Synopsys finally gets China greenlight on $35B chip deal after US eases export restrictions

China has approved the $35B acquisition of Ansys by Synopsys following a policy reversal from the U.S.

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. That’s why the merger between Synopsys and Ansys represents more than a significant milestone in Synopsys’ strategy to expand its reach beyond core chip design tools into broader engineering software.

China approves $35B deal after U.S. policy reversal

China’s top antitrust regulator has conditionally approved the $35B acquisition of Ansys by Synopsys. The approval by the State Administration for Market Regulation (SAMR) was confirmed on Monday, just days after the United States quietly relaxed recent export restrictions on chip design software.

The merger between Synopsys and Ansys, two leading U.S. software companies, was first announced in January 2024 and had already received clearance from U.S. and European regulators.

However, the SAMR paused its review in May after Washington imposed new restrictions that effectively barred U.S. chip design toolmakers like Synopsys from selling software to China.

Synopsys’ CEO, Sassine Ghazi, had previously expressed optimism about closing the deal by the end of June. However, that timeline slipped due to SAMR’s pause.

In early July, the U.S. government eased up parts of that restrictive policy as trade talks between the U.S. and China, which had been underway for months, reached an agreement in Geneva at the end of June. Companies involved in the negotiations confirmed that the policy changes were communicated earlier this month.

According to people familiar with the matter, China’s commerce ministry urged the SAMR to resume the paused approval process shortly after the U.S. eased restrictions. The regulator responded swiftly, approving the deal on July 12, which was a single day after the process resumed.

The SAMR’s conditions

While China ultimately allowed the transaction, the SAMR imposed three main conditions to manage concerns regarding market concentration and ensure that Chinese companies are not unfairly disadvantaged after the merger.

The companies are required to divest business lines where their offerings significantly overlap to mitigate the risk of monopolistic control in specific software markets.

The SAMR also stipulated that Chinese customers must be allowed to renew their existing contracts under the same terms after the merger to save local businesses from sudden disruption or unfavorable renegotiations.

Finally, the Chinese regulator mandated Synopsys to continue offering its EDA software to Chinese firms on fair and reasonable terms without bias in pricing or functionality.

The regulator noted that Synopsys formally accepted these terms on July 11. Any failure to comply could result in penalties under China’s anti-monopoly law.

Synopsys, headquartered in Silicon Valley, provides essential EDA tools and intellectual property used by top semiconductor companies like Nvidia and Intel to design and test their chips.

Ansys, based in Pennsylvania, initially dealt with structural analysis software but has since become a major player in multiphysics simulation tools used in industries ranging from automotive and construction to healthcare and aerospace.

Analysts say that the $35B deal reflects the growing intersection of semiconductor design and engineering workflows, due to the complexity of modern technologies like AI, electric vehicles, and industrial automation.

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