Synopsys Signs $1B Amazon Deal to Shift to Royalty Payments

Amazon has contracted Synopsys to provide application-optimized intellectual property for its internal semiconductor portfolio, including its custom AI and server chips. Under the multi-year agreement, the e-commerce giant will integrate Synopsys's engineering software and silicon tools into its Graviton, Trainium and Nitro chip lines while serving as the lead customer for the vendor's specialized IP business.

The agreement, valued at more than $1 billion, transitions Synopsys to a license-plus-royalty revenue model that allows payments to scale alongside Amazon's production volumes. In a reciprocal arrangement, Synopsys will expand its use of Amazon Web Services infrastructure and further optimize its software for Amazon's proprietary hardware. The deal was disclosed during a Synopsys Investor Day.