Ladies and gentlemen, thank you for standing by, and welcome to the Synopsys Earnings Conference Call for the Second Quarter Fiscal Year 2013. [Operator Instructions] Today's call will last 1 hour. Five minutes prior to the end of the call, we will announce the amount of time remaining in the conference. As a reminder, today's call is being recorded. At this time, I would like to turn the conference over to Lisa Ewbank, Vice President of Investor Relations. Please go ahead.

Thank you, Laurie. Good afternoon, everyone. With us on the call today are Aart de Geus, Chairman and Co-CEO of Synopsys; and Brian Beattie, Chief Financial Officer. Before we begin our remarks this afternoon, I'd like to remind everyone that during the course of this conference call, Synopsys will discuss plans, forecasts and targets and will make other forward-looking statements regarding the company, its business and its financial results. While these statements represent our best current judgment about future results and performance as of today, our actual results and performance are subject to many risks and uncertainties that could cause actual results to differ materially from what we expect. In addition to any risks that we highlight during this call, important factors that may affect our future results are described in our most recent quarterly report on Form 10-Q and today's earnings press release. All financial information to be discussed on this conference call, the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures and supplemental financial information can be found in the 8-K, the earnings press release and the financial supplement that we released today. All of these items are currently available on our website at www.synopsys.com. With that, I'll turn the call over to Aart de Geus.

Good afternoon, and thank you for joining us. Synopsys again delivered strong business, technology and customer results in Q2, meeting or beating every target we communicated last quarter. We achieved revenue of $499 million, non-GAAP earnings per share of $0.66 and considerable operating cash flow. As a result, we're raising our non-GAAP earnings per share outlook for fiscal 2013 to a range of $2.37 to $2.42, representing solid, double-digit growth for the year. We're also raising our operating cash flow target to $375 million to $400 million. Brian will provide more financial detail in just a minute. Before discussing some highlights, let me comment on the customer landscape, which I would characterize as steady. Semiconductor companies continue to face significant competitive challenges. And while cognizant of ongoing uncertainty in the macro environment, the race for differentiation and time to market, product functionality and advanced technology continues unabated. Synopsys has collaborated closely with market leaders for many years. With the high-value, but also, great technical challenges of the latest silicon technologies, more and more customer executives are sharing their future direction with us and how Synopsys is needed to get them there. As a result, we see continued successes and business strengths across key customer segments, the foundries, top IDMs and key fabless customers, particularly in mobile and cloud-related systems companies. Let me provide a couple of examples. First, during the quarter, we renewed a significant multiyear agreement with Intel. Second, we've made excellent progress with a large semiconductor company, who had been a competitor stronghold for more than a decade. For a number of years, we have worked closely with them on their most advanced designs. This quarter, with a substantial long-term commitment, they moved to Synopsys as their main partner because of our technology excellence and dedicated support. The…

Well, thank you, Aart, and good afternoon, everyone. In my comments today, I will summarize our financial results for the quarter and provide you with our guidance for Q3 and the full year. In my discussions, all of my comparisons will be year-over-year, unless I specify otherwise. Now Synopsys delivered an excellent quarter, meeting or exceeding all of the quarterly financial targets that we provided in February. Q2 financial results were highlighted by strong business levels, double-digit growth in both revenue and non-GAAP earnings and considerable free cash flow generation. In addition, the revenue run rate is positive. Now some additional detail. Total revenue was $499 million, an increase of 15% compared to a year ago and at the high end of our target range. Greater than 90% of Q2 revenue came from beginning-of-quarter backlog, and one customer accounted for slightly more than 10% of second quarter revenue. The weighted average duration of our renewable customer license commitments for the quarter was greater than 4 years, reflecting a mix of contracts, including the impact of a large contract renewal. As a result, we now expect average duration for fiscal 2013 to be greater than 3 years. Turning to expenses. Q2 total GAAP costs and expenses were $420 million, which included $32 million of amortization of intangible assets and $16 million of stock-based compensation. Q2 total non-GAAP costs and expenses were $365 million, an expected year-over-year increase, due primarily to increases in headcount and expenses from our recent acquisitions. Non-GAAP operating margin was 27% for the quarter and 26% for the first half of fiscal 2013. As we mentioned last quarter, we expect total non-GAAP expenses to be skewed towards the second half of the year. This is simply due to timing of expenses, such as employee compensation, some hiring that…

[Operator Instructions] And our first question from the line of Rich Valera with Needham. Richard Valera - Needham & Company, LLC, Research Division: Brian, just a question with respect to one of the comments you made. I think you said the revenue run rate was positive on the quarter, and I wondered if that also applied to the bookings run rate versus the prior years on average.

