Feb 25 (Reuters) – Synopsys’ second-quarter revenue forecast fell short of investor expectations on Wednesday, as the chip design software maker navigates export restrictions in China and broader economic uncertainty.

Shares fell more than 5% in extended trading.

The company has faced a slowdown in China as export restrictions have prevented customers from starting new chip design projects, alongside weaker-than-expected demand from a major foundry customer.

Analysts have also flagged that the capacity shift toward AI chips is squeezing production of consumer devices such as smartphones and PCs, hurting the company’s IP segment, which licenses pre-made circuit designs.

Revenue from that segment fell more than 6% to $407 million in the first quarter from $435.1 million a year earlier.

“Excluding Ansys, China revenue declined slightly year‑over‑year, consistent with our outlook,” CFO Shelagh Glaser said on the earnings call. Ansys contributed approximately $886 million to first-quarter revenue.

For the second quarter, the company forecast revenue of $2.23 billion to $2.28 billion, compared with analysts’ consensus estimate of $2.24 billion, according to data compiled by LSEG. 

It projected adjusted earnings of $3.11 to $3.17 per share, against estimates of $3.09.

First-quarter revenue came in at $2.41 billion, beating estimates of $2.39 billion. Adjusted profit was $3.77 per share, topping the $3.56 consensus.

The company is also managing a heavy debt load taken on to fund its $35 billion acquisition of engineering simulation software firm Ansys, which closed in July 2025. 

In November, Synopsys initiated a restructuring plan to cut about 10% of its workforce and redirect investment toward other opportunities.

(Reporting by Anhata Rooprai in Bengaluru; Editing by Tasim Zahid)