Despite recent consensus between Washington and Beijing on a trade framework agreement in London, escalating US export restrictions on artificial intelligence (AI) chip design tools have prompted Chinese antitrust regulators to delay approval of Synopsys's proposed US$35 billion acquisition of simulation software firm Ansys.
According to the Financial Times, the deal has already secured regulatory clearance in the US and European Union and is now under final review by China's State Administration for Market Regulation (SAMR), with a decision expected by the end of June.
The delay coincides with Washington's late-May directive barring American firms—including Synopsys, Cadence, and Siemens EDA—from exporting electronic design automation (EDA) software to China. US authorities argue that EDA tools are critical to developing high-performance semiconductors, including those used in AI and military applications.
Credit: Synopsys
Synopsys remains optimistic about closing the deal
Despite the geopolitical headwinds, Synopsys remains confident the deal will close. "ANSYS only generates about 5% of its revenue in China, but that share is tied to crucial infrastructure and applications," said Trey Campbell, Synopsys's Head of Investor Relations. "We've seen strong support from Chinese customers who want integrated simulation and EDA capabilities."
According to a June 12 report by Reuters, Synopsys has partially resumed operations in China after suspending all services in compliance with US export controls. While some sales have restarted—including non-core hardware and intellectual property (IP) to existing clients—the company's core EDA tools remain off-limits.
An internal company memo revealed that Synopsys initially halted all sales and distribution in China and cut off access to its customer support portal, SolvNet Plus, for users within the country, including local employees of multinational corporations. As a result, the company withdrew its financial outlook for the region.
Sources indicate that access to SolvNet has been partially restored for legacy clients, although documentation related to the core EDA products remains restricted. The limited restart encompasses secondary offerings such as chip design IP and hardware verification systems like HAPS and ZeBu, which aid in accelerating chip development. However, with the central EDA software still unavailable, Synopsys's potential for growth in the Chinese market remains constrained.
Synopsys warns China's EDA access will fade as licenses expire
While all three leading EDA vendors have suspended core services in China, the immediate fallout for local chipmakers has been muted, according to Synopsys. Most customers are still operating under multi-year contracts that allow temporary continuity.
"Typical contracts run 2.5 to 3.5 years, so some clients can continue using the tools for now," said Trey Campbell, Synopsys's Head of Investor Relations. "They'll go dark at some point; it just depends on what their renewal dates were."
He also warned that both semiconductor equipment and EDA software represent the "two key chokepoints" in the chip supply chain—areas where export controls could inflict the most collateral damage. That's precisely why the US government is tightening its grip on these technologies.
Revenue hit reflects the cost of decoupling
Before the export clampdown, China had been a fast-growing market for Synopsys, delivering 25% year-over-year growth. But in the latest quarter, the company's China revenue dropped 28%—a sharp reversal that's likely to continue into the second half of the year.
Campbell noted that the development of many AI and high-performance computing chips has been halted due to the new regulations, leaving much of the associated intellectual property (IP) unutilized.
Together with Cadence and Siemens EDA, Synopsys commands more than 70% of China's EDA software market, according to a report published in April by the official Chinese news agency Xinhua. These tools underpin the design of semiconductors used in everything from smartphones and laptops to automobiles and advanced AI systems.
Article edited by Jack Wu
