Nvidia Buys $2 Billion Of Chip Software Maker Synopsys Stock

Nvidia Invests $2 Billion in Synopsys, Aiming to Boost AI Computing

Nvidia Corp. has made a significant investment of $2 billion in chip-design software maker Synopsys Inc. as part of a broader engineering and design tie-up.

The deal, announced on Monday, sees Nvidia purchasing shares of Synopsys at $414.79 each, representing a 2.6% stake in the company's outstanding stock.

About Synopsys

California-based Synopsys is one of the largest providers of software and services used to design electronic components. It aids with designing the complex layout of billions of transistors and connectors for modern chips, as well as verifying that hardware will work as intended before the production stage.

• Used by semiconductor and systems companies, including Alphabet Inc. and Tesla Inc.
• Aids in designing the complex layout of billions of transistors and connectors for modern chips.
• Verifies that hardware will work as intended before the production stage.

New Partnership

The new partnership involves integrating Nvidia's tools into Synopsys' chip-design applications, as well as deploying AI agents and joint marketing efforts.

Nvidia Chief Executive Officer Jensen Huang noted that the partnership is not exclusive, meaning that Synopsys' other chipmaker customers will be able to benefit from it.

"This is more of a technology upgrade," Huang said. "We still have many older computers based on general-purpose chips in use in the automated design industry. Having closer ties with Synopsys will speed up the adoption of artificial intelligence and accelerated computing in the area."

Impact on the Industry

The deal has sparked concerns about the increasingly close-knit nature of the AI industry, with some fearing the potential for circular deals that prop up the valuations of certain companies.

However, Bloomberg Intelligence analyst Niraj Patel notes that the move will allow Synopsys to use more advanced chips for its own design and simulation tools for various sectors, including automotive, aerospace, industrial, and energy.

• Shares of Synopsys jumped as much as 6.9% in New York on Monday, before paring some of their gains.
• Nvidia shares rose as much as 1.7% on Monday.

Background on Nvidia's Investments

Nvidia has made significant investments in companies such as OpenAI and data center operator CoreWeave Inc., as well as agreeing to invest $5 billion in Intel Corp. as part of a partnership to co-develop chips for personal computers and data centers.

The company's investments have raised concerns about the potential for circular deals and the valuation of certain companies in the AI industry.