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South China Morning Post
9 hours ago
- Business
- South China Morning Post
Tech war: China's top three EDA firms under spotlight after US ban on chip design tools
Advertisement The restrictions, however, are expected to help strengthen China's semiconductor self-sufficiency efforts, according to the latest research note by ICBC Credit Suisse Asset Management. Following news of the US tech ban, the Shenzhen -listed shares of Empyrean, Primarius and Semitronix initially recorded strong trading, as investors hoped these firms could become major alternative EDA suppliers in China. Primarius surged over 22 per cent since Wednesday last week, while Semitronix and Empyrean rose over 17 per cent and 8 per cent over the same period, respectively. On Wednesday, Primarius fell 9.41 per cent to close at 28.80 yuan (US$4). Semitronix slipped 4.19 per cent to 55.85 yuan, while Empyrean was down 4.01 per cent to 125.09 yuan. Advertisement Still, investor interest in the three Chinese companies reflects room for growth, as they tap fresh opportunities in the domestic market.
Asia Times
10 hours ago
- Business
- Asia Times
Trump's tech sanctions to empower China, betray America
President Donald Trump is stepping up US efforts to cut off China's access to advanced technology, marking a continuation of restrictions first launched in his first term and continued under the Biden administration. The primary victims of these technology bans are American companies that were once China's preferred suppliers. The main beneficiaries are Chinese companies, some of which have been handed massive market opportunities stripped of their most formidable foreign competitors. This has most recently been illustrated by new restrictions on exports to China of US semiconductor design technology, Nvidia's H20 AI processor and jet engines for passenger aircraft. Last week, the Bureau of Industry and Security of the US Department of Commerce ordered electronic design automation (EDA) software providers serving the semiconductor industry to halt shipments to Chinese customers. On the news, the share prices of the world's top two EDA companies, Synopsys and Cadence Design, dropped by more than 13% and then recovered to finish down 6% and 8%, respectively, in the week to Friday, May 30. The third major EDA supplier, the US company formerly known as Mentor Graphics now owned by Germany's Siemens, is no longer publicly traded. According to market research organization TrendForce, Synopsys, Cadence Design, and Siemens have 31%, 30%, and 11% of the global EDA market, respectively. China accounted for 16% and 12% of Synopsys' and Cadence's EDA sales in 2024. Siemens does not provide a geographical breakdown of its EDA sales. As EETimes reports, EDA is seen as 'the true choke point' in China's semiconductor industry, particularly with regard to artificial intelligence (AI) processors and other advanced integrated circuits (ICs). In addition, according to Cadence, the BIS wrote that the sale of EDA software to Chinese companies constitutes 'an unacceptable risk of use in or diversion to a 'military end use' in China or for a Chinese 'military end user.'' In theory, exports of EDA tools to Chinese customers would be allowed under BIS license; in practice, licenses are extremely unlikely to be forthcoming. For this reason, Synopsys has reportedly shut down its EDA sales and service operations and told its local staff to stop taking new orders in China. EDA export restrictions were first considered during the previous Trump administration, but until now have reportedly been rejected because they were considered too aggressive. Now they are part of Trump's strategy to ramp up pressure on China in pursuit of a broad trade deal. Last year, Synopsis, Cadence Design and Siemens held approximately 80% of the Chinese EDA market, but that figure is already in decline. Synopsys' sales in China dropped 28% year-on-year in the first half of its fiscal 2025 (the six months to April), with the share of its total sales made there falling from a peak of 17% in Q3 of fiscal 2024 to 10% in Q2 of 2025. Cadence Design reported a 9% year-on-year increase in China sales in Q1 of its fiscal 2025 (ended March) but a 24% decline from Q4 of 2024, with the share of its total sales made in China dropping from 13% to 11%. And now, if Trump doesn't back down, it – and Synopsys's 10% – could fall to zero. Meanwhile, the sales of Chinese EDA companies are growing. There are more than ten EDA software and system developers in China, including Empyrean Technology, Primarius Technologies and Xpeedic. A combination of estimates from market research and industry associations, independent analysts and the companies themselves puts their market shares at 10%-12%, 5%-6% and 3%-4%, respectively. In March 2025, Empyrean announced plans to take control of Xpeedic. In Q1 of 2025, Empyrean and Primarius' sales were up 10% and 12% year-on-year, respectively. While the share prices of US EDA companies fell, those of their