Synopsys offices in Mountain View, California.
(Bloomberg) — Shares of chip-design software maker Synopsys Inc. suffered their worst single-day decline on record after the company warned that US export restrictions are contributing to a slowdown in China, the largest market for semiconductors.
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As part of the company’s quarterly report on Tuesday, Chief Executive Officer Sassine Ghazi said that a push to develop its own intellectual property isn’t achieving the desired results — partly because of the China challenges. Ghazi said he would be refocusing resources on other areas and is reducing the company’s headcount by about 10%.
“Our results were primarily impacted by underperformance in the IP business as we had the expectation of deals that did not materialize, driven largely by the following three factors: one, new export restrictions disrupted design starts in China, compounding China weakness; two, challenges at a major foundry customer are also having a sizable impact on the year,” Ghazi said on a call with analysts. “And finally, we made certain road map and resource decisions that did not yield their intended results.”
The shares fell 36% in New York on Wednesday, their biggest intraday swoon since an initial public offering in 1992. They had been up 25% this year through Tuesday’s close.
Synopsys and rival Cadence Design Systems Inc. are the two largest providers of software and services used to design electronic components. This year, they’ve been the subject of on-and-off actions by the US government to rein in Chinese access to advanced semiconductors, something successive administrations have said represents a threat to national security.
Synopsys predicted revenue of as much as $2.26 billion for the three months ending Oct. 31. Profit in that period will be $2.76 to $2.80 a share, minus certain items, the company said. That’s well short of the more than $4 a share analysts had been estimating.
(Updates trading starting in first paragraph.)
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