Conditional Approval of Synopsys-Ansys Merger(2025.3.20)

– Concerns over price hikes in semiconductor chip, optical, and photonics design software markets –

– Partial divestiture of assets by Synopsys and Ansys –

– First case reflecting the companies’ self-submitted remedies –

 

The Korea Fair Trade Commission (KFTC, Chairman Han Ki-Jeong) has conditionally approved the merger in which Synopsys Inc. (hereinafter “Synopsys”) will acquire all shares of Ansys Inc. (hereinafter “Ansys”) for approximately USD 35 billion (around KRW 50 trillion), on the condition that the two companies divest certain assets.

 

This merger involves two U.S.-based software companies—Synopsys and Ansys—both of which supply software used by South Korean companies like Samsung Electronics and SK Hynix for designing semiconductor chips and various light-based products. Therefore, the merger has significant implications for the domestic market. In particular, Synopsys also supplies intellectual property (IP), which are standardized components used in semiconductor chip designs, to Samsung Electronics and SK Hynix.

 

In its review process, the KFTC collected opinions from various stakeholders at home and abroad, sought expert technical advice, and closely cooperated with international competition authorities from the EU, UK, and U.S., given the cross-border nature of the merger.

 

The KFTC focused its assessment on the risk of reduced competition in three specific software markets used in semiconductor design:

1. Register-transfer level (RTL) power analysis software
2. Optical design software
3. Photonics design software

All three are “horizontal mergers,” meaning Synopsys and Ansys have overlapping businesses in these markets.

The KFTC found a high risk that Synopsys and Ansys could exploit their dominant market position post-merger to unilaterally raise prices or impose unfavorable terms on customers in the RTL power analysis, optical, and photonics software markets.

 

The Commission particularly noted that the combined market share of Synopsys and Ansys would exceed a majority in these markets, granting them significant dominance.

 

Additional concerns included:

• The elimination of direct competition between Synopsys and Ansys
• A reduced set of options for domestic and international customers, increasing their dependency on Synopsys and Ansys
• The high technological barriers in these markets that make entry by new competitors difficult

The KFTC also considered the possibility of foreclosure strategies in vertically or conglomerate-related markets but concluded that Synopsys and Ansys lacked both the ability and incentive to implement such strategies, and that these would not substantially lessen competition even if attempted.

 

To address the anti-competitive concerns in the three key markets, the KFTC imposed the condition that either Synopsys or Ansys divest all relevant assets:

• In the RTL power analysis software market: Ansys and its affiliates must divest all relevant assets.
• In the optical and photonics software markets: Synopsys and its affiliates must divest all relevant assets.

This remedy is significant because it safeguards competition in critical software markets essential for designing semiconductor chips, optical, and photonics products. It helps protect domestic players like Samsung and SK Hynix—who face intense international competition amid the rise of AI chips and global supply chain restructuring—from potential harm.

 

Notably, this is the first case in which the KFTC utilized the “remedy proposal system” introduced under the Fair Trade Act in August 2023.

 

This system allows merging parties to voluntarily submit proposed remedies to resolve competition concerns. The KFTC then considers these proposals when deciding on corrective measures.

 

In this case, Synopsys and Ansys submitted a self-remedy plan that included asset divestitures. After receiving feedback from competitors and customers, the KFTC made the following adjustments to the final plan:

1. Included assets held by the companies’ affiliates in the divestiture requirements
2. Added interoperability agreements with competitors to the list of divested assets

This case is meaningful because it demonstrates how the KFTC can design effective, market-acceptable remedies by leveraging the insights of merging firms, competitors, and customers.

 

The KFTC plans to continue closely monitoring international mergers with potential impacts on domestic players—especially in the semiconductor chip sector—and will work to promote wider use of the new remedy proposal system.