Chinese competitors rose. The share prices of Empyrean Technology and Primarius Technologies jumped 16% and 21%, respectively, last Wednesday and Thursday. Primarius, which has a significantly smaller market capitalization, continued to rise, finishing up 35% in the week through Tuesday, June 3. Chinese EDA companies receive support from central and local governments, academia and private sector customers, including tech giants Huawei and SMIC. China's National Center of Technology Innovation for EDA was established in Nanjing in June 2023, with contributions from Jiangsu Province, the Ministry of Education, Peking and Xidian universities, and an investment company from Shenzhen. Member companies include Empyrean, Primarius and Shenzhen Giga Design Automation. It could take some time, but China appears to be relatively well-positioned to take advantage of and overcome the latest US government sanctions. The Chinese EDA industry is already undergoing consolidation, and the forced withdrawal of US competitors provides a new incentive to push their technological limits and build economies of scale. Notably, Empyrean already works with Japan's Renesas while Empyrean, Primarius and Xpeedic are EDA partners of Samsung Foundry. In April, Nvidia revealed in an SEC filing that sales of its H20 AI processors to China would effectively be banned, and that it was therefore planning to write down $5.5 billion worth of inventory, purchase commitments and related reserves in Q1 of its fiscal 2026. (Shipments of equivalent processors from AMD were also restricted.) In the event, Nvidia's write-down was $4.5 billion but the ban also reduced sales by $2.5 billion and $8 billion more is expected to be lost in Q2. China accounted for about 10% of Nvidia's sales in Q1, down from 13% the previous fiscal year. Now, the figure seems likely to drop to low single digits. Nvidia's share of the Chinese market for AI processors, which has already dropped from 95% to 50% (40% by some estimates), is also expected to keep falling, likely to insignificance if US policy doesn't change. At the Computex 2025 event held in Taipei, Taiwan, from May 20 to 23, Nvidia CEO Jensen Huang called export controls a 'failure.' Elaborating on the assessment, he said that, 'The US has based its policy on the assumption that China cannot make AI chips. That assumption was always questionable, and now it's clearly wrong.' A Nvidia spokesperson added, 'With the ban on H20, our competitors in China are now largely shielded from US competition and free to leverage that entire $50 billion market to build a robust AI ecosystem.' In an interview with the Stratechery tech newsletter published on May 19, Huang said, 'China's doing fantastic. 50% of the world's AI researchers are Chinese and you're not going to hold them back, you're not going to stop them from advancing AI. Let's face it, DeepSeek is deeply excellent work. To give them anything short of that is a lack of confidence, so deep that I just can't even tolerate it.' Alibaba, Baidu, Tencent and other Chinese buyers of AI processors are already using domestic alternatives to chips from Nvidia and AMD, starting with, but not limited to, Huawei's Ascend series. On May 28, The New York Times reported that the US government has restricted sales of jet engine technology to China, which will likely be a major headache for the Commercial Aircraft Corporation of China (COMAC). COMAC's C919 passenger jets are currently equipped with LEAP turbofan engines manufactured by CFM International, a joint venture between GE Aviation of the US and Safran Aircraft Engines of France. However, the Aero Engine Corporation of China appears to be making progress toward developing a domestic alternative, known as the CJ-1000. In March, as reported by the South China Morning Post, Shi Jianzhong, honorary president of the Shanghai Society of Aeronautics and former deputy general manager of COMAC, told a Chinese aviation forum that 'The CJ-1000 engine is in trial runs and it fared better than my most optimistic expectations.' Verification flights of the C919 aircraft equipped with the CJ-1000 jet engine are expected to begin 'soon.' There is also the possibility of renewed collaboration with Russia, which has a history of building jet engines for commercial aircraft dating back to the Soviet Union era. But that appears to be on hold as Russia concentrates on developing key components for its own short- and medium-range passenger jets. Two years ago, Yury Slyusar, CEO of Russia's United Aircraft Corporation (UAC), warned COMAC that 'There may come a point when Western nations halt the supply of crucial components, assemblies, and products, potentially leading to a halt in aircraft production. Therefore, we urge them to reconsider the 'insides' of the aircraft as part of joint projects and reduce dependency on Western companies.' Ever since Trump first slapped sanctions on Huawei in 2018, the US government has incentivized Chinese innovation while undermining once-dominant American market shares, creating