The "EDA Century Acquisition" is about to land! The FTC conditionally approves the $34 billion deal led by Synopsys

According to the Zhitong Finance APP, after agreeing to sell a portion of its assets, the leader in chip design—EDA software giant Synopsys (SNPS.US)—has received formal approval from the U.S. Federal Trade Commission (FTC) for its massive acquisition plan to acquire computer-aided engineering software leader Ansys (ANSS.US) for $34 billion.

According to the FTC, Synopsys will sell its optical and photonic software tools business to electronic testing and measurement company Keysight Technologies in the future. Ansys will also sell a power analysis product to Keysight.

This large-scale acquisition led by Synopsys was first announced in early 2024 and has since been undergoing antitrust review globally, and it still requires formal regulatory approval from China. The two companies had previously reached a similar settlement acquisition agreement with the European Commission in January. In September of last year, Synopsys agreed to sell its Optical Solutions Group to Keysight after the acquisition of Ansys is completed.

The Century Acquisition in EDA

The $34 billion acquisition proposal for Ansys announced by Synopsys is regarded as the "century acquisition" in the EDA software field. If Synopsys successfully acquires Ansys, it will significantly strengthen Synopsys's leading position in the EDA software sector, greatly enhancing its market share over its largest competitor Cadence Design Systems (CDNS.US).

Synopsys already holds a leading position in the EDA software field, providing a wide range of chip design software and tools, which are essential tools for chip design, earning the title of "mother of chips." Ansys primarily provides simulation-type software, especially in engineering fields such as structural, fluid dynamics, and electromagnetic simulation.

According to chip design experts, by acquiring Ansys, Synopsys can further enhance its technical strength in chip design simulation, particularly in system-level simulation and integrated simulation tools, providing a more comprehensive product portfolio to help major chip design clients like NVIDIA, AMD, and Broadcom better conduct end-to-end simulations. Simulation is considered a core technological aspect of the entire chip design process. Therefore, after integrating Ansys's simulation technology through the acquisition, Synopsys will be better equipped to meet the design needs of the next generation of semiconductor products, especially in areas involving 6G technology, next-generation AI chip architectures, and the extremely complex design requirements of quantum computing chips.

One of the Big Winners in the AI Boom—EDA Software

Synopsys's latest financial report and strong performance outlook indicate that as chip design leaders like NVIDIA, AMD, and tech giants like Apple, as well as cloud computing giants like Amazon and Microsoft, accelerate the development of high-performance AI chips, their demand for Synopsys's EDA software, which can design more complex AI chip architectures and accelerate chip design with new AI technologies, is continuously expanding The core customers of EDA software giant include many of the world's top chip giants, concentrated in the chip design field. These chip giant customers include NVIDIA, AMD, Qualcomm, and Apple. As cloud computing giants accelerate the launch of self-developed data center server CPUs and self-developed server AI chips, more and more cloud computing companies have also become customers of Synopsys.

In addition, chip manufacturing leaders TSMC and Samsung are also important customers of Synopsys. Synopsys's EDA products and technologies play a key role in helping chip manufacturers like TSMC optimize chip manufacturing and accelerate the development of new chip process nodes. As a global leader in semiconductor foundry, TSMC extensively uses Synopsys EDA tools and IP solutions in its advanced process technologies (such as 5nm and 3nm). The design tools provided by Synopsys help TSMC and its customers optimize chip design architecture to meet the strict requirements of power consumption, performance, and area (PPA).

The agreement between Synopsys and the FTC marks a renewed willingness of U.S. antitrust enforcers to resolve merger cases through settlements rather than primarily challenging them in court. The regulatory agencies under the Biden administration have rarely reached settlements with merging companies and have publicly stated a preference for litigation.

The three commissioners of the FTC stated in a joint statement that they will soon release new guidance on how the agency will evaluate all merger settlement agreements.

Spokespersons for Synopsys and Ansys did not immediately respond to requests for comment.

Keysight, located in Santa Rosa, California, is also striving to gain regulatory approval for its own leading merger deal, as it intends to acquire its British competitor Spirent Communications Plc.

The century acquisition is just one step away from completion

Synopsys, headquartered in Sunnyvale, California, is one of the few large technology companies in the world that develops semiconductor design software, primarily competing fiercely with Cadence Design Systems Inc. Ansys mainly develops simulation software to help engineers predict how actual products will perform in the real world. Engineers use its structural analysis software before launching projects to control costs, reduce risks, and bring products to market faster.

U.S. companies seeking antitrust approval for mergers in China, especially in the technology sector, are often caught in the geopolitical disputes between the two countries. Earlier on Wednesday, media reports indicated that the Trump administration was considering a comprehensive restriction on the sale of EDA chip design software to China, while the U.S. government was evaluating a broader semiconductor policy statement on this issue. This latest move may make it more difficult for Synopsys and Ansys to obtain merger approval in the Chinese market.

"The asset divestiture conditions recently required by the FTC are largely consistent with the conditions set by the European Commission and the UK's Competition and Markets Authority earlier this year. After the transaction is completed, Synopsys plans to sell its optical business along with Ansys's PowerArtist to Keysight. Synopsys is still seeking approval from China, and the company's management expects the transaction to be completed before the end of the first half of the year "Analyst Niraj Patel from Bloomberg Intelligence said