Synopsys Revenue Misses Forecast Amid China Export Woes

Synopsys' second-quarter revenue forecast missed investor expectations on Wednesday, signaling challenges ahead for the chip design software maker. The company's stock saw a decline in extended trading following the announcement.

Navigating U.S. export restrictions targeting China has become a significant hurdle, preventing customers there from initiating new chip design projects. This, coupled with weaker-than-anticipated demand from a key foundry client, has contributed to the subdued outlook.

An ongoing capacity shift towards AI chips is also impacting Synopsys' intellectual property (IP) segment, which licenses pre-made circuit designs. This segment's revenue decreased by over 6% in the first quarter compared to the previous year.

Despite these headwinds, Synopsys reported first-quarter revenue of $2.41 billion, surpassing estimates. The company also recently completed its $35 billion acquisition of Ansys in July 2025, which has added to its debt load.

In response to current market conditions, Synopsys initiated a restructuring plan in November, aiming to reduce its workforce by approximately 10% and reallocate investment toward other growth opportunities.