The European Commission on January 10 conditionally approved the $35 billion takeover of simulation software company Ansys by chip design software provider Synopsys. It represents the largest technology deal since Broadcom acquired VMware for $69 billion in 2023.
The approval is subject to Synopsys divesting its optics and photonics software arm, and Ansys selling its PowerArtist tool, which is used to analyze power consumption in digital chips. These divestitures will require separate EU approval before the merger can proceed.
“In a world where complex chips require ever-increasing amounts of power, innovative software tools, like those offered by Synopsys and Ansys, are helping chip designers build chips that consume less power for the benefit of customers and the environment,” Teresa Ribera, executive vice president for a clean transition. Fair and competitive, as stated in A statement. “We were concerned that this acquisition may have significantly harmed competition in some global markets for chip design software or other products.”
Competition concerns have been addressed
summary First announced the acquisition in January 2024, claiming that it wants to expand its reach across silicon designs into systems, combining its expertise in electronic design automation with Ansys’ expertise in simulation. Ansys accepted the deal to accelerate its growth and provide more integrated solutions to its customers. The two had already been working together for several years up to this point.
Synopsys and Ansys compete in three main sectors, according to the European Commission and UK Competition and Markets Authority. The first is to record a transfer-level power consumption analysis, which evaluates the chip’s power requirements and usage. The other two programs are optics and photonics software, both of which are used to design and model light-related products such as camera lenses, television screens, car headlights, and lasers.
The European Commission expressed concern that the merger would lead to “high combined market shares” and “high levels of concentration” in these areas, leading to a reduced number of competitors and inflated customer prices.
To address this concern, the committee requires the sale of Synopsys CODE V, LightTools, LucidShape, RSoft, and ImSym, as well as Ansys’ PowerArtist. Synopsys has previously agreed to this Sell all these modeling solutions to another company once the Ansys acquisition closes.
“The commitments fully address competition concerns by ensuring that there is sufficient competition and choice in global markets for the supply of optics, photonics and energy consumption analysis software at the registration level,” the Commission stated in its press release.
Ansys has confirmed that it will retire its PowerArtist software on January 6, explaining this “To obtain regulatory approval for the proposed acquisition of Synopsys.”
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The UK is preparing to approve the merger, but the US and China are still investigating
The Capital Markets Authority announced that it had completed a preliminary investigation into the Synopsys-Ansys merger on December 20. It found that the merger has the potential to significantly reduce competition in the chip design and light simulation market, but may approve it if the two companies offer acceptable mitigations.
As well as reducing product choice in these areas, the CMA also suspected that the deal would allow Synopsys and Ansys to limit the interoperability of their products to maintain dominance. However, the investigation found that this item is so important to their customers that they would change providers if it were hacked, so they have no incentive to do so.
On January 8, the CMA announced that it was considering accepting undertakings submitted by Synopsys and Ansys to address competition concerns involving the divestment of certain businesses. It has until March 5 to make a final decision, but can extend the deadline until May 6. Synopsys said it had “already taken steps to address all the concerns raised by the CMA” in its decision. statement.
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At the same time, Synopsys is actively cooperating with the FTC to conclude its investigation and review proposed remedies. The company says. Synopsys also claims that China’s State Administration for Market Regulation is reviewing the merger file, and this has been reported The authority will request China-specific behavioral treatments.