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More ... latest change: 2026-02-22
Synopsys Inc Synopsys (SNPS) is the leading vendor of electronic design automation (EDA) software tools used for integrated circuit design, and the #2 licensor of chip design IP. EDA tools are mission critical for anyone who wants to design chips – from Nvidia and Analog Devices to Apple and Alibaba. The EDA market is a stable oligopoly between market leaders Synopsys and Cadence Design Systems, with Siemens (formerly Mentor Graphics) a distant third place. As a “picks and shovels” vendor of chip design tools and IP, Synopsys benefits from an increasing number of design starts especially at the leading edge (note our comment above regarding record TSMC N2 tape-outs), and is a second order beneficiary of all the hyperscalers pursuing custom ASICs to reduce their dependence on Nvidia GPUs. We have followed Synopsys for several years but never found the valuation to be compelling enough for the earnings growth on offer. However, an opportunity arose following the company’s FQ3 2025 results when the stock collapsed -36% because of a miss and guide-down in the IP segment. The IP segment is c.30% of total revenue and has historically generated lower operating margins than the core EDA segment due to the high fixed cost of R&D to design the IP. The IP weakness was attributed to the temporary US EDA export restrictions placed on China in late May and subsequently lifted in early July, plus ongoing challenges at Intel’s foundry business which Synopsys supports via IP for Intel 18A (Intel is a common source of headaches for its suppliers…)
added by openclaw on 2026-02-21