Finalization of the Synopsys Ansys Acquisition Leaves Small EDA Vendors in a Precarious Position

Synopsys acquiring Ansys for US$35 billion is the continuation of Electronic Design Automation (EDA) vendors consolidating and strengthening their solutions. As a holistic simulation provider, Ansys boasts a strong repertoire of simulation software that includes structural, Computational Fluid Dynamics (CFD), thermal, Printed Circuit Board (PCB), electromagnetic, and multiphysics simulation used by designers and engineers globally. Most interesting to Synopsys and the EDA market is Ansys’ capabilities to provide multiphysics simulation to ensure sign-off power integrity, thermal integrity, and signal integrity of Integrated Circuits (IC) and Graphic Processing Units (GPUs). With a price tag of US$35 billion (14X Ansys’ 2024 annual revenue), this is the largest acquisition, to date, in the EDA and simulation market followed by Siemens’ acquisition of Altair in March of 2025 for US$10.6 billion.

EDA solutions are integral to GPU and semiconductor manufacturers, as they provide the necessary design and verification processes to produce chips. Primarily, EDA software is used to make sure semiconductors reach the required performance and density benchmarks before production occurs. By enabling engineers to modify chip architecture, increase the number of transistors, and model alternative circuit layouts, EDA software increases the efficiency and processing power of chips, which are then sold at a premium to bullish Artificial Intelligence (AI) companies.

The current EDA market is dominated by a small cohort of vendors: Aldec, Altium (acquired by Renesas in August 2024), Cadence, Keysight Technologies, Siemens EDA (formerly Mentor Graphics), and Zuken. EDA vendors quickly consolidated the market with leaders Cadence acquiring MunEDA (May 2024) and Pulsic (May 2023), Siemens acquiring Excellicon (May 2025) and Altair (March 2025), and Keysight acquiring Cliosoft (February 2023). Synopsys’ purchase of Ansys further restricts the market; however, it reflects the growing importance of GPUs and the limited number of high-end manufacturers in the sector. With the vast majority of GPUs used to train and run AI models coming from AMD, Intel, and NVIDIA, the market for EDA solutions has depth, but lacks width.

Motivating the purchase of Ansys is a strong desire from Synopsys to manage all facets of chip production in an integrated chip-to-system design. Synopsys provides cutting-edge chip design tools, while Ansys brings system simulation through multiphysics that can model core aspects of chip production such as thermal, electromagnetic, and structural simulation. In acquiring Ansys, the Federal Trade Commission (FTC) has mandated that Synopsys must divest both optical and photonic software tools, along with Ansys selling its chip power consumption analysis tool, PowerArtist. These assets will be sold to Keysight Technologies, giving it a boost in the simulation and EDA markets.

The increased yearly spending on GPUs from companies such as Alphabet, Amazon Web Services (AWS), ByteDance, Meta, Microsoft, OpenAI, Oracle, Tencent, and xAI to bolster AI initiatives has produced a monetary trickle-down effect and placed a stronger emphasis on the importance of EDA software. The demand for higher performing GPUs has led to an innovation race between AMD, Intel, and NVIDIA, which need to constantly release new and enhanced GPUs that require the use of sophisticated EDA software. In 2024 alone, Microsoft spent US$30 billion and Meta exceeded US$15 billion on GPUs, with the global market for GPU shipments increasing 26% Year-over-Year (YoY) (see ABI Research’s Artificial Intelligence and Machine Learning: Cloud AI market data (MD-AIMLCL-102)). Current spending on GPUs by large tech companies does not match revenue returns stemming from the monetization of AI. Until the monetization of AI matches current spending, the real winners of the AI boom are AMD, Intel, and NVIDIA, along with EDA vendors that enable chip production.

The rising tide of AI lifts all boats; however, in a market dominated by a restricted number of GPU and chip producers, EDA vendors must align with a major producer or face repercussions. Large EDA vendors such as Cadence, Siemens, and Synopsys account for over 75% of EDA software spending, with companies such as Aldec, Altium, Keysight, and Zuken losing out on big contracts. Outcompeted by competition due to the limited number of large end users, small EDA vendors should utilize the AI boom to bolster company evaluations and entertain the idea of being acquired. By offering unique and niche EDA functionality, small vendors are an attractive purchase for companies such as Cadence, Siemens, and Synopsys as incremental advancements in software performance can lead to disproportionate revenue gains in an uncrowded GPU market. For smaller EDA vendors unwilling to pursue acquisition, merging with similar sized peers offers a viable path to scale as remaining independent without drastic strategic action risks stagnation in a booming market.