Synopsys shares experienced a sharp 35% drop in price after the company’s quarterly results disappointed investors.
The U.S.-China trade tensions have affected the businesses of companies that rely on the Chinese market for a substantial portion of their revenue, and Synopsys has taken a beating today, Wednesday.
Synopsys shares have plunged by 35%
Shares of Synopsys fell by nearly 35% on Wednesday, putting the chip design software company in a position to lose all of its 2025 gains. The dramatic drop was a result of the company’s weak quarterly results due to the effects of the escalating U.S.-China trade tensions on its business.
The 35% plunge is Synopsys’ biggest single-day decline on record. The company reported a third-quarter revenue of $1.74B for the period ending July 31, falling below estimates by analysts, according to LSEG data.
Synopsys’ CEO Sassine Ghazi cited a weakness in the company’s intellectual property (IP) business, which was disrupted by U.S. export restrictions to China and difficulties with a major foundry customer.
The export restrictions, imposed in late May, limited the sale of advanced chip design software to China. The Chinese market accounts for over 10% of revenue for many companies within the industry. The restrictions were later lifted in July, but analysts say that the damage had already been done.
“Chinese customer confidence has been shaken and spending appetite has waned considerably,” analysts at Piper Sandler stated.
Successive U.S. administrations have tightened curbs on Beijing’s access to American semiconductor technology in an effort to safeguard national security and slow China’s technological advances, but their policies have increasingly strained the supply chain of U.S. firms like Synopsys.
Shares of a peer company, Cadence Design Systems, also fell by nearly 7% on the news.
Strategy changes within the industry
Synopsys’ CEO Ghazi stated that a major foundry customer has scaled back their projects, further affecting the firm’s results. Ghazi did not name the customer, but analysts believe that the company is Intel, one of Synopsys’ long-time partners.
Intel has recently backed out of furthering its manufacturing ambitions. The company has slowed down and canceled some foundry projects tied to its “18A” technology node. The program had initially been intended for external customers but has now been repositioned for Intel’s own products.
Intel’s CEO, Lip-Bu Tan, has said that the company sees a “reasonable return” from 18A only if it is used internally.
J.P. Morgan analysts suggested that Synopsys had likely concentrated significant IP resources on the 18A platform, leaving it exposed when Intel shifted course.
Weeks after the company closed its $35B acquisition of engineering design software firm Ansys, Synopsys announced a strategic review of its operations. As part of the restructuring, Ghazi announced that the firm will reduce its workforce by 10% by the end of fiscal year 2026.
Despite the challenges, Synopsys remains a critical supplier of chip design tools and IP to the semiconductor industry.Its products are essential for companies developing advanced processors that power everything from smartphones to data centers and artificial intelligence systems.
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