The Six Five team discusses Synopsys acquisition of ANSYS.
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Transcript:
Patrick Moorhead: Synopsys is making a giant acquisition of ANSYS here. Obviously, what needs to be approved here, but I think this one is incredibly interesting here, because what it does is it connects the world of electronic design automation in semiconductors, which is what Synopsys does, which essentially is using software to create either silicon IP blocks, doing an entire SOC for it. It’s pretty incredible. And then you sprinkle on AI for stuff like validation, where instead of having 200 engineers doing validation the old-fashioned way like we did 20 years ago, the AI would do it on its own. And there’s also design support. Right? What can the AI, what did it learn about the best design methodologies? Now, Synopsys is very clear that it doesn’t kind of merge data. So one chip maker’s IP doesn’t bleed over into another.
That was ANSYS. Think of ANSYS as a company that essentially does simulations in the physical world. And that could be a server rack, it could be the design of a car. I mean, on their website, there are literally hundreds of examples out there. And just for fun, I was thinking, “Hey, how would AWS use the assets of these combined companies?” So they could use it to design a chiplet, and then the Graviton SOC, the PCA board, the rack, the server, the fleet of servers, an entire data center, they can essentially with these tools, create. And in this world where we’re losing gains from Moore’s Law, but we have to keep cranking out the innovations, there has to be a push on another type of innovation. So these interconnected links closely coupled designs come together. And I could see this for cars. I could see this for data centers like we talked about. I could see this for specialized silicon and building materials. I mean, go on ANSYS website if you already know what Synopsys does, and you can get an idea of this.
By the way, Cadence bought a fluid dynamics company. They’re the big competitor of Synopsys. So it’s interesting to see the two of these becoming what I thought they would become about five years ago, is they could become the new power players here.
Daniel Newman: Do you think there’s any regulatory here, Pat? There’s some speculation, just because of this new category, sort of design software. And I mean, this is a massive tie-up, right? I mean, it’s how much… What’s that?
Patrick Moorhead: 35 billion.
Daniel Newman: I’m not talking about the size of the deal though, but the number of companies that play in this space with the importance around AI chip. It didn’t even occur to me that these two… This is the same size deal as the Xilinx deal. Isn’t it?
Patrick Moorhead: Huge. Yeah, yeah, exactly when it closed. Right. And it’s funny, Dan, every time I think about the pre-crazy laws on antitrust, I remember it’s kind of Looney Tunes right now. So you have to think about now what could people do as opposed to exerting monopoly powers? Forget the fact that these two companies do completely different things. So it gets down to all. It gets down to market definition. Right? We could have another Figma. Heck, Figma and Adobe are in two separate markets doing two different things and it still got stymied. So yeah, could get held up particularly in-
Daniel Newman: Well, it’s interesting, right? Because one sort of makes the tools to design the chips and the other kind of has software that can evaluate the systems where these chips are placed. And together though, the capability of these two companies could really… Again, I’m optimistic the deal will get done. It’s just interesting because as we know AI will… This goes back to the Davos theme, but the Davos theme is that effectively, AI is going to be the economy and the national defense. We used to talk about why we needed chips act, was the economic supply chain resiliency, national defense and technology leadership. Well, those that can design the most sophisticated chips, they have the tools and technology to design and build the most capable, lowest power, highest performing AI chips will run the world.
That’s a little bit grandeur, but it’s also kind of what’s happening. So it’s an incredibly visionary tie up. And I had the chance to have Sassine Ghazi on a pod with me last week, making markets, a Six Five media production. And we had the chance to talk about… This was right before this was announced and just the direction that Synopsys was heading. And a lot of people don’t realize, but Synopsys is a bit of a juggernaut. I mean, they have an incredibly comprehensive set of tools for chip design. They have a burgeoning and growing IP portfolio. I think they’re number two only to Arm, which a lot of people don’t realize. And of course, their growth has absolutely out clipped the market because when people changed focus on chip type, it didn’t affect Synopsys that much. They’ve just continued to grow very profitably, very successfully.
And within its new leadership, it’s drawn in some really great new talent. Now with ANSYS, this becomes a really big company. I mean, really, really big organization that is now going to be sort of centerpiece. Nvidia, and AMD, and Qualcomm and everyone, they’re all going to be using these companies for what they’re going to be doing, and the packing and stacking that they’re going to be doing with the silicon and the designs going forward.
So it’s a really exciting tie up, but it is interesting because it didn’t even occur to me. I was just reading an article before we started on Reuters where they actually said, “This could actually be susceptible to some policy scrutiny.” I’m like, “It didn’t even occur to me. Really, they’re going to tie up a bunch of tools and software and design?” I mean, this is hardly the Arm and video tie up, but it is interesting to think it could happen. Like I said, my gut says it goes through. Very, very smart buy, expensive, but not that expensive. And if the bet is that AI and those that can build the most sophisticated AI chips is going to rule the world, then what do they say? It’s kind of like a Super Bowl, all roads lead to… In this case, all roads will lead to this new Synopsys and ANSYS tie up. It’s pretty exciting stuff about.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