That's in fact how we do measure the revenue run rate, and so we're looking at the bookings and compare that to the beginning of the year, looking at revenue that we'd be expecting to get in the deals as we go forward. Richard Valera - Needham & Company, LLC, Research Division: So that exactly is your sort of standard measure of run rate?

Yes. Richard Valera - Needham & Company, LLC, Research Division: Okay, and that was positive on -- in aggregate. And then, Aart, just wanted to ask a couple of questions on the IP business, which is clearly a big focus and a nice growth driver for you guys. Want to try to understand where the margin of that business is today. I believe it's below the corporate average. But where you see it today and where you see it going? And does that require any meaningful upfront investment for the move to FinFET, to sort of crank out all the different FinFET versions of these products which, obviously, you would benefit from down the road?

Okay. In general, that business is strong and we have continued our push to improve its profitability, at the same time balancing it, I think, well, with the amount of continued investment in creating the products available for next year. The good news is on the FinFET side, we have actually invested already quite a while ago. And so I think we're going to start to see the benefits of that, as the early investments will start to turn now into growing revenue from that. So I actually see it as a very positive outlook for that business. Richard Valera - Needham & Company, LLC, Research Division: And with respect to the Intel renewal, a couple of questions. First, was it really exclusively the Intel deal that drove up the average duration for the quarter? Were the -- was the rest of the business kind of in line with your norm? And two, would have thought that, all things equal, your deferred revenue would have gone up sequentially with that renewal in the quarter, but it actually went down a bit. Just wondering if you could comment on those couple of items.

Well, as you know, in general, we are very shy to comment about anything regarding a specific customer, and that includes Intel. Needless to say, this is an important customer for us and a significant agreement. Let me not break it out further, given that we really don't want to comment about the specifics of the transaction.

And to your question on deferred revenues, Rich, just recall that increases in deferred revenue happen only when we're able to invoice the customers. Richard Valera - Needham & Company, LLC, Research Division: So could I take it that maybe you didn't yet invoice for that particular large deal?

Same comment in terms of providing, we don't provide the details of the individual accounts. Richard Valera - Needham & Company, LLC, Research Division: And I understand you don't want to provide the duration of that specific deal, but can you say if we should be expecting any change in duration going forward? Any other -- whether -- any other change in your average duration other than that one deal?

What we do is look at the total weighted average renewal lengths that we've been able to close in the quarter. And the impact, as we said, for Q2 was that it became greater than 4 years, and then the impact, as we look at bookings perspectives for all of FY '13, will be just over 3 years as well.

And our next question from the line of Krish Sankar with Bank of America Merrill Lynch.

There are a few of them. Aart, in the past, you have spoken about growing your IP business in the double-digit range, or the low-double digits. Is this still the target for this year? And can you talk a little bit around the competition now that Cadence has Tensilica?

Yes, we have not changed our outlook. We think that this is a part of our business that is growing in double-digit range. We foresee it to continue to be there. And of course, at any point in time, we're dealing with a variety of competitors. And I think that is more an indication that it's a healthy business than anything else.

Got it, all right. And then, on the emulation side of the market, after you guys purchased EVE, can you talk about what kind of trends you're seeing there? I know that everyone believes in it being a secular grower. Are there any cyclical trends within that, because 2 of your competitors have 2 different views, at least for this year on how the emulation revenue is going to trend? And along the same path, when I look at your operating margin or the margin profile, you're going to improve your margins in IT business. How was the margins on the emulation business? And where do you think it can get to?

