The administration of US President, Donald Trump, has directed American software firms responsible for semiconductor design tools to cease sales to Chinese clients, intensifying efforts to curb China’s technological progress in advanced chip manufacturing. This policy shift, communicated through the Department of Commerce’s Bureau of Industry and Security (BIS), focuses on companies providing electronic design automation (EDA) software, including leading providers such as Synopsys, Cadence Design Systems, and Siemens EDA.
Washington Targets EDA Exports to Curb China’s Chip Ambitions
According to insiders, BIS has issued official notices to these firms, though it remains unclear whether the guidance has reached all relevant entities. The move represents a strategic escalation in Washington’s campaign to restrict China’s capacity to produce cutting-edge artificial intelligence chips, following similar restrictions earlier this year on AI semiconductors designed specifically for the Chinese market by Nvidia.
Tensions Resurface Amid Fragile US-China Trade Truce
The timing of the announcement is particularly sensitive, coinciding with renewed attempts by Washington and Beijing to ease trade tensions, including a recent agreement in Geneva to suspend reciprocal tariffs for 90 days. Nonetheless, the latest export controls risk reigniting hostilities, as some US officials had previously advocated for a delay to safeguard the fragile truce.
Industry analysts have flagged the potential instability of this diplomatic pause. Christopher Johnson, a former CIA China analyst and current head of China Strategies Group, noted that both sides are keen to showcase their leverage, with China utilising its control over rare earth supplies as a bargaining chip, prompting US policymakers to reassert their influence via export regulations.
Financial and Industry Fallout for US Firms
EDA tools, while representing a smaller niche of the semiconductor ecosystem, play a pivotal role in chip innovation by enabling design and testing processes. American companies dominate the global EDA landscape, collectively holding around 80% of the Chinese market share. In 2024, Synopsys reported nearly $1 billion in Chinese revenue—around 16% of its total—while Cadence’s Chinese income stood at $550 million, or 12% of its earnings.
The announcement immediately affected financial markets, with shares of Synopsys and Cadence dropping 9.6% and 10.7%, respectively. Siemens, which owns Siemens EDA, confirmed it had been notified of the new restrictions and pledged to support its global customers while adhering to export laws.
During his first term, Trump had already banned Chinese telecom giant Huawei from accessing US EDA technology, a move aimed at undermining a potential rival to Nvidia, particularly through Huawei’s AI chip line, “Ascend.” Despite these actions, Nvidia CEO Jensen Huang recently suggested that American efforts to isolate China’s AI sector have largely fallen short.
Meanwhile, Synopsys’ planned $35 billion acquisition of Ansys, a US-based simulation software firm, remains under review by Chinese regulators. In a related development, the US Federal Trade Commission has required the divestiture of certain software tools as a condition for approving the merger. Ansys’ shares dropped 5.3% following the news.
China’s Domestic EDA Sector Gains Ground
China’s response to these mounting restrictions has included strengthening its domestic EDA sector. Local players such as Empyrean Technology, Primarius, and Semitronix have seen rapid growth, with their shares climbing over 10% in early trading following the US directive.
This latest export control decision is part of a broader strategy by Washington to protect its technological edge while navigating an increasingly competitive and adversarial relationship with Beijing.
Written by:
*Dr Iqbal Survé
Past chairman of the BRICS Business Council and co-chairman of the BRICS Media Forum and the BRNN
*Cole Jackson
Lead Associate at BRICS+ Consulting Group
Chinese & South American Specialist
**The Views expressed do not necessarily reflect the views of Independent Media or IOL.
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