The Federal Trade Commission voted 3-0 to approve the final consent order for the $35 billion merger between Synopsys, Inc. and Ansys, Inc., but only after mandating significant asset divestitures to address antitrust concerns in critical semiconductor design software markets.
Under the final order, both companies must sell specific software tools to Keysight Technologies, Inc. to preserve competition across several markets essential for semiconductor and light simulation device design. Synopsys is required to divest its optical software tools and photonic software tools, while Ansys must sell its PowerArtist power consumption analysis tool.
The FTC's investigation revealed that without these remedies, the merger would eliminate head-to-head competition between the two companies in three critical software tool markets. The agency alleged this consolidation would lead to higher prices for semiconductor design tools and decreased innovation in an industry where competition drives technological advancement.
"The final consent order preserves competition across several software tool markets that are critical for the design of semiconductors and light simulation devices," the FTC stated in its announcement.
The semiconductor design software market has become increasingly concentrated as companies seek to offer comprehensive solutions for chip manufacturers. Synopsys and Ansys both provide essential electronic design automation tools that semiconductor companies rely on to develop everything from mobile processors to automotive chips.
The merger represents one of the largest consolidations in the semiconductor software industry, combining two companies that have competed directly in multiple market segments. Electronic design automation tools are crucial for the semiconductor industry, enabling engineers to design, simulate, and verify complex chip architectures before manufacturing.
Without the required divestitures, the FTC determined that the combined entity would have gained excessive market power in optical software tools, photonic software tools, and power consumption analysis tools. These software categories are essential for different aspects of semiconductor design, from optimizing power usage to simulating light-based components in advanced chips.
The agency's concerns centered on the potential impact on device manufacturers and ultimately consumers. Higher prices for design software tools could increase costs for semiconductor companies, which might then pass those expenses on to electronics manufacturers and consumers purchasing devices containing those chips.
Keysight Technologies, the designated buyer for the divested assets, operates in the electronic test and measurement market and provides software solutions for various industries. The FTC's selection of Keysight as the acquirer suggests the agency believes the company can maintain competitive pressure in these specialized software markets.
The FTC's review process included a public comment period before the final vote, allowing industry stakeholders and competitors to provide input on the proposed remedies. The unanimous 3-0 approval indicates broad agreement among commissioners that the divestitures adequately address competitive concerns.
Commissioner Mark R. Meador issued a concurring statement alongside the final order, though the specific details of his additional commentary were not disclosed in the announcement.
The approval comes as federal antitrust agencies have increased scrutiny of technology sector mergers, particularly those involving companies that provide essential tools or infrastructure for other businesses. The FTC's approach in this case demonstrates its willingness to allow large mergers to proceed when companies agree to meaningful remedies that preserve competition.
For the semiconductor industry, the approved merger with divestitures represents a balance between allowing companies to achieve scale and efficiency while maintaining the competitive dynamics that drive innovation in design tools. The industry relies heavily on sophisticated software to manage the complexity of modern chip design, where billions of transistors must be precisely arranged and optimized.
The final order ensures that competition will continue in markets where Synopsys and Ansys previously competed directly, while allowing the companies to combine their complementary technologies in other areas. This approach aims to preserve the benefits of competition while enabling the efficiencies that the merging companies argued would result from their combination.
The merger's completion, subject to the required divestitures, will create a larger entity with expanded capabilities across the electronic design automation landscape. However, the FTC's conditions ensure that critical competitive pressures remain in place to benefit semiconductor manufacturers and, ultimately, consumers who purchase electronic devices.
Implementation of the divestiture order will require careful oversight to ensure the transferred assets maintain their competitive effectiveness under Keysight's ownership and continue to provide meaningful alternatives to the merged entity's offerings in these specialized software markets.