Synopsys (SNPS) received a shoutout from CEO Jensen Huang at Nvidia's (NVDA) GTC event: the company was highlighted for its Nvidia partnership, which will accelerate chip design leveraging AI. Synopsys CFO Shelagh Glaser joins Yahoo Finance Live to discuss the future prospects of this collaboration

Glaser explains that Synopsys is responsible for developing the software that semiconductor engineers use to create AI chips. She states that the significance of Nvidia's announcement demonstrates to compute companies that "you really simply can't build a leading-edge chip without us."

The CFO clarified that the Nvidia partnership aims to create "accelerated compute" for designing and manufacturing chips, "the most intensive workload in the industry." However, she notes that their software is not exclusive to Nvidia, utilized by all companies within the industry and extending beyond semiconductors.

Glaser adds that the AI boom will continue to be a growth driver for Synopsys: "People need more of our tools, more of our software."

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Editor's note: This article was written by Angel Smith

Video Transcript

JULIE HYMAN: Well, it's been a big week in the chip space as NVIDIA held its GTC event this week and CEO Jensen Huang giving a shout out to Synopsys. It's the chip design company which also made its own series of announcements at the event and at its own event. And it's working with NVIDIA to substantially accelerate chip design and automotive prototyping using AI. On top of that, synopsis adjusted its full year guidance as it decided to sell its software integrity group business.

Joining us now is the CFO of synopsis Shelagh Glaser. Shelagh, thanks so much for being here. Appreciate it.

SHELAGH GLASER: Hi, Julie. Great to be with you.

JULIE HYMAN: So in terms of how synopsis fits into this bigger ecosystem, you all are helping build the chips or provide the software infrastructure to further design the chips that start with NVIDIA, is that the best way to think of it? And what is the significance of the announcements this week?

SHELAGH GLASER: And that's exactly the way to think about it. So we build the software that semiconductor engineers use to actually make these incredible chips that we saw launch this week. And the significance of the announcement we were really pleased to be front and center in NVIDIA's GTC. The significance of this announcement is with the continued move of high performance compute.

You really simply can't build a leading edge chip without us. And so we're excited to partner with NVIDIA to solve these really complex problems facing the industry. And we're looking forward to continued growth, which as you said we also updated our guidance based on the strength we're seeing in the industry.

JOSH LIPTON: Shelagh, I'm interested, this work that you're doing with NVIDIA is it exclusive to NVIDIA. I mean, are you locked in there or can you do-- can you work with AMD and Intel as well?

SHELAGH GLASER: Well, the work that we talked about with NVIDIA, we're working with them to use accelerated compute in designing chips. And we're working with them to use accelerated compute in actually manufacturing chips which is the most intensive workload in the industry. But our software tools can be used by anybody in the industry. And we support all the leading semiconductor companies. We support hyperscaler companies. And also we support automotive companies.

So we have a very open platform and we have the ability to support on any given foundry that anybody wants to build a chip on.

JULIE HYMAN: Obviously Shelagh, the numbers that NVIDIA has been regularly putting up have gotten the market's attention in terms of the size of the potential AI opportunity there. Now when we've caught up with sasseen recently, Susan Gatza, your CEO, he's talked about the opportunity here. But it does seem to be a smaller magnitude. Can you help us understand, especially since you're the numbers person, how we should think about the opportunity for Synopsys going forward around AI?

SHELAGH GLASER: Absolutely. So AI is fueling not only chip design. So more AI chips are being built, which means that people need more of our tools and more of our software. And then also we're infusing AI into all of our tools. So think about our tools creating even more productivity for the engineers that buy our tools. And what we talked about yesterday is we view our TAM long term, a double digit TAM of about 12%. And we believe over the long term AI is going to add about 2% additional TAM to that. So growing our TAM from 12% to 14%