Nvidia takes $2 billion stake in Synopsys as AI deal spree accelerates
December 1 (Reuters) — Nvidia has invested $2 billion in chip design software maker Synopsys as part of an expanded multi-year partnership to jointly develop new tools for designing products across different industries using artificial intelligence technology.
The agreement, announced by the companies on Monday, came as Nvidia made a series of investments such as OpenAI and Anthropic to consolidate its dominance in the artificial intelligence market.
The Synopsys deal is about shifting the work of several high-tech industries that are just starting to embrace AI from the central processing units used in the past to graphics processing unit chips sold by Nvidia.
Synopsys software is widely used in the design of everything from computer chips to jet engines. Engineers use their tools to virtually simulate these designs on computers before embarking on expensive prototype production.
These simulations can take weeks but can be sped up to a few hours using Nvidia chips, the CEOs of the two companies said at a press conference.
“The magnitude of the acceleration will unlock opportunities that were not possible before,” Nvidia CEO Jensen Huang said in announcing the deal.
Synopsys and Nvidia are customers of each other. Nvidia’s investment flurry has raised concerns that it is paying customers to buy its chips.
THE AGREEMENT IS NOT EXCLUSIVE
Synopsys CEO Sassine Ghazi said the Nvidia money would give Synopsys “optionality” as it adapts its software to Nvidia chips.
“We have no intention or commitment to use this $2 billion to purchase Nvidia GPUs,” Ghazi said at the press conference. “This is something we do in our normal course of business.”
Both CEOs said the deal was non-exclusive, and Ghazi said Synopsys was open to working with other chipmakers.
“If an AMD, Intel or any customer wants to pursue a similar opportunity (approach Synopsys), it is not an exclusive situation. We are willing and happy to work with them,” Ghazi said.
Shares of Synopsys rose almost 5%, while Nvidia rose 1.4%.
The world’s most valuable company has invested billions of dollars this year in companies linked to the burgeoning artificial intelligence industry, ranging from deals allowing a $100 billion investment in ChatGPT’s parent company OpenAI to a $5 billion stake in Intel.
Nvidia bought shares of Synopsys for $414.79 per share, the companies announced Monday; This represents a discount of approximately 0.8% to the stock’s last closing price on Friday.
Synopsys also counts AMD as a customer, while Nvidia is working with the electronic design automation firm’s rival Cadence Design.
Shares of Cadence, which announced its own partnership with Nvidia earlier this year, were nearly flat.
(Reporting by Stephen Nellis in San Francisco and Arsheeya Bajwa in Bengaluru; Editing by Shinjini Ganguli, Ani D’Silva and Bill Berkrot)
