Cadence Design Systems Inc at JPMorgan Global Technology, Media and Communications Conference (Virtual) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jackson Edmund Ader - JPMorgan Chase & Co, Research Division - Analyst : All right. Perfect. So Lip-Bu, just a brief introduction of the business, kind of the markets that Cadence serves, end customers, that sort of thing would be great.

Question: Jackson Edmund Ader - JPMorgan Chase & Co, Research Division - Analyst : Yes. Can we talk about that acceleration? I mean for the pandemic for a lot of companies, unfortunately, it was certainly a major headwind. But just curious what did the -- what did the macro environment or demand environment look like for Cadence in 2020 through the pandemic?

Question: Jackson Edmund Ader - JPMorgan Chase & Co, Research Division - Analyst : So I'm curious about that. I mean, these design cycles take so long, months, years, in fact. And so I'm just curious, as the chips get more complex and the nodes get smaller, right, we're running out of numbers here. We're down to 2-nanometer, talking about or so. I mean what are you seeing in terms of turnaround times for -- from concepts to tape-out and ultimately manufacturing for these more complex nodes?

Question: Jackson Edmund Ader - JPMorgan Chase & Co, Research Division - Analyst : You mentioned a couple of industrial end markets, automotive, aerospace. Those are cyclical, right? And especially coming out of the pandemic, as we start to feel a little bit more normalization in terms of auto production and travel. Are you seeing a change in demand? Or are you seeing a change in customer conversations, maybe from some of these cyclical end markets?

Question: Jackson Edmund Ader - JPMorgan Chase & Co, Research Division - Analyst : And how does the chip shortage or the fact that production -- automotive production has slowed so much? How does that actually impact Cadence financially? And in what areas?

Question: Jackson Edmund Ader - JPMorgan Chase & Co, Research Division - Analyst : From a high level, could you just give investors an idea of what is the Cadence? What is -- what would you say is that the main competitive advantage that you have in core EDA over your competition?

Question: Jackson Edmund Ader - JPMorgan Chase & Co, Research Division - Analyst : So you mentioned 45 full-flow customers. Is this -- has this been the way that customers have always preferred to buy, and now Cadence feels like they have the full digital flow to compete? Or is this a new phenomenon on the smaller -- on the more advanced nodes?

Question: Jackson Edmund Ader - JPMorgan Chase & Co, Research Division - Analyst : How does the IP portfolio -- how are you able to keep pace with the advanced nodes on the design side with your IP portfolio? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 25, 2021 / 6:55PM, CDNS.OQ - Cadence Design Systems Inc at JPMorgan Global Technology, Media and Communications Conference (Virtual)

Question: Jackson Edmund Ader - JPMorgan Chase & Co, Research Division - Analyst : You've mentioned 3D simulation or the system analysis piece that Cadence has moved into over the last couple of years. Simple question, why? What prompted it?

Question: Jackson Edmund Ader - JPMorgan Chase & Co, Research Division - Analyst : All right. Let me push back for 1 second. Were there really many semiconductor companies, existing customers that were pushing you to get into computational fluid dynamics? Or was that just a -- is it an attractive market that you saw a nice asset that you could extend into? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 25, 2021 / 6:55PM, CDNS.OQ - Cadence Design Systems Inc at JPMorgan Global Technology, Media and Communications Conference (Virtual)

Question: Jackson Edmund Ader - JPMorgan Chase & Co, Research Division - Analyst : And what do you think -- I mean, getting into this space into that -- into the -- whether it's electromagnetics or computational fluid dynamics, it's not necessarily greenfield, right? That's a saturated market with existing competitors. What do you think that Cadence can bring that maybe the existing competitors are maybe lacking at the moment? What do you think can be your differentiated angle?

Question: Jackson Edmund Ader - JPMorgan Chase & Co, Research Division - Analyst : What about go-to-market? How is the go-to-market motion? Any different? Or do you have any kind of different strategy in the go-to-market motion for the system analysis? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 25, 2021 / 6:55PM, CDNS.OQ - Cadence Design Systems Inc at JPMorgan Global Technology, Media and Communications Conference (Virtual)

Question: Jackson Edmund Ader - JPMorgan Chase & Co, Research Division - Analyst : All right. We have just a few minutes left. So I want to make sure just to remind the audience, if you do have any questions, just submit them online. So a question around the recent refreshes, the hardware, both Palladium and Protium. So they sound like a significant upgrade it's -- these refreshes happen every, what, I don't know, 18 months, 24 months maybe. So I guess, on a scale of 0 to 10, how important is this refresh relative to maybe some of that you've had in the past?

Question: Jackson Edmund Ader - JPMorgan Chase & Co, Research Division - Analyst : Can we touch on -- you just mentioned that there's a custom ASIC in your hardware and that your competitor Synopsys has commercial FPGAs. Just -- that's just frankly 2 different ways of skinning a cat. Why do you think that a custom chip makes more sense for customers?

Question: Jackson Edmund Ader - JPMorgan Chase & Co, Research Division - Analyst : Great. So if we think about the design verification suite, PCB and packaging, flowing through all the way to system analysis. But the area we really haven't touched on yet is that PCB and packaging portion here. How important is that lynchpin to be able to connect winning design flow and core EDA and also making sure that these new investments in simulation are indeed successful?

Question: Jackson Edmund Ader - JPMorgan Chase & Co, Research Division - Analyst : Okay. Great. Well, Lip-Bu, if John were here, I'd probably ask him about guidance, but that's all right. I'll save you from that. I really appreciate you taking the time in doing this. It was great. And we'll talk to you soon. Thanks again.