On July 14, China’s State Administration for Market Regulation (SAMR) announced conditional approval for Synopsys’ proposed $35 billion acquisition of Ansys. This marks the final regulatory hurdle after the deal was cleared by authorities in the U.S. and other jurisdictions. The acquisition was first announced in January 2024 and is expected to close in the first half of 2025.

Synopsys, a leading American provider of EDA tools and semiconductor IP, announced its plan to acquire simulation software leader Ansys through a cash-and-stock transaction in January 2024. The deal had already received approval from the U.S. Federal Trade Commission and other global regulators by May, with China being the last major authority to weigh in.

However, the review in China was delayed amid rising U.S.-China tech tensions and the temporary suspension of EDA tool exports to China by Synopsys and two other U.S. firms. These restrictions were lifted by the U.S. Commerce Department on July 2, clearing the path for China’s antitrust ruling.

SAMR expressed concerns that the deal could reduce competition in several markets, including optical software, photonic software, certain segments of EDA tools, and semiconductor design IP. To address these concerns, Synopsys and Ansys must comply with eight binding conditions:

1. Divestiture of Optical and Photonic Simulation Business: Synopsys must sell off its entire optical and photonic simulation operations globally.

2. Divestiture of Power Analysis Software Business: Ansys must divest its RTL-level power analysis software business, including R&D, licensing, distribution, and support.

3. Contractual Commitments: The merged entity must honor all existing customer contracts—particularly with Chinese customers—including pricing and service level terms. They must not terminate current contracts or deny renewals.

4. Ban on Product Bundling: Synopsys and Ansys are prohibited from tying or bundling their products. Customers must be free to purchase each product separately without being penalized on pricing, service, or functionality.

5. Support for Industry Standards: The combined company must continue to support industry-standard formats used by EDA products related to parasitic analysis, transistor-level power integrity, and power device analysis.

6. Interoperability Maintenance: Synopsys and Ansys must maintain existing interoperability agreements and renew them upon request from Chinese customers.

7. Third-Party Interoperability Agreements: With written support from Chinese customers, the company must sign new interoperability agreements with third-party EDA vendors if requested.

8. Confidential Obligations: Additional confidential commitments were also submitted and approved as part of the remedy package.

The timing of China's approval aligns with the recent easing of U.S. export restrictions on EDA tools to China. In May, the U.S. Bureau of Industry and Security (BIS) had temporarily blocked exports from Synopsys, Cadence, and Siemens EDA to Chinese firms, only to reverse the restrictions on July 2.

Analysts say the conditional approval reflects China's dual goals of maintaining access to essential design tools while addressing antitrust concerns amid growing geopolitical competition in the semiconductor space.