Well, let me go backwards. We actually do not break out the margins of any of the individual businesses, partially because there are some fluctuations as we decide to invest or not. The key objective, of course, is to manage the overall profitability of the company to be in line with our even higher-level objective, which is to grow the earnings per share in high-single-digit range. And so all of this fits together nicely in that regard. As we look at EVE particularly, we are now in the very interesting phase of integrating it, while we simultaneously are integrating the debugging capability acquired from SpringSoft. And so our aim and objective is really to now take what is a fabulous collection of really best-in-class technologies and deliver a well-thought-out integrated platform. And EVE absolutely is a key piece in that. And so far, I think that's going very, very well.

Got it. And then the final question, on the FinFET side, clearly, you guys have a lot of experience on the FinFET design. When you contracted [ph] the foundries, most foundries are expected to start manufacturing FinFET-based chips some time next year. I don't think there's any specific timing quite yet. But when you look at it, is the challenge in FinFET more on the design side? Or do you think its more on the manufacturing side?

Well, I don't want to be not humble and say, "Well, it is hindsight. We have it sort of under control." But the reality is I think it is both, meaning that these are new structures that are simultaneously being introduced with much, much smaller nodes. So that's sort of squaring the complexity of the problem and simultaneously achieving much higher density of transistors, which brings a lot of challenges for the tools. The only reason that I speak with, I think, a fairly high degree of confidence is we have already helped customers tape out chips that are on the market today with this technology. And in that sense, the proof of concept is beyond concept, that is absolutely in production. Now having said that, there's no question that there are multiple players that are all racing forward to deliver their own version of this technology, and that requires adjusting to their specific technologies, adjusting to how they would like to see the designs come together. And we are extremely engaged in -- with all of them, which, from my perspective, is a really, really positive sign because I think that FinFET is one of the enablers for truly a next generation, meaning a decade or so, of advanced design. And I think this is moving at super high speed.

Our next question from the line of Sterling Auty with JPMorgan. Sterling P. Auty - JP Morgan Chase & Co, Research Division: I was wondering if we could approach it this way, if you take out your largest couple of deals, was the duration of the rest of the contracts below 3 years or above 3 years.

I think, let's not go too much into trying to reverse engineer all the numbers. Fundamentally, our business has not changed. And in aggregate, we have always said that the balance of transactions that we do is in the 3-year range. In the last few quarters, it was a bit lower. Before that, it was a little higher. But fundamentally, there's nothing that would indicate to me that our business is changing. Everything else, I think, we're not going to go into further, if you don't mind. Thank you. Sterling P. Auty - JP Morgan Chase & Co, Research Division: And what year -- as we think about the collections through the year, you do have a seasonality to it. Given the increase in cash flow for the year, would you say that your second half collections are going to be above seasonal as compared to the past?

You're right on it. They're typically higher in the third quarter. That's what we've seen every year and still expect then, we have a second half which is stronger than the first half. And with the confidence we had and the business activity, we had increased confidence in cash flow, primarily around collections. And so that is looking better for this year and allowed us to raise guidance. Sterling P. Auty - JP Morgan Chase & Co, Research Division: You mentioned the FX impact. You've been able to hold the revenue guidance. As you look at the pipeline for the back half of the year, is there any concentration in terms of either bookings in the pipeline or other that we should think about being -- coming out of Japan?

I think let's just align on the question. It's really a perspective for foreign exchange, is that we typically hedge off all the expenses as we operate around the world. But in this past 6 months or so, we have seen a notable devaluation in the yen. It affects the revenues, most of the revenues out of Japan, not all of them. And as we look for the year, we've been able to offset that impact. We have not had a material impact to any of the key line items, in particular, in terms of earnings per share, and just been able to offset that with good operational performance. We've been able to hold our revenues for the year. And just good hedging, the natural hedging, and managed it to have a very minimal impact to the year and even allowed us to raise guidance. So this year has been very good from a yen perspective. We typically don't have any fluctuations to the budgets we set for the year because of all these programs that I just went through. And at the end of the day, with Japan and the economy is expected to pick up as a result of this devaluation in the long run, we think that's good for our customers as well. Sterling P. Auty - JP Morgan Chase & Co, Research Division: All right, great. Last question, Aart, can you just kind of maybe characterize where we are in the transition? It seems like 20-nanometer might be a little bit of a transition node. Do you agree with that? And kind of where are we in the move to the next big node in terms of tooling?

