U.S.-China Trade Deal Sparks Surge in Chip-Design Software Stocks

Shares of chip-design software companies Synopsys Inc., Cadence Design Systems Inc. and Siemens AG climbed on Thursday after the companies said the U.S. had lifted export controls restricting sales and business in China as part of a trade deal reached last month.

Cadence’s stock was up 5.1% at the market close on Thursday, while Synopsys’s stock was up 4.9%. Siemens’s Germany-listed shares also finished fractionally higher.

On Wednesday, Synopsys said that it had received a letter from the U.S. Commerce Department’s Bureau of Industry and Security that said export restrictions requiring a license from the government to sell electronic-design-automation (EDA) software and technology to Chinese customers “have now been rescinded, effective immediately.”

The Commerce Department had informed Synopsys of the rules on May 29, the company said in a statement . Synopsys, which focuses on silicon design, said it “is working to restore access to the recently restricted products in China,” and that it “is continuing to assess the impact of export restrictions related to China on its business, operating results and financials.”

Siemens, which is based in Germany with operations in the U.S., said in a statement on Thursday that it was told by the BIS that the export restrictions related to China “are no longer in place.” The company, which develops industrial automation and software, said it had received a letter from BIS on May 23 about the export controls.

With the rules now lifted, Siemens said it “has restored full access to software and technology” under the regulations, and has continued sales and support to firms in China.

Cadence said in an 8K filing on Thursday that it was informed by the BIS on Wednesday that license requirements outlined in a May 23 letter “were rescinded effective immediately.” The company added that it “is in the process of restoring access to EDA software and technology for its affected customers in accordance with these updated U.S. export regulations.”

The Commerce Department did not respond to a request for comment from Tech Bytes Lab.

Late last month, the U.S. and China reached a trade truce that included an agreement for China to relax curbs on rare-earths exports , while the U.S. would ease some restrictions on chip software.

Siemens, Synopsys and Cadence are leading players in the EDA market, which provides semiconductor companies with software and hardware for designing chips. Synopsys held a 31% share of the global EDA market as of 2024, according to TrendForce. Cadence held 30% and Siemens held 13%, according to the report.

Disclosures from Cadence’s latest 10-K indicate that China represented 12.3% of its $4.6 billion in revenue for fiscal 2024, while disclosures from Synopsys’s 10-K show that China accounted for 16.1% of the company’s $6.1 billion in total revenue. Siemens operates a more diversified business but generated 10.6% of revenue from China last fiscal year, when including areas beyond EDA.

The restrictions on chip-design software “were unlikely ever to have a really big impact on the USA’s long-term goals” of curbing China’s advanced chip efforts, Richard Windsor, founder of research firm Radio Free Mobile, said in a note on Thursday.

Chinese companies would still have a hard time making some chips with or without access to the EDA tools, according to Windsor, because they are cut off from purchasing equipment for chips made below the 20-nanometer process. Chips built on the 7-nanometer process node and below are considered to be advanced.

“It would also have made very little difference at 7nm and below, where China is currently using an old technique pioneered by TSMC where it has been developing its own tools, which are described as ‘usable,’” Windsor wrote.

However, China’s restrictions on exports of rare earths would’ve dealt a blow to the U.S. and other Western countries because “it takes time and money to ramp up production elsewhere,” Windsor added.

“In the long term, this will not be a problem because while China controls production, it does not control the resources, meaning that these metals can be sourced and refined from outside of China in time.”