Investment Rating - The report rates the EDA industry as "Overweight," indicating a positive outlook for the sector compared to the overall market performance [2][24]. Core Insights - The domestic EDA industry is experiencing heightened activity with multiple IPOs and investments, signaling an accelerated development phase [4]. - The long-term trend suggests the emergence of 2-3 leading EDA firms through mergers and acquisitions, with a focus on domestic alternatives [4][12]. - The report emphasizes the importance of domestic process divergence, IPO and acquisition activity, and the need for industry chain collaboration and support from policies and capital [12][15][16]. Summary by Sections Key Industry Events - In December 2025, four significant events occurred in the domestic EDA industry, including three IPO-related activities and one equity investment [4]. - Notable events include: - Hejian Industrial Software Group initiated IPO counseling on December 26, 2025, focusing on digital IC verification and IP [5]. - Xinheng Semiconductor completed its IPO counseling on December 20, 2025, specializing in multi-physical field simulation [6]. - Huada Jiutian invested 100 million yuan in Sierxin, acquiring a 90.9% stake in the company on December 16, 2025 [8]. - Quanxin Zhizao started IPO counseling on December 11, 2025, focusing on manufacturing tools [11]. Industry Perspectives - The report highlights opportunities arising from the divergence of domestic processes, as domestic wafer fabs develop new technology paths that are unsupported by overseas EDA vendors [12]. - The active IPO and acquisition landscape indicates a shift towards a concentrated market with fewer leading players, aligning with the overall development trend of the EDA industry [15]. - Emphasis is placed on the necessity for EDA firms to possess platform capabilities to enhance competitiveness and the role of local EDA companies as integration platforms [16]. Key Company Valuations - The report provides valuations for key companies in the EDA sector as of December 31, 2025: - Huada Jiutian: Market cap of 58 billion yuan, projected revenues of 12 billion yuan in 2024, increasing to 25 billion yuan by 2027 [18]. - Gai Lun Electronics: Market cap of 15.2 billion yuan, projected revenues of 4 billion yuan in 2024, increasing to 8 billion yuan by 2027 [18]. - Guangliwei: Market cap of 14.4 billion yuan, projected revenues of 5 billion yuan in 2024, increasing to 12 billion yuan by 2027 [18].