Synopsys has signed a multiyear agreement with Amazon worth more than $1 billion to supply custom silicon intellectual property for Amazon's in-house chips, Investing.com reported Wednesday. The deal also marks a change in how Synopsys gets paid for IP, adding royalties tied to the number of chips its customers produce.

What Happened

Amazon Web Services is the lead customer for an expanded line of what Synopsys calls application-optimized IP blueprints. Synopsys has long sold standard interface blocks that chip designers drop into their products; the blueprints go further, covering designs tuned for specific cloud workloads. Amazon also gets access to Synopsys' electronic design automation (EDA), simulation and analysis software and its agentic AI design tools, and the companies plan to jointly develop AI capabilities for chip design and validation.

The agreement supports Amazon's custom chip lines, which a second Investing.com report listed as Nitro for cloud security, Graviton general-purpose processors and Trainium AI accelerators. The companies did not say which specific chips will use the new blueprints.

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In return, Synopsys will use Amazon EC2 computing and AWS storage to develop its IP and EDA tools, and will build AI applications and agents on Amazon Bedrock. The two companies have worked together for more than 15 years.

Sassine Ghazi, Synopsys' president and chief executive, said the company was proud to have Amazon as the lead customer as it expands into application-optimized IP. Peter DeSantis, an Amazon senior vice president, said purpose-built chips perform better at lower cost because they are designed for exactly what customers need.

Why It Matters

The pricing change is the bigger shift for Synopsys. Under a license-plus-royalty model, the company collects not only up-front fees for its designs but also payments that grow with customer production. Applied to a hyperscaler that deploys its own processors across a global fleet, that ties part of Synopsys' revenue to the volume of AWS silicon rather than to design work alone.

The size of the deal is significant against Synopsys' existing business. Its silicon IP unit generated $1.75 billion in revenue in the most recent fiscal year, according to Investing.com, so a single agreement worth more than $1 billion over several years is large relative to that base.

Investors responded. Synopsys shares rose more than 3% Wednesday, and Amazon gained about 1%, Investing.com reported.

Context

Amazon has designed its own chips since it acquired Israeli chip designer Annapurna Labs in 2015, and its Nitro, Graviton and Trainium lines are now central to how AWS prices and differentiates its services. Other large cloud providers have followed with in-house accelerators and CPUs, which has made them major direct customers for EDA vendors and IP suppliers. Synopsys and its rival Cadence have both been adding AI agents to their design tools as chipmakers look for ways to shorten design cycles.

What to Watch

Synopsys did not detail how the agreement will affect its financial guidance or how quickly royalty income will build. Other questions are whether more hyperscalers sign similar license-plus-royalty deals for workload-specific IP, and which future Graviton and Trainium generations end up carrying Synopsys blueprints.