what it aims to prevent – the emergence of Chinese technology industries that are both self-sufficient and globally competitive. The attempt to suppress Huawei – which today is not only a world leader in telecom equipment but also has a growing presence in AI, IC design, autonomous driving and even enterprise software – has, by any measure, failed. And that will likely be the case for many Chinese companies targeted by the latest round of US sanctions. At the Reagan National Economic Forum held in California at the end of May, JP Morgan Chase CEO Jamie Dimon said, 'I would engage with China. I just got back from China last week. They're not scared, folks. This notion they're going to come bow to America, I wouldn't count on that. When they have a problem, they put 100,000 engineers on it. They've been preparing for this for years.' Follow this writer on X: @ScottFo83517667
South China Morning Post
10 hours ago
- Business
- South China Morning Post
US-China trade war goes nuclear with Trump's chip software ban
It is hardly a stretch to say that the Trump administration went nuclear last week in banning the sale of American semiconductor design software to China. The unprecedented move signals a tectonic shift in policy. The goal now is not simply to slow down China's semiconductor ambitions; it is to halt them. As with previous, less extreme restrictions, these ones are likely to backfire. They will further isolate the United States from the world's largest semiconductor consumer market, strengthen Beijing's resolve for hi-tech self-sufficiency and force President Xi Jinping to respond in kind. Yet, even if events follow this now-familiar pattern, the nuclear analogy still holds. The stakes are so high because the latest US bans cut off China's access to the most advanced electronic design automation (EDA) software While EDA is a small part of the broader chip ecosystem, it is arguably the most important part. It is essential for the design, simulation and verification of the most advanced chips, including those used in military defence and artificial intelligence. Yet EDA software technology is the weakest link in China's indigenous chip ecosystem. Chinese chip designers and manufacturers could be rendered helpless without access to it, as analysts estimate China is five to 10 years behind the most cutting-edge software. Unlike earlier semiconductor bans that were relatively narrow in scope – targeting specific companies or chip types – the latest ban is sweeping and comprehensive. It restricts all Chinese companies from using US-created EDA technology. US and US-origin companies presently control over 70 per cent of the world market, so the new ban directly threatens China's national security and technological ambitions.
IOL News
10 hours ago
- Business
- IOL News
BRICS+ Series: US intensifies Chinese Chip Development Regulation
This photo taken shows semiconductor chips under process at a factory in Binzhou, in eastern China's Shandong province. The administration of US President, Donald Trump, has directed American software firms responsible for semiconductor design tools to cease sales to Chinese clients, intensifying efforts to curb China's technological progress in advanced chip manufacturing. This policy shift, communicated through the Department of Commerce's Bureau of Industry and Security (BIS), focuses on companies providing electronic design automation (EDA) software, including leading providers such as Synopsys, Cadence Design Systems, and Siemens EDA. Washington Targets EDA Exports to Curb China's Chip Ambitions According to insiders, BIS has issued official notices to these firms, though it remains unclear whether the guidance has reached all relevant entities. The move represents a strategic escalation in Washington's campaign to restrict China's capacity to produce cutting-edge artificial intelligence chips, following similar restrictions earlier this year on AI semiconductors designed specifically for the Chinese market by Nvidia. Tensions Resurface Amid Fragile US-China Trade Truce The timing of the announcement is particularly sensitive, coinciding with renewed attempts by Washington and Beijing to ease trade tensions, including a recent agreement in Geneva to suspend reciprocal tariffs for 90 days. Nonetheless, the latest export controls risk reigniting hostilities, as some US officials had previously advocated for a delay to safeguard the fragile truce. Industry analysts have flagged the potential instability of this diplomatic pause. Christopher Johnson, a former CIA China analyst and current head of China Strategies Group, noted that both sides are keen to showcase their leverage, with China utilising its control over rare earth supplies as a bargaining chip, prompting US policymakers to reassert their influence via export regulations. Financial and Industry Fallout for US Firms EDA tools, while representing a smaller niche of the semiconductor ecosystem, play a pivotal role in chip innovation by enabling design and testing processes. American companies