Synopsys Q2 Revenue Forecast Misses Expectations Amid China Export Curbs and AI Shift

Synopsys shares dropped more than 5% in extended trading after the chip design software leader issued a second-quarter revenue forecast that fell short of Wall Street expectations. The weaker outlook highlights ongoing challenges tied to China export restrictions, shifting semiconductor demand, and broader economic uncertainty.

For the second quarter, Synopsys projected revenue between $2.23 billion and $2.28 billion, compared with analysts’ consensus estimate of $2.24 billion, according to LSEG data. The company expects adjusted earnings per share of $3.11 to $3.17, slightly ahead of the $3.09 forecast.

Despite the cautious guidance, first-quarter results exceeded expectations. Synopsys reported revenue of $2.41 billion, topping the $2.39 billion estimate, while adjusted profit reached $3.77 per share, well above the $3.56 consensus.

The company continues to face headwinds in China, where export restrictions have limited customers’ ability to launch new chip design projects. “Excluding Ansys, China revenue declined slightly year-over-year, consistent with our outlook,” CFO Shelagh Glaser said during the earnings call. Ansys, the engineering simulation software firm Synopsys acquired for $35 billion in July 2025, contributed approximately $886 million to first-quarter revenue.

Additionally, the global shift toward AI chips has reduced capacity for consumer electronics such as smartphones and PCs. This trend has pressured Synopsys’ intellectual property (IP) segment, which licenses pre-designed circuit blocks. Revenue from the IP business declined more than 6% year over year to $407 million in the first quarter.

Synopsys is also managing significant debt from the Ansys acquisition while executing a restructuring plan announced in November to cut roughly 10% of its workforce. The company aims to streamline operations and redirect investment toward high-growth opportunities in AI and advanced semiconductor design.