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Nov 29 (Reuters) - Synopsys (SNPS.O) on Wednesday forecast first-quarter revenue above Wall Street expectations, as artificial intelligence (AI) adoption boosted demand for the company's chip designing software.

Shares of the Sunnyvale, California-based company rose 1.9% in trading after the bell.

Synopsys forecast current-quarter revenue between $1.63 billion and $1.66 billion, above analysts' average estimate of $1.60 billion.

The growing need for faster and more efficient chips that are AI compatible has increased the market prominence for electronic design automation (EDA) firms like Synopsys and Cadence Design System (CDNS.O), which provide software and intellectual property for designing chips.

The rise in custom chip design efforts by firms like Microsoft (MSFT.O) and Alphabet (GOOGL.O) has also boosted demand.

"You need a very specific silicon in order to power that (AI) training," Sassine Ghazi, the company's president and chief operating officer, said of the boom in AI chips in an interview.

"Those are massive, complex chips. From our side, that's an awesome opportunity," he added. Ghazi is due to take over as chief executive from founder Aart de Geus next year.

Synopsys' software tools are instrumental in assisting chip makers like Intel (INTC.O) in the semiconductor designing process, and automakers like Mercedes-Benz (MBGn.DE) for the development of electronic control unit for engines.

Synopsys, the largest maker of software used in chip design, said earlier this month that it has worked with Microsoft (MSFT.O) to create its own chip-design assistant which would help to fix bugs and errors at an early stage.

Ghazi told Reuters that increased use of Synopsys AI services helped boost the value of some of its contracts by 20% at renewal time.

The company projected full-year 2024 revenue between $6.57 billion and $6.63 billion.

It forecast adjusted earnings per share between $3.40 and $3.45 for the first quarter. Analysts had expected $3.05 per share, according to LSEG data.

Revenue in the fourth quarter ended Oct. 31 rose to $1.60 billion, beating analyst expectations of $1.59 billion. It also beat profit estimates for the reported quarter.

Reporting by Harshita Mary Varghese; Editing by Shailesh Kuber and Deepa Babington

Our Standards: The Thomson Reuters Trust Principles.

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Synopsys forecasts robust first-quarter revenue as AI boosts chip ... - Reuters