At the beginning of the new year, a $35 billion acquisition transaction occurred in the field of chip design.
Recently, Xinsi Technology, a leading global EDA (Electronic Design Automation) manufacturer, announced the acquisition of Ansys, an engineering simulation software company. After the merger, the two sides will create a global leader in the field of chip to system design solutions.
According to the terms of the agreement, Ansys shareholders will receive $197.00 in cash per share and 0.3450 shares of New Silicon Technology common stock. Based on the closing price of New Silicon Technology common stock on December 21, 2023, the total value of the acquisition is approximately $35 billion, and the transaction is expected to be completed in the first half of 2025.
The field of chip design tools has always preferred to expand product portfolio and market share through mergers and acquisitions, which are based on similar reasons and have strong complementarity between the two parties.
Sassine Ghazi, Global President and CEO of Xinsi Technology, stated: "Faced with the increasing complexity of systems, the development of mainstream trends such as artificial intelligence, the surge in chip demand, and software defined systems requires higher computational performance and efficiency. The strong combination of Xinsi Technology's EDA solution and Ansys simulation analysis technology will enable us to provide a comprehensive, powerful, and seamless integration of innovative paradigms from chips to systems, helping technology research and development teams in various industries to maximize their development capabilities."
Both Xinsi Technology and Ansys are manufacturers with considerable positions in the field of chip design. Among them, Xinsi Technology's advantage is the world's leading chip electronic design automation (EDA), providing chip design services to chip giants such as Intel, Nvidia, and AMD. Ansys's advantage is the simulation analysis of product combinations, with strong complementarity in industrial, consumer, energy and other fields of design, The merger can better address the complexity challenges in the current chip design field.
Xinsi Technology stated that the complexity of today's intelligent systems requires semiconductor design to be combined with simulation and analysis to ensure the normal operation of interconnected intelligent systems in actual environments. All Ansys customers, including those outside the semiconductor industry, can benefit from a more comprehensive product and technology portfolio, driving their innovation.
In addition, this merger can drive the new company to accelerate its strategy and growth in emerging areas. For example, this merger will further strengthen the "chip to system" development strategy of New Thinking Technology in core EDA fields and highly potential emerging growth areas (such as automotive, aerospace, and industrial intelligence manufacturing), in which Ansys has mature business layout and successful market experience.
Xinsi Technology stated that the overall potential market size (TAM) of the merged company is expected to increase by 1.5 times, reaching approximately $28 billion. Nowadays, the demand for the integration of circuits and the physical world in various industries is accelerating. Driven by this trend, it is expected that the overall potential market size of the two companies after the merger is expected to reach a compound annual growth rate of 11%.
According to foreign media reports, this transaction will become the largest acquisition in the technology industry since Broadcom's $69 billion acquisition of VMware last year, but it still needs approval from regulatory agencies in multiple countries.
According to public information, Xinsi Technology was founded in 1986 and headquartered in Mountain View, California, USA. It is the world's top EDA manufacturer and also the 15th largest software company in the world. In fiscal year 2023, Xinsi Technology's revenue was $5.84 billion, a year-on-year increase of 15%, and its non GAAP profit was $1.737 billion. Ansys was founded in 1970 and is headquartered in Pennsylvania, USA. Its revenue for the first three quarters of 2023 was $1.46 billion, with a non GAAP profit of $424 million.