Simulation specialist Ansys has been acquired by Synopsys for a staggering $35 billion after receiving approval from Chinese regulatory bodies. The merger aims to create a comprehensive design platform.

In a significant move, semiconductor and electronic design automation (EDA) giant Synopsys has merged with Ansys, a leader in engineering simulation software. This union brings together two industry titans, aiming to serve customers across various sectors, including semiconductors, high-tech, automotive, aerospace, industrial, and more.

The merger reduces the number of independent players in a critical tech space, raising competitive and regulatory concerns. Regulatory pressure on the combined company may grow, as the new entity will offer a comprehensive set of tools applicable in the semiconductor sector and other sensitive spaces like aerospace or defense. Export restrictions, national security rules, and cross-border IP management are expected to become more complex for the combined company.

The approval of the Synopsys-Ansys merger is noteworthy, given China's past reluctance to sign off on large U.S. tech mergers. However, China has greenlighted the deal, recognising the unique capabilities the combined company brings to Chinese chip and system designers. Synopsys will tap into Ansys's stronghold in aerospace, automotive, energy, and heavy industry, whereas Ansys gains deeper exposure to electronics and semiconductors.

The new company will be uniquely positioned to deliver comprehensive, integrated simulation and design solutions that empower customers to innovate the next generation of intelligent systems. The integration of simulation data (Ansys) with AI-accelerated EDA tools (Synopsys) will open the door for smarter, automated co-design across domains.

The transaction creates a unified platform for developing complex, multi-domain products like AI processors and servers, aircraft, defense systems, consumer electronics, and vehicles. The merged Synopsys-Ansys company may face increased scrutiny from governments, particularly in the U.S., China, and EU, due to its influence on critical systems and design workflows.

The deal was approved by regulators in Europe, the U.S., and the UK, but China imposed a condition that Synopsys must not turn down any customer requests to extend existing licenses or force bundling. Unless specifically prohibited, both companies will be able to upsell and bundle solutions, increasing customer stickiness and total contract value.

The new Synopsys will fast-track the development and delivery of holistic engineering solutions that bring together multiphysics simulation with the full EDA stack. The Ansys brand will be retained for some time after the merger with Synopsys. The U.S. has demanded that Synopsys ensure all Ansys and Synopsys tools will be interoperable with competing solutions from rivals such as Cadence, Dassault, or Siemens, potentially triggering further M&A or ecosystem shifts.

No governments have been publicly linked to the Synopsys and Ansys merger so far, nor have any specific future regulatory pressures on the merged company been identified in available sources. The merger may lead to a more complex landscape for the EDA and simulation industry, with increased competition and potential regulatory challenges ahead.