Synopsys Eats Ansys: Does HPC Get Indigestion?

By Doug Eadline

February 8, 2024

Recently, it was announced that Synopsys is buying HPC tool developer Ansys. Started in Pittsburgh, Pa., in 1970 as Swanson Analysis Systems, Inc. (SASI) by John Swanson (and eventually renamed), Ansys serves the CAE (Computer Aided Engineering)/multiphysics engineering simulation market. Since its inception, Ansys has acquired 34 companies (notably HPC CFD firm Fluent in 2006).

Now it seems Ansys has become the acquiree and not the acquirer. Synopsys, Inc. is an American Electronic Design Automation (EDA) company headquartered in Sunnyvale, California. Synopsys focuses on silicon design and verification, silicon intellectual property, software security, and quality. Synopsys supplies tools and services to the semiconductor design and manufacturing industry, which is a segment of the HPC market. However, the Ansys acquisition significantly broadens the addressable markets for Synopsys.

The $35 billion cash-and-stock deal will create a $100 billion software entity in the EDA/CAE software space. Ansys and Synopsys have a market capitalization of $30 billion and $73.6 billion, respectively. The transaction is anticipated to close in the first half of 2025, subject to approval by Ansys shareholders, the receipt of required regulatory approvals, and other customary closing conditions.

Mergers and acquisitions (M&A) happen constantly; nothing new here; however, there are sometimes both immediate and long-term consequences when the market gets shuffled.

Historically, high-tech M&As have had various consequences. An early HPC hardware acquisition was when Hewlett Packard purchased supercomputer vendor Convex. The market was changing at the time, and the acquisition made sense. However, some Convex people and technologies never made it into Hewlett-Packard plans. In addition, employees of the acquiree often face uncertainties about their jobs. Most decisions are put on hold until new management structures are in place. Today, the Convex name is a Wikipedia entry that HP has totally absorbed.

Another recent acquisition was the IBM purchase of Red Hat. In this case, IBM seems to keep Red Hat at arm’s length, providing some independence from big blue and big blue hardware. Indeed, Red Hat’s current web page lists AWS, Microsoft Azure, Google Cloud, and IBM Cloud prominently at the top, and there is no other mention of IBM proper on the web page. This strategy seems to have worked because Red Hat is still perceived as the largest independent Linux company and, in some cases, with a solid HPC presence.

In 2003, Penguin Computer, a cluster hardware company, acquired Scyld software, a developer of Beowulf HPC cluster provisioning and management software. The acquisition allowed Penguin to offer an integrated HPC solution based on Scyld software. Before the acquisition, Scyld started licensing directly to other cluster vendors. After the sale to Penguin, interest in Scyld from other vendors dropped because it became associated as part of a Penguin cluster and not an independent product. However, it can still be purchased separately as a software product.

All three of the above scenarios had different effects on the HPC market. Though not HPC-related, Broadcom’s recent acquisition of VMware has brought major changes to the market and relationships with resellers. According to Broadcom, the move simplifies the numerous and various types of contracts offered to vendors. Some other collateral damage may force or invite resellers to look at other solutions.

Between Synopsys and Ansys there is no product overlap, and the two companies enjoy a synergistic relationship in the semiconductor area. For chip development, design challenges have emerged at 7nm and below, as well as with multi-die systems. With a range of novel physical effects, from thermal analysis to electromagnetic interference and advanced 3D layout capabilities, there is a need to assist the designer right at the prototyping stage. Ansys and Synopsys formed a strategic alliance to address these issues that build on each company’s expertise.

The Ansys’ RedHawk-SC family of power integrity, thermal, and reliability products have been integrated with Synopsys’ Fusion Compiler platform, 3DIC Compiler platform, and PrimeTime platform to provide customers new levels of accuracy for chip design. The result is a faster shift-left methodology (moving testing, quality, and performance evaluation early in the development process) with rapid design exploration, early weakness detection, in-design analysis, voltage-timing optimization, thermal-aware reliability, and final sign-off from within the place-and-route environment.

Some analysts believe the acquisition has been brewing for a while and suggest there were possibly multiple bidders. Potential other bidders include Cadence and possibly Siemens, although Siemens and Ansys overlap in many product areas. Synopsys may have jumped first because they have a relationship with Ansys and did not want to lose them to a competitor. The strategic rationale behind the acquisition makes sense: there is little overlap, an expanded market, and a continued chip design and simulation.

From an HPC perspective, there may be some concerns. Synopsys history is a chip design company and enjoys revenues over twice that of Ansys. Adding new markets pioneered and acquired by Ansys requires a broader focus on different products and markets. For example, Ansys Fluent is a leader in CFD and is constantly developing new products and capabilities. Will Ansys Fluent be able to continue to provide its level of focus and attention to the HPC market? Or, will Ansys Fluent become a “distant market” to Synopsys leadership because it is not directly related to chip design, their revenue leader?

The success or failure of M&As always takes time to figure out. The Synopsys Ansys merger makes sense on paper; both are strong companies (Ansys does not need rescuing) and should Synopsys operate under the “IBM-Red Hat” model, Synopsys could continue its leadership in HPC and build out new synergistic products. On the other hand, should there be a “Penguin-Scyld” approach where the focus remains on the revenue-leading chip design products and a market supported by a subset of Ansys products, the Ansys relationship could change for HPC users.

 

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