Synopsys forecasts muted quarter on China export restrictions, shares fall

SelfRugger · 2026-03-29T02:54:35+00:00

Synopsys reported a weaker-than-expected revenue forecast for the second quarter due to export restrictions in China and economic uncertainty, causing shares to drop over 5%. Despite a first-quarter revenue beat, concerns over declining demand and heavy debt persist.

SelfRugger

2026-03-29 02:54:35

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Synopsys forecasts muted quarter on China export restrictions, shares fall

Illustration shows Synopsys logo · Reuters

Reuters

Thu, February 26, 2026 at 8:39 AM GMT+9 1 min read

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Feb 25 (Reuters) - Synopsys’ second-quarter revenue forecast fell short of investor expectations on Wednesday, as the chip design ‌software maker navigates export restrictions in China and broader ‌economic uncertainty.

Shares fell more than 5% in extended trading.

The company has faced a slowdown in China as export restrictions have prevented customers from starting new chip design projects, alongside weaker-than-expected demand from a major foundry customer.

Analysts have also flagged that the capacity shift toward ‌AI chips is squeezing ⁠production of consumer devices such as smartphones and PCs, hurting the company’s IP segment, which licenses ⁠pre-made circuit designs.

Revenue from that segment fell more than 6% to $407 million in the first quarter from $435.1 million a year earlier.

“Excluding Ansys, China revenue declined slightly year‑over‑year, consistent with our outlook,” CFO Shelagh ‌Glaser said on the earnings call. Ansys contributed approximately $886 million to first-quarter revenue.

For the second quarter, the company forecast revenue of $2.23 billion to $2.28 billion, compared with analysts’ consensus estimate of $2.24 billion, according to data compiled by LSEG.

It projected adjusted earnings of $3.11 ‌to $3.17 per share, against estimates of $3.09.

First-quarter revenue came in at $2.41 billion, beating estimates of $2.39 billion. Adjusted profit was $3.77 per share, topping the $3.56 consensus.

The company ‌is also managing a heavy debt load taken on to fund its $35 billion acquisition of engineering simulation software firm Ansys, which closed in July 2025.

In November, Synopsys initiated a restructuring ‌plan to cut about 10% of its workforce and redirect investment toward other opportunities.

(Reporting by Anhata Rooprai in Bengaluru; Editing by Tasim Zahid)

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