What is Electronic Design Automation (EDA)?

Electronic Design Automation (EDA) refers to specialized software tools that engineers use to design and test electronic systems like computer chips. These tools help create, verify, and prepare complex integrated circuits for manufacturing. Think of EDA as the digital workbench that makes modern electronics possible - without it, designing today's sophisticated chips with billions of transistors would be practically impossible.

What was the Synopsys-Ansys acquisition?

Synopsys acquired Ansys for $35 billion in a major industry deal that combined two leaders in the electronic design and engineering simulation software markets. This acquisition, which received final regulatory approval from China, creates a dominant company in the EDA (Electronic Design Automation) space. The merger brings together Synopsys' chip design tools with Ansys' simulation software, significantly consolidating power in the semiconductor design software market.

What is semiconductor IP?

Semiconductor IP (Intellectual Property) refers to reusable design components that chip designers license rather than create from scratch. These are pre-designed, pre-tested building blocks for specific functions within a chip - like processors, memory interfaces, or communication protocols. Using semiconductor IP is similar to using premade ingredients when cooking instead of making everything from basic elements. Companies like Rambus (RMBS) specialize in creating and licensing these valuable chip design components.

Why might companies want to diversify their EDA tool suppliers?

Companies might want to diversify their EDA tool suppliers to reduce risk and maintain negotiating leverage. When a single vendor controls too much of the critical software needed for chip design (as might happen after the Synopsys-Ansys merger), customers become vulnerable to price increases, support changes, or product roadmap decisions that don't align with their needs. Additionally, different EDA vendors often have specialized strengths for certain types of designs, so maintaining relationships with multiple suppliers can provide access to best-in-class tools for specific applications.

What makes a company an acquisition target in the EDA industry?

Companies become attractive acquisition targets in the EDA industry when they have specialized technology, valuable intellectual property, or unique capabilities that larger firms want to add to their portfolios. After major consolidation like the Synopsys-Ansys deal, competitors often look to acquire smaller players with complementary technologies to remain competitive. Companies with strong customer relationships, innovative solutions for emerging design challenges, or expertise in fast-growing market segments (like AI chip design or advanced packaging) are particularly appealing targets.

13 handpicked stocks

EDA Underdogs

This collection features carefully selected companies in the electronic design automation (EDA) and semiconductor IP space. Our professional analysts have identified these stocks as potential beneficiaries of the changing competitive landscape following Synopsys' massive $35 billion acquisition of Ansys.

Han Tan | Market Analyst

Published on July 15

Top Picks from This Group

Here are a few of the assets in this group. Create an account to unlock the full list.

Cadence Design Systems Inc.

CDNS

Current price

$347.24

As a primary competitor to the newly merged entity, this company is well-positioned to attract customers seeking to diversify their EDA tool suppliers...

As a primary competitor to the newly merged entity, this company is well-positioned to attract customers seeking to diversify their EDA tool suppliers to mitigate risks associated with the increased market concentration.

Synopsys Inc.

SNPS

Current price

$470.76

This company is the acquirer in the landmark deal, and its stock reflects the market's perception of the strategic benefits and integration risks asso...

This company is the acquirer in the landmark deal, and its stock reflects the market's perception of the strategic benefits and integration risks associated with creating a dominant force in the EDA industry.

PTC Inc.

PTC

Current price

$203.02

A significant player in the broader CAD and PLM software market, this company's offerings in simulation and digital twin technology may see increased ...

A significant player in the broader CAD and PLM software market, this company's offerings in simulation and digital twin technology may see increased interest from customers looking for alternatives to the merged giant.

Autodesk, Inc.

ADSK

Current price

$320.91

Keysight Technologies, Inc.

KEYS

Current price

$175.16

Lam Research Corporation

LRCX

Current price

$145.99

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12 Month Growth Potential

Use the growth calculator to see how much investing in these assets could return over one year, based on aggregated analyst sentiment provided by Refinitive Ltd.

If you invested across these assets:

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In 12 months it might be worth:

$1,000.00

+4.55%

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About This Group of Stocks

Our Expert Thinking

The Synopsys-Ansys merger creates a dominant force in semiconductor design software, which might prompt customers to diversify their suppliers. This potentially benefits smaller, specialized companies in this space, making them attractive both as alternative providers and as potential acquisition targets.

What You Need to Know

Electronic design automation (EDA) software is essential for designing modern chips and electronics. This theme includes both direct competitors to the newly merged giant and complementary players across the semiconductor ecosystem who could see shifting business dynamics.

Why These Stocks

These companies were selected because they represent potential beneficiaries of industry consolidation. Some are direct competitors who could gain market share, while others provide critical technologies that may become more valuable in a more concentrated market environment.

Group Performance Snapshot

4.55%

Average 12 Month Profit

On average, analysts expect assets in this group to grow 4.55% over the next year.

12 of 13

Stocks Rated Buy by Analysts

12 of 13 assets in this group are rated Buy by professional analysts.

Source: Analyst sentiment is provided by Refinitiv Ltd, a global leader in financial market data with over 40k business clients. Refinitiv Ltd is an independent third party to Nemo. This is not advice.

Why You'll Want to Watch These Stocks

🔄

Market Disruption in Action

The $35 billion Synopsys-Ansys deal is reshaping the entire chip design software industry. When giants merge, it often creates unexpected opportunities for smaller players and industry partners.

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Potential Acquisition Targets

Industry consolidation often happens in waves. Some of these specialized EDA and semiconductor IP companies could become attractive acquisition targets as competitors respond to the changing landscape.

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Customer Diversification Play

Chip designers may not want to rely on a single vendor for critical design tools. Companies in this group could benefit as customers seek to diversify their supplier relationships to reduce risk.

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