Well, we are definitely seeing the number of designs growing in the 20-, 22-nanometer node. I concur with the general feel of somewhat of a transition from 28 to 14, 16. And the reason that's a little bit of a misnomer is because the transition to FinFET is actually the important driver, not necessarily the node size, although the 2, of course, interact. And the reason the transition to the FinFET is so enticing is that it really changes the performance power nature of the transistor, and that has been one of the increasing or the difficult bottlenecks in semiconductors. And so, that being the opener to a next volley, so to speak, the race is obviously on. But it is also fair to say that a number of customers will land, at least temporarily, on the 22 -- 20-, 22-nanometer just because they want to pipe-clean their design flow, they want to sort of minimize the risk in the transitions, and that makes a lot of sense. But we definitely see both behaviors.

And our next question from the line of Tom Diffely with D.A. Davidson. Thomas Diffely - D.A. Davidson & Co., Research Division: Brian, looking at the operating or, I guess, the margin expansion, the 100 basis points this year perhaps a little bit more in the out year. Is that driven by kind of the ramping IP and better margins in IP? Or just an overall revenue growth in the company that's driving the operating margin expansion?

Well, Tom, it's all of the above. It's really that our revenues are up very nicely this year. We're looking at revenue growth in the range of 11% to 12%. Spending is not growing as fast as that, and we are seeing good improvements across the board in the operating margins of the company. At the same time, we've got to retain dollars to invest in leading-edge technologies. So again, still on track for the commitment for the year to see approximately 100-basis-points improvement in the margins. Thomas Diffely - D.A. Davidson & Co., Research Division: Okay. And when you look at the -- all the acquisitions last year, is there an opportunity to have operating expense improvements as integration happens over the next few quarters? Or are we pretty much at the ongoing level at this point?

So there's still, in a number of the product lines, still some of the integration activities underway, getting best-in-class performance features out of all of the various products and bringing those to market as quickly as we can. So again, there could be some opportunities there. But again, overall, the company does need to stay invested in leading-edge technologies and continue to drive EPS at the same time. Thomas Diffely - D.A. Davidson & Co., Research Division: Okay. And what was the actual impact of the yen over the -- during the quarter?

Really not very material at all. As you saw from an impact through the yen on the revenues because of our hedging and the other activities and overachieving, as well as other income and expense, where we are able to recognize some of the non-hedge accounting impacts to the company. So bottom line to the company was really minimal, nothing almost. Thomas Diffely - D.A. Davidson & Co., Research Division: Okay, great. And then you talked about tax rate of 23%. That includes the, I guess, the $0.09 impact of the R&D tax credit already?

Yes, it does. Thomas Diffely - D.A. Davidson & Co., Research Division: It's already embedded in your guidance.

Absolutely, yes, that's factored in. We -- that came through in our first quarter. There was about $0.04 impact related to FY '12 as a retro catch-up that we had in Q1. And then, we had forecast an additional $0.05 to come through in earnings per share for the balance of FY '13 which, again, we're just building on. So we saw the $0.09 increase in Q1, primarily coming from tax, and then we're adding on another $0.02 improvement in EPS coming from operational improvements this quarter. Thomas Diffely - D.A. Davidson & Co., Research Division: Okay. And your long-term view without the tax credit going forward in the out-years is still that 25%?

Yes, at 25% to 26%. Because when you look at, I said 23%, it's a roughly 3 percentage points change. So 25% to 26% is a good, long-term planning model for us. Thomas Diffely - D.A. Davidson & Co., Research Division: Okay. And then I guess, just finally, on the technology side, is the move to some of these advanced technologies for memory, like the 3D NAND, are they big drivers as well? It sounds like FinFET and the fact that the fabless guys are, in conglomerate, all of your biggest customers per se. Are you going to see much of an impact once the industry moves to some of these other memory technologies?

