Cadence Design to Acquire Hexagon’s Engineering Unit for $3.16 Billion

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Cadence Design Systems (CDNS.O) announced on Thursday that it will acquire the design and engineering (D&E) business of Sweden’s Hexagon AB (HEXAb.ST) for €2.7 billion ($3.16 billion). The U.S.-based chip design software leader will finance the deal with 70% cash and 30% in newly issued shares to Hexagon.

Cadence, whose clients include Nvidia and Qualcomm, is a global leader in electronic computer-aided design (ECAD) tools that underpin chip development and verification. By acquiring Hexagon’s D&E unit, which specializes in structural and multibody dynamics simulation, Cadence will expand into adjacent markets such as aerospace and automotive engineering.

Hexagon’s D&E division generated nearly €265 million in revenue in 2024 and employs over 1,100 people worldwide. Its customer roster includes industry heavyweights such as Volkswagen Group, BMW, and Lockheed Martin, providing Cadence with a stronger foothold in the automotive and aerospace sectors.

The deal builds on Cadence’s acquisition of BETA CAE Systems in 2024 for $1.24 billion, further strengthening its simulation and engineering software capabilities. The Hexagon transaction is expected to close in Q1 2026, subject to regulatory approval. Cadence has agreed to pay a reverse termination fee of up to €175 million if the deal falls through.

With this acquisition, Cadence is positioning itself as not only a key player in semiconductor design software but also as a broader engineering solutions provider, extending its reach beyond chips into high-performance industries reliant on advanced simulations.

OpenAI to Debut First AI Chip in 2026 With Broadcom Partnership

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OpenAI will launch its first in-house artificial intelligence chip in 2026 through a partnership with U.S. semiconductor leader Broadcom (AVGO.O), according to the Financial Times. The chip will be used internally to power OpenAI’s own AI systems rather than being sold to external customers, people familiar with the matter said.

The move reflects OpenAI’s push to diversify away from Nvidia, whose GPUs currently dominate AI computing, and to lower infrastructure costs amid surging demand for training and running large-scale AI models like ChatGPT. OpenAI has previously collaborated with Broadcom and Taiwan Semiconductor Manufacturing Co. (TSMC) on design and fabrication, while also supplementing with AMD and Nvidia chips.

Reuters earlier reported that OpenAI was finalizing the design of its first custom silicon, to be manufactured at TSMC, with a focus on reducing reliance on outside suppliers. By developing its own chip, OpenAI joins rivals Google, Amazon, and Meta, which have already rolled out proprietary processors to handle escalating AI workloads.

The timing of the news coincides with Broadcom CEO Hock Tan’s announcement on Thursday that the company had secured over $10 billion in AI infrastructure orders from a new unnamed customer, set to drive significant revenue growth in fiscal 2026. Industry watchers say OpenAI could be that customer, given its scale and need for dedicated compute.

If successful, the partnership would not only help OpenAI gain greater control over its AI infrastructure but also cement Broadcom’s position as a leading custom silicon provider in the generative AI era.

Broadcom Projects Strong AI Growth for Fiscal 2026 With $10B Customer Win

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Broadcom (AVGO.O) forecast a sharp improvement in artificial intelligence revenue for fiscal 2026 after securing more than $10 billion in AI infrastructure orders from a newly signed customer, CEO Hock Tan announced Thursday. The news boosted shares by 4% in after-hours trading, as investors cheered both the order and Tan’s commitment to remain at the helm for at least another five years.

Earlier this year, Tan hinted at four potential new partners exploring custom chip development with Broadcom. One has now placed a firm order, officially joining its roster of clients. While Broadcom did not disclose the name, analysts see the deal as another sign of cloud giants seeking alternatives to Nvidia’s dominant but costly GPUs.

Broadcom has positioned itself as a key enabler of generative AI, designing custom silicon to help hyperscalers overcome performance bottlenecks. “Custom offerings for cloud giants are well-positioned as Big Tech races to push model training and inference forward,” said Emarketer analyst Jacob Bourne, noting that while Nvidia remains the default choice, bespoke chips offer niche performance advantages.

The company’s AI revenue grew 63% to $5.2 billion in the third quarter ended August 3 and is projected to rise to $6.2 billion in Q4. Broadcom has also expanded its portfolio with new networking products, including the Tomahawk Ultra and next-generation Jericho chips, both aimed at accelerating AI computing workloads.

Despite booming AI demand, Tan acknowledged softness in the company’s non-AI semiconductor units, particularly in enterprise networking and service storage. Even so, Broadcom guided for fourth-quarter revenue of about $17.4 billion, above Wall Street’s estimate of $17.01 billion.

Broadcom shares have gained nearly 82% since April, extending a threefold surge over the past two years, while Nvidia stock is up 27% in 2025.