Synopsys (SNPS), a top chip design software company, saw its shares drop nearly 35% on Wednesday, erasing all 2025 gains in one day.
The major fall, one of the worst ever for the firm, was driven by U.S.-China trade restrictions and weak earnings. See the finance card above for price details (SNPS: $390.837).
What Caused the Crash?
Synopsys reported $1.74 billion in revenue for the third quarter, ending July 31, 2025, missing Wall Street’s $1.77 billion estimate. Earnings per share of $3.39 fell below the expected $3.74. CEO Sassine Ghazi pointed to U.S. export rules blocking sales to China and issues with a key client, likely Intel (INTC: $24.335).
China makes up over 10% of revenue for chip design firms like Synopsys. U.S. restrictions in May halted sales for over a month. Though lifted in July, these curbs reduced Chinese customer spending, per Piper Sandler analysts.
Impact on the Chip Industry
U.S. limits on chip technology hurt Synopsys’ intellectual property (IP) business, with revenue down 8% to $428 million from last year. Shares of rival Cadence Design Systems (CDNS: $331.816) fell nearly 7%, while Intel’s stock stayed steady. See the finance card above.
Intel’s Role
Analysts suggest Intel, a long-time Synopsys partner, played a part. Synopsys invested heavily in Intel’s “18A” chip project, which Intel scaled back to focus on its own products, not external clients, per J.P. Morgan.
Synopsys’ Big Changes
In July 2025, Synopsys bought Ansys for $35 billion, increasing design automation revenue by 23% to $1.31 billion. But IP struggles and merger costs hurt profits. To cut expenses, Synopsys will reduce its workforce by 10% by 2026, Ghazi said.
What Lies Ahead?
Synopsys cut its 2025 earnings forecast to $12.76–$12.80 per share, down from $15.11–$15.19, missing Wall Street’s $15 target. Bank of America downgraded the stock to Underperform, lowering its price target from $625 to $525.
Despite hurdles, Synopsys remains strong in chip design and AI, but trade and client issues pose risks.
