Synopsys abandons chip fab software to chase higher margins in AI design

Synopsys to cut chip fab manufacturing control software in shift to AI design, sources say

SEOUL, July 7 (Reuters) - U.S. chip design giant Synopsys (SNPS.O), opens new tab plans to stop offering a suite of manufacturing process control software used by global semiconductor makers, six sources briefed on the matter said, as it seeks to divert resources to higher-margin offerings such as AI design. Synopsys in April and May informed more than 10 chipmakers including Samsung Electronics, SK Hynix (000660.KS), opens new tab, Kioxia Holdings Corp (285A.T), opens new tab and Qorvo Inc (QRVO.O), opens new tab about the "end of life" move that means Synopsys will not provide future new versions and will only carry out maintenance obligations, two of the sources said. The affected products include the Equipment Engineering System (EES) and Fault Detection and Classification (FDC), a set of automation software that acts as the central nervous system of semiconductor fabrication plants to monitor and detect any anomalies before they cascade into costly defects, the two sources ⁠said. The company has already laid off a few dozen staff, said three of the sources, one of whom added that Synopsys plans to conclude talks with each chipmaker on maintenance obligations by July. Synopsys is discontinuing some legacy manufacturing analytics products to focus resources on the highest-value products, a company spokesperson told Reuters in a statement, without naming the products. The move highlights a changing balance in the semiconductor software industry, where vendors are investing more heavily in AI design technologies while some chipmakers increasingly build manufacturing software in-house. "While we are discontinuing certain manufacturing analytics products, which are older diagnostic tools not in our customers' critical paths of production, we continue to invest in new capabilities in this area of our portfolio and are honoring all existing contractual and support obligations as we take this action," the Synopsys spokesperson said. The company declined to disclose whether job cuts were involved. CUSTOMERS LOOK TO DEVELOP IN-HOUSE TOOLS Synopsys began offering the EES product after acquiring semiconductor manufacturing solutions from South Korean ⁠firm BISTel in 2021 for an undisclosed amount. One of the sources said Synopsys had been wanting to be free of support and maintenance obligations related to IP services and to reallocate engineers to high-margin AI design. Synopsys completed its $35 billion purchase of engineering software firm Ansys, opens new tab in 2025. That person and a second source said the software's removal risked causing some declines in production yields for chipmakers as the software needed to be constantly maintained, updated and patched. However, four of the other sources said they did not expect an impact on ⁠production at major chipmakers. One of the sources said the decision was also taken partly because enhancing the EES service required chipmakers to share tightly-held manufacturing data. Some clients like Samsung were also developing their own in-house tools, impacting the competitiveness of Synopsys' offerings, two sources said. A Samsung spokesperson confirmed the end-of-life decision and said active discussions were underway with Synopsys regarding ⁠the product's sunset. Samsung had established compatible alternatives and there would be "no negative impact on production," the spokesperson said when asked if production yields could decline. SK Hynix declined to comment. Kioxia and Qorvo did not respond to requests for comment. Synopsys has for decades been one of the main suppliers of software used in determining ⁠how to arrange the tens of billions of transistors that make up chips, which can be 2,000 times smaller than the width of a strand of human hair. In March, Synopsys introduced a technology it said would pave the way toward AI agents taking over many of the tasks in creating chips. Reporting by Cynthia Kim and Hyunjoo Jin in Seoul, Wen-Yee Lee in Taipei and Stephen Nellis in San Francisco; Editing by Brenda Goh and Jamie Freed Our Standards: The Thomson Reuters Trust Principles., opens new tab

Synopsys pulls back from chip fab software to chase AI design margins

The EDA giant is reportedly ending an "end of life" suite that helps run the world's fabs, and pointing those engineers at AI instead. Synopsys, the US chip design software giant, is preparing to walk away from the manufacturing control software that helps run the world's semiconductor fabs, and to redirect the engineers behind it towards the far more lucrative business of AI chip design. The plan, reported by Reuters and attributed to six people briefed on the matter, is a pointed retreat from the factory floor for a firm whose AI pivot has already drawn a $2bn vote of confidence from Nvidia. According to two of those sources, Synopsys told more than 10 chipmakers, among them Samsung Electronics, SK Hynix, Kioxia, and Qorvo, that a suite of its manufacturing tools had reached "end of life." The notices, sent in April and May, mean no future versions, only maintenance, with talks on remaining support obligations due to conclude by July. At the centre of the decision sit two products, the Equipment Engineering System (EES) and Fault Detection and Classification (FDC). Two sources described the software as the nervous system of a fabrication plant, watching equipment in real time and flagging anomalies before they cascade into costly defects. Synopsys did not name the products publicly. A spokesperson told Reuters the company was "discontinuing certain manufacturing analytics products, which are older diagnostic tools not in our customers' critical paths of production," while insisting it would keep investing in the area and honour existing contracts. So why abandon software that global fabs depend on? The short answer, according to the people familiar with the plan, is margins: Synopsys wants to free up engineers tied to support and maintenance work and aim them at AI design, the field it has been building out aggressively since completing its $35bn acquisition of Ansys in 2025. There is a strategic logic beyond headcount. Enhancing EES reportedly required chipmakers to share tightly held manufacturing data, and some clients, including Samsung, were already developing their own in-house tools, which two sources said had eroded the competitiveness of the Synopsys offering. Not everyone agrees on the risk One source, backed by a second, cautioned that stripping out maintenance and patches could dent production yields at some chipmakers over time, since the software needs constant upkeep. Four other sources said they expected no impact at the major manufacturers. Samsung, for its part, confirmed the end-of-life decision and said active discussions with Synopsys were underway. It had lined up compatible alternatives and expected "no negative impact on production," a spokesperson said. SK Hynix declined to comment, while Kioxia and Qorvo did not respond to requests. The retreat carries a human cost that Synopsys would not quantify. The company has already laid off a few dozen staff linked to the products, three sources said, though it declined to confirm whether jobs were cut or to detail the timing. The software is relatively new to the Synopsys stable, arriving through its 2021 purchase of manufacturing solutions from South Korean firm BISTel. Letting it go fits a broader reshaping of the EDA industry, where vendors pour resources into AI design tools while chipmakers increasingly write their own factory software and startups rethink the economics of who owns the underlying silicon. For Synopsys, the direction is unmistakable. This is a company that has spent decades supplying the software used to arrange the tens of billions of transistors on a modern chip, features that can be 2,000 times thinner than a human hair. In March it unveiled technology it said would let AI agents take over many of the tasks in creating chips, the future it now clearly wants to run towards. The wager is that autonomous design software, rather than factory maintenance contracts, is where the next decade of growth lies.