Oh, absolutely, although they're not completely linked. And there's a key reason for that, which is that the largest portion of the industry that has -- that sees the biggest benefit in changing the performance power segment is clearly the mobile side of the industry. Now the power equation is starting to impact the cloud side as well, because these very large centers of servers are heavily eating up too much power. But that's going to be a little slower. So mobility is driving this, and mobility is just incredibly hunger for -- hungry for even more performance. We're essentially limited by battery power. And since most of the computational energy goes into the core processors, that is where the emphasis on FinFET is going to be first. Now memories are following their own track of technology development, but they have the very same need of being very, in this case, being very, very price sensitive. And so we are going to see more and more push there, as well, in parallel to the processors. By the way, when I say processors, I should clarify that I mean not just the apps processors, but any other form as well. The graphics processors are key, the DSP processors as well. Thomas Diffely - D.A. Davidson & Co., Research Division: Okay. And so once you guys -- it really comes down to just battery life as the main driver of the mobile consumer today.

Yes. In many ways, largely because I think battery improvements, and don't quote me on the number, but I think is maybe in the 10% to 15% per year, which is woefully insufficient versus what we wish our phone could do. And therefore, I think any advances in semiconductors are going to be of very high value. And by the way, I think this is going to continue in years to come because the demand for more compute power will, if nothing else accelerate with the type of applications that are possible. Therefore, over time, I certainly have hopes that we will see some more migration of capital and money flow into the semiconductor industry, precisely because there's such a high leverage on being able to improve the performance power ratio of a number of these chips.

And our next question from the line of Jay Vleeschhouwer with Griffin Securities.

Brian, to start with you, just to reconcile some revenue numbers here. You had an unusually large increase in your Asia-Pacific revenues, both year-over-year and sequentially, but your upfront revenues declined sequentially by a fair amount. So was the increase in Asia Pac largely tied to the increase in TBL revenues generally? And was IP and/or services the main driver to that increase in Asia Pac?

Yes. Let's go through a couple of your points here. One is that APAC did have a very strong quarter and, when we look at trailing 12 months, is doing very, very well as well, so a very strong region for the company. In terms of the mix of products, of course, it fluctuates from quarter-to-quarter. When we look at -- now that, of course, we have an increased hardware business, we have more business coming in the areas of percentage completion or milestone-based accounting for our revenues. And also, that we see from time to time, royalty is coming through in a quarter-to-quarter basis. So there will be some natural fluctuations from quarter-to-quarter. And I don't link it specifically to the region but, overall, for the company. But APAC is very strong for us, and looking at very strong year-over-year growth.

Okay. So just to clarify on that, so it was a variety of things. It wasn't necessarily a single, large, scheduled TBL payment or anything like that.

Right, that's correct.

Okay. For Aart, let's see how far we can take the Intel discussion. When you last publicly disclosed a renewal with them, which was August 2007, there were some comments you made at the time with regard to technology collaboration and work with them. So perhaps you could comment in what ways the arrangement now might, in any way, be different from what you talked about back then. Also at that time, in 2007, your quarterly revenue run rate with them that you disclosed was roughly, let's call it, $34 million a quarter. Now based on recent disclosures, you're up to over $50 million a quarter. Some of that's inorganic, of course, but would you foresee a prospect of further material increases in the run rate with them as we've seen over the last 5 to 6 years?

Well, if nothing else, Jay, you're keeping very good notes. But unfortunately, I'm not going to add much to the notes because we don't comment about the business relationship with -- we have with our customers. Intel is obviously, visibly so, an important technology driver and has been a very good partner to us, and all I can say is that, that relationship continues on that basis.

Okay. On the IP business, I think you've mentioned in an earlier call that you have something like 1,400 engineers now in that business. Could you just remind us what proportion of that headcount is inwardly focused in terms of R&D versus customer engagements where you're doing projects for customers that -- apart from the internal R&D work that you do?

Well, the number I mentioned was 1,700. And I'm not quite sure how to answer the question because these are engineers that are essentially developing IP for customers. Some of the IP is very generic. Some of the IP gets tuned specifically for the customers' technology. And whenever an IP is not fully synthesizable, you have to do that in order to take advantage of the specific nature of their silicon node. And the node is not only single node, it often has different characteristics being optimized for performance or low power, for example. And so the breadth of the type of these engagements is quite broad, but the number I mentioned is all really fundamentally in the development and delivery of IP to the customer.

