Synopsys Investor Day 2024

By Patrick Moorhead - March 27, 2024

The Six Five team discusses Synopsys Investor Day 2024

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Daniel Newman: You put out a really thoughtful, hey, after this Broadcom day and all the complexity of PAM-4 and optics, this Synopsys, EDA stuff is actually really easy to get, and you put a really thoughtful post. Why don’t you run us through what Synopsys had to say?

Patrick Moorhead: So, first and foremost, they had to get two things across. One thing, Synopsys without Ansys is doing great. And then, secondly, Synopsys plus Ansys makes it even better. But, one thing I really appreciated is that the company actually described what they do in a way that people, that I think anybody related to chips could understand all the way from design going all the way to the fab and foundry and everything in between. That’s really hard to do. Now, two years ago it dawned on me with more transportable IP chiplets, and by the way, IP that’s qualified all the way to the foundry and the improvements in the tools. And you layer on top of that, AI, literally copilots, and this is something Synopsys was the first one to work on. They’re not the only one that’s doing it now, but they did come out with it first. You have something that’s just going to be incredible.

This is how AWS can do their own chips. This is how Tesla can do their own chips. Once we get farther on, I think you’re not going to need 100, $200 million to do a full chip. And you might see Dell Technologies be able to afford to do their own chips given their scale and capability, a much smaller company. So, this is an exciting time. I’m going to end with Ansys kind of a joke. It took me 15 seconds once the announcement was made. And think of Synopsys as the electronics world, and think of Ansys as electro mechanical, designs like cars, airplane, jet engines, stuff like that. And with the need for time to market and shrinking, having one company being able to connect that if you’re an end user, I can do AWS chiplet, I can do the SoC, I can do the PCA, I can do the rack, I can do the fleet, I can do the fricking data center and all the flow of air going in there. Anyways, that’s a no-brainer to me. Do they pay too much? I don’t know. But, they won a bidding war with Cadence.

Daniel Newman: Well, I’ll tell you what, Pat, I thought IBM paid too much for Red Hat and I think, I actually, they probably could have paid more, because had they not made that decision I think there would’ve been some really long-term troubles for the company. I think AMD what they paid for Xilinx. You could look at that and say that was a lot. And I think in the end, they’re probably not going to regret what they paid for Xilinx. I think a lot of times, Pat, we got to give some credit to these executives, founders, boards and visionaries that they do understand what they’re looking at, and they do understand what’s at stake. You know how smart Jensen was to try to buy Arm. Just imagine had that gotten done, by the way. Just imagine the situation NVIDIA would be in had they actually, so regulators might’ve got that one right, even more so than I would’ve thought.

So, anyways, Synopsys, Pat. You kind of hit the technical stuff. I want to say something that was very interesting to me. It drove a tweet and I wanted to share this. Over the last three years, there’s only one company in the Magnificent Seven that would’ve delivered you a better return than had you invested in Synopsys stock, and that company is NVIDIA. So, just take that into perspective. I have two things to say. One, silicon eats the world. So, everything you just said is because jet planes and cities and telco and banks and everything runs on silicon. Software just sits on top of it people. You got to develop silicon. Where are you going to go? You got a couple of options, and Synopsys right now is the leader. And then, of course, the other side of it is that EDA is cool, because we are democratizing the development of chips.

All these companies that have gotten into “Homegrown silicon,” never going to happen without a company like Synopsys. They’ve made it happen and the market’s rewarding it. And so, I think this tie up is going to be great, Pat, and I think Synopsys had a really compelling day. Are we bullish on everything? No, but are we bullish on this? Gosh, it seems like a really good outlook.

Patrick Moorhead

Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.