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Synopsys sells software and tools that help engineers design computer chips and electronics.
Synopsys sells the software that other companies use to design computer chips. If you've ever wondered how a chip with billions of tiny switches gets built without exploding into a mess, the answer is tools like Synopsys'. Chipmakers such as Nvidia, Intel, and AMD pay Synopsys to plan, test, and verify their designs before spending billions on a factory. The company makes money mostly from software licenses, which are like long-term subscriptions customers renew year after year, plus support and services. This business splits into two main parts: design automation, which is the core chip-design software (the biggest slice of revenue, roughly 90% including intellectual property), and design IP, where Synopsys sells ready-made building blocks that engineers drop into their chips instead of designing from scratch.
Think of it as the Microsoft Word and Lego set of the chip world: engineers write and check their designs in Synopsys' tools, and when they need a common part like a USB connector or memory controller, they snap in a Synopsys-made block instead of building it themselves. That combination makes Synopsys sticky. Once a chip team learns these tools and trusts them, switching is painful and slow, so customers tend to stay for years. Recently, Synopsys has pushed hard into AI and into simulation software, buying Ansys, an engineering simulation company, in a deal that closed in 2025 and adds tools that test how physical products behave before they are built.
Synopsys was founded in 1986 and grew by being early to chip-design software and buying smaller rivals over time. It also sells security and quality testing software for code, though that is a smaller piece of the pie. The company generates a lot of free cash, which it mostly reinvests in research, buys back shares, and uses for acquisitions rather than paying a dividend. Growth lately comes from AI chips, rising chip complexity, and the Ansys deal, while risks include export rules to China and the slowdowns that hit chip demand.
Saved answer · last researched 11 Oct 2026