Okay, a couple of last things. You mentioned in your prepared remarks that you had a win in Japan. Could we speak about Japan a little bit more broadly? Because it's been obvious for the last number of years that it's been shrinking in importance to EDA as a percentage of EDA spend. And yet we've seen, in the last couple of quarters or so, some renewed momentum among other technical software companies. And I'm wondering if this particular win is indicative of all. Are they a reinvestment cycle that may be occurring in Japan vis-à-vis EDA as a whole and not just this one particular success that you've had there?

Just for the record, I did not mention any specific win in Japan. But on the general topic of Japan, it is very clear that over the last -- no, actually, more than a decade, but visibly so in the last half decade or so, that the Japan economy and the semiconductor industry, in particular, have been under enormous pressure, while we, as a company, are doing quite well. I'd like to link to one of the things that Brian said earlier, which is this very change in the valuation of the yen is viewed in Japan as at least the beginning of a ray of hope that they become more competitive on a worldwide basis. And with that, the opportunity for their business to sort of restart themselves beyond the somewhat stale situation that the industry has been in. Now having said that, there are a number of companies that have taken very aggressive steps in consolidating or in streamlining their businesses. And like any other part of the world, these changes are difficult to do. They take some time. But after a while, they -- the positive impact starts to show. So we certainly hope that the industry in Japan, in semiconductors, will grow again and potentially also refocus on some of the newer opportunity spaces. And the indications are a little bit better than they were, actually, just 6 months ago. But having said that, these are macroeconomic events that are certainly far beyond our control as a company.

Okay. And then lastly, would you care to comment on the announcement earlier this week by Cadence of a potentially competitive offering versus PT?

Well, of course, this is DAC season. And you will see a wave of announcements of products that are all better than what was ever built before, and the reality will sink in over time. So no, I don't think that there's anything more to be said right now. We will have to see what the reality is. And obviously, we have a strong competitor in Cadence, and we will compete equally strongly back.

[Operator Instructions] Our next question comes from the line of Mahesh Sanganeria with RBC Capital Markets.

Aart, can you comment on the design win you talked about this quarter you had was -- which product area that was in and what was the driver for your design win?

Well, I think, I mentioned the term design wins when summarizing how far our USB franchise and delivery had gone. Because it's quite astounding how the IP business for us has evolved over a number of years. And sometimes, we work so hard that we don't realize how many designs have actually utilized our IP. And in that context, I think the 3,000th design win of USB was actually, I think, quite remarkable. Having said that, the other aspect where there were design wins comes in is literally every day, meaning that no matter how good a company we hope we are, we have to prove every day again that we're worthy of the responsibility of being on the top chips for tomorrow. And therefore, we do have a very active engagement in the field through our technical support team. And the good news is, I think we are really massively involved in all the new advanced chips. And in that context, every day, there's, somewhere in the world, some good news of being selected again to continue that journey. But it's also the responsibility and the fun challenge to actually have to deliver on chips that are driving the boundaries of what we can do. And so in that context, I think the FinFET efforts, be it through the tools that are very much on top of it, I think already, the IP that is in very rapid development and now, increasingly, the technical skills in our field to support our customers, these are all very positive indicators for the future that we have with the people driving the most important design wins.

And just a follow-up on the FinFET. You mentioned that you have experience designing with FinFET. Can you give us a little bit more color, where is the more profound impact in terms of the different tools? Is it more in the device simulation or placement or power closure? Where is the most profound changes you had to make in the tools to enable the FinFET?

Good question. It's actually very much across the board, because it starts with really the design of both the technology, which, by the way, is moving to a very, very small node, 14-, 16-nanometer. And with that, there's a lot of lithography type of issues, but there's also lithography creeping into the place en route by virtue of what's called double-patterning. Secondly, the entire layout space is highly impacted, because the nature of the transistor will change the timing and power calculations. But the layout is also influenced greatly by all the rules that you have to follow to place these things on the chip just right. And when I say rules, we're talking essentially a doubling of rules of 2,000 to 4,000 rules that you have to follow. And then, indirectly, it really impacts, or it will impact, I should say, going forward the entire verification space. Because all the way down to the SPICE level, simulation of the transistor, all the way up to the sheer number of transistors, and therefore, complexity of chip verification from a functional point of view. So it is quite remarkable the breadth of it, but it's also quite rewarding because that is the very, very reason that we can see how much impact this will have on design and on electronics going forward. Then summarizing all of that, it also impacts every one of the building blocks. And again, you can look at the transistor as being literally the smallest atomic building block, all the way to the large pieces of IP that have to be tuned for these technologies. And as I mentioned in the context of an earlier question, we have been working on IP developments, be it in memories or libraries or building blocks, now already for quite a while. And in that sense, I think we are very much in sync with the foundries as they roll out their production-ready solutions.

