What we think about Synopsys (SNPS)
Synopsys in Three Words: Electronic Design Automation
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Background
Just as new cars run crash tests to ensure their safety before coming to market, new chips similarly need to be validated before they’re commercialized.
Synopsys is the global leader in electronic design automation (EDA). Think of its “Smart Everything” platform as a chipmaker’s outsourced Quality Assurance department – providing a diverse suite of technologies including chip design, verification, IP integration, and software security – to all help customers develop new chips as quickly and reliably as possible.
Microprocessors can now contain tens of billions of transistors, so there’s a lot of double-checking required to minimize the risk of costly failures or errors. Synopsys has introduced AI into its product lines, using deep learning and pervasive intelligence in its Design Space Optimization platform to perfect every aspect of a chip’s power, performance, and area of usage.
As a complement to its EDA business, Synopsys also sells semiconductor IP to its customers that serve as the processor, memory, and interface building blocks to accelerate development. If you’re going to build your dream house, you want to first ensure it’s standing on a strong foundation.
Synopsys historically also had a Software Integrity group that allowed developers to test their new software for security vulnerabilities, yet it announced in May that it plans to sell off this division for $2.1 billion and allow it to operate as an independent company.
During fiscal 2023, Synopsys’ EDA division grew revenue 14% to $3.7 billion, its IP group grew 17% to $1.5 billion, and its software integrity group grew 13% to $524 million. Consolidated revenue increased 14% to $5.8 billion.
90% of Synopsys revenue is recurring through software licenses, and it often sells multiple products to the same customers. Some very large customers – specifically Broadcom and Intel, pay a fixed price for unlimited access to all modules. Synopsys reported that its largest customer accounted for 12.4% of revenue in fiscal 2023, up from 10.6% in 2021.
Synopsys’ customer base includes everyone who’s serious about chip design – including NVIDIA, AMD, Taiwan Semiconductor, and Samsung. It has 20,000 employees and is headquartered in Sunnyvale, California.
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Recent Company Updates:
March 3, 2025:
It looks like everything is aligning for Synopsys' $35 billion acquisition of ANSYS to through.
This will be the fourth-largest enterprise software acquisition of the past decade, behind only Dell/EMC in 2015 ($67b), AMD/Xilinx in 2022 ($49b), and Broadcom/VMware in 2023 ($61b).
Synopsys finalized the agreements to sell off its Optical Solutions and PowerArtist divisions to Keysight Technologies.
It has now received provisional approval from both the European Commission and the UK's Competition and Markets Authority (pending the completion of the PowerArtist transaction)... Join 7investing to get access to this section