Group 1 - Morgan Stanley reports that the State Administration for Market Regulation (SAMR) in China has conditionally approved Synopsys (SNPS.US) to acquire ANSYS (ANSS.US) for $35 billion, removing the last major regulatory hurdle for the deal [1][2] - The approval comes with several conditions, including the divestiture of Synopsys's optical and photonics simulation business and the separation of ANSYS's power analysis software business [1] - Both companies must maintain existing contracts with Chinese customers, including pricing and service levels, and cannot bundle products; EDA tools must support industry-standard formats and maintain interoperability agreements with Chinese customers [1][2] Group 2 - The deal had been under review due to US-China trade tensions and potential export controls on chip design software, making the approval a positive development for Synopsys [2] - Morgan Stanley views this approval as the final major obstacle before the deal's completion, which is expected to occur soon, with updates likely during the earnings call around August 20 [2] - Long-term, the merger is expected to strengthen Synopsys's position in the EDA market, and any clear signals regarding the approval could pave the way for a stock re-rating [2]

Core Insights - ANSYS, Inc. and Synopsys, Inc. are set to finalize their merger on or about July 17, 2025, after receiving regulatory approval in all jurisdictions except China, which has now been granted [1][3][10] - The merger, initially announced on January 16, 2024, is valued at $35 billion, with Ansys shareholders receiving $197 in cash and 0.3450 Synopsys shares per ANSS share [3][10] - The combined entity aims to create a comprehensive engineering platform that enhances AI-driven product innovation, addressing the complexities of modern smart, connected devices [4][5][10] Company Overview - ANSYS specializes in simulation and analysis solutions, serving industries such as aerospace, automotive, and healthcare [5] - Synopsys is recognized for its advancements in silicon design and intellectual property, contributing significantly to semiconductor and system design [5] Market Performance - Following the merger announcement, shares of ANSYS rose approximately 3%, with a year-over-year gain of 16.8%, outperforming the Zacks Computer – Software industry's growth of 15.7% [2]

Core Viewpoint - Trade Desk Inc (NASDAQ:TTD) shares increased by 11.4% to $84.06 following the announcement that it will replace Ansys (ANSS) on the S&P 500 Index due to Synopsys (SNPS) acquiring Ansys for $35 billion [1][2] Group 1 - TTD's stock is trading at five-month highs and is on track for its best daily percentage increase since May 12, despite being down 30% year-to-date due to a significant post-earnings decline in February [2] - The 160-day moving average is currently limiting gains for TTD [2] Group 2 - Options trading activity has surged, with 53,000 calls and 19,000 puts traded, which is eight times the average daily volume, indicating strong interest in the stock [3] - The most popular options are the July 85 and 90 calls, with new positions being opened [3] - TTD has historically outperformed analysts' volatility expectations, reflected in its Schaeffer's Volatility Scorecard (SVS) rating of 90 out of 100 [3]

Group 1 - The Trade Desk Inc. will replace ANSYS Inc. in the S&P 500 effective July 18, 2025 [1] - Synopsys Inc. is set to acquire ANSYS, with the deal expected to be completed on July 17, 2025 [1] - The Trade Desk will be added to the Communication Services sector, while ANSYS is currently in the Information Technology sector [1]

Chip design software provider Synopsys said it received conditional approval from Chinese regulators for its $35 billion purchase of Ansys, clearing the final regulatory hurdle for the deal. https://t.co/CUTSCAjurp ...

Core Viewpoint - Synopsys, Inc. has received all necessary approvals to proceed with the acquisition of ANSYS, Inc., with the transaction expected to close around July 17, 2025 [1][2]. Group 1: Acquisition Details - The acquisition involves a stock and cash transaction, announced on January 16, 2024, aimed at combining Synopsys' silicon design and IP solutions with ANSYS' simulation and analysis portfolio [2]. - This merger is anticipated to create a leader in engineering solutions, enhancing the ability for customers to innovate AI-powered products rapidly [2]. Group 2: Company Profiles - Synopsys, Inc. specializes in silicon to systems design solutions, including electronic design automation and system verification, partnering with semiconductor and systems customers to enhance R&D capabilities [3]. - ANSYS, Inc. has over 50 years of experience in simulation software, enabling innovators across various industries to utilize predictive simulation for advancements in technology, including sustainable transportation and advanced semiconductors [4].

