Key Points
- The U.S. imposes new licensing requirements on tech exports to China, revoking existing permissions.
- EDA software firms, such as Synopsys, Cadence, and Siemens EDA, are directly affected.
- China condemns the move, vowing to continue its pursuit of tech self-reliance.
- Chinese firms, such as Empyrean and Primarius, gained significantly amid hopes for domestic growth.
The U.S. government has imposed new export restrictions targeting American companies that supply key technologies to China, including software and equipment vital to the semiconductor and aviation sectors. According to sources familiar with the matter, the U.S. Department of Commerce has notified several firms that they must now obtain special licenses to ship products to Chinese clients, and previously granted licenses have been revoked.
The restrictions affect a range of products, including electronic design automation (EDA) software, chemicals used in semiconductor manufacturing, and materials such as butane and ethane. U.S. firms Cadence, Synopsys, and Siemens EDA were among those alerted that licenses are now required to export their software tools to China.
These measures, while not a blanket ban, will require case-by-case license approvals, signaling a more strategic approach to limit China’s access to critical technologies. The Commerce Department stated that it is reviewing exports of strategic significance and may suspend or add license conditions during the review.
Markets reacted sharply. Shares of Cadence and Synopsys fell 10.7% and 9.6%, respectively, although both rebounded slightly in after-hours trading. Synopsys clarified that it had not yet received formal notification from the Bureau of Industry and Security (BIS) but reaffirmed its 2025 revenue outlook.
China’s Foreign Ministry criticized the U.S. for using trade and technology as geopolitical weapons, insisting that such moves will not hinder China’s progress or its self-sufficiency goals. Notably, Huawei claimed in 2023 to have developed its own EDA tools for chips manufactured at 14nm nodes and beyond, while Chinese firms such as Empyrean Technology and Primarius Technologies saw their shares jump 17% and 20%, respectively, in response to the news.
Although implementation details are pending, analysts suggest that the move could spur China’s domestic EDA industry and accelerate its tech self-reliance. With China accounting for 16% and 12% of annual revenues for Synopsys and Cadence, respectively, the impact on U.S. firms could be significant.
