US curbs export controls on chip design software and tools to China
These new controls, likely to heighten Beijing-Washington tensions, target critical supply points to restrict China's access to essential sector components.
The affected items include semiconductor design software, chemical compounds like butane and ethane, industrial machinery, and aviation-related equipment.
The US commerce department recently dispatched notifications to various companies about these enhanced restrictions.
Last Friday, companies providing electronic design automation (EDA) software for semiconductors were informed about new licensing requirements for Chinese customers, according to two Reuters.
The Department confirmed its ongoing assessment of strategic exports to China, stating that "in some cases, Commerce has suspended existing export licenses or imposed additional license requirements while the review is pending."
Cadence shares dropped 10.7% whilst Synopsys fell 9.6%. Synopsys' CEO Sassine Ghazi clarified during an analyst call that they hadn't received any communication from the Bureau of Industry and Security.
"We are aware of the reporting and speculations, but Synopsys has not received a notice from BIS ... We have not received a letter," Ghazi stated.
Post-market trading saw both companies recover somewhat, with 3.5% gains.
Synopsys maintained its 2025 revenue projections. The potential removal of Chinese customers could substantially affect these companies' revenues and Chinese chip design capabilities.
A former Commerce Department official noted these EDA tools are crucial control points, revealing that similar restrictions were considered during Trump's presidency but deemed too severe.
Chinese markets represent significant revenue streams for these companies, with China contributing approximately 16% for Synopsys and 12% for Cadence.
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The Wire
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Indian officials claim that China has reportedly promised to address India's concerns regarding rare earths, fertilisers and tunnel boring machines. None of these have figured in any of the official statements but these economic carrots, essentially reversing the coercive actions taken by Beijing, have led to a major strategic concession by the Modi government. What are the strategic risks of this concession? This decision represents a fundamental departure from India's long-standing position that the border dispute must be resolved as a comprehensive package deal, as established in the 2005 Political Parameters and Guiding Principles. By agreeing to explore 'early harvest' options, the Modi government has legitimised China's piecemeal approach that violates this foundational principle. The move is particularly dangerous given China's expanding claims against Bhutan, including new territorial demands in the eastern part of the Himalayan kingdom that emerged around 2020. Any resolution of the Sikkim sector boundary without addressing these broader strategic concerns will only embolden China's aggressive posture toward India's Himalayan neighbours, security experts feel. Moreover, the agreement comes at a time when China has been systematically strengthening its border infrastructure and military capabilities. The PLA has established itself firmly in the Doklam plateau and explored alternative routes to reach the Jhampheri ridge. The PLA's enhanced capabilities, and increasing superiority over India, make any territorial concessions even more strategically problematic. To conclude, the Modi government's decision to explore China's 'early harvest' proposal represents a dangerous precedent that abandons decades of careful strategic thinking for short-term economic and political relief. By legitimising China's divide-and-conquer approach to the border dispute, the Modi government has weakened India's negotiating position and potentially compromised the strategic interests. There is no 'early harvest' for India in this arrangement, only a reversal of its longstanding policy disguised as diplomatic progress. The Wire is now on WhatsApp. Follow our channel for sharp analysis and opinions on the latest developments. Advertisement
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