Semiconductor Power Play: Why the Synopsys-Ansys Deal is a Buy Now Opportunity

The $35 billion merger of Synopsys (SNPS) and Ansys (ANSS) isn't just a consolidation—it's a seismic shift in the semiconductor design ecosystem. While headlines focus on regulatory hurdles, I'm here to tell you why this deal is a once-in-a-decade opportunity to profit from strategic divestitures, regulatory clarity, and the rise of a new industry titan. Let's dig in.

The Divestitures: A Hidden Goldmine for Keysight

The FTC's mandate to divest Synopsys' optical/photonic software tools and Ansys' PowerArtist tool to Keysight (KEYS) isn't a penalty—it's a gift wrapped in red tape. These assets, while critical to competition, are non-core to the merged entity's growth trajectory. Think of it like selling off a profitable rental property to focus on developing a luxury resort.

• Keysight's Play: By acquiring these tools, Keysight gains instant entry into high-margin simulation software markets it couldn't crack alone. Optical tools (used in LED screens and solar panels) and PowerArtist (RTL power analysis for chips) are strategic assets with secular tailwinds in EVs, 5G, and AI. Keysight's valuation is woefully undervalued relative to this potential.
• Market Reset: The divestitures remove regulatory roadblocks while preserving Synopsys/Ansys' ability to dominate system-level design—the holy grail of integrating electronic design automation (EDA) with physics-based simulation. This is where the real money is.

Regulatory Clearance: China is the Final Frontier

The FTC and global regulators have already blinked. The U.S., EU, UK, and Japan have all provisionally approved the deal, with the FTC's consent order now in its 30-day public comment period. The only wildcard is China's State Administration for Market Regulation (SAMR).

Here's why I'm confident:
1. Remedy Proposals Work: Synopsys has submitted two rounds of remedies to SAMR, addressing concerns about market dominance. The fact they're iterating shows progress, not stonewalling.
2. SAMR's Clock is Ticking: While the review clock was paused in Phase 3, this is a sign of diligence, not obstruction. China wants to ensure competition, not block the deal outright.
3. Timing is Now: Analysts still expect a mid-2025 close. If SAMR approves by June, this deal could close in Q3—a timeline that's baked into current stock prices.

Why Buy Now?

The merged Synopsys-Ansys entity will be a $20 billion revenue monster with 20%+ growth visibility in AI chips, autonomous vehicles, and advanced packaging. Meanwhile, Keysight is getting $500M+ in annual revenue from these tools, with margins to match software giants.

• SNPS/ANSS: Buy on dips below $350 (SNPS) and $200 (ANSS). The synergy math is undeniable—$1.5B in annual cost savings alone justify today's prices.
• KEYS: At 12x forward EV/EBITDA, this is a buy at $100 or below. The divestiture assets alone could add $15 EPS by 2026—a hidden kicker for patient investors.

The Bottom Line: Act Before SAMR's Green Light

This isn't a “wait-and-see” play. The market has already priced in most regulatory risks, but the SAMR approval could trigger a 20%+ pop in all three stocks. The divestitures are a textbook example of value creation—unloading non-core assets to fuel growth in higher-margin spaces.

If you're on the sidelines, now is the time to load up. The semiconductor tool market is a $200B+ industry, and this merger is positioning Synopsys-Ansys to own its future. Keysight? It's the undiscovered country of this deal—cheap, overlooked, and about to explode.

Don't miss this window. The next move is yours.

— Jim