The industrial software sector is witnessing a landmark event of change.
Synopsys and Ansys announced that the two sides have reached a final agreement, Synopsys will acquire Ansys for $35 billion, after the completion of the transaction, the former Ansys shareholders will hold a total of 16.5% of the shares of Synopsys.
There are statistics, Synopsys is the global EDA (chip electronic design automation) in the field of one of the three giants, its share of the global EDA market is as high as 32.14%, ahead of the second and third Cadence 23.4% and Siemens EDA 14%. Ansys is the head of the CAE (computer-aided engineering) field, also belongs to the R & D design category of core industrial software.
According to Synopsys, after the acquisition is completed, Synopsys’ world-leading electronic design automation (EDA) for silicon will join forces with Ansys’ broad portfolio of simulation and analysis products to create a global leader in chip-to-system design solutions. It is foreseeable that the merger of the two head companies will bring changes to the competitive landscape of the entire simulation industry worldwide.
Why target the simulation software space?
Industrial simulation software is a tool that uses computer technology to simulate and analyze industrial production processes. Engineers can predict and optimize product performance at the product design stage by simulating physical phenomena in the real environment on the computer. It has significant advantages for shortening the time-to-market and reducing R&D costs.
With the growing demand for advanced manufacturing and the increasing requirements of enterprises for cost reduction and efficiency, especially in the automotive industry, the simulation software market demand is surging with huge potential and growth space, driven by intelligent driving technology and new energy vehicles. Some research data indicate that the simulation software market size is expected to grow from USD 10.82 billion in 2023 to USD 19.12 billion by 2028, at a CAGR of 12.06% during the forecast period (2023-2028).
It is reported that Ansys has a market share of up to 42% in the field of simulation software, and its simulation software products are widely used in aerospace, semiconductor, automotive and many other industrial fields.The merger of Synopsys and Ansys undoubtedly further consolidates the leading position of Synopsys in the field of simulation software, gaining a competitive advantage, while expanding its share and layout in the simulation software market.
For its part, Synopsys said that the merger with Ansys is expected to strategically expand its overall potential market size, with Synopsys’ overall potential market size (TAM) projected to grow by a factor of 1.5 to approximately $28 billion.
Industrial software market towards concentration
Industrial software market competition pattern of the three giants first appeared in the 1990s, at that time, the rapid development of chip technology, high-level language description began to be applied, ESDA gradually become mainstream. In order to promote technological innovation and application, improve market share and market competitiveness, the three giants opened a frequent mergers and acquisitions. Some statistics show that in nearly three decades of history, these giants have participated in more than 200 mergers and acquisitions, with an average of up to 70 mergers and acquisitions per company.
Industrial software field giant merger or big fish eat small shrimp acquisition events are commonplace, the growth history of software giants are often through a series of mergers and acquisitions to gradually expand their own business territory, for Synopsys is also the case, the acquisition is to expand its market share, enhance the competitiveness of enterprises a landmark action.
Just in the past year of 2023, Synopsys also completed a number of important acquisitions. in December of 2023, Synopsys made a low-key acquisition of imperas, the UK’s leading provider of RISC-V processor models, RISC-V validation solutions, and virtual prototypes for software simulation, further solidifying its position in the RISC-V space. Position; last August Synopsys announced the acquisition of PikeTec, plans to PikeTec’s test automation tools and services to join their own product line, for automotive OEMs to provide a more comprehensive virtualization and test solutions; last May, Synopsys acquired a special manufacturing chips, test chips to provide the relevant simulation EDA software company Silicon Frontline, and so on.
Cadence, another industrial software giant, is also making a lot of M&A moves. Recently, Cadence also completed a major acquisition, namely the acquisition of Invecas, Inc. Cadence will fully integrate the technical strength of Invecas, using its expertise to provide customers with highly customized solutions across the chip design, product engineering, packaging technology and embedded software. 2023, Cadence has also completed three important acquisitions. acquisitions, namely ARC, Intrinsix and Pulsic, as well as the acquisition of Rambus PHY IP.
Siemens EDA has not made as many moves as the previous two in the past year, completing only the acquisition of Insight EDA, a company that provides groundbreaking circuit reliability solutions to many of the world’s leading integrated circuit (IC) design teams. The acquisition of Insight EDA further completes Siemens EDA’s circuit reliability validation The acquisition of Insight EDA further completes Siemens EDA’s technology roadmap for circuit reliability verification.
Some people tease that EDA companies are either in mergers and acquisitions or on the way to find targets for mergers and acquisitions. Indeed, M&A is an important means for software companies to rapidly expand their market share and strategic layout. Industrial software giants use acquisitions and mergers and acquisitions to acquire new technologies and innovative capabilities to meet market demand and drive the industrial software industry to a higher level of development. It is also because of the completion of these mergers and acquisitions that the industrial software market has flourished and continued to progress.
As we wrap up this article, ABB has announced the acquisition of software services provider Meshmind to expand its R&D capabilities in the areas of artificial intelligence, industrial IoT and machine vision. Mergers and acquisitions are the norm for headline companies, whether they are actively acquiring or being acquired, and will become a pool of living water that will stir the industry’s technology fishbowl.