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.

17 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

Updated 2 days ago | Published at juillet 15