LONDON – The UK's Competition and Markets Authority has found that Synopsys’ proposed $35 billion purchase of Ansys could reduce competition in the supply of semiconductor chip design and light simulation products in the country.

Synopsys and Ansys announced a $35 billion merger in January, with the goal of combining Synopsys' semiconductor electronic design automation with Ansys' broad simulation and analysis portfolio to create a design leader.

The CMA said its concerns about the merger include the reduction of choice among customers who use the two companies' products, which could lead to a loss of innovation, lower quality software and/or higher prices which may then be passed onto UK businesses and consumers.

The CMA has conducted a Phase 1 investigation, in which it examined the impact of the merger across a wide range of semiconductor chip design and light simulation software markets, looking at the extent to which Synopsys and Ansys currently compete or may do so in the future. The CMA found that while the companies' products are largely complementary, the deal could reduce competition in the supply of three software products where Synopsys and Ansys have strong market positions and compete closely with one another.

The CMA said its concerns relate to global register transfer level power consumption analysis, which is used to check how much power a chip consumes and requires to function, as well as global optics software and global photonics software, which are used to design and model light-related products.

The CMA has invited Synopsys and Ansys to submit proposals to address those concerns, and if they are not submitted, it will progress to a more in-depth investigation.

"Synopsys and Ansys are important suppliers of semiconductor chip design and light simulation software, and we’re concerned that this deal could reduce innovation and lead to higher prices for these products in the UK," said Naomi Burgoyne, senior director of mergers at the CMA. "Millions of businesses and consumers in the UK use products that rely on these companies’ software every day, whether that’s consumer electronic devices, medical equipment, modern vehicles or even AI. The companies now have the opportunity to offer solutions to address our concerns, otherwise the deal will be referred to an in-depth Phase 2 investigation."