dominate the global EDA landscape, collectively holding around 80% of the Chinese market share. In 2024, Synopsys reported nearly $1 billion in Chinese revenue—around 16% of its total—while Cadence's Chinese income stood at $550 million, or 12% of its earnings. The announcement immediately affected financial markets, with shares of Synopsys and Cadence dropping 9.6% and 10.7%, respectively. Siemens, which owns Siemens EDA, confirmed it had been notified of the new restrictions and pledged to support its global customers while adhering to export laws. During his first term, Trump had already banned Chinese telecom giant Huawei from accessing US EDA technology, a move aimed at undermining a potential rival to Nvidia, particularly through Huawei's AI chip line, 'Ascend.' Despite these actions, Nvidia CEO Jensen Huang recently suggested that American efforts to isolate China's AI sector have largely fallen short. Meanwhile, Synopsys' planned $35 billion acquisition of Ansys, a US-based simulation software firm, remains under review by Chinese regulators. In a related development, the US Federal Trade Commission has required the divestiture of certain software tools as a condition for approving the merger. Ansys' shares dropped 5.3% following the news. China's Domestic EDA Sector Gains Ground China's response to these mounting restrictions has included strengthening its domestic EDA sector. Local players such as Empyrean Technology, Primarius, and Semitronix have seen rapid growth, with their shares climbing over 10% in early trading following the US directive. This latest export control decision is part of a broader strategy by Washington to protect its technological edge while navigating an increasingly competitive and adversarial relationship with Beijing. Written by: *Dr Iqbal Survé Past chairman of the BRICS Business Council and co-chairman of the BRICS Media Forum and the BRNN *Cole Jackson Lead Associate at BRICS+ Consulting Group Chinese & South American Specialist **The Views expressed do not necessarily reflect the views of Independent Media or IOL. ** MORE ARTICLES ON OUR WEBSITE ** Follow @brics_daily on X/Twitter & @brics_daily on Instagram for daily BRICS+ updates
Yahoo
13 hours ago
- Business
- Yahoo
U.S. ban on EDA software hits Chinese tech companies hard — Xiaomi, Lenovo among affected
When you buy through links on our articles, Future and its syndication partners may earn a commission. Washington cracked down on semiconductor design software exports to China, banning companies like Synopsys and Cadence from issuing licenses to tech companies that use their software to build advanced chips. While this ban is unlikely to stop these companies from using the electronic design automation (EDA) software they already have, it will prevent them from getting updates and the required technical support needed to continue designing chips for manufacture in Taiwan, says the Financial Times. Xiaomi is one of the bigger companies to be affected by this move, especially as it just launched the XRing 01 SoC, which uses a 3nm process node from TSMC. Lenovo, which took over IBM's Consumer PC business, and crypto mining hardware specialist Bitmain, also use American EDA software, so they're expected to be affected by this ban as well. This will only impact the most advanced chips, especially those used for AI processing. Less advanced semiconductors, like those used for smartphones and other mobile devices, will likely be exempted, but we will only know for sure when the White House releases the document containing all the details of the ban. Aside from that, China has also been working on its own EDA tools to reduce its reliance on American tech. Huawei is one of those, especially as it was one of the first major Chinese companies that received a blanket ban from the U.S.. Empyrean and Primarius Technologies also make their own respective EDA systems, while Semitronix focuses on electrical testing and semiconductor yield improvement. Chinese EDA systems still aren't on the cutting-edge of chip development, but sources say that they're good enough to work with older 7nm nodes and up. The Financial Times also reported that smaller companies use pirated versions of EDA software from Synopsys and other U.S.-based companies. One analyst told the publication that it's easy to hack into the software to use and support it without a license, which is one of the reasons why the demand for these apps is lower compared to industry growth in China. This ban will negatively affect China's capability to design and manufacture the most advanced chips in the short term, especially when paired with the various other sanctions that the U.S. has applied to the country. However, this will also provide Chinese companies with greater reason to push forward with their own innovations, potentially making them a threat to American technological supremacy in the long run. Follow Tom's Hardware on Google News to get our up-to-date news, analysis, and reviews in your feeds. Make sure to click the Follow button.
