Synopsys expects upbeat Q4 on firm demand for chip design software

By Max A. Cherney and Jaspreet Singh

(Reuters) - Synopsys forecast its fourth-quarter revenue and profit above Wall Street estimates on Wednesday, a sign of steady demand for its software to design complex and AI-compatible chips as businesses race to adopt the lucrative technology.

Growing computing requirements for artificial intelligence systems have triggered demand for custom design of more powerful and complex chips, helping companies such as Synopsys, as they provide software and hardware used to design cutting-edge processors.

For the past five decades there has been an inflection point for the industry and "right now that inflection point is AI", CEO Sassine Ghazi told Reuters in an interview.

"It's not hype, it's real and it's driving silicon complexity and building out of infrastructure and data center and training at a pace the industry has not seen before," Ghazi said, adding that Synopsys launched its first AI product in 2020.

Shares of the Sunnyvale, California-based company, which partners with chip firms including Nvidia, Qualcomm and Intel, were up 1.2% in extended trading.

Revenue from the company's design automation unit — its largest segment, which includes digital and custom integrated circuit design software — rose about 6% to $1.06 billion in the third quarter.

Synopsys competes with companies such as Cadence Design Systems and Siemens AG's Siemens EDA in electronic design automation software, which is used by engineers for designing semiconductors.

Semiconductor firms also turn to Synopsys' AI-powered electronic design automation suite, Synopsys.ai, in a bid to improve complex chip designs.

Synopsys expects fourth-quarter revenue to be between $1.61 billion and $1.64 billion, the midpoint of which is above LSEG estimates of $1.61 billion.

It forecast adjusted earnings per share between $3.27 and $3.32 for the quarter ending Oct. 31, versus the estimate of $3.23.

Third-quarter revenue rose about 13% to $1.53 billion. Excluding items, it earned $3.43 per share, beating estimates of $3.28.

(Reporting by Jaspreet Singh in Bengaluru and Max A. Cherney in San Francisco; Editing by Shilpi Majumdar)

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