Written by Stephen Nellis and Zaheer Kashwala
(Reuters) – Chip design software maker Synopsys on Wednesday forecast fiscal 2025 revenue to be below Wall Street expectations, partly due to lower China sales as the United States tightens controls on chip technology that can be sold to the country.
Shares of the Sunnyvale, Calif.-based company fell 6.6% in extended trading, following expectations. Synopsys CFO Shelagh Glaser told Reuters that the company still expects to close a $35 billion deal to acquire engineering software company Ansys in the first half of 2025.
Synopsys expects fiscal 2025 revenue to be between $6.75 billion and $6.8 billion, with the full range below estimates of $6.91 billion, according to LSEG data.
A change in Synopsys’ financial calendar to make it easier to consolidate its financial reporting with Ansys lowered the company’s full-year revenue forecast by about $80 million, Glaser said. But the biggest driver of revenue was continued sales declines in China, where the United States earlier this week imposed new restrictions on chip technology exports.
The list of companies to which Synopsys can no longer sell in China has grown, and some remaining Chinese customers are hesitant about plans to make new chips because of uncertainty about whether they will be able to make chips, Glaser said.
“It’s kind of a cumulative effect of the restrictions,” Glaser said.
Glaser said the election of Donald Trump as US president, who promised to impose new tariffs on Chinese imports, did not change Synopsys’ expectations about closing the Ansys deal.
“We certainly have an expectation that each jurisdiction will have its own standards and reviews,” Glaser said. “But that was true from the beginning, and there were always elections.”
Synopsys expected full-year adjusted EPS to range between $14.88 and $14.96 per share, while analysts expected $14.88 per share.
The company expects first-quarter revenue to range between $1.44 billion and $1.47 billion, compared to estimates of $1.64 billion.
It expects first-quarter adjusted EPS to range between $2.77 and $2.82 per share, compared to estimates of $3.53 per share.
Revenues for the fourth quarter ending November 2 were $1.63 billion, in line with estimates. On an adjusted basis, the company earned $3.40 per share, above estimates of $3.30 per share.
(Reporting by Zaheer Kashwala in Bengaluru and Stephen Nellis in San Francisco; Editing by Krishna Chandra Eluri and Stephen Coates)
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