Trump Administration Tells Cadence, Synopsys, Siemens To Stop Selling Chip Design Software To China, Says Report

The Trump Administration has reportedly instructed U.S. electronic design automation (EDA) companies, including Cadence Design Systems (CDNS), Synopsys (SNPS), and Siemens (SIEGY), to cease selling chip design software to Chinese companies.

According to a Financial Times report, the move is part of the Trump administration’s broader effort to curb China’s development of advanced AI chips, similar to earlier restrictions on Nvidia’s (NVDA) China-specific AI chips and ASML’s (ASML) extreme ultraviolet lithography (EUV) machines.

The U.S. Commerce Department's Bureau of Industry and Security has reportedly sent letters to these EDA companies, although not all firms confirmed receiving them. Synopsys told the Financial Times it hadn’t been notified but expected a decline in China revenue.

EDA software, though a small slice of the chip sector, is vital for designing cutting-edge semiconductors and could have a significant impact on these companies. 

Synopsys, for instance, reported almost $1 billion in sales to China in fiscal year 2024, which accounted for around 16% of its revenue. Cadence said China accounted for $550 million of its sales, or 12% of its revenue.

An official from the commerce department told the Financial Times it was “reviewing exports of strategic significance to China. In some cases, [the department] has suspended existing export licenses or imposed additional license requirements while the review is pending.”

Cadence’s stock declined over 10% on Wednesday but rebounded by as much as 3% in pre-market trading on Thursday. Synopsys’ stock experienced a similar drop of more than 10% on Wednesday, recovering 3.6% in early trading on Thursday. Siemens’ stock fell 2.5% on Wednesday and remained unchanged in pre-market trading.

The rebound in their respective shares was buoyed by the broader market trending green after Nvidia raised its guidance for the second quarter (Q2), despite headwinds from China, and beat its first-quarter (Q1) estimates. 

The news comes on the heels of the U.S. and China agreeing to a 90-day truce to halt their tariff war. 

Synopsys is also awaiting approval from Chinese regulators to finalize its agreement to acquire Ansys (ANSS), a U.S.-based simulation software company, for $35 billion. Ansys’ stock fell 5.3% on Wednesday and is up 0.81% in pre-market trade.

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