US Blocks Chip Design Software, Chemical Shipments to China

The Trump Administration has ordered companies to stop shipping certain products to China – such as goods related to computer chips – without a licence, and revoked licences already granted to some suppliers.

The new restrictions, which are expected to annoy Beijing, appear aimed at choke points to prevent China from getting products necessary for key sectors, one of three sources who spoke to Reuters said.

Products affected include design software and chemicals for semiconductors, butane and ethane, machine tools, and aviation equipment, the people said.

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Many companies received letters from the US Department of Commerce in recent days informing them of the new restrictions.

Electronic design software for chips

Firms that supply electronic design automation (EDA) software for semiconductors were sent letters last Friday that licences would now be needed to ship to Chinese customers, two of the sources said.

The electronic design automation software makers include Cadence, Synopsys and Siemens EDA, a subsidiary of Siemens, one said.

The two sources said the Commerce Department will review requests for licences to ship to China on a case-by-case basis, suggesting the action was not an outright ban.

China also upset about revoking of student visas

It is unclear whether the new restrictions are part of a broader strategy to create leverage for trade talks during a pause in the imposition of higher tariffs.

There is uncertainty also on whether Beijing has adhered to its agreement in Geneva to restore exports of rare earth elements, and whether that is a related concern.

Washington has also begun to revoke visas for Chinese students wanting to study at top universities in the US, such as Harvard.

CNN has said there were more than 270,000 Chinese students in the US in 2024 and that some come from the country’s political and business elites. Analysts are wondering if these issues may be linked to the countries’ trade dispute.

China’s foreign ministry said on Thursday it strongly opposed the “unjust” revoking of visas “under the pretext of ideology and national security.”

The Commerce Department said it is reviewing exports of strategic significance to China, while noting “in some cases, Commerce has suspended existing export licences or imposed additional licence requirements while the review is pending.”

The White House did not immediately respond to a request for comment.

Cadence, Synopsys shares fall

Shares of Cadence, which declined to comment, closed down 10.7% and shares of Synopsys fell 9.6%.

Siemens said it was assessing the impact of the new restrictions on exports of EDA software and will provide more information as soon as possible.

China’s foreign ministry said in a response to Reuters’ questions that such US practices disrupted the stability of global supply chains and that Washington was weaponizing tech and trade issues to shut out and persecute China.

“There are no sanctions or pressure that can block the pace of China’s development and progress, no bullying or coercion that can shake China’s determination to achieve self-sufficiency,” it said.

Synopsys‘ CEO Sassine Ghazi said in a call with analysts that the company had not received a letter nor had it heard from the Commerce Department’s Bureau of Industry and Security, which enforces export controls.

“We are aware of the reporting and speculations, but Synopsys has not received a notice from BIS … We have not received a letter,” Ghazi said.

After the market closed, Synopsys reaffirmed its revenue forecast for 2025. Its shares and those of Cadence bounced back 3.5% in trading after the close.

Restricting Chinese firms’ access to EDA tools would be a big blow to the industry as Chinese chip design customers heavily rely on top-of-the-line US software. In April, Chinese state news agency Xinhua said Synopsys, Cadence and Siemens’ Mentor Graphics together control more than 70% of the market share in China.

Chinese companies that have said they use Synopsys and Cadence software include design firm Brite Semiconductor, Zhuhai Jieli and semiconductor IP portfolio provider VeriSilicon.

VeriSilicon and Brite did not immediately respond to emails seeking comment. Calls to Zhuhai Jielei went unanswered.

Design tech seen as ‘choke point’

However, three sources familiar with the matter in the EDA tools industry said on Thursday that business was still carrying on normally in China as companies await more clarification on how the restrictions need to be implemented.

“I believe this is another ineffective measure that will only help China advance its self-reliance, just like with semiconductors,” said Nori Chiou, investment director at Singapore-headquartered White Oak Capital Partners, adding that there are many pirated versions of these design tools, which are not hard to obtain.

Chiou said once legitimate channels are blocked, many Chinese EDA companies will benefit.

Domestic alternatives to the US firms’ tools include Empyrean Technology and Primarius Technologies, whose shares jumped 17% and 20% respectively.

In 2023, Huawei said it had developed its own EDA tools for chip designs that can be produced at 14-nanometre or more advanced technology. It has been blocked from using US suppliers since 2019. Any move to strip the software makers of their Chinese customers could deal a blow to their bottom.

“They are the true choke point,” said a former Commerce Department official, who added that rules restricting the export of EDA tools to China have been under consideration since the first Trump administration, but were ruled out as too aggressive.

Synopsys relies on China for about 16% of its annual revenue, and China accounts for about 12% of annual revenue for Cadence.

Synopsys, which partners with chip companies such as Nvidia, Qualcomm and Intel, provides software and hardware used for designing advanced processors.

The Financial Times earlier reported that the Trump administration had ordered the software firms to stop selling their services to Chinese groups.