April 2, 2026 -
Synopsys’ SNPS Design IP business remained soft in the first quarter of fiscal 2026. Revenues from the segment were $407 million, down 6% year over year and flat sequentially. Synopsys expects fiscal 2026 to be a transition year for the IP business and expects performance to improve sequentially as the year moves forward.
Here, AI-related design activity is expected to support the recovery in SNPS' IP business. In the first quarter of fiscal 2026, Synopsys noted that design starts in AI remained strong, which should help the company engage customers early and sell a broader IP portfolio. The management noted that industry standards are changing faster than before, with customers needing more bandwidth and lower power. This is creating demand for products such as PCIe, 224G SerDes, HBM, LPDDR and UCIe.
The company pointed to a few signs of demand strength in the first quarter. Synopsys recorded more than 40 PCIe design wins with HPC and automotive customers. It also achieved an industry-first demonstration of PCIe 8.0 and now has 10 lifetime wins for its 224G SerDes platform on advanced nodes and leading foundries. This supports the company's view that the long-term opportunity in the IP business remains intact.
Management said some of the expected improvement in the IP business is likely to come later in fiscal 2026, with part of it weighted toward the fourth quarter of fiscal 2026. Synopsys' IP business could show some recovery later in fiscal 2026 on the back of execution improvement and strong design wins. The Zacks Consensus Estimate for Synopsys’ fiscal 2026 and 2027 revenues indicates year-over-year growth of 36.4% and 10.3%, respectively.