Synopsys to exit fab control software to focus on more profitable AI chip design

Synopsys, the American chip-design software giant, is preparing to drop the manufacturing control software that helps semiconductor fabs around the world operate, and to move the engineers responsible for it to a far more profitable business: designing chips for artificial intelligence. Reuters reported the plan, citing six sources familiar with the matter.

What exactly Synopsys is dropping

The business in question is manufacturing control software, a category of tools that helps semiconductor fabs control the process steps used to produce chips. It is separate from the classic EDA (Electronic Design Automation) business. It has historically been part of Synopsys's portfolio, but it brings the company lower margins than tools for designing the chips themselves.

• Synopsys is the largest US developer of semiconductor design software
• The company is preparing to drop its control software for chip fabs
• Engineers in this unit are to be moved to AI chip design
• Reuters reported the plan, citing six sources familiar with the matter

Why the company is betting on AI chip design

Demand for specialized chips for training and inference of artificial intelligence models, from data-center accelerators to custom designs by cloud providers, has grown so much that tools for designing such chips have become one of the highest-margin segments of the semiconductor industry. For Synopsys, which sells software to companies developing their own AI chips, shifting engineering resources toward this area looks like a logical step: the more complex chips for AI workloads become, the higher the price and demand for the tools that help design and verify them before they go into production.

At the same time, leaving fab control software means Synopsys is narrowing its focus. It is giving up a business closer to operational support of the production process, rather than to creating added value at the design stage, which is where the company has traditionally been stronger than its competitors.

What this means

The decision by one of the largest software suppliers to the chip industry to concentrate on AI chip design is another sign of how the AI boom is reshuffling priorities across the whole semiconductor chain: even companies that worked on the manufacturing side of the industry are ready to sacrifice that business for a more profitable role in the race to build chips for AI.