Amazon, Synopsys agree chip design licensing deal worth more than $1 billion
Key Facts
Synopsys announced a multiyear agreement with Amazon worth more than $1 billion on September 30, 2026, to license intellectual property used in chip design, according to a company statement. The agreement makes Amazon the lead customer for Synopsys' expansion into application-optimized silicon, giving that expansion a partner that uses its designs in its custom chip business. The agreement is tied to a shift in Synopsys' intellectual property business toward a model combining licensing fees and royalties as production volumes grow. Under this model, design licensing revenue is paired with production-linked royalties within the companies' longstanding commercial relationship. The announced cooperation also includes AI-powered engineering and cloud services, alongside chip design licensing.
The agreement comes against the backdrop of Synopsys' existing business licensing chip component designs, which generated revenue of $1.75 billion in the latest fiscal year cited by Reuters at the time of the announcement. The company competes with Arm in this business, within the market for licensing designs used to build chips. According to Reuters, Synopsys has expanded from licensing common components to offering more complex designs. This expansion includes computing cores, broadening the range of designs the company provides to customers compared with the common chip components it previously licensed. As for its relationship with Amazon, the new agreement builds on more than 15 years of cooperation between the companies, according to Synopsys' statement, adding application-optimized silicon licensing to a longstanding partnership.
Amazon's Peter DeSantis linked the development of purpose-built chips to their suitability for customers' needs. He said in Synopsys' statement that "purpose-built chips deliver better performance at a lower cost because they are designed to meet customers' needs precisely." His explanation focuses on the connection between customizing a chip's design and improving its performance and the economics of its use for the customer. On the engineering and design side, the agreement expands Amazon's use of Synopsys' agentic AI technologies, according to the same statement. That brings AI tools within the scope of engineering cooperation between the companies, alongside licensing intellectual property for chip design.
In the market, Reuters reported on October 1 that Synopsys shares jumped 10% during trading following a series of financial and commercial developments. Those developments included a company financial outlook that exceeded analysts' estimates, alongside the announcement of agreements with OpenAI and Amazon Web Services. The Amazon agreement was among the news accompanying the share price rise, together with the financial outlook and the other agreement reported by the news agency. The comparison with analysts' estimates concerned the company's financial outlook, while the agreements added commercial developments to the session's news. The move Reuters recorded in the October 1 session thus followed the announcement of the chip design licensing agreement on September 30.
In implementing the cooperation, the companies will work to accelerate multiphysics simulation solutions on Trainium and Graviton chips, according to Synopsys' statement. This effort includes running simulation solutions on Amazon technologies as part of the engineering side of the announced partnership. In turn, Synopsys will use computing and storage services provided by Amazon Web Services, according to Reuters. It will also use Amazon Bedrock to build and deploy AI applications, adding application development to its use of computing and storage resources. The forthcoming cooperation thus spans accelerating simulation on Amazon chips and using its cloud infrastructure for Synopsys' AI applications.