Electronic system design industry revenue rose by 12.7% year on year to $5.75bn during the first quarter of 2026, as semiconductor complexity and artificial intelligence investment increased demand for engineering software and reusable intellectual property.
The figures, compiled by the Electronic System Design Alliance, also show that the four-quarter moving average grew by 10.3% compared with the preceding four quarters.
Computer-aided engineering generated $2.02bn in quarterly revenue, an increase of 15.5%, while semiconductor intellectual property rose by 14.1% to $2.33bn and remained the largest category. Integrated-circuit physical design and verification increased by 8.3% to $751.3m.
Printed circuit board and multi-chip module design revenue grew by 4.8% to $419.2m, and services increased by 6.5% to $226.4m. Although every product category expanded during the quarter, the strongest growth remained concentrated around tools used to manage advanced chip design and verification.
Regional demand was led by Asia Pacific and Europe, the Middle East, and Africa. EMEA procurement increased by 17.6% to $766.4m, Asia Pacific grew by 17.7% to $2.26bn, and the Americas rose by 10.2% to $2.43bn, while Japan declined by 9.9% to $283.1m.
Employment across the companies included in the survey reached 72,544 people, 12.6% higher than a year earlier and 1.1% above the fourth quarter of 2025. Revenue growth is therefore being accompanied by additional engineering and commercial capacity rather than arising solely from pricing or subscription changes.
Advanced chips now combine more specialised accelerators, higher-speed interfaces, greater software content, and increasingly demanding power and thermal limits. Verification workloads rise faster than the visible component count because engineers must test interactions across hardware blocks, firmware, operating conditions, and failure states.
Artificial intelligence infrastructure has intensified those demands. Large processors, high-bandwidth memory, advanced packaging, optical links, power conversion, and cooling have to be engineered as connected systems, extending design activity into simulation, emulation, multiphysics analysis, package layout, PCB development, and system-level validation.
Semiconductor intellectual property offers a way to control that complexity. Reusable processor cores, memory controllers, interfaces, security functions, and verification components can shorten development, although they introduce dependencies around licensing, compatibility, cybersecurity, and support across long product lives.
Europe’s 17.6% increase follows renewed investment in automotive, industrial, communications, power-electronics, sensing, and embedded-system design. Public programmes are also directing more funding towards pilot lines, validation, manufacturing access, and the commercialisation of technologies developed within the region.
The planned expansion of the Compound Semiconductor Applications Catapult into a broader Semiconductor Catapult is part of that effort, creating a route for UK designs to move through validation and towards commercial deployment across more device technologies.
Access to tools remains a barrier for start-ups, universities, and smaller engineering companies. Advanced design flows can require several software packages, specialised compute infrastructure, foundry-specific process data, and experienced verification teams, so licensing and engineering costs accumulate well before a physical prototype exists.
Shared infrastructure can lower that threshold, but it does not remove the need for skilled designers who understand the limits of models and automation. AI-assisted engineering tools may generate options, write code, or complete repetitive tasks, yet safety-critical and high-value products still require traceable decisions, controlled data, and formal verification.
The rise in employment suggests that automation is expanding the workload engineers can tackle rather than reducing headcount across the surveyed companies. More complex products create demand for application engineers, software developers, verification specialists, customer-support teams, and intellectual-property developers around the tools themselves.
Electronic design is also becoming less separable from mechanical and thermal engineering. A functionally correct chip can still fail as a product if the package overheats, the PCB introduces signal-integrity problems, the enclosure restricts cooling, or the power architecture cannot handle transient loads.
Product-category and regional differences remain significant. Japan’s quarterly decline and the slower growth in PCB and multi-chip module tools show that investment cycles do not move uniformly, while programme cancellations or semiconductor-industry consolidation can quickly reduce design spending.
Computer-aided engineering and semiconductor intellectual property remain comparatively resilient because they sit close to the problem of increasing chip complexity. Once a programme begins, removing either capability usually transfers cost and risk back into engineering labour, verification time, or later-stage redesign.
With manufacturing capacity expanding across Europe and other regions, the next constraint may increasingly lie in verified designs, qualified intellectual property, packaging routes, and engineers capable of combining them. The $5.75bn quarter shows how much industry is already spending to prevent design complexity from becoming the limiting factor.
