[November 14] Synopsys, a leader in the Electronic Design Automation (EDA) sector, submitted a regulatory filing last night, confirming plans to lay off around 2,000 employees globally, representing 10% of its total workforce, and to close some of its sites.

The company has set aside pre-tax expenses ranging from $300 million to $350 million (approximately RMB 2.1 billion to 2.5 billion) to cover severance, termination payments, and site consolidation costs. On average, each departing employee will receive compensation between $100,000 and $150,000. While this compensation standard is deemed 'average' locally, the total payout has earned the moniker of the 'most expensive severance package in history.'

The bulk of the layoffs are scheduled to take place in the 2026 fiscal year, with all restructuring efforts expected to be finalized by the end of the 2027 fiscal year.

This downsizing initiative represents the first significant contraction since the company's merger in July—Synopsys acquired simulation software company Ansys for $35 billion. As a result, there's a need to streamline operations in overlapping business areas to achieve cost synergies and meet Wall Street expectations.

The company clarified that it is eliminating 'non-core, low-growth' functions. It anticipates annual operating cost savings of approximately $200 million, which will be redirected towards AI chip design, system-level simulation, and AI-driven EDA tools. Synopsys is confident that high-margin sectors can compensate for the decline in traditional IP licensing revenue. The company's strategy is to 'trim old businesses first to safeguard profits, then leverage AI simulation tools for growth.'

Financial results reveal that the company's revenue for the third quarter of the 2025 fiscal year reached $1.74 billion, marking a 14% year-on-year increase but falling short of market expectations. The GAAP net profit took a significant hit, plummeting by 43%. The design IP business was particularly affected by export controls imposed on China.

The company acknowledged that policy uncertainties have delayed the launch of projects in China. This, coupled with capacity adjustments from major foundry customers, has put short-term revenue under pressure.

At the industry level, the EDA duopoly has solidified its position. Synopsys and Cadence now jointly command 80% of the global market, with smaller tool vendors either being acquired or exiting the market. However, the surge in AI computing power has sparked new demand, with orders for AI accelerators and Chiplet system-level simulation continuing to rise.

Established in California in 1986, Synopsys specializes in EDA software and semiconductor IP. Engineers rely on its tools for verifying advanced processor designs. Its clientele includes chip giants such as NVIDIA, Intel, and Qualcomm.