Synopsys Secures Approval for $35 Billion Acquisition of Ansys in China

On July 14, Synopsys Inc. received conditional approval from Chinese regulators for its $35 billion acquisition of Ansys, a move that solidifies Ansys's market dominance in chip design software. The State Administration for Market Regulation of China stated that Synopsys must divest its entire optical and photonic device simulation business and that Ansys must sell its power analysis software-related research, distribution, licensing, and sales operations. The deal, announced in early 2024, has attracted global attention and has already received approvals from European and American regulatory bodies. Given that China is one of the largest semiconductor markets in the world, such mergers must be sanctioned by Chinese authorities. Following this announcement, Synopsys's stock price rose by 3.7%, marking an approximately 15% increase year-to-date. Synopsys is one of the few major companies providing semiconductor design software, with Cadence Design Systems Inc. as its main competitor. Synopsys and Ansys have been expanding their successful partnership since 2017. In January 2024, Synopsys stated that its leading chip electronic design automation would collaborate with Ansys’s extensive simulation product portfolio to create a global leader in chip-to-system design solutions. The statement also claimed that Synopsys's overall potential market size is expected to grow by 1.5 times to approximately $28 billion, with a projected 11% compound annual growth rate for the combined market size of both companies. In the first full year after completion of the transaction, Synopsys's operating margin is expected to increase by about 125 basis points under non-GAAP accounting standards. Additionally, in January of this year, Ansys and Synopsys jointly announced that Ansys signed a definitive agreement to sell its PowerArtist™ business to Keysight Technologies, contingent upon regulatory review and the completion of Synopsys's proposed acquisition of Ansys. Keysight Technologies is a leader in semiconductor, electronic, and high-performance system design and simulation software, and its acquisition of the PowerArtist business aligns with its strategy to expand market share in high-performance system design and simulation software. PowerArtist is a comprehensive register-transfer level (RTL) power design platform used by semiconductor companies for early power analysis, characterization, and optimization. Compared to traditional gate-level methods, this platform enables rapid turnaround in designs at millions of instance scales, helping to make critical power-related decisions early in the design process.