Synopsys (SNPS.US) expands chip IP business Amazon (AMZN.US) becomes the first major customer for application optimization design

Zhitong Finance App learned that Synopsys (SNPS.US) is expanding its chip intellectual property (IP) business into the field of design optimized for specific applications and has signed a new multi-year agreement with Amazon (AMZN.US). As the first major customer in this business, Amazon will further expand the use of Synopsys chip IP and electronic design automation (EDA) technology to support its own development of general-purpose computing and artificial intelligence chips.

The agreement further deepens the 15-year cooperative relationship between the two sides. As Amazon Cloud Services (AWS) continues to expand its self-developed chip layout, Synopsys will provide technical support in various aspects such as chip IP, design tools, simulation analysis, and AI-assisted engineering.

Amazon expands self-developed chip layout

Chip IP refers to a functional module that can be reused for different chip designs. Under the new agreement, Amazon will expand the scope of use of Synopsys IP, further extending from traditional general-purpose design modules to chip designs optimized for specific application scenarios.

Amazon has continued to increase the number of customized chips in recent years. AWS's Graviton series processors are mainly aimed at general computing, while Trainium is designed for AI model training and inference tasks. In addition, Amazon is also using the Nitro system to transfer networking, storage, and security functions from the main processor to dedicated hardware to improve the operational efficiency of cloud computing infrastructure. AWS launched a cloud computing example based on the fifth-generation Graviton5 processor this year, further advancing its self-developed chip plan, which began with the first generation Graviton chip in 2018.

This expanded partnership with Synopsys means that Amazon's chip development will receive more external design technical support. In addition to chip IP, Amazon will also increase the use of Synopsys EDA tools and simulation and analysis techniques.

EDA tools are one of the core software for modern chip design. They help engineers complete chip design and simulate and test the expected performance of the chip before actual manufacturing to discover potential design issues.

AI further enters the chip engineering process

The collaboration between the two sides will also extend to multiphysics analysis of Trainium and Graviton chips. As advanced chips and computing systems become more complex, engineers need to simultaneously consider the interplay of factors such as temperature, power consumption, and mechanical effects. Synopsys and Amazon plan to use related technology to comprehensively simulate and analyze these factors to improve chip and system design.

At the same time, the two companies also plan to further apply AI to Synopsys' “chip-to-system” engineering process and develop customized intelligent AI functions for Amazon engineers.

These AI tools will be used to help engineers complete the design, analysis, optimization and verification of chips and systems. While the demand for AI chips themselves is growing rapidly, AI technology will also be further introduced into the chip development process.

Synopsys stock price still fell more than 11% during the year

Despite the new partnership driving Synopsys' stock price higher, its overall performance since this year has remained relatively weak. Up to now, Synopsys stock prices have fallen by more than 11% during the year, while Amazon has accumulated a cumulative increase of more than 9%. In contrast, the NASDAQ 100 ETF (QQQ.US), which holds both Synopsys and Amazon shares, has accumulated a cumulative increase of more than 21% since this year.

According to data from the Stocktwits platform, retail investors are currently still “bearish” on both Synopsys and Amazon stocks. This collaboration shows that at a time when cloud computing and generative AI are driving rapid growth in demand for customized chips, Amazon is further strengthening its self-research capabilities from chip design to system optimization, while Synopsys is also trying to further extend its business from traditional chip design IP and EDA software to application optimization design and AI-driven engineering processes.