Synopsys faces high AGI disruption risk because its core EDA business is tooling for knowledge workers (chip designers) who could be directly replaced by AGI — though near-term AI-augmented chip design is a significant tailwind.
Synopsys is the world's largest electronic design automation (EDA) company, providing software tools that chip designers use to design, simulate, verify, and test integrated circuits before they are manufactured. The company also provides semiconductor intellectual property (IP) cores that can be licensed and embedded into chip designs, as well as application security testing software. Synopsys tools are essential to the semiconductor design workflow and are used by virtually every major chip company in the world.
Synopsys's primary customers are semiconductor companies and chip design teams at companies including Intel, AMD, NVIDIA, Qualcomm, Apple, Samsung, Broadcom, MediaTek, and virtually every other IC design firm. Also serves system companies designing their own chips (Google, Amazon, Microsoft, Meta). Application security customers include enterprise software development teams.
Synopsys provides Electronic Design Automation (EDA) software used by engineers to design semiconductors. EDA is quintessential knowledge-worker tooling — it helps human chip designers do their jobs. AGI could potentially design chips directly, bypassing EDA tools entirely. If an AGI can go from a specification to a verified chip layout without human intervention, the entire EDA workflow — and Synopsys's $6B+ revenue base — becomes unnecessary overhead. Synopsys's customers are semiconductor companies employing large teams of chip design engineers. If AGI automates chip design, these companies would need far fewer engineers, reducing seat-based EDA license demand. However, the chip companies themselves would still exist — they sell physical products. The risk is to the engineering headcount, not the chip companies.