By Stephen Nellis and Jaspreet Singh
(Reuters) – Synopsys raised its annual revenue and profit forecast on Wednesday in anticipation of robust demand for its software to design advanced chips driving artificial intelligence applications.
The AI-boom has boosted investments in custom design of chips as tech firms are racing to dominate the lucrative technology with new innovations, triggering demand for companies such as Synopsys.
Chief Executive Sassine Ghazi said demand for the company’s core products remained strong, with revenue from them expected to grow 15% this year as customers design their own chips for AI and other purposes.
Semiconductor firms continue to invest in research and design and turn to the company’s AI-powered electronic design automation suite, Synopsys.ai, in a bid to ace and improve complex chip designs.
The company raised its annual revenue forecast in a range of $6.09 billion to $6.15 billion, compared with its prior expectations of $6.06 billion to $6.12 billion.
It now expects annual adjusted earnings per share between $12.90 and $12.98 from its earlier forecast of $12.86 and $12.94.
Synopsys updated its annual expectations on its investor day in March, excluding its software integrity (SIG) unit.
Earlier this month, the company said it would sell the SIG unit to a private-equity group led by Clearlake Capital and Francisco Partners in a $2.1 billion deal.
Synopsys forecast third-quarter revenue between $1.51 billion and $1.54 billion, below analysts’ average estimate of $1.60 billion, according to LSEG data.
Revenue in the second-quarter ended April 30 rose about 15% to $1.45 billion, but fell short of estimates of $1.53 billion. Excluding items, it earned $3.00 per share, beating estimates of $2.95 per share.
In January, Synopsys, which partners with chipmakers including Taiwan Semiconductor Manufacturing Co, Intel, and Samsung Electronics, said it would buy Ansys in a $35 billion cash-and-stock deal.
Separately, Ansys said on Wednesday that its stockholders approved its proposed acquisition by Synopsys.
Last week, Synopsys revealed in a filing that it received a notice from China’s State Administration for Market Regulation, asking it to report its planned acquisition of Ansys.
Ghazi told Reuters that the deal falls below a threshold for notification to Chinese regulators, but those regulators have asked the company for its cooperation in examining the deal.
“At this stage we are in a assessment phase in terms of understanding from them why and what are the next steps we need to take,” Ghazi told Reuters.
(Reporting by Jaspreet Singh in Bengaluru and Stephen Nellis in San Francisco; Editing by Shailesh Kuber)
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