U.S. lifts chip software curbs on China in sign of trade truce

In a significant shift in trade policy, the U.S. government has lifted its export restrictions on chip-design software directed toward China, as announced by three leading companies in the semiconductor software industry on Thursday. Siemens AG, Synopsys, and Cadence each confirmed they received notifications from the U.S. Department of Commerce indicating that these controls had been removed. Although Siemens is headquartered in Germany, its subsidiary, Siemens EDA, operates out of Oregon, USA. The reversal of the export controls has allowed Siemens to proclaim that it has "restored full access" to the previously restricted software and technology, enabling them to resume sales and support for their Chinese clientele. Synopsys and Cadence are also in the process of reinstating their operations in the region. The U.S. Commerce Department had previously mandated that, effective May 23, chip design software companies must acquire licenses before exporting any semiconductor-related software and technology to China. This decision followed an earlier tightening of export controls that limited the sale of advanced AI processors from major companies like Nvidia and AMD to China. Following the news of the lifted restrictions, shares of Synopsys and Cadence experienced a notable uptick, rising over 6% and 7%, respectively, in after-hours trading on the Robinhood platform. These three companies are key players in the U.S.-dominated electronic design automation (EDA) market, which encompasses the software, hardware, and vital services necessary for semiconductor design. During a conference call with analysts in May, Synopsys CEO Sassine Ghazi noted a downturn in business from China in the fiscal second quarter ending April 30, with Chinese customers accounting for approximately 10% of Synopsys' quarterly revenue of $1.6 billion. Concurrently, China has been implementing strategies to bolster its domestic chip-design software sector and cultivate independent chip design capabilities. According to TrendForce statistics, as of 2024, Synopsys, Cadence, and Siemens EDA commanded a global market share of 31%, 30%, and 13%, respectively. This development follows a recent indication from China that they are making strides toward a trade agreement with the U.S., which includes conditional arrangements to resume exchanges of rare earth materials and advanced technologies.