China clears Synopsys’s US$35 billion Ansys buyout in US win

[HONG KONG] Synopsys has secured China’s approval to buy out Ansys for US$35 billion, a major win for a company regarded as key to helping sustain US dominance of certain aspects of semiconductor technology.

The State Administration for Market Regulation gave the acquisition a green light, with certain conditions, the agency said in a statement. Among other things, the Chinese watchdog mandated that Synopsys cannot reject requests from customers to renew their contracts.

Washington this year briefly considered limiting Synopsys and its rivals from dealing with Chinese clients on the grounds of national security.

Synopsys and Cadence Design Systems – the two American firms that dominate the global market for software tools used to design chips – got drawn into the Washington-Beijing trade war this year. The US imposed a licensing requirement that would’ve limited exports of their products, part of its response to Beijing’s limits on rare earths, before abruptly lifting that mandate weeks later.

Following Beijing’s decision, Synopsys has cleared one of the last major hurdles to a deal to intended to shore up its market position. The buyout, announced in early 2024, was already approved by European and US authorities. In June, reports emerged that Chinese officials were delaying it in part because of escalating tensions over Washington’s chip sanctions.

Synopsys shares rose as much as 3.7 per cent in premarket trading on Monday. They have risen about 15 per cent so far this year.

US companies seeking Chinese antitrust approval – particularly for deals in the tech sector – are often caught in the middle of geopolitical disputes between the countries. The companies needed Beijing’s sign off because China is one of the world’s largest semiconductor markets.

In 2018, US-based Qualcomm scrapped a US$44 billion bid for Dutch chipmaker NXP Semiconductors after failing to secure a nod in time. As recently as 2023, Intel Corp. abandoned its proposed US$5.4 billion acquisition of Tower Semiconductor for the same reason.

Broadcom’s US$61 billion merger with software maker VMware eventually went through, although investors remained on edge throughout the process due to speculation that China would hold up the deal. BLOOMBERG