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Synopsys (NASDAQ:SNPS) and Cadence Design Systems (NASDAQ:CDNS) are likely to continue benefiting as semiconductor design continues to become tougher, with the two companies showing off their competitive moats, investment firm Baird said.
“In our view, both companies are driving product strategies that will solidify leading roles into the future, particularly as advanced designs require greater coordination within the EDA flow,” analyst Joe Vruwink wrote. “We have also been impressed with the presence of Ansys at the conference and feedback around the latest generation of power reliability signoff in SigmaDVD (building upon RedHawk-SC franchise and addressing major challenges around voltage drop at advanced nodes).
Vruwink has Outperform ratings on Synopsys, Cadence Design and Ansys (ANSS), which is in the process of being acquired by Synopsys.
As evidenced at the Design Automation Conference, there is the potential for greater overlap between chip design and system engineering, and the increase in artificial intelligence-driven electronic design automation products and move into new areas should further benefit Synopsys and Cadence Design and to some extent Ansys, Vruwink added.
Additionally, while companies like Nvidia (NVDA) and Microsoft (MSFT) have deployed large amounts of generative AI capital, overall deployment is still very early, Vruwink said.
Delving deeper, Vrwuwink said Synopsys should benefit from next-gen design, as it is “strong” in exploration and construction with its Fusion architecture, while the Ansys partnership brings multiphysics analysis.
“Greater convergence likely seen through end-of-decade; something like multi-die solutions require this,” Vrwuink wrote.