Chinese Antitrust Regulator Approves M&A Between U.S. Semiconductor Companies

Two Rounds of U.S.-China Trade Talks Mark a Turning Point
Chinese Authorities Shift Review Stance
Synopsys-Ansys Merger Approved

The Chinese antitrust regulator, equivalent to the Fair Trade Commission, has approved a merger and acquisition (M&A) deal between two U.S. semiconductor design software companies. It is observed that the Chinese authorities' review stance has shifted dramatically, by 180 degrees, as the previously deteriorating U.S.-China relations changed course following two rounds of trade negotiations.

According to foreign media outlets such as the Financial Times (FT) and the South China Morning Post (SCMP), on July 14, the State Administration for Market Regulation of China announced its approval of the acquisition of Ansys by U.S. semiconductor design software giant Synopsys for $35 billion. The Administration is responsible for domestic market oversight, consumer protection, and antitrust regulation, and is the Chinese counterpart to Korea's Fair Trade Commission.

Headquartered in Silicon Valley, Synopsys is a semiconductor electronic design automation (EDA) software company that provides software tools and intellectual property (IP) to help semiconductor companies such as Nvidia and Intel design and test chips.

The Administration imposed conditions that neither Synopsys nor Ansys may terminate existing contracts or refuse requests from Chinese customers to renew contracts. The SCMP pointed out that this underscores the importance of EDA technology in the Chinese semiconductor market.

Originally, Synopsys announced its plan to acquire Ansys in January of last year and intended to complete the deal by the first half of this year, but the worsening relations between the two countries caused delays. In May of this year, when the United States strengthened semiconductor export restrictions targeting the world's three largest EDA companies?Synopsys, Cadence Design Systems, and Germany's Siemens EDA?China immediately blocked approval of the deal, according to FT. Furthermore, China responded with its own rare earth export restrictions.

As the United States issued warnings regarding semiconductor sanctions against China, concerns among companies also grew. According to a research note from global investment bank Morgan Stanley, the combined market share of Synopsys, Cadence, and Siemens in the Chinese market reached 82% in 2024.

The bleak market atmosphere began to shift after the conclusion of the second high-level U.S.-China trade negotiations, which took place in London, United Kingdom, from June 9 to 10. At this meeting, both sides agreed to faithfully implement the framework established during the first trade agreement reached in Geneva, Switzerland, on May 10. About three weeks later, in early July, the U.S. Department of Commerce notified Synopsys, Cadence, and Siemens of what was essentially a "sanctions relief measure."

Foreign media also commented that the Chinese government's rapidly changed stance indicates an easing of tensions following the June agreement between the two countries. The FT noted, "The influence of the U.S.-China trade negotiations is being felt across policy decisions, and the new trade agreement is now coming into full effect." The SCMP similarly reported, "This move is interpreted as an initial signal of the agreement's implementation."