![]() ![]() Synopsys also offers products that improve software developers’ code, ensuring that there are no code defects and verifying that the code is secure. Synopsys’s massive IP portfolio and over 15 years of investments give them a firm grip on this market. It is the 2nd largest global player in this $4.5 billion market, according to IBS’s 2018 data. Its IP products provide customers with ready to use chip designs that are proven, saving customers time. Analysts are expecting these margins to expand as the company enjoys economies of scale. This high margin business is going to continue to drive robust profitability. Its duopoly with Cadence (CDNS) (controlling 85% of the EDA industry) and high barriers to entry gives the firm, strong pricing power. The EDA market was worth almost $7 billion in 2018 and is expected to grow by nearly 8% annually for the next 5 years, according to IBS data. Its EDA software serves hardware designers every step of the way from initial design to verification for quick and efficient turn arounds. Synopsys’s core competency is its EDA tools (making up 60% of revenues) that help design chips as well as the systems that create these chips. ![]() Synopsys is at the foundation of new technology and will ride this wave. 5G infrastructure is just being put in place, and the world’s largest tech companies are preparing their turnkey solutions for the massive demand this improved infrastructure will spur. 5G is going to drive the next tech surge as it will exponentially improve the speed and ability to connect. The demand for the newest and fastest technology is always there, and we are on the brink of the next tidal wave of tech. Today, integrated circuits or computer chips can hold billions of transistors on a chip the size of your fingernail. The law hypothesizes that every two years the number of transistors on a microchip doubles and the cost halves. The world of electronics is proliferating with Moore’s Law, which was established 50 years ago by the co-founder of Intel (Gordon Moore), still holding today. Synopsys has been able to able to consistently beat expectations and progressively risen guidance, driving analysts’ estimates up and SNPS into a Zacks Rank #1 (Strong Buy). This company is the market leader in electronic design automation (EDA) tools, which is the foundation of all electronics in the world today. Synopsys (SNPS) is the backbone of innovation for global electronics and is a safe way to invest in the semiconductor and electronics space with less cyclicality then the underlying market. ![]()
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