Aimed at Curbing China's Rise in Advanced Semiconductor Technology
Tech War Persists Despite Tariff Truce
Growth of Chinese EDA Companies Accelerates
The Financial Times (FT) reported on May 28 (local time) that the Donald Trump administration has instructed U.S. Electronic Design Automation (EDA) companies to halt technology exports to China. This move is interpreted as an effort to curb the development of advanced semiconductors in China.
According to multiple sources familiar with the matter, the U.S. Department of Commerce has issued guidance to major EDA companies, including Cadence, Synopsys, and Siemens EDA, instructing them not to provide their technology to Chinese firms.
The FT reported that the guidance was delivered to each company in the form of a letter from the Bureau of Industry and Security (BIS) under the U.S. Department of Commerce. However, it has not yet been confirmed whether all EDA companies have received the letter.
Previously, in April, the Trump administration implemented measures to restrict the export of Nvidia's China-specific AI chips. FT interpreted this move as evidence of the Trump administration's determination to block China's progress in developing advanced semiconductors for AI.
At the second quarter earnings conference call, Sassine Ghazi, CEO of Synopsys, stated, "We are aware of the related reports and speculation, but we have not yet received any notification from BIS." He added, "Our current fiscal year outlook reflects BIS export controls and a year-over-year decrease in revenue from China."
This measure comes as the United States and China have recently agreed to a truce in their tariff war. Although the tariff war has been paused for 90 days, the technology war over technological supremacy continues.
Christopher Johnson, former CIA China analyst and CEO of consulting firm China Strategies Group, pointed out, "This measure exposes the fundamental instability of the tariff truce reached in Geneva." He added, "Since both countries still want to demonstrate their ability to pressure each other, there is always a risk that negotiations could break down during the 90-day grace period."
Although EDA software accounts for a small portion of the overall semiconductor industry, it plays a critical role in next-generation semiconductor design and verification, making it extremely important in the supply chain. Synopsys, Cadence, and Siemens EDA together hold about 80% of the Chinese EDA market.
In the 2024 fiscal year, Synopsys' revenue from China was approximately $1 billion, accounting for about 16% of its total revenue, while Cadence generated about $550 million from China, representing 12% of its total revenue. After this news was reported, Synopsys and Cadence shares fell by 9.6% and 10.7%, respectively.
Previously, in 2022, the Biden administration also restricted exports of advanced semiconductor design software to China. However, EDA companies were allowed to export as long as they complied with export control regulations. During his first term, President Trump banned Chinese telecommunications equipment maker Huawei from using U.S.-made EDA tools. Huawei is now emerging as a competitor to Nvidia through its own AI chip, Ascend.
FT analyzed that as U.S. regulations are tightened, the growth of domestic EDA companies in China is also accelerating. In particular, three companies?Empyrean Technology, Primarius, and Semitronix?have rapidly expanded their market share in recent years.
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