The UK's competition watchdog has raised concerns about the proposed merger of Synopsys and Ansys, claiming the deal could reduce competition.
The $35 billion purchase could affect the market for certain semiconductor chip design and light simulation products in the UK, the Competition and Markets Authority (CMA) said.
Originally announced in January 2024, the aim of the deal is to bring together Synopsys' electronic design automation solutions with Ansys’ simulation and analysis capabilities. The two companies have been partnering since 2017.
However, while in most cases the products the companies offer are complementary, the CMA noted there are certain product areas where Synopsys and Ansys have strong market positions and compete closely with one another, meaning a merger could reduce the options available to customers.
The regulator is particularly concerned about global register transfer level power consumption analysis software, which is used to check how much power a chip consumes and requires to function. The merger could reduce choice for users who rely on these tools for optimizing chip designs, the CMA said.
There are also concerns about global optics software, used for the design and simulation of products such as camera lenses, TV displays, and other optical systems.
"Synopsys and Ansys are important suppliers of semiconductor chip design and light simulation software, and we’re concerned that this deal could reduce innovation and lead to higher prices for these products in the UK," said Naomi Burgoyne, senior director of mergers at the CMA.
"Millions of businesses and consumers in the UK use products that rely on these companies’ software every day, whether that’s consumer electronic devices, medical equipment, modern vehicles or even AI."
The two companies now have the chance to submit proposals to address the CMA’s concerns. If these aren't found to be suitable, the CMA will begin an in-depth Phase 2 investigation.
Synopsys said it has already moved to address a lot of the CMA's concerns. For example, the firm announced plans to sell its Optical Solutions business to Keysight.
"Customers continue to express their overwhelming support for the transaction. Together, Synopsys and Ansys can help drive innovation across industries by addressing the rapidly increasing customer need for system design solutions that provide a deeper integration of EDA and Simulation and Analysis (S&A) software," it said in a statement.
"We remain confident in a positive resolution of the ongoing regulatory review process, and we continue to expect the transaction to close in the first half of 2025."
