Why Synopsys Lagged Cadence (And Why It May Be Cheap)

Synopsys (SNPS) and Cadence (CDNS) own the chip design software duopoly — yet both have badly lagged semiconductor stocks, and Synopsys has fared worst. One year after the Ansys merger, here's what went wrong and what the market is pricing in now. Synopsys and Cadence Design Systems control the EDA software duopoly that every chip designer depends on, yet both have trailed the SOXX semiconductor ETF since 2022. In this video, we break down what went wrong one year after the Synopsys-Ansys mega merger and whether the stock now looks cheap. We cover the new Multiphysics Fusion platform and AI agents for chip verification. We also explain why Synopsys sold its ARC processor IP business to GlobalFoundries (GFS) for $450 million, and how GlobalFoundries plans to pair it with MIPS for a RISC-V push into automotive and industrial markets. Then we dig into the fundamentals: organic EDA growth of about 8.5%, an IP segment near 20% of revenue, more than $6 billion in net debt versus roughly $1 billion at Cadence, a rising share count, and flat free cash flow per share. We wrap with six reasons Synopsys underperformed Cadence, including Intel's shrinking share of revenue. Then we run a reverse DCF to show what growth the market is pricing in at around $415 per share. If you want the reasoning behind more names like this one, Semiconductor Insider covers the process in more depth. Get access to all our research, weekly live Q&A events, and a growing set of tools to build your process: https://www.chipstockinvestor.com 📰 Why Chip Stock Investor Is Becoming a Software Business: https://chipstockinvestor.com/why-chip-stock-investor-is-becoming-a-software-business/ Linktree for all our socials: https://linktr.ee/chipstockinvestor If you found this video useful, please make sure to like and subscribe! 0:00 - Why SNPS & CDNS Lagged the SOXX ETF 1:10 - Where EDA & IP Fit in the Chip Supply Chain 2:35 - One Year After Ansys: Multiphysics Fusion & AI Agents 5:55 - Why Sell ARC Pro