Johnson, who heads China Strategies Group, a risk consultancy, said that China had successfully leveraged its stranglehold on rare earths to bring the US to the negotiating table in Geneva, which “left the Trump administration’s China hawks eager to demonstrate their export control weapons still have purchase.”
While it accounts for a relatively small share of the overall semiconductor industry, EDA software allows chip designers and manufacturers to develop and test the next generation of chips, making it a critical part in the supply chain.
Synopsys, Cadence Design Systems, and Siemens EDA—part of Siemens Digital Industries Software, a subsidiary of Germany’s Siemens AG—account for about 80 percent of China’s EDA market. Synopsys and Cadence did not immediately respond to requests for comment.
In fiscal year 2024, Synopsys reported almost $1 billion in China sales, roughly 16 percent of its revenue. Cadence said China accounted for $550 million or 12 percent of its revenue.
Synopsys shares fell 9.6 percent on Wednesday, while those of Cadence lost 10.7 percent.
Siemens said in a statement the EDA industry had been informed last Friday about new export controls. It said it had supported customers in China “for more than 150 years” and would “continue to work with our customers globally to mitigate the impact of these new restrictions while operating in compliance with applicable national export control regimes.”
In 2022, the Biden administration introduced restrictions on sales of the most sophisticated chip design software to China, but the companies continued to sell export control-compliant products to the country.
In his first term as president, Donald Trump banned China’s Huawei from using American EDA tools. Huawei is seen as an emerging competitor to Nvidia with its “Ascend” AI chips.
Nvidia chief executive Jensen Huang recently warned that successive attempts by American administrations to hamstring China’s AI ecosystem with export controls had failed.
Last year Synopsys entered into an agreement to buy Ansys, a US simulation software company, for $35 billion. The deal still requires approval from Chinese regulators. Ansys shares fell 5.3 percent on Wednesday.
On Wednesday the US Federal Trade Commission announced that both companies would need to divest certain software tools to receive its approval for the deal.
The export restrictions have encouraged Chinese competitors, with three leading EDA companies—Empyrean Technology, Primarius, and Semitronix—significantly growing their market share in recent years.
Shares of Empyrean, Primarius, and Semitronix rose more than 10 percent in early trading in China on Thursday.
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