Recently, Synopsys, a global leader in electronic design automation (EDA), announced plans to lay off approximately 10% of its workforce, which amounts to around 2,000 employees. This decision comes as a significant strategic adjustment following the company's $35 billion acquisition of engineering simulation software giant Ansys. According to documents filed with the U.S. Securities and Exchange Commission, the layoffs are expected to begin at the end of the 2025 fiscal year, with the majority of the reductions to be completed in the 2026 fiscal year. The restructuring plan is anticipated to be largely finished by the end of the 2027 fiscal year.

The main reasons for Synopsys' layoffs include:

● Business Integration Needs: After acquiring Ansys, Synopsys needs to optimize internal resources to address organizational redundancy and cost pressures. The company's CEO, Sassine Ghazi, stated that the regulatory approval process for the Ansys acquisition took 18 months, during which the company's actions to adjust its investment portfolio and personnel configuration were restricted.

● Market and Financial Pressures: Synopsys' third-quarter performance failed to meet expectations, leading to a significant drop in its stock price after the financial report was released. The company's design intellectual property (IP) business underperformed, and it also faced challenges related to geopolitical factors and export restrictions.

● Strategic Transformation Needs: Synopsys aims to reallocate resources to areas with higher growth potential through layoffs, such as AI chip design, system-level simulation, and AI-driven EDA tools.

Restructuring Plan and Future Layout

Synopsys' restructuring plan aims to enhance the company's long-term competitiveness by optimizing resource allocation. The company expects the restructuring to incur pre-tax costs of $300 million to $350 million, mainly for severance pay, one-time termination benefits, and the costs associated with closing some office locations. After the restructuring, Synopsys will focus on investing in the following areas:

● AI Chip Design: With the surge of generative AI, there has been a significant increase in customer demand for advanced chips. Synopsys plans to accelerate research and development in this area to maintain its leading position in the semiconductor design industry.

● System-Level Simulation and Multiphysics Simulation: Through the acquisition of Ansys, Synopsys has strengthened its capabilities in system-level design and multiphysics simulation in fields such as chips, automotive, and aerospace. Moving forward, the company will further integrate Ansys' technology to enhance the competitiveness of its system-level simulation solutions.

● AI-Driven EDA Tools: Synopsys will push EDA tools towards higher levels of abstraction, stronger automation, and deeper AI integration to meet customers' needs for efficient design tools.

Future Outlook

Although Synopsys may face some short-term challenges, in the long run, the company is expected to maintain its competitive edge in the market by optimizing resource allocation and accelerating technological innovation. In summary, Synopsys' layoff plan is an important strategic adjustment following its acquisition of Ansys, aimed at enhancing the company's long-term competitiveness to meet the rapidly changing market demands and technological trends.

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