More Carmakers Will Need In-House Chip Skills, Says Synopsys CEO

The need for carmakers and industrial system integrators to develop their own in-house chip design capabilities is growing, asserting that this is no longer a luxury but a necessity for remaining competitive, reports Nikkei Asia.

Sassine Ghazi, president and CEO of Synopsys, the world's leading provider of electronic design automation (EDA) software, told Nikkei Asia that the ability to customize chips is crucial for creating differentiated products.

"When you look at the next five to 10 years, certain markets are going to evolve, and in order for them to be competitive, they need to customize their silicon with their software," Ghazi stated, emphasizing that this trend will particularly accelerate in the automotive and industrial sectors as vehicles become increasingly connected and electrified.

Synopsys is already witnessing this shift, with some automotive companies proactively developing their own customized chips. Ghazi clarified that this isn't a matter of choice but a strategic necessity to stand out in the market.

This trend mirrors the strategies of tech giants like Amazon, Google, and Microsoft, which are prioritizing custom chip development for their e-commerce, search, and AI applications. Similarly, Tesla's focus on designing custom chip systems for its electric vehicles underscores the growing importance of this capability.

For Synopsys, this shift is already a significant revenue driver, with custom chip development already accounting for 45% of the company's revenue. Concurrently, the broader chip industry is seeing a shift toward a more customized approach, with more chip developers offering tailored solutions to specific customer needs.

Synopsys has experienced consistent revenue growth since 2009, with the recent AI chip boom propelling the company to a record $6.12 billion in fiscal 2024. The company anticipates another record-breaking year in fiscal 2025.

Ghazi described the current landscape as the dawn of the "pervasive intelligence" era, characterized by a rapid proliferation of chips across diverse applications. This trend, he noted, is driving investment in AI capabilities across various sectors, despite ongoing economic challenges.

Synopsys is capitalizing on these opportunities, with its adoption of AI expected to boost engineering productivity by 10% to 15% in 2025, with further improvements anticipated in 2026. The company is also expanding its presence in Asia, particularly in Japan, where it sees significant opportunities as the country seeks to revitalize its chip industry.

Ghazi highlighted the emergence of Rapidus, a government-backed chip startup, as a promising development. He also noted the potential of India to benefit from the global push for supply chain diversification. However, Ghazi emphasized that Taiwan and South Korea, with their established expertise in chip manufacturing technology, will continue to hold prominent positions in the global chip landscape.

Beyond design software, Synopsys is also a leading supplier of chip intellectual property, particularly in areas like interfaces, interconnectivity, and security features. The company is expanding its offerings to cater to the growing trend of developers building system-level solutions, similar to Nvidia's approach of not only selling chips but also building entire systems like the NV72 AI server and high-speed interconnect technologies. To further support this shift, Synopsys recently acquired Ansys, a company specializing in simulation and design software for system-level tasks.