Chip design firm Synopsys has agreed to acquire simulation and analysis firm Ansys in a deal worth $35 billion. This strategic move within the tech industry addresses the challenge posed by the slowdown in Moore’s Law. Synopsys’ stock price rose in response to the announcement, while Ansys’ stock price dropped.
Integration of Expertise and Portfolio
The acquisition will bring together Synopsys’ expertise in semiconductor electronic design automation (EDA) with Ansys’ extensive simulation and analysis portfolio. This combination creates a powerhouse in silicon-to-systems design solutions. The agreement states that Ansys shareholders will receive cash and shares of Synopsys common stock for each Ansys share.
Addresing the Increasing Demand for Fusion
The acquisition is poised to address the increasing demand for a fusion of electronics and physics, augmented with artificial intelligence (AI). By integrating Synopsys’ EDA technology with Ansys’ simulation capabilities, the companies aim to provide customers with a comprehensive, integrated approach to innovation.
“It’s a bold move. The two companies already had a strategic partnership and this shows they value the relationship enough to combine the two companies. Advanced simulation is a natural partner to chip design…I wonder what government reviews of the deal will bring.” – Kevin Krewell, Chip Analyst at Tirias Research
“It’s a good size premium but the acquisition makes strategic sense as Synopsys and the EDA industry continue to expand the reach of IP, tools, and the silicon software model to address a broader set of customers and industries…This acquisition will allow Synopsys to grow faster than the overall semiconductor industry over the next five to seven years.” – Mario Morales, Chip Analyst at IDC
“It’s a hefty acquisition price…I like that the combined entities combine chip design with system design. With one set of combined tools, customers can design and simulate a chiplet, an SoC, a rack, a server, a fleet of servers, and a datacenter. This could optimize the entire design which could mean the highest efficiency system leading to lower costs and less energy.” – Patrick Moorhead, Chip Analyst at Moor Insights & Strategies
Sassine Ghazi, CEO of Synopsys, commented, “Bringing together Synopsys’ industry-leading EDA solutions with Ansys’ world-class simulation and analysis capabilities will enable us to deliver a holistic, powerful, and seamlessly integrated silicon-to-systems approach to innovation.”
Aart de Geus, executive chair and founder of Synopsys, emphasized the strategic evaluation that led to this decision. He stated, “The technology-broadening team-up with Ansys is an ideal, value-enhancing step for our company, our shareholders, and the innovative customers we serve.”
The acquisition is expected to significantly expand Synopsys’ total addressable market (TAM) by 1.5 times to approximately $28 billion, growing at an estimated 11% compound annual growth rate (CAGR). Synopsys anticipates that the deal will be accretive to non-GAAP earnings per share within the second full year post-closing and substantially accretive thereafter. The transaction is subject to approval by Ansys shareholders, regulatory approvals, and other customary closing conditions. It is anticipated to close in the first half of 2025.
This strategic move reflects the ongoing trend of consolidation in the technology sector, with companies seeking to strengthen their positions by combining complementary capabilities to address evolving industry challenges.
