US restricts sale of key chip-making software to China

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The Donald Trump administration has directed US software firms that provide electronic design automation, or EDA, tools to halt sales to Chinese customers, in a sweeping move to slow China's progress in advanced semiconductor development. 

According to Ars Technica, the US Department of Commerce has issued notices to key EDA providers — Cadence Design Systems, Synopsys, and Siemens EDA — ordering them to restrict their technology exports to Chinese entities.

The directive, delivered through letters by the Bureau of Industry and Security (BIS), marks the latest effort by the US government to scupper China's access to critical technology used in the design of high-performance AI chips. 

The move follows a similar restriction in April on Nvidia's AI chips designed for the Chinese market.

While Synopsys CEO Sassine Ghazi stated on an earnings call this week that his company has not yet received such a notice, he acknowledged the export control climate was tightening and said Synopsys expected a year-over-year revenue decline from China.

A Commerce Department spokesperson confirmed that the agency was "reviewing exports of strategic significance to China" and, in some cases, has suspended export licences or imposed new requirements while reviews are ongoing.

The US and China have over the months attempted to de-escalate tensions, agreeing in Geneva to a 90-day suspension of retaliatory tariffs.

The Trump administration has long pursued a strategy to contain China's technological ascent. A central component of this has been restricting access to US semiconductor technologies, particularly those used in AI, defence, and high-performance computing. 

Last month, his administration considered blacklisting several Chinese chipmakers, a move postponed by some officials to preserve the fragile momentum of trade discussions.

China has invested heavily in its domestic semiconductor sector as part of its Made in China 2025 plan, aiming to become self-sufficient in chip production. However, it still lags behind global leaders in advanced chip manufacturing and design tools.

The US currently dominates the EDA software market, with Synopsys and Cadence together controlling over 60 per cent of the global market. Siemens EDA, through its acquisition of Mentor Graphics, also holds a significant share. 

Although Chinese companies like SMIC (Semiconductor Manufacturing International Corporation) have made progress in recent years, they remain behind cutting-edge players such as TSMC and Samsung. 

US companies like Intel, Nvidia, and AMD also lead in chip architecture and design.