And then one more question I'd like to follow up on, the topic that was discussed, is the 20-nanometer being a transitory node. Will it be possible for you to give us a quantitative sense on what will be the -- what is your expectation for big design starts on 28, 20 and 14, so that we can get an idea for how big or how small this 20-nanometer is going to be?

Yes, let me give you a little bit of sense. For the 28 -- 28-, 32-nanometer node, we actually have stopped tracking. And what that means is we count the early chips up until 500. After that, it becomes completely untrackable. And so that node, I think, will continue to be a big node in the sense that a lot of designs will aggregate there. On the 20-, 22-nanometer, we have, I think, about 100 designs and growing on the radar scope. And then we do not communicate the 14-, 16-nanometer, partially because there's too much confidential information in that. But I can only tell you that there are some very hard-driving folks engaged in both test chips and production chips there.

Our next question from the line of Satya Kumar with Crédit Suisse.

This is Farhan asking the question on behalf of Satya. Question on the fragmentation in the foundry. Like, recently there's been some large companies which have indicated that they are entering the foundry space. Compared to 3, 4 years ago, there are more companies doing foundry works. How does that effect the EDA world? And does that imply that you have a greater amount of OpEx now needed because you have to support multiple design flows? And also, is that leading to more design activity because people have to design for different foundries?

To be honest, the -- acoustically, it was a little hard to understand. So let me try to formulate the question and see if I answer the right one, which is, as the foundry landscape is changing and a number of the foundries are -- and a number of their users are trying to use multiple foundries, what all do you have to support? Because in that context, the number of nodes sort of multiplies in the dark, so to speak, meaning that, not only do you have these smaller and smaller nodes, but you have variations on each one of those for performance, power and maybe cost. And so it is certainly true that this puts a fairly heavy burden on us, but also on the foundries, to have the complete ecosystem ready. And the good news on our side is that we have designed our tools to be extremely flexible for a variety of parameters. And therein lies actually one of the differentiating essences of what Synopsys has built, literally for the last 20 years, all the way starting to synthesis and through the physical implementation, which is we can read in the characteristics of different technology nodes and their variations, and then optimize the circuit based on that. And so if a certain node, let's say, may have some better capabilities in low power, we will take advantage of that automatically in the tools. Now having said that, the one area where the -- that is sometimes challenged is as you develop IP, that has to be individually optimized, in some cases, almost manually for best results because it's going to get reused so much. Now we need to have working contract with the customers so that we can invest the resources to do that, deliver it on time. And they have a strong interest that their IP looks really good because that will attract their customers to go to them. And so there's an economic relationship there that has to jive. And moreover, there's a temporal relationship because they want to have their technology ready at the same time as the tools being ready at the same time as the IP being ready and at the same time as the support being ready. And of course, you are talking about things that are really state-of-the-art. And so predicting the right arrival time is not always trivial. But we're working closely with, as I said, all of the top foundries on that. And again, I think it's both a privilege and an opportunity to be at the center of gravity of this whole next wave of capability.

And I'll turn it back to our speakers for closing remarks.

Well, at this point in time, thank you for attending the call. I think we communicated to you that we had really an excellent quarter and, moreover, are making really great progress in many of the technology directions that, I believe, will profoundly impact semiconductors in the years to come. And so, from that perspective, as much as the pressure is on us to continue to deliver, the privilege is here to be part of that, right? And we're looking forward at finishing our year well within the targets that we've given you. Thank you so much, and we'll be available for questions afterwards as usual.

Thank you. And ladies and gentlemen, this will conclude our conference call for today. Thank you for your participation and for using AT&T Executive TeleConference service. You may now disconnect.