Synopsys' Acquisition of Ansys Set for Approval in the UK
In January this year, Synopsys, one of the world's largest electronic design automation (EDA) companies, announced plans to acquire simulation software provider Ansys for $35 billion. This significant deal has generated considerable attention within the industry since its announcement. However, recent developments suggest that the UK's Competition and Markets Authority (CMA) has raised concerns about the potential impact of the acquisition on competition within three key software sectors.
According to the CMA's preliminary findings, released following its Phase 1 investigation, there are concerns that the merger could reduce competition in the markets for three types of software: digital chip RTL power analysis tools (used to assess power consumption and energy requirements in chip design), optical design software, and photonics software (used for designing and modeling optical products).
Despite these concerns, the CMA noted that the deal could still proceed if Synopsys and Ansys provide alternative solutions that address the competition authority's concerns. This could potentially allow the transaction to be approved without triggering a more detailed Phase 2 investigation.
Under the CMA's standard process, the authority first conducts a Phase 1 investigation to assess whether a merger could potentially violate competition laws. The fact that the CMA has identified potential competition issues does not automatically mean the deal will move to Phase 2; instead, the companies involved have the opportunity to propose remedies to resolve the issues raised.
Synopsys appears to have anticipated such concerns and has already suggested selling its optical and photonics business to Keysight Technologies in an effort to secure approval. Additionally, reports from MLex indicate that Synopsys may also propose divesting Ansys' RTL power analysis business, PowerArtist, to address the CMA's concerns further.
In response, Synopsys expressed that the CMA's Phase 1 investigation is a standard part of the UK regulatory process and that the company has already taken measures to address the concerns raised. The company remains optimistic about achieving a positive outcome from the ongoing regulatory review and expects the acquisition to be finalized in the first half of 2025. Synopsys has also emphasized that its customers continue to express strong support for the deal.
As semiconductor manufacturing scales down to increasingly smaller nodes and the complexity of chip designs grows, the acquisition of Ansys by Synopsys is seen as a strategic move to provide more integrated solutions for electronic design automation (EDA) and simulation and analysis (S&A) software. This merger would help design engineers validate product performance and power consumption early in the design process, minimizing project risks, reducing rework, and ensuring timely production and subsequent chip sales.
At the 2021 SNUG World event, Synopsys co-founder and former chairman Aart de Geus introduced the "SysMoore" concept, emphasizing the shift from scaling complexity to system-level complexity in chip design. He argued that, in addition to optimizing the physical layer to follow Moore's Law, there needs to be collaborative optimization across chips, software, and systems. This system-level approach aims to define chip requirements based on market needs.
In recent years, other major players in the EDA sector, such as Cadence and Siemens EDA, have also been expanding beyond traditional chip design tools, focusing more on system analysis to enable a seamless integration of design from chip to system. Cadence, for example, has acquired companies like Sigrity, AWR, and Integrand Software to enhance its electromagnetic simulation capabilities and formed a multi-physics system analysis department. Siemens EDA, through its acquisition of Mentor and its own strengths in computer-aided engineering (CAE), has also strengthened its simulation and analysis capabilities. In October, Siemens announced plans to acquire US-based industrial simulation software firm Altair, further consolidating its position in system-level EDA.
As the industry moves towards more holistic solutions that span chip to system design, the trend towards integrated system-level EDA capabilities is clear and will likely shape the future of the sector.
