Synopsys versus Cadence
- Verdict: Cadence is the stronger business
- Cadence grows twice as fast organically and converts at a higher margin
- Synopsys is mid-repair: FY25 decline in design IP and China. FY26 absorbing Ansys integration, three divestitures, and a 10% workforce cut.
- Margin favors Cadence (narrowly)
- Synopsys has lower gross margin because of higher mix in people-intensive Design IP versus Design Automation, and higher stock compensation. iIt is aiming to close the gap with cost synergies and a 10% workforce cut.
- Growth favors Cadence
- Cadence's growth is organic and broad, while Synopsys's is acquired and concentrated in simulation.
- Customer power favors Cadence
- Cadence has no concentration and a rising order book.
- Synopsys has just worked through a concentration shock.
- Moat at parity
- Synopsys: Sign-off and implementation at the leading node. The broadest silicon IP catalog. Ansys metaphysics sign-off.
- Cadence: Custom and analog design. Emulation on its own silicon. Digital full flow.
- Risks are of different kinds
- Cadence is more exposed to AI capex slowdown or a renewed China restriction, given its higher mix of upfront revenue (hardware, IP licenses, multi-year system analysis licenses), and in China.
- Synopsys is exposed to $10B of gross debt after Ansys, against 3.6 billion of cash, and and IP rebuild after the 2025 stumble.
- Strategy
