AsianFin -- The Trump administration is further tightening high-tech curbs on China with new orders to halt sales of certain technologies including chip design software to the world’s No.2 economy, according to reports on Wednesday.
Credit：Xinhua News Agency
The Bureau of Industry and Security (BIS) under the U.S. Commerce Department has issued an directive via letters to electronic design automation software makers including Cadence, Synopsys and Siemens EDA, asking these firms to stop selling their services to Chinese groups, the Financial Times (FT) cited people familiar with the move.
Washington has considered rules restricting the export of EDA tools to China since U.S. President Donald Trump’s first term, but were ruled out as too aggressive, said a former Commerce Department official , per the FT. EDA, or Electronic Design Automation, is a specialized category of software used by electronics engineers to design, simulate and verify electronic systems and circuits.
It is not clear the scope of the reported order, though it is set to dent the aforementioned companies’ earnings. China contributes about 16% of Synopsys’ annual revenue, and around 12% of Cadance’s annual revenue comes from the market.
U.S.-traded shares of Cadence and Synopsys extended their losses in afternoon trading following the report, and closed around 10.7% and 9.6% lower, respectively.
Cadance and Simens EDA didn’t comment on the report. Synopsys CEO Sassine Ghazi said on an earnings conference that the company had not received a letter, nor had it heard from the BIS, which is in charge of granting companies licenses that allow firms to export products that have strategic importance to the United States.
“We are aware of the reporting and speculations, but Synopsys has not received a notice from BIS. So, our guidance that we are reiterating for the full year, reflects our current understanding of BIS export restrictions as well as our expectations for year-over-year decline in China. We have not received a letter,” Ghazi said.
Later Wednesday, the New York Times (NYT) reported that some sales to China of critical U.S. technologies, not just semiconductor, but also those related to jet engines and certain chemicals also have been suspended. The suspension is a response to Beijing’s recent restrictions on exports of critical minerals to the U.S, the report quoted people familiar with the matter.
The source said the Commerce Department had paused some licenses to ban American companies from selling products and technology to the state-owned Commercial Aircraft Corporation of China (COMAC), which is developing its C919 aircraft.
It was reported that the new export curbs appear to part of a broader review within the Commerce Department of exports of strategic goods to China.
A spokesperson for the U.S. Commerce Department said it is “reviewing exports of strategic significance to China”, per Reuters and CNN. “In some cases, Commerce has suspended existing export licenses or imposed additional license requirements while the review is pending,” the spokesperson said, not responding to inquiry regarding which companies have been affected.
The reported export restrictions could complicate the outlook of U.S.-China talks over trade following a tariff truce. During a high-level meeting on economic and trade affairs in Geneva from May 10 to 11, two countries had agreed to a 90-day pause on further trade measures.
The U.S. lowered reciprocal tariffs of 125% on Chinese goods to 10%, and a 20% tariff tied to the fentanyl crisis remained. China accordingly cut its tariffs on U.S. goods to 10% from 125%. China also adopt all necessary administrative measures to suspend or remove the non-tariff countermeasures taken against the United States since April 2. The two countries also decided to establish a mechanism to continue discussions about economic and trade relations, and the discussions may be conducted alternately in China and the United States, or a third country upon agreement of both sides.
China’s Ministry of Commerce (MOFCOM) said it has temporarily paused export controls of dual-use items for 28 U.S. entities to implement consensus reached in Geneva. The move suggested 28 U.S. entities would temporarily not be subject to export ban on rare earths from China. also halted its unreliable entity list and export control measures on 17 U.S. entities.
China firmly opposes the U.S. overstretching the concept of national security, abusing export controls, and maliciously blocking and suppressing China, said Liu Pengyu, a spokesperson for the Chinese Embassy in the U.S. on Wednesday, declining to comment on the U.S. Commerce Departments’ latest actions.
Liu added Beijing will closely monitor relevant developments and take resolute measures to safeguard the legitimated and lawful rights and interests of Chinese companies.
