Investment Rating - The report rates the EDA industry as "Overweight," indicating that the industry is expected to outperform the overall market [2][19]. Core Insights - The domestic EDA industry is experiencing heightened activity, entering an accelerated development phase, with significant IPO movements and mergers [3][11]. - The long-term outlook suggests that the EDA industry will consolidate into 2-3 leading firms through mergers and acquisitions, with a focus on domestic alternatives [3][10]. Summary by Sections 1. Key Events of the Month - Horizon Industrial Software Initiates IPO Counseling: Horizon Industrial Software submitted its IPO counseling to the Shanghai Securities Regulatory Commission on December 26, 2025, focusing on digital IC verification and IP [4]. - Xinheng Semiconductor Completes IPO Counseling: On December 20, 2025, Xinheng Semiconductor completed its IPO counseling, offering multi-physical field simulation capabilities [5]. - Huada Jiutian Invests in Sierxin: On December 16, 2025, Huada Jiutian announced a 1 billion investment in Sierxin, acquiring a 90.9% stake, enhancing its digital IC design capabilities [6][7]. - Quanxin Intelligent Manufacturing Starts IPO Counseling: On December 11, 2025, Quanxin Intelligent Manufacturing initiated its IPO counseling, focusing on OPC and other manufacturing tools [8]. 2. Industry Perspectives - Opportunities from Domestic Process Divergence: The EDA industry is closely tied to the semiconductor ecosystem, with domestic wafer fabs developing new technology paths that create independent market space for local EDA firms [9]. - Active IPO and M&A Movements: The report highlights three new IPO processes in the EDA sector, indicating a shift towards a concentration of leading players and an active M&A environment [11]. - Importance of Industry Chain Collaboration and Support: The report emphasizes the need for EDA firms to have platform capabilities to enhance competitiveness, supported by local government initiatives and national funds [12]. 3. Valuation of Key Companies - Huada Jiutian: Projected revenue of 12 billion in 2024, increasing to 25 billion by 2027, with a market cap of 580 billion [14]. - Gailun Electronics: Expected revenue growth from 4 billion in 2024 to 8 billion in 2027, with a market cap of 152 billion [14]. - Other Companies: Additional companies are also highlighted with their respective revenue projections and market caps, indicating a positive growth trajectory in the EDA sector [14].