The most advanced integrated chips contain hundreds of millions of transistors, the positions of which have been carefully designed to optimise performance. It would be difficult to design and test such chips without software from Synopsys, or peer Cadence Design Systems, which collectively command over 60% market share in the electronic design automation market.
Synopsys also sells semiconductor intellectual property, which customers use as components of larger chip designs rather than designing those circuits themselves – offering optimised applications for specific requirements such as mobile and cloud computing. By automating highly complex chip designs and reducing defects that could lead to costly errors, Synopsys’ tools have become mission critical for chip designers, allowing the business to enjoy high recurring revenue from ‘sticky’ customer demand. A potential risk to the business could come from open source software, but with Synopsys’ research and development budget at 35-40% of its revenue, the barriers to would-be competitors remain high.