Regulatory Approval - Market regulators approved Synopsys' acquisition of Ansys' equity with restrictive conditions [1] Export Restrictions - The US government has lifted export restrictions on chip design software to China for Siemens AG [1] - Siemens has restored full access to its software and technologies for Chinese customers [1] EDA Software Vendors - Cadence Design Systems and Synopsys have not yet responded to the lifting of export restrictions [1]

Core Viewpoint - The acquisition of Ansys by Synopsys, valued at $35 billion, has been approved by China's regulatory authority with additional restrictive conditions to mitigate market concentration risks in specific software sectors [1][2]. Group 1: Regulatory Approval and Conditions - China's State Administration for Market Regulation approved the acquisition but identified significant market concentration risks in optical software, photonic software, and RTL power analysis tools, with a combined market share of 65%-70% in China's optical software market [1]. - The HHI index for the combined entity is projected to rise from 2527.65 to 4802.49, exceeding international antitrust thresholds, prompting China to require divestitures of certain business units [1]. - Synopsys must divest its Optical Solutions Group to Keysight Technologies, while Ansys is required to divest its PowerArtist power analysis business [1]. Group 2: Market Impact and Strategic Goals - The merger aims to create a comprehensive "chip-to-system" solution, addressing the collaborative design needs for advanced processes like 3DIC and photonic chips, with an expected total addressable market (TAM) increase of 1.5 times to $28 billion [2]. - Cost synergies of $400 million are anticipated by the third year post-merger, with long-term benefits potentially exceeding $1 billion [2]. - The merger is seen as a strategic move to enhance technological advantages in AI chips and autonomous driving, while also allowing local Chinese companies to carve out space in the market amid international consolidation [2]. Group 3: Competitive Landscape - In response to the merger of international giants, Chinese EDA companies are accelerating their development, with Jiutongfang launching six RF EDA tools and plans for a complete toolchain replacement by 2025 [2]. - Chip and semiconductor companies are focusing on 3DIC packaging simulation to compete with Ansys's Totem product line [2]. - Continued investment from initiatives like the "Big Fund" Phase II is aimed at promoting local solutions among companies like Huawei and SMIC [2].

Core Viewpoint - The State Administration for Market Regulation has approved the acquisition of Ansys by Synopsys with additional restrictive conditions to prevent anti-competitive effects in the optical software, photonic software, and certain EDA software markets [1][2]. Summary by Sections Acquisition Approval - The acquisition is approved with conditions due to potential anti-competitive effects in global and domestic markets for optical software, photonic software, and parts of the EDA software market [1]. Divestitures Required - Synopsys must divest its entire optical and photonic device simulation business [1]. - Ansys must divest its power analysis software-related business, including R&D, distribution, licensing, and sales [2]. Compliance Obligations - Both companies must adhere to existing customer contracts, including pricing and service level agreements, and cannot terminate or refuse contract renewals for Chinese customers [2]. - There is a prohibition on bundling products from both companies and on discriminating against customers in terms of service levels, pricing, or functionality [2]. Support for Standards and Agreements - Continued support for industry-standard formats related to Ansys and Synopsys EDA products is required [2]. - Existing interoperability agreements must be maintained and renewed upon request from Chinese customers [3]. - Synopsys is required to sign interoperability agreements with third-party EDA vendors upon written request from Chinese customers [3].

Economic Growth - The Central Financial Committee emphasized the need to deepen the construction of a unified national market and regulate "involution" competition among enterprises[3] - President Xi Jinping highlighted the importance of guiding enterprises to improve product quality and promoting the orderly exit of backward production capacity[3] - The State Council issued a notice to enhance employment support policies, including expanding special loans and increasing unemployment insurance return ratios[3] Infrastructure and Industry Policies - The China Cement Association released guidelines to promote "anti-involution" and "stable growth" in the cement industry, with many industries issuing production reduction notices[4] - A collective production cut of 30% was announced by leading photovoltaic glass companies to alleviate "involution" competition[4] - Some steel mills have received notices for production reduction and emission limits[4] Consumer Policies - Shanghai optimized the environment for outbound tax refunds, and Taobao launched a 50 billion RMB subsidy for consumer vouchers to stimulate consumption[4][16] - The initiative by Taobao is expected to benefit more small and medium-sized businesses and stimulate greater consumption[16] Financial Regulation - Recent financial regulatory policies focus on optimizing capital market mechanisms and exploring the development of RMB stablecoins in Shanghai and Hong Kong[19] - The government aims to guide insurance companies towards long-term stable investments[19] Trade Policies - The U.S. has lifted certain trade restrictions on China, including the requirement for government licenses for major chip design software suppliers[5][22] - The U.S. plans to implement new tariffs ranging from 10% to 70% on countries without trade agreements starting August 1[6][25] Overseas Macro Policies - The U.S. Federal Reserve members largely expect another interest rate cut later this year, with the "Big Beautiful Act" extending tax cuts set to expire in 2025, potentially increasing the fiscal deficit by 3 to 4 trillion USD over the next decade[6][25] - The U.S. Treasury plans to increase its cash reserves significantly, from approximately 313 billion USD to 500 billion USD by the end of July[27]