Synopsys Clears China Hurdle for $35 Billion Ansys Acquisition

Synopsys, a leading software company, has finally received approval from China for its $35 billion acquisition of Ansys. This clearance follows a significant policy shift by the United States, which eased export restrictions on chip design software, thereby smoothing the path for the deal. The approval was confirmed by China's State Administration for Market Regulation (SAMR) on Monday, after a period of uncertainty that began when the U.S. imposed new restrictions in May. These restrictions had effectively barred U.S. chip design toolmakers, including Synopsys, from selling software to China, leading to a pause in the SAMR's review process.

The merger between Synopsys and Ansys, announced in January 2024, had already received clearance from U.S. and European regulators. However, the SAMR's pause due to the U.S. restrictions delayed the deal's closure. The U.S. government's decision to ease parts of the restrictive policy in early July, following trade talks between the U.S. and China, allowed the SAMR to resume its approval process. The regulator swiftly approved the deal on July 12, just a day after the process resumed.

The SAMR's approval came with several conditions aimed at managing concerns regarding market concentration and ensuring fair treatment for Chinese companies. Synopsys and Ansys are required to divest business lines where their offerings significantly overlap to mitigate the risk of monopolistic control in specific software markets. Additionally, Chinese customers must be allowed to renew their existing contracts under the same terms after the merger, and Synopsys must continue offering its EDA software to Chinese firms on fair and reasonable terms without bias in pricing or functionality. Failure to comply with these conditions could result in penalties under China’s anti-monopoly law.

The merger represents a significant milestone in Synopsys' strategy to expand its reach beyond core chip design tools into broader engineering software. As chip design becomes increasingly important to global innovation and security, the regulation of supporting software tools has become a high-stakes issue in geopolitics. The deal reflects the growing intersection of semiconductor design and engineering workflows, driven by the complexity of modern technologies such as AI, electric vehicles, and industrial automation.

Synopsys, headquartered in Silicon Valley, provides essential EDA tools and intellectual property used by top semiconductor companies to design and test their chips. Ansys, based in Pennsylvania, is a major player in multiphysics simulation tools used in various industries, including automotive, construction, healthcare, and aerospace. The merger is expected to enhance Synopsys' capabilities in engineering simulation and design, positioning the company as a leader in the rapidly evolving tech landscape.