Cadence commits to Scottish chip design center

Cadence Design Systems said it will invest several hundred million dollars to establish a design complex in Livingston, Scotland, just west of Edinburgh, for purposes of developing a kind of semiconductor often called "system on a chip."

Cadence, a San Jose, California, company, will aim to develop design specifications for chip manufacturers and also smaller electronics firms, but will not actually manufacture system-on-a-chip microprocessors. Technical support for Scottish Design Centre, as it will be called, will come from IBM, the University of Edinburgh, and the Scottish Enterprise government agency.

System-on-a-chip is one of the semiconductor industry's hot topics. As chips gain the ability to pack in more transistors, chipmakers gain the ability to incorporate modems, graphics accelerators, video playback chips, and other formerly separate chips alongside the central processing unit onto a single piece of silicon.

The resulting product is cheaper than the aggregate of separate chips for each of these functions, leading to lower PC prices. The system-on-a-chip is something of a compromise product, however, because certain kinds of chips are advancing faster than others, meaning the system-on-a-chip is technologically limited to the lowest common denominator.

The market for system-on-a-chip semiconductors is forecast to be worth between $20 to $50 billion by 2000.

Cadence's Scottish Design Centre promises to create 1,895 high-tech jobs over the next seven years, and is seen locally as a much-needed shot in the arm. Cadence said around 160 jobs would be created by the end of 1998, followed by 1,100 in 2001, building up to around 1900 by 2004.

Even as Cadence was making its announcement, however, Hyundai confirmed it would delay expansion of its Scottish semiconductor plant because of South Korea's economic difficulties.

The planned investment is a boost for British industry, Reuters reported, after Japan's Toyota Motor opted to site a new car plant in France rather than the U.K.. The decision raised fears over Britain's lukewarm commitment to a single European currency.

Reuters contributed to this report.