Synopsys, Inc. (SNPS.US) expands chip IP business; Amazon.com, Inc. (AMZN.US) becomes first major customer for application-optimized design.

Synopsys, Inc. (SNPS.US) is expanding its chip intellectual property (IP) business into application-optimized design and has signed a new multi-year agreement with Amazon.com, Inc. (AMZN.US). As the first major customer for this business, Amazon.com, Inc. will further expand its use of Synopsys, Inc.'s chip IP and electronic design automation (EDA) technologies to support its in-house development of general-purpose computing and AI chips. This agreement further deepens the two companies' 15-year partnership. As Amazon.com, Inc.'s cloud service (AWS) continues to expand its custom chip lineup, Synopsys, Inc. will provide technical support across multiple areas, including chip IP, design tools, simulation and analysis, and AI-assisted engineering. Amazon.com, Inc. expands custom chip lineup Chip IP refers to functional blocks that can be reused across different chip designs. Under the new agreement, Amazon.com, Inc. will expand its use of Synopsys, Inc. IP from traditional general-purpose design blocks to chip designs optimized for specific application scenarios. Amazon.com, Inc. has been steadily increasing its investment in custom chips in recent years. AWS's Graviton series processors are mainly aimed at general-purpose computing, while Trainium is designed for AI model training and inference tasks. In addition, Amazon.com, Inc. also uses the Nitro system to offload functions such as networking, storage, and security from the main processor to dedicated hardware, improving the operating efficiency of its cloud computing infrastructure. AWS launched cloud computing instances based on the fifth-generation Graviton5 processor this year, further advancing its custom chip program that began with the first-generation Graviton chip in 2018. The expanded cooperation with Synopsys, Inc. means Amazon.com, Inc.'s chip development will receive more external design technology support. In addition to chip IP, Amazon.com, Inc. will also increase its use of Synopsys, Inc.'s EDA tools as well as simulation and analysis technologies. EDA tools are one of the core software categories in modern chip design, helping engineers complete chip designs and simulate and test expected chip performance before actual manufacturing, thereby identifying potential design issues. AI moves further into the chip engineering process The cooperation between the two companies will also extend to multiphysics analysis of Trainium and Graviton chips. As advanced chips and computing systems become increasingly complex, engineers need to simultaneously consider the interactions among multiple factors such as temperature, power consumption, and mechanical effects. Synopsys, Inc. and Amazon.com, Inc. plan to use related technologies to conduct comprehensive simulation and analysis of these factors to improve chip and system design. At the same time, the two companies also plan to further apply AI to Synopsys, Inc.'s "chip-to-system" engineering process and develop customized agentic AI capabilities for Amazon.com, Inc. engineers. These AI tools will be used to assist engineers in the design, analysis, optimization, and verification of chips and systems. As demand for AI chips themselves grows rapidly, AI technology is also being further introduced into the chip R&D process. Synopsys, Inc. shares still down more than 11% year to date Although the new cooperation has pushed Synopsys, Inc.'s stock price higher, its overall performance this year remains relatively weak. As of now, Synopsys, Inc. shares have fallen more than 11% year to date, while Amazon.com, Inc. has risen more than 9%. By comparison, the Nasdaq 100 ETF (QQQ.US), which holds shares of both Synopsys, Inc. and Amazon.com, Inc., has risen more than 21% year to date. Data from the Stocktwits platform shows that retail investor sentiment toward both Synopsys, Inc. and Amazon.com, Inc. shares remains "bearish." This cooperation shows that, at a time when cloud computing and generative AI are driving rapid growth in demand for custom chips, Amazon.com, Inc. is further strengthening its in-house capabilities from chip design to system optimization, while Synopsys, Inc. is also seeking to extend its business from traditional chip design IP and EDA software further into application-optimized design and AI-driven engineering processes.