Synopsys to Slash 2,000 Jobs After $35 Bn Ansys Merger and China Slowdown

Chip-design software maker Synopsys will lay off about 10% of its workforce, which accounts for roughly 2,000 employees, according to a regulatory filing as quoted by Reuters. The move comes as the company looks to redirect investment towards growth opportunities.

The company, in the filing, said it expects to incur pretax charges to its financial results ranging from $300 million to $350 million, which will cover severance and other one-time termination benefits, as well as costs associated with certain site closures.

Synopsys further clarified that the majority of the workforce reductions is expected to take place in the fiscal year 2026, and the company will “substantially” complete the restructuring plan by the end of fiscal 2027, the report said.

It is pertinent to note that the company completed its $35 billion cash-and-stock acquisition of engineering design firm ‘Ansys’ earlier this year. To give context, the cost-and-stock acquisition is a business transaction in which the acquiring company pays for the target company using a combination of cash and shares of its own stock.

Synopsys develops software and hardware tools that enable the design of cutting-edge processors. Its client pool includes major chipmakers like Nvidia, Intel, and Qualcomm. The company has recently faced headwinds in China, where the fresh export curbs and issues with a key foundry partner have slowed new chip design activity.

The United States, in early July, had lifted restrictions on exports to China for chip design software developers.

Job Cuts Surge

Tech companies across the globe are undergoing one of the biggest layoff waves in recent history, with US employers cutting over 150,000 jobs in October. The month marked the steepest reduction in more than 20 years, according to a report by Challenger, Gray & Christmas.

“Like in 2003, a disruptive technology is changing the landscape. At a time when job creation is at its lowest point in years, the optics of announcing layoffs in the fourth quarter are particularly unfavorable," said Andy Challenger, workplace expert and chief revenue officer at the firm, in the report.

The report highlighted that tech firms drove the bulk of these job cuts, trailed by retail and services sector, as businesses worldwide adjust to a more cautious economic development.

The report also shared a glimpse of the labour market at a time when official government data remains unavailable due to the ongoing shutdown in Washington, DC.

However, analysts caution that the Challenger report tends to fluctuate month to month, and the surge in layoffs has not yet reflected in state-level weekly jobless claims, which continue to be filed despite the shutdown.

Meanwhile, payroll processor ADP noted that October added 42,000 private-sector jobs, marking a rebound after two straight months of declines.