Merger of Two "EDA Giants"? Synopsys Close to Acquiring Ansys

Two giants in the EDA field may merge to expand their reach and streamline the design process.

On January 5th, local time, it was reported that chip design software manufacturer Synopsys has submitted a tender offer to acquire engineering software supplier Ansys, with a market value of $30 billion. Currently, the two companies are engaged in exclusive negotiations, and if the negotiations go smoothly, an agreement could be reached as early as the middle of next week.

Synopsys is primarily engaged in electronic design automation (EDA) software and chip IP-related businesses, headquartered in Silicon Valley, California, USA. Its software is mainly used in the field of intelligent products. Ansys is one of the world's leading engineering simulation software suppliers, headquartered in Pennsylvania, USA. Its software is mainly used in industries such as aerospace, healthcare, and automotive.

Generally, before chips enter mass production, they need to undergo "trial production" or chip tape-out. Due to the high cost of tape-out, simulation testing is usually conducted on EDA software first. Only when the simulation on the EDA software has been confirmed, will the wafer fabrication plant recognize the relevant results.

Currently, the "Four Horsemen" of the EDA field hold a market share of up to 80%. If the agreement is reached, the two companies will merge to become one of the "Three Giants" in the EDA field, alongside Cadence and Mentor.

Why does Synopsys want to acquire Ansys?

As one of the "Three Giants," Ansys has been diligently cultivating the simulation market in the EDA software field for many years, and its EDA software has become an industry standard.

In recent years, Ansys has gradually expanded its business into physical fields such as fluid, thermal, electromagnetic, and optoelectronics. In the trend of "small chips," Ansys' simulation capabilities in multiple physical fields have become extremely valuable.

In addition, Ansys has an irreplaceable position in the field of chip design. It is mainly focused on chip sign-off and simulation, while Synopsys and Cadence software focus more on the design process of chips, completing the process from architecture, functionality, to schematic and layout design and verification.

In simple terms, the other three giants mainly focus on chip design verification, while Ansys focuses on chip sign-off and simulation, establishing the "last line of defense" for chip design.

Therefore, to complete the final design of EDA chips, the cooperation of the "Three Giants" is necessary.

If Synopsys successfully acquires Ansys, the combined entity's simulation software production capabilities will not only be greatly enhanced but may also achieve seamless integration of the chip design process within the company.

Both an acquisition and a development

With the continued popularity of artificial intelligence, the requirements for chip manufacturing processes are becoming increasingly demanding, and EDA software companies have to strengthen their simulation software manufacturing capabilities. In fact, mergers and acquisitions are not uncommon in the EDA industry and the entire industrial software industry. Almost all industrial software companies expand their territories through acquisitions.

Some believe that in the field of industrial software, giants can achieve more cost-effective results by acquiring high-quality companies to complement their weaknesses, rather than relying solely on their own research and development. If the integration is done well, the effect can be 1+1>>2.

Therefore, it is also said that "the history of industrial software development is a history of mergers and acquisitions."

In the first 10 years of its establishment, Synopsys completed more than 20 acquisitions, and in the 21st century, it initiated even larger-scale acquisitions. In 2000, Ansys also embarked on the path of acquisitions, completing a staggering 28 acquisitions between 1999 and 2020.