Intel (INTC 0.30%) stock has increased by 83% over the past three months. This is positive for semiconductor investors and could also help one of Intel's key partners, Synopsys (SNPS +1.33%). Intel is not just a Synopsys customer; the main weakness in Synopsys' business may have been tied to issues at Intel, which now appear to be improving as new investments and partnerships emerge. Here's what's happening.
Why Intel stock soared
Intel's business challenges are readily apparent. The table below breaks down operating income by segment. Intel Products, which encompasses the Client Computing Group (CCG) and Data Center and AI (DCAI), is performing well; however, the Intel Foundry segment is experiencing difficulties.
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Key Data Points
The foundry business is central to Intel's growth plans. Instead of only designing and manufacturing its own chips, Intel is now offering its manufacturing services to outside customers, much like Taiwan Semiconductor Manufacturing operates its foundry model.
The business has faced significant challenges, leading Intel CEO Lip-Bu Tan to tell investors that Intel will be more careful moving forward. He said that the company "will grow our capacity based solely on the volume commitments and deploy capex [capital expenditures in] lockstep with the tangible milestones and not before."
Intel also has stopped manufacturing projects in Poland and Germany, slowed construction in Ohio, and moved its Costa Rica operations to facilities in Vietnam and Malaysia.
|
Intel |
Revenue |
Operating Income for First 9 Months of 2025 |
|---|---|---|
|
Client Computing Group (CCG)* |
$24,305 million |
$8,400 million |
|
Data Center and AI (DCAI)* |
$12,182 million |
$1,040 million |
|
Intel Foundry |
$13,319 million |
$(11,042) million |
|
Other |
$2,989 million |
$(211) million |
Intel's connection with Synopsys
While not named directly, Intel is probably the foundry customer Synopsys CEO Sassine Ghazi mentioned during a September call with analysts when discussing the weak results in the Design Intellectual Property (IP) business.
According to Ghazi, the IP business underperformed due to a combination of three factors: (1) the lingering impact of previous export restrictions on its products to China, (2) "challenges at a major foundry customer," and (3) "certain road map and resource decisions that did not yield their intended results."
The third issue is partly tied to the foundry customer that I think is Intel, as Synopsys invested in technology expecting revenue that will now not be realized in the second half of 2025.
This wasn't very pleasant for stakeholders, and Synopsys' stock is still down over 18% this year, despite the company completing its transformative acquisition of engineering simulation software firm Ansys in July.
Image source: Getty Images.
Why Intel bounced back and Synopsys can, too
Since the summer, many developments have been positive for Intel's foundry business.
- In August, SoftBank agreed to invest $2 billion in Intel, after reportedly considering buying the foundry business outright.
- In August, the U.S. government agreed to invest $8.9 billion in Intel to boost domestic semiconductor production under the CHIPS Act.
- In September, Nvidia agreed to invest $5 billion in Intel and announced a collaboration to "jointly develop multiple generations of custom data center and PC products," according to the press release.
- In October, Intel announced the entry into volume production of its Panther Lake processor later this year.
These updates have strengthened Intel's foundry business, and the market has responded quickly. This is likely good news for Synopsys, too, since it has been a strategic partner of Intel's foundry services for a long time. Synopsys not only sells its main electronic design automation (EDA) tools for chip design, but its Design IP segment also offers IP blocks that work well with customers' designs, including Intel's.
So, whether or not Intel is the customer Ghazi mentioned, better prospects for Intel's foundry business are very likely to help Synopsys as well.
Image source: Getty Images.
What's next for Synopsys
Since the design IP business was the main challenge for Synopsys, and the early integration of Ansys into its Design Automation business seems to be going well, Synopsys' management could have a more positive outlook for its Design IP segment when it reports fourth-quarter earnings on Dec. 10. It's something to watch for.
