The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Jackson Edmund Ader - JPMorgan Chase & Co, Research Division - Analyst
: Great. Aart, first one is for you. You talked about the chip differentiation by vertical as a nice tailwind for the company. I'm just curious, how do we
scale the benefits of those -- I'm sorry, not scale -- square the benefits of those differentiations with the fact that there's -- there tends to be more
increased IP usage from some of these newer entrants? And so I'm just curious, with differentiation seeming to lead to more custom design, what
does that mean for those IP blocks that get designed once and used by many?
Aart J. de Geus - Synopsys, Inc. - Co-Founder, Chairman & Co-CEO
Okay. Well, there's 2 ways to look at this, from the perspective of the vertical or from the perspective of the pure semiconductor companies. From
the vertical, the first thing that people need to choose is, will they design their own chips, yes or no.
And if you take the example of the hyperscalers, some, not all, but some of the automotive companies, the hyperscalers clearly are doing more
and more of their own chip design. And automotive are either sort of dabbling in it or looking at some of their suppliers, the Tier 1s. In all cases,
they are doing more chip design. And so that is good news for us. And absolutely, you're right that a lot of that design is done by substantial IP
reuse, and you saw that our IP business is strong.
Now if you sit on the other side of the fence as a semiconductor provider, you look at these customers are -- each of them as opportunities to take
sort of a core architecture and then say, "Well, how do I take my architecture and do different derivatives that are particularly good for different
submarkets and essentially reuse some IP or add some that are just -- that is just necessary for that vertical?" And so I think there's no doubt that,
therefore, we will see more chips of different type and more design. In all cases, consumption of IP will continue to grow.
Question: Gal Munda - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst
: The first one is just when I look at your performance in H1 actually in total, like you said, it's really the opposite of what we had last year when it
was very, very back-end loaded. So nice recovery there. But then also looking at the Q3 guide, which is very solid, I'm thinking when you look at
for the rest of the year and you have a pretty good visibility now, especially into Q3, is it fair to say that if -- especially some of the hardware orders,
some other stuff comes in, you could consider the guidance as fairly conservative still at this stage? Or do you think that's kind of a fair representation
of what you're seeing?
Question: Gal Munda - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst
: Right. Yes, that makes sense. And yes, that's what I was thinking. And then the second one, you talked again about double-digit growth for this
year now implied in the new guidance. Last year, we were virtually at that level as well.
How do we think about Synopsys as an effectively sustainable double-digit growth company now, especially if I'm thinking potentially Software
Integrity ramping up growth a little bit and starts contributing incremental -- maybe a few bps of growth? Like is that a profile that you're happy
with when you're kind of thinking about the midterm planning?
Question: Gal Munda - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst
: Right. No, that's why I was thinking, right? It's 10%. So it's growing 5 to 10 points faster. Obviously, that's a nice contribution. Congrats again.
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