The European Union is expected to greenlight Synopsys Inc.’s blockbuster $35 billion acquisition of Ansys Inc., a fellow provider of software for chip engineers. 

Reuters reported the development on Monday, citing sources familiar with the matter.

Synopsys is one of the world’s largest providers of electronic design automation, or EDA, applications. Those are the programs that chip engineers use to develop new semiconductors. The company’s EDA software makes it possible to create processor blueprints, test them for reliability issues and perform related tasks.

Synopsys’ other major revenue driver is a portfolio of repackaged chip designs. Those blueprints make it easier for engineers to implement components such a processor’s onboard memory, which speeds up chip projects. Across its product portfolio, Synopsys generated $1.63 billion in revenue last quarter. 

Ansys likewise makes EDA tools for developing chips. However, the software accounts for less than half its sales. The company makes most of its revenue from selling applications that ease the development of systems such as cars, medical devices and industrial equipment.

The acquisition is poised to significantly boost Synopsys’ share of the engineering software market. When it first announced the deal in January, the company stated that Ansys will expand its total addressable market by 50% to $28 billion. EU regulators began looking into the transaction’s potential impact on rivals shortly thereafter.

The European Commission, the bloc’s executive arm, is expected to grant the deal a conditional approval. This means that Synopsys must take certain steps before officials sign off on the transaction. According to Reuters, those steps will include the spin-out of the company’s Optical Solutions Group and Ansys’ PowerArtist product.

The Optical Solutions Group develops software tools for designing products such as camera lens and fiber-optic cables. The software was used to develop one of the sensors aboard the Perseverance Mars rover. In addition to product blueprints, Synopsys’ optical applications ease related tasks such as testing a new product design in simulations to find flaws.

The company will offload its Optical Solutions Group to Keysight Technologies Inc., a publicly-traded maker of microscopes and related hardware. It also has a business unit that makes EDA tools for designing chips. Engineers use the software to develop wireless networking devices such as antennas. 

To secure EU regulators’ approval, Synopsys has reportedly also proposed selling Ansys’ PowerArtist product. This is an application that chipmakers such as Advanced Micro Devices Inc. use to optimize their processors’ power usage. 

A chip design project unfolds across multiple levels of abstraction. Engineers have to define physical properties such as the width of transistor gates. There are also higher-level details such as the number of circuits that the processor should include, their type and the way data should travel between them. Those high-level details are defined in a blueprint known as an RTL, or register-transfer-level, design.

PowerArtist, the Ansys product that Synopsys will reportedly offload, helps chipmakers scan a new processor’s RTL design for power-efficiency issues. For example, the software can put out if a certain section of a chip uses more electricity than it should. PowerArtist’s interface resembles that of a code editor because RTL chip blueprints are not drawn, but rather written in a specialized programming syntax.

Synopsys’ push to secure regulatory approval in the EU could also help it win over the UK’s antitrust watchdog. 

The Competition and Markets Authority, or CMA, started looking into the Ansys deal in August. Earlier this month, it determined that the acquisition could reduce competition in the market for software tools that ease the development of optical components. Synopsys reportedly hopes to address the CMA’s concerns with the same remedies it proposed to EU officials.

The European Commission is expected to complete its preliminary review of the deal on Jan. 10. 

Image: Synopsys