A conflict is emerging in a lesser-known sector of the artificial intelligence (AI) field: chip creation software. Numerous consolidation deals have been publicized, and a massive amalgamation is on the horizon involving electronic design automation (EDA) frontrunner Synopsys (NASDAQ: SNPS) and Ansys (NASDAQ: ANSS). Shortly after this announcement, the second EDA software package, Cadence Design Systems (NASDAQ: CDNS), unveiled its latest high-performance computing platform for simulating electronic systems.
Not wanting to be left in the dust, Japanese semiconductor producer Renesas (OTC: RNECY) declared its plans to acquire a smaller EDA software vendor Altium (OTC: ALMF.F). Is there a major development happening in the AI industry?
Renesas Pursues a Software Enhancement
Renesas operates as an integrated device designer and manufacturer of semiconductors. This mixed business model has been experiencing a resurgence in recent times. Alongside Japan emerging as a prominent hub for manufacturing in the Eastern region, Renesas can attribute its revival to the electric vehicle (EV) revolution, among other more established production processes for chips used in industrial and power-related applications.
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In addition to other minor procurements to fortify its power chip assortment, I previously discussed Renesas’ agreement with Wolfspeed (NYSE: WOLF) to obtain silicon carbide (SiC) wafers for applications in upcoming technologies such as EV motors.
However, the acquisition of Altium, a minor competitor of EDA software giants Synopsys and Cadence, signifies a different progression. Altium, a small Australian-based entity (noteworthy for having Wolfspeed as a client for chip design), recorded revenue of just $139 million in U.S. dollars during the initial half of its fiscal year 2024. Nonetheless, Renesas is set to make a considerable investment, spending A$9.1 billion ($6 billion in U.S. dollars at April 5, 2024 exchange rates). That represents a substantial premium.
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Renesas’ stated reasoning is to enhance the software and digital tool offerings to its clientele, specifically since many of these clients (e.g., automakers) may require assistance in implementing cutting-edge electronics.
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