Synopsys: AI drives demand for chip design, with strong revenue expected in the first quarter
Synopsys predicts higher than expected revenue for the first quarter of fiscal year 2024 (November to January next year), as the adoption of artificial intelligence (AI) has boosted demand for the company's chip design software.
Synopsys expects revenue in the first quarter of fiscal year 2024 to be between $1.63 billion and $1.66 billion, higher than the average analyst expectation of $1.6 billion; The adjusted earnings per share for the first quarter ranged from $3.40 to $3.45. According to LSEG data, analysts had previously estimated $3.05 per share. Synopsys expects annual revenue for fiscal year 2024 to be between $6.57 billion and $6.63 billion.
Synopsys announced that its revenue for the fourth quarter of the 2023 fiscal year (as of October 31) rose to $1.6 billion, a 25% year-on-year increase, exceeding analysts' expectations of $1.59 billion. It also reported a quarterly profit of $491 million that exceeded expectations, a year-on-year increase of 65%.
The growing demand for faster and more efficient AI compatible chips has elevated the market position of EDA companies such as Synopsys and Cadence Design System, which provide software and IP for chip design.
"You need a very special chip to support AI training. These are huge and complex chips. For us, this is an excellent opportunity," said Sassine Ghazi, President and Chief Operating Officer of Synopsys, when discussing the prosperity of AI chips. Sassine Ghazi will take over as CEO from founder Aart de Geus next year.
The rise of custom chip design work by companies such as Microsoft and Alphabet has also stimulated demand. Synopsys software tools help assist chip manufacturers such as Intel in the semiconductor design process, as well as automotive manufacturers such as Mercedes Benz in developing engine electronic control units.
Synopsys announced earlier in November this year that it has partnered with Microsoft to create its own chip design assistant, which will help fix bugs and errors in the early stages. Sassine Ghazi stated that the increased use of Synopsys AI services will help increase the value of some of its contracts by 20% upon renewal.
Synopsys announced that its revenue for the fourth quarter of the 2023 fiscal year (as of October 31) rose to $1.6 billion, a 25% year-on-year increase, exceeding analysts' expectations of $1.59 billion. It also reported a quarterly profit of $491 million that exceeded expectations, a year-on-year increase of 65%.
The growing demand for faster and more efficient AI compatible chips has elevated the market position of EDA companies such as Synopsys and Cadence Design System, which provide software and IP for chip design.
"You need a very special chip to support AI training. These are huge and complex chips. For us, this is an excellent opportunity," said Sassine Ghazi, President and Chief Operating Officer of Synopsys, when discussing the prosperity of AI chips. Sassine Ghazi will take over as CEO from founder Aart de Geus next year.
The rise of custom chip design work by companies such as Microsoft and Alphabet has also stimulated demand. Synopsys software tools help assist chip manufacturers such as Intel in the semiconductor design process, as well as automotive manufacturers such as Mercedes Benz in developing engine electronic control units.
Synopsys announced earlier in November this year that it has partnered with Microsoft to create its own chip design assistant, which will help fix bugs and errors in the early stages. Sassine Ghazi stated that the increased use of Synopsys AI services will help increase the value of some of its contracts by 20% upon renewal.