials document multiple qualified EDA providers and prevent a uniqueness claim.
Admission gates
- dimension floors: pass — C/S/E/P meet 3 and D meets 2.
- materiality: pass — Company-level materiality route is documented.
- decisive confidence: pass — Every decisive dimension is at least Moderate confidence.
- source packet: pass — Minimum admission packet is present for the draft judgment.
- current review: pass — Structural review is current at the research cutoff.
- material event: pass — No unresolved material eligibility event is recorded at the research cutoff.
Rationale, falsifiers, and next observation
15/20; include
**Perimeter:** integrated EDA and system-design workflows; qualitative company-level route. Acquired system-analysis activity is not automatically assigned core EDA scarcity.
**Evidence:** Q2 revenue $1.584bn, GAAP operating margin 28.4% versus adjusted 45.5%, R&D $531.3m; core EDA grew 18%. TSMC's alliance documents design-flow collaboration and lists Cadence, Synopsys, Siemens and specialists. The extracted tables do not establish every product's certification status. [C1, X1]
**Judgment:** C3/S3 for difficult-to-reproduce, process-linked workflows; E3/D3 for meaningful earnings after R&D and compensation costs; P3 for recurring process/design integration. The existence of qualified competitors prevents a uniqueness claim. Backlog is contractual visibility, not proof of five-year scarcity.
**Review/removal trigger:** loss of relevance at major process transitions, material customer migration to competing flows, or deteriorating retained economics despite rising engineering spending. Next review at results or by December 16. Renewal pricing, actual switching costs and a fuller cash/SBC history remain missing. The same total as NVIDIA is not an assertion of identical economics.
- Loss of relevance at major process transitions
- Material customer migration to competing design flows
- Deteriorating retained economics despite rising engineering spending
Next: Obtain renewal-pricing, switching-cost, cash-flow, and stock-compensation evidence at the next results review.
Valuation context
PEG: unavailable (qualified reference path not assembled). Economic sPEG: unavailable (paired valuation uncalibrated). SDS